Exercise in futility

Greetings good citizen,

Unlike yesterday’s bizarro Goldman Sachs inspired rally, today the markets didn’t know what to do…it looks like they tried to sell off but something…some ‘mysterious force’ kept pushing them upwards.

What we don’t know is when the ‘insiders’ will be finished selling. They obviously weren’t done last week as Goldman waited until this week to make their screwy ‘buy recommendation’. That said, I’m sitting here contemplating just how disturbing the whole situation is, all by itself…

It’s nearly as disturbing as Goldman Sachs unexpectedly popping up during the debate over China’s involvement in a plot to undermine the dollar…what part of the pie doesn’t have Goldman’s fingerprints all over it?

Well, at first glance, it seems Goldman isn’t (directly) involved in the topic of tonight’s offering

Support Is Building for a Tax Credit to Help Hiring

By CATHERINE RAMPELL
Published: October 6, 2009

The idea of a tax credit for companies that create new jobs, something the federal government has not tried since the 1970s, is gaining support among economists and Washington officials grappling with the highest unemployment in a generation. [Damn good citizen, if government gets any more ‘business friendly’, employers will be ‘reimbursed’ two for one for every dollar they ‘invest’ in payroll. This helps the cash strapped employee how?]

The proposal has some bipartisan appeal among politicians eager both to help their unemployed constituents and to encourage small-business development. Legislators on Capitol Hill and President Obama’s economic team have been quietly researching the policy for several weeks. [Have you noticed you hear the word ‘bipartisan’ far too much during Democratic administrations and not at all during Republican ones? Like there’s actually a nickel’s difference between politicians of either party…which they frequently change allegiance to, depending on the mood of the electorate…]

“There is a lot of traction for this kind of idea,” said Representative Eric Cantor of Virginia, the Republican whip. “If the White House will take the lead on this, I’m fairly positive it would be welcomed in a bipartisan fashion.” [Leave it to a Republican to support a stupid idea that rewards owners for something they had to do anyway…not one of these greedy fucktards is going to hire someone they don’t absolutely need, even if the job only pays minimum wage!]

In addition to the economists working on the proposal, some heavyweights support the concept, including the Nobel laureate Edmund S. Phelps, Dani Rodrik of Harvard and former Labor Secretary Robert B. Reich. [I stand by my earlier indictment, it’s a damn stupid idea to pay people to do what they are going to do anyway…which is another way of pointing out that this program won’t create a single job that would otherwise have not happened.]

One version of the approach, to be unveiled next week by the Economic Policy Institute, a labor-oriented research organization, would give employers a two-year tax credit if they increased the size of their work force or added significant hours of work (for example, making a part-time worker full time). Employers would receive a credit worth twice the first-year payroll tax for each new hire, amounting to several thousand dollars, depending on the new worker’s salary.

“It’s beautiful if it can be timed at a dire moment like this, when unemployment is way too high and appears to be going somewhat higher,” said Mr. Phelps, an economics professor at Columbia, lamenting that the president dropped it from the $787 billion stimulus plan approved in February. “But it’s a pity that this wasn’t done a year ago.” [I wonder if he gets a nosebleed because his ‘Ivory Tower’ is so high? If the proposal was dropped from the original plan, that should tell you something by itself…]

One of a number of ideas being discussed, the policy is intended to encourage companies to start hiring again by making it cheaper to add new workers. It has raised concerns, though, that employers might try to exploit the system. [AARRRGGGGHH! There isn’t anybody ‘stupid’ enough to hire people they don’t need! Making the employee ‘cheaper’ (to the employer) does nothing for the employee nor the economy, it merely makes the employer richer, which is akin to trying to extinguish a fire by throwing gasoline on it!]

States have dabbled with similar tax credits in recent years, with mixed results. The federal government last tried this measure in 1977-78. During that period, employment — which had been soft from the 1973-75 recession — climbed at a record pace. The creation of one out of three jobs that was awarded the credit then was attributed directly to the policy. But the permanence of those jobs was less clear, and some dispute how many of those positions would have been created eventually anyway.

Supporters say that improvements upon the 1970s policy would increase its potency. These include better publicizing the credit; making it available even to concerns that are not making money, in the form of a direct payout to nonprofits and companies in the red; and distributing the credit quarterly so that companies see it sooner. [That’s pretty nuts…the ship is sinking but they’re going to pay us to add more anchors! (although they’re not going to pay us enough to offset the cost of hiring the new employees…)]

Timothy J. Bartik, a senior economist at the Upjohn Institute for Employment Research who is working on the draft with John H. Bishop of Cornell, estimates that it would cost about $20,000 for each job created.

But some dismiss the idea as corporate welfare.

“Some bad ideas never go away,” said Howard Gleckman, a senior research associate at the Urban Institute. “It’s just providing incentives to lots of companies that probably aren’t going to make it in the end anyway.”

Under the proposal from Mr. Bartik and Mr. Bishop, the credit in the first year would equal 15.3 percent of the cost of adding an employee. In the second year, it would fall to about 10.2 percent.

For example, hiring a worker might cost a small business $50,000 annually. But with the tax credit, the cost would fall to $42,350 in the first year, and then be $44,900 the next year. After that, the cost would return to $50,000. [Um, considering $50 k is $20k more than the ‘average’ worker gets, you won’t see that happening too often.]

The credit would apply only to the portion of an employee’s salary under $106,800. Lowering the cap further, however, could provide an even greater benefit to low-wage, unskilled workers. [Um, yeah…make you wonder why the taxpayer would be ‘subsidizing’ executive salaries, I mean, you sure don’t see production workers pulling down that kind of money!]

The authors estimate their proposal could create more than two million jobs in the first year. [I ‘estimate’ these ding-dongs are full of what makes the grass grow green! If there is no demand for workers, they won’t get hired regardless of whether the government offers to subsidize 100% of their pay!]

“Businesses like those provisions that reduce the hurdle rate that you have to surmount in order to make an investment — like an employee — a profitable investment,” said Robert Willens, president of a tax and accounting advisory firm in New York. [Um, the ‘hurdle rate’ is a minor factor when it comes to hiring a new employee, the justification for new hires is ‘need driven’, if you don’t need them then you can’t afford them at any price!]

Of course, even in recessionary times, some companies are hiring without tax breaks. So a subsidy could merely benefit those businesses that already would have added new workers. [Full circle, back to square one…and by the way, does anyone think this is ‘free’? It sure as hell isn’t!]

An American Economic Review study has suggested that the 1970s policy was responsible for adding about 700,000 of the 2.1 million jobs that were awarded the credit. This may sound modest, but if accurate, economists say it would make this proposal a successful and relatively cheap way of creating jobs. [Uh, just because employers claimed 700,000 tax breaks doesn’t by any stretch of the imagination mean 700,000 jobs were actually created. Then we have to ask ourselves another question…like who is ‘American Economic Review’ and why should I give a fuck what they say? What we’re seeing here is another disturbing ‘propaganda technique’ where we tend to trust ‘strangers’ because they’ve never lied to us before…]

Advocates argue that such incentives would be more effective this time around not only because of design, but also because of timing. In 1977, hiring was already on the upswing, whereas economists expect today’s job market to decline a bit more and then stagnate for months.

“Now is a better time than ’77 was because we’re closer to the bottom of a recession,” said Daniel S. Hamermesh, an economics professor at the University of Texas, Austin, who helped create the 1970s plan. “This could help an uptick proceed more rapidly.” [Does it seem like one of the problems we are having is due to the people making policy proposals have zero real world experience? Intellectual exercises often ‘work’ because they are in one’s mind, but there is no reason why anyone would hire people they don’t have work for just to get a 15% ‘tax break’. If people in the real world were that stupid, our entire economy would be insolvent…er, nevermind.]


But critics of the idea argue that businesses hire based on actual demand for their products, and a minor subsidy for adding an employee will not make up for the collapse in demand across the broader economy. [You see, not everyone is stupid…]

“Why would a business hire a new worker?” Bill Rys, tax counsel to the National Federation of Independent Business, a small-business industry group, said. “They’re hiring because they need to do work. Unless you have work to do, it’s still an expense.”

Barack Obama — like Senator John Kerry before him — proposed a job creation tax credit during his presidential campaign, and then in discussions for the stimulus package. The proposal was eventually killed because of concerns that employers would exploit the tax credit. For example, companies might close and reopen, claiming credit for all their “new” employees. [Just because employers claimed seven hundred thousand ‘tax credits’ doesn’t mean seven hundred thousand new hires took place…there are dozens of ways to ‘cheat’ that sort of incentive.]

Even advocates acknowledge that, as with any tax incentive, employers and their accountants will take advantage of loopholes. But they argue that with strong rules — possibly by reducing the credit for “new” companies, or by requiring a company’s overall wage bill to rise along with its work force — the proposal could minimize such abuse. [I’m no ‘Biz Wiz but it has already occurred to me how to cheat both of those ‘countermeasures’, the reason this was dropped from the original stimulus bill is because it is too easy to beat. It has ‘fraud’ written all over it.]

Deficit hawks still worry about the cost of the proposal, and whether it would be politically feasible for Congress to phase it out once businesses have grown used to it. [It would be a freaking nightmare, with a huge ‘churn’ of the labor force that would cost taxpayers a needless fortune…just to make the fat cats wallets thicker…]

The biggest fear among some, though, is that the proposal might unintentionally reduce job opportunities if it sits in Washington too long without passing. [Ahem…bullshit!]

“Particularly for big employers, if they think a job creation tax credit is in the offing, it could certainly be an incentive to delay hiring,” said Lee E. Ohanian, an economics professor at the University of California, Los Angeles. “That means it could have the perverse effect of actually prolonging the recession.”

Unbefreakinglivable! Why does anybody listen to these (idiot) Ivory Tower types that have Zero Real World experience?

I posted this tonight as an example of just how ‘goofy’ things are getting, how desperate the search for answers has become.

Time for lights out good citizen…sleep well.

Gegner

Equities up...Dollar down

Greetings good citizen,

Today we slid another step closer to pulling the plug on life as we have come to know it. Once again I feel compelled to warn you that this is not so much being done ‘for you’ as much as it is being done ‘to you’, contrary to what the ‘cheerleaders’ say.

Frustrating as it is for us ‘doom and gloom’ types, the world refuses to slide over the cliff in one neat, brisk movement. It continues to get hung up on the tiny obstacles it encounters on the way down, which the ‘Pollyanna’s’ amongst us seize upon to declare that the disaster is over, it’s time to ‘get happy’! (Again)

The failure of our corporate controlled government to rein in the free-wheeling finance sector has set into motion other forces our corporate overlords may or may not control…

Understand good citizen that the water is plenty murky as the stage is being set for, for lack of a better term, ‘the mother of all contrarian plays’. We are truly lurching toward the point where ‘no good deed will go unpunished’…

Without further adieu, we proceed to tonight’s offering

Stocks and Gold Gain as Investors Shun the Dollar

By JACK HEALY and KEITH BRADSHER
Published: October 6, 2009

Investors clamored to buy pretty much anything on Tuesday — as long as it was not the dollar

A seven-month slide in the value of the dollar gained force as investors migrated to other markets and fretted over a report that crude oil could one day be priced in other currencies, hobbling the dollar’s role as a vehicle for global trade. [How worried do you think the multi-nationals are over the fate of the dollar? They have proven time and again that the dollar doesn’t mean shit to them! Case in point, why do you think the dollar is in the crapper in the first place?]

On Wall Street, shares climbed higher on hopes of robust profit reports as earnings season kicks off later this week. And the dollar’s declines propelled gold prices briefly above $1,040 an ounce — a record high — and touched off a buying spree for copper, silver and platinum and crude oil — commodities that stand to hold their value if the dollar does not. [And who do you suppose ‘makes out’ when commodity prices skyrocket? It sure isn’t consumers so that leaves who? Gee, who gets to shove it up your backside (with higher prices) while they hunt for the ‘greater fool’? Who do you suppose gets to play that stupid game? You don’t suppose that would be ‘the investors’ would you? Maybe we should be asking a different question…like why isn’t all of this predatory bullshit illegal?]

The dollar slipped further against major currencies, continuing a decline that has sent it tumbling 15 percent since early March. The dollar fell to $1.47 against the euro, and the Japanese yen strengthened to 88.76 for every dollar. Concerns about record-breaking deficits and a lackluster economic outlook in the United States have steadily eaten away at the dollar’s value since early March. [Um, and what do you suppose has changed since early March? Equities have gone up (for no apparent reason) but other than that…nothing. So the dollar continues to collapse and we can only wonder why. Or would wondering why the dollar isn’t totally worthless already be a more worthwhile question?

Investors who sought the relative safety of the American currency during the financial crisis are now pursuing higher returns in stocks, commodities and foreign currencies, amid speculation that demand for American debt is waning, and that the dollar could lose its status as the world’s reserve currency. [Strangely, if we flip that rock over (The dollar loses reserve currency status) what difference does it make at this stage of the game? It sure don’t mean a shitload, good citizen…]

Underlying the dollar’s weakness is the growing perception that many policymakers around the world, and in Washington, quietly welcome a slow but sustained depreciation of the dollar, especially against the Chinese renminbi and other Asian currencies. [Um, geez Louise, why the hell would THAT make a difference now, AFTER we’ve already sent all of our factories there? Which is to say the ‘damage’ is already done…]

A weaker dollar would make imported goods more expensive in the United States and American exports* more competitive [* too bad there aren’t any!], but it could also make overseas investors wary of buying the Treasury bonds that the United States needs to sell to finance its budget deficit. [Tell me again why the multi-nationals are (or ever have been) worried about this?]

On Tuesday, investors’ concerns were piqued by Australia’s surprise decision to raise interest rates, making it the first big economy to lift rates after the global financial crisis. [How much do you want to bet that the only people ‘ignorant’ of this move were the sheep themselves. This is what’s going to cause the ‘green shoots’ that nobody has seen yet to ‘disappear’.]

Countries around the world — including the United States — trimmed interest rates to record lows as the credit crisis metastasized last year, in an emergency effort to stimulate the markets and keep lending from drying up. Although credit is flowing better now, the Federal Reserve has indicated that interest rates will hover near zero for some time. [How long will the Fed be able to keep rates low when the ‘rest of the world’ is paying higher returns?]

“The move was taken as a sign that the global economy is firmly on the road to recovery,” said Vassili Serebriakov, a currency strategist at Wells Fargo. “That’s lifted risk appetites and assets across the world. The dollar strengthened when global financial markets went into tailspin and has retraced back all that strength.”

Adding to the turmoil, a report on Tuesday in The Independent, a British newspaper, suggested that China, France, Japan and Russia were in secret talks with Persian Gulf countries to abandon the dollar for international trade in oil and replace it with a basket of currencies plus gold. [Couldn’t have been ‘real secret’ if the press knows about it, could it? We can only wonder whose idea it was to add the ‘golden clincher’…]

The article named no sources and was quickly denied by Muhammad al-Jasser, the governor of the Saudi central bank, and Dmitry Pankin, Russia’s deputy finance minister. French officials declined to comment. In China, the government is closed for a weeklong holiday, but well-connected bankers were skeptical.

“While informal discussions might have taken place, I doubt they represent a serious intent to undermine the existing global monetary order or the role of the U.S. dollar,” said Fred Hu, who is the chairman of greater China for Goldman Sachs and advises the Chinese government. [Who else among you is disturbed to see that particular name ‘pop up’ in this most unseemly of circumstances? If one encounters trouble these days, you can almost count on Goldman Sachs to be nearby…]

But the report caught the attention of financial markets because several economists have been predicting in recent months that at some point, the world’s oil exporters would start moving toward other currencies to limit exposure to the dollar.

“It won’t be easy to make such a shift, it’s a pretty unrealistic idea in the near term,” said Qu Hongbin, an HSBC economist in Hong Kong. But in the years to come, he added, China would be delighted if it could print its own currency to pay for oil, instead of having to earn dollars through exports.

As they pulled away from the dollar, investors streamed into commodities like crude oil and gold, whose values often move in opposite directions from the dollar. [While inflicting major whackage on the non-investor class by jacking up the cost of living!] Fears that the American currency could decline even further if investors seek higher returns in more lucrative investments pushed gold prices higher.

“Right now it doesn’t give any sign of pulling back significantly,” said James Steel, a commodities analyst at HSBC. “There’s still a worry about the dollar. There’s a latent worry about inflation.” [It won’t be ‘latent’ for long if the US has to play ‘follow the leader’ when global interest rates head for the stratosphere!]

Crude oil futures in New York rose 43 cents to $70.83 a barrel.

Analysts characterized the surge in gold and oil prices as a reaction to weakness in the dollar, rather than a sign of bullish hopes for a quick recovery. Although activity is picking up, oil consumption remains subdued as factories lope along at partial capacity, and consumers are still reluctant to spend thousands of dollars on gold jewelry when the recovery is so tenuous. [ The honest answer is they’re still too broke to be loading up their credit cards with such luxuries…at least those of us not depending on seven digit bonus checks next month…]

At 2:30 p.m., the Dow Jones industrial average was up 85 points, or 0.9 percent, and the broader Standard & Poor’s 500-stock index was 0.8 percent higher, adding to their sharp gains from a day earlier. The Nasdaq was 0.9 percent higher.

What these ‘coke sackers’ aren’t telling you is the Dow was up 150 points at 11:30 this morning and has been headed in the down direction ever since. Okay, I can see it rallied a little before the closing bell and it closed up 131.50 points…on dollar weakness; that lead to a rush into commodities...

Now you’re really screwed good citizen. For months we’ve been told there’s nothing ‘safer’ than the US dollar. Sure the dollar is ‘weak’ right now but there isn’t anything out there to take its place. If equities ‘slip’, not to worry, people will crowd into dollars!

How much do you want to bet that’s a bunch of horse pucky too?

Imagine how much trouble our economy will be in if ‘everybody’ starts avoiding the dollar?

Remember what I said about our ‘supply lines’ collapsing? This is the situation that will make that happen…and understand something else good citizen, we could become the next Zimbabwe, virtually overnight.

Not to get you all worked up but we aren’t talking ‘might’ here…this is happening and it’s happening here and now!

I’m sure you aren’t going to be comforted when I tell you there isn’t a dip, dang thing you can do about it either…the ‘speed’ of the collapse will be tied to how quickly interest rates rise.

The quicker they go up, the quicker the wheels fly off…that said, I’m willing to bet the Aussies will ‘back off’ if things get too overheated.

Once everybody is back in ‘lockstep’, the ‘danger’ will pass.

Now, I haven’t gone hunting for this information but it would be a good thing to know how much the Aussies have jacked up their rate, just to see where this game of ‘follow the leader’ is headed.

Sadly, that information isn’t there for the taking, I’ll have to go dig for it.

That said, you may want to keep your eyes open because things could change, not day by day but minute by minute…

Thanks for letting me inside your head,

Gegner

Scary shit

Greetings good citizen,

I’m unsure if I want to laugh or scream because on one hand the news that today’s markets tacked on 112 points because Goldman Sachs ‘upgraded’ financials is absolutely hilarious, but the fact that investors actually swallowed this malarky is more than a little frightening…

If GS is playing ‘trick or treat’, I’m voting ‘trick’. The only thing preventing the global finance markets from crumbling to dust is ‘creative accounting’. Banks are getting hammered by a record number of foreclosures but, thanks to ‘mark to fantasy’ accounting rules they get to ‘pretend’ it’s not happening…and this makes the banking sector ‘attractive’ how, precisely ?

How many of you folks feel bad for Jack Healy? I know he has my sympathy…

Upgrade for Big Banks Helps Chase Away Gloom

by JACK HEALY
Published: October 5, 2009

Wall Street climbed back to its feet on Monday after two weeks of losses. [Why do I suspect these are ‘famous last words’?]

Investors went shopping across all sections of the market, from financial shares to oil producers to health care companies. They were heartened by new figures showing that service businesses, which dominate the American economy, grew last month after nearly a year of relentless declines, a private research group said on Monday. [Private and apparently ‘totally anonymous’ research group…]

The report from the Institute for Supply Management offered corroboration that the economy was recovering, though perhaps at a glacial pace. Businesses said that new orders were coming in and business activity was picking up, though they were still cutting jobs and worried about overstocked shelves. [How much do you want to wager there isn’t enough ‘measurable’ business activity here to fill a thimble? Oh, and did you notice…they slippery ‘coke-sackers’ aren’t saying if the ‘definite improvement’ is ‘year over year’ or ‘month over month’ (the more likely of the two cases…).]

Over all, the report noted only a slight return to positive growth, but it seemed enough of a shift for Wall Street. [If the gain is ‘month over month’ then it’s pretty much meaningless, they keep pulling the month over month rabbit out of the hat on housing data, while the year over year is still pitiful…but these assholes are absolutely ‘shameless’.]

A report from Goldman Sachs upgrading big banks to attractive encouraged investors to buy in the financial sector.

Shares of the consumer bank Wells Fargo rose nearly 7 percent to $28.09, and other financial giants like the Bank of America, JPMorgan Chase and Citigroup were all higher. Regional lenders, too, were up slightly, even though Goldman cautioned they could be outfoxed by their larger rivals. [Um, is ‘outfoxed’ code for being screwed into the woodwork by the ‘to big to fail’/too big to operate profitably, federally protected instutions?]

The market has failed to recognize the dramatic improvement in earning power at the large banks versus the regionals,” Goldman analysts wrote. [Perhaps the markets are recoiling at the idea that the government would provide these supposedly ‘private’ institutions with such unfair advantages over their competitors…these circumstances make a mockery of both the government and the rule of law!]

The Dow Jones industrial average gained 112.08 points, or 1.18 percent, to close at 9,599.75, and the broader Standard & Poor’s 500-stock index rose 15.25 points, or 1.49 percent, to 1,040.45. The Nasdaq was up 20.04 points, or 0.98 percent, at 2,068.15.

The price of crude oil inched up to $70.41 a barrel, and gold prices shot to $1,017 an ounce as the dollar weakened against other major currencies. [While Mr. Geithner tried to ‘jaw-bone’ the dollar into a stronger position on world markets…Seriously good citizen, just how ‘bad’ can the rest of the world be compared to the level of unmitigated bullshit that’s being pulled off here on Wall Street? If the US is truly ‘the safest place in the world’ to invest then the whole world is ‘toast’ because there is nothing even remotely ‘safe’ or ‘honest’ about the US markets or the people that run them!]

Interest rates were steady. The Treasury’s benchmark 10-year note was unchanged at 103 13/32 and the yield remained at 3.22 percent.

Comments from the White House about its efforts to stabilize the job market spurred speculation that Washington would push through extensions of several tax credits and spending programs already passed under the stimulus. Some investors fear a so-called double dip recession if the government abruptly withdraws stimulus spending. [Honestly good citizen, at this point in time, the government IS the economy…if they stop spending, there won’t be anything left to put on ‘life support’.]

“The economy itself is not yet healthy enough to propel itself forward without the aid of the government. That is the consensus,” said Marc Pado, market strategist at Cantor Fitzgerald. [No kidding…so what’s all of this ‘babbling’ about an ‘economic recovery’ all about? ]

After two weeks of declines and souring economic news, investors had been looking for something to fill their sails in advance of third-quarter earnings season, which begins on Wednesday when the aluminum maker, Alcoa, reports results.

This summer, businesses showed they could turn a profit by slashing costs, usually by laying off workers and reducing plans for growth. Now, many investors are hoping for glimmers of rising revenue at industrial producers, consumer companies and financial firms as the recession ebbs.

Some analysts believe that companies will surprise Wall Street with better profits and smaller losses than expected, touching off another surge forward in stocks. [Strangely, most observers believe the market has gotten ahead of itself because the transport sector refuses to verify the ‘uptick’ in production the ‘analysts’ claim to see.]

“We’re looking for some decent numbers,” said Bruce McCain, chief investment strategist at Key Private Bank.

But last week, stocks fell close to 2 percent after new reports on job losses, and on weakened manufacturing activity and automobile sales, suggested that the recovery will be a difficult slog for investors and workers alike. The weak economic numbers reinforced worries that stocks had surged too far, and were overdue for a correction.

On Monday, some investors were betting that such a correction had already occurred, and began buying again. Shares of department stores like Macy’s, Saks and Dillard’s all rose more than 3 percent, and the online marketplace eBay was up slightly after the report on service-sector growth.

I am once again compelled to restate the fact that I am not an investment professional and nothing you read here should be construed as ‘investment advice’.

The opinions expressed here are the opinions of the author alone and are not necessarily those of the management, employees, or other associates of this web site.

That should do it, now, how about that stock market? While I have repeatedly expressed my ‘distrust’ of Wall Street (and the MSM along with it) can you believe there are people ‘stupid’ enough to buy financial stocks just because ‘Government Sachs’ recommended them?

Sadly, this whole ‘rally’ is made of these exact same ‘vapors’, nobody in their right mind is buying stocks (especially financial stocks) so it must be something else…and that ‘something else’ has some pretty dire ramifications if it turns out to be what it appears to be.

Do I ‘know’ what is going on? Most definitely not! All I have is my suspicions…and we can talk about those for a while…

Now, win, lose or draw here good citizen, you have to admit our circumstances are more than a little ‘unique’. For the first time in history we have investment banks that have direct access to the government printing presses.

These ‘gamblers’ can borrow from the Fed at rates nobody else enjoys, and that rate is at a historic low…how much more over ‘zero’ is the Fed charging ‘Government Sachs’?

Now, for some bizarre reason, the badly beaten financial stocks keep rallying. One would think there was no unemployment and foreclosures were at a ‘normal’ level considering how, er, ‘glibly’ investors are snapping up the stocks of these extremely ‘shaky’ institutions…face it good citizen, the abrupt return of ‘mark to market’ would put them all out of business at once! Poof and they’d be gone!

No questions at all.

It is this extremely bizarre set of circumstances (which the MSM routinely ignores) that we all find deeply disturbing.

Somehow smashing your TV set to bits and throwing the remains out on the street isn’t going to ‘fix’ this problem (at least all by itself, although I bet it would get their ‘attention’.)

Perhaps this is my question to you good citizen,

Just how bizarre does it have to get before the wheels come flying off this broken-down old jalopy?

You can’t invest for your future or that of your children with any degree of certainty. Worse, it’s already a fact that you won’t last long enough with any single employer to put aside enough money to retire on…and should you be so lucky, the odds are the thieves on Wall Street will help themselves to it before you collect a single nickel!

And there ain’t a fuckin’ thing you can do about it! Nothing, not one blessed thing…well, nothing legal that is.

Is this the kind of world YOU want to live in good citizen?

Not me and certainly not my kids…

Thanks for letting me inside your head,

Gegner

More of the same...

Greetings good citizen,

This weekend the employment picture has filled the usual weekend ‘news void’, perhaps the most disturbing aspect of this not particularly unusual development is that the reports are almost universally ‘bad’. Regardless of what side of the fence you’re riding as far as the recovery is concerned, the latest unemployment data spells doom for anything even remotely resembling a recovery.

I chose the intro to Ilargi’s 10/3 piece because of his laser-like focus on the topic at hand. If you wish to read the entire text of tonight’s offering you can find it by following the link…

October 3 2009: Just the naked eye

Ilargi: I’m starting to wonder how many people there are left who actually believe all the talk about the economic recovery we're supposed to have entered. You know, the one proclaimed by governments, central bankers, institutions such as the IMF and the entire flock of parrots and parakeets that call themselves media and are all set 24/7 to repeat their every word, chirping, tweeting and twittering as they go along. And I'm afraid there still are far too many such believers left. They have a great shot at losing a lot of money in the next few months.

I also wonder how many people have gotten real nervous by now. Who've asked themselves what I asked a while back: what are the odds that the stock markets will keep on rising? And on what grounds would they do so? Surely many must have realized by now that perhaps that talk about a recovery is just that, talk. The strength of their belief may depend, to a large degree, on the job market. After all, it should be obvious that "jobless recovery" is a term used exclusively by people who do have jobs, and often cushy ones.

I like this little graph, because it provides a very nice picture of the effect of the hundreds of billions in taxpayer money spent by the American government on the job market. From about May through September the country has bought itself a slight decrease in the rate of job losses. Still, the unemployment rate has gone up despite all the cash and credit so generously supplied by you, the taxpayer. And it by no means tells the entire story; indeed, it may well relate only the rosiest parts available.

Now other, less positive, parts are slowly being revealed that could change and even shatter the image we have of the job market. Here's a few choice bullet points from the reports that came out this week:

* Job losses for September, according to the Bureau of Labor Statistics' U3 calculations, were 263.000.
* This brings the U3 unemployment rate to 9.8%.
* While the U6 rate reached 17%.
* The household survey by the same BLS indicates that employment fell by 785,000.
* An alternate view at the household survey suggest 995,000 fewer people were working in September than in August, while the labor force contracted by 1,262,000 people and the number of people "not in the labor force" rose by 1,516,000.
* More than a half a million people dropped out of the labor force
* 551,000 initial jobless claims were filed.


I don't know about you, but I assure you that I have a hard time seeing the forest through the trees here. It's simply too much of a strange coincidence that the number most trumpeted in the media is always the lowest (U3) one. As soon as you peel away just the first few underlying layers, it becomes clear that this number merely scratches the surface. Most of the 10 million or so people who get counted in U6, but not in U3, are very much unemployed or at least underemployed. The bottom line is that even though the 263,000 number is unrealistically low, likely by a lot, it is the one that government and media stubbornly keep providing, as if the American people, who after all pay the salaries of the BLS employees, are too stupid to have a right to hear the real data.

The latest report does lift the veil a little bit: The Labor Department yesterday admitted it may have underestimated unemployment numbers by as much as 17%, partly because of its faulty birth/death model, which is a useless tool in times like these. The BLS data missed 824,000 lost jobs for the year through last March, with most of the additional job loss occurring in the first quarter of 2009. The potential revision would mean that the economy lost 5.6 million jobs for the period instead of the 4.8 million suggested until now.

[..] the tax records showed the Labor Department’s payrolls figures overestimated payrolls by about 150,000 [..] That implies the estimates missed the mark by about 675,000 in the first quarter of this year [or 225,000 per month] , which currently shows a 2.1 million drop in payrolls.[..]


Calculated Risk added these new numbers to his usual graph which compares job loss percentages in recessions.



Catherine Rampell at Economix provides a similar graph, but using the share of employment:



Awfully bad as it is, the unemployment situation, of course, is but one aspect of an economy that will now grow weaker at a rapid clip.

* US personal bankruptcy filings will exceed 1.4 Million by the end of the year, more than the 1.3 million they reached right before the bankruptcy laws were altered with aim of bringing bankruptcy numbers down.
* Bank card delinquencies hit a record high last month.
* Meredith Whitney says:

o Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan.
o Small business loans are hard to find, and credit-card lines (a critical funding source to small businesses) have been cut by 25% since last year.
o [..] more than 32% of U.S. homes are worth less than their mortgages.
o Small businesses primarily fund themselves through credit cards and loans from local lenders. In the past two years, credit-card lines have been cut by over $1.25 trillion. During the same time, 10% of all credit-card accounts have been cancelled.



But the worst part of it all is that deflation is here, and it’s here to stay for a while. In the past few days, we could see heavy hitters like David Rosenberg, Joseph Stiglitz, Janet Tavakoli address deflation in the same way that we at The Automatic Earth have even for longer than the 20 months that this site exists. Ironically, at about the exact same moment when we figured perhaps we were the only ones left (with Mike Shedlock and a few Minyans) to warn of the perils of deflation, it is slowly turning into a mainstream concern. As Tavakoli tells Max Keiser (who still can't believe it), the debts are simply too overwhelming. Not that anyone has seriously attempted to address them.

Rosenberg:

* "We are certainly in a deflationary state," said David Rosenberg, chief economist and strategist with Gluskin Sheff and Associates in Toronto. "Of that, there's no doubt."
* "I think people still have no clue as to just how weak the economy is," Mr. Rosenberg said. Remove the "impressive medication" administered by governments, and most economies are at a virtual standstill. The U.S. economy faces a decade of stagnation, he said.
* [..]"deflation will last until we see the next secular trend of expanding household balance sheets, and that is some time away" Mr. Rosenberg said.



The Federal Reserve decides to stick with another label for the exact same phenomenon.

* "Disinflationary winds are blowing with gale-force effect," [Chicago Fed president] Evans said in a Sept. 9 speech in New York.
* The Fed needs to "keep inflation expectations from slipping to undesirably low levels in order to prevent unwanted disinflation," Vice Chairman Donald Kohn said Sept. 10 in Washington during a speech at the Brookings Institution.



In other words, the government's unemployment data have proven to be unreliable. That in itself is not new, but what is, is the Labor Department's own admission that its stats are flawed. It still hasn't fully opened up by any means, but the cracks are now visible to the naked eye.

The potential for a continued rally in the stock markets is becoming more questionable by the day. If those markets start caving in, as we think they simply must, the hollowness of the recovery proclaimed by governments and media will also lie exposed to naked eye. Whether or not the government and the Federal Reserve have been busy painting lipstick on the markets pig though the past 6 months is no longer even relevant; they will be powerless to do so going forward.

We have the likes of Paul Krugman, Robert Reich and, in the UK, Samuel Brittan, shrieking loudly for more, much more, stimulus. They see the problem coming, that's true, but they fail to see that the US and UK governments opted sometime in 2007-2008 to pour money into their financial systems, and that money cannot be spent a second time.

Many of us remember how a trillion here and a trillion there were doled out with the message that the taxpayer was likely to make a healthy profit on this "investment". Haven't heard that one for a bit. The reality is that between what Washington has thrown into AIG, the Wall Street banks and the Fannie and Freddie and Ginnie family, as bankrupt as it is incestuous, there are only losses.

If and when financials stocks get hammered, banks and insurers -among others- will be forced to execute additional gigantic writedowns and losses. With a 3.6 million official housing inventory, to which we can add a 7 million shadow one, America will have a 25 month supply of unsold homes. If Fannie and Freddie weren't dead yet, that would do it. The losses are yours.

The Krugman clan now wants you to finance a second stimulus. And it will come (albeit under an alternative moniker), but it can bring only more misery for the people. The government will get a little more transparent in a desperate fight for credibility, but it was lost a long time ago. And it's not a specific government, it's the entire system that's morally broke. The entire economic, financial and political systems, all of it and all of them, broke, broker and broken. [understand good citizen that the funds simply don’t exist to ‘bailout’ the global financial system…and if they did, they still shouldn’t do it! This isn’t a problem that can be fixed by throwing money at it, they need to cut to the chase and write off a whole shitload of (mostly toxic) debt…]

I asked above how many people are left that still believe all the talk about that heavily promoted recovery…and though I know they are there, scores of them, that at the same time is something that I'm starting to find hard to believe. Look at the numbers, and never forget that many of them are not even anywhere near as bad as the real ones.

Yes, consider this your storm warning. Batten down the hatches, don’t let your kids wander off, and please, take off those silly rose-colored glasses. From now on in, just the naked eye.

I was sorely tempted to just use the last two paragraphs of this piece but that wouldn’t be particularly fair to Ilargi, who deserves to be heard ‘in context’. Sadly, it was all of the graphs which tempted me to make such an edit but oh well.

What worries most commentators is the ramifications of a second market collapse, especially if it is worse than the first one. Older workers have already seen their retirement plans shrink by 60%, to see them hit again would be disastrous!

It’s a two edged sword, on one edge you have elderly workers unable to exit the workforce while on the other you have young workers unable to enter…we must not let this logjam turn the generations against one another.

But that’s exactly where this is headed, to a second market crash…and most fools haven’t pulled their funds out of the markets!

That said, I am not an investment professional and nothing written here is offered as investment advice.

Thanks for letting me inside your head,

Gegner

Revisions and adjustments...

Greetings good citizen,

This isn’t exactly ‘flip your wig’ material but they recently ‘revised’ the unemployment figures due to, yup, you guessed it, the birth/death model assumptions being way off.

How bad were they? How about 824,000 or roughly another million that they had counted as still being employed! Perhaps more damning is we are still seeing reports of ‘new claims’ hovering in the 550,000 PER WEEK range…which would mean the overall number is actually much higher than even this sorry revision suggests!

Yes good citizen, we can only account for eight million being ‘officially’ unemployed yet depending on your source, the figure jumps to as high as 19 million! (Which ‘coincides’ roughly with the number of foreclosures there have been since the beginning of the real estate collapse.)

But if we take into account that you are not considered ‘unemployed’ once you’ve exhausted your benefits…that creates another large and getting larger, gray area.

Since there is no good way to tell for sure how severe the unemployment problem is, we may as well proceed to tonight’s offering…

Early Job Cuts Worse Than First Thought, as More Companies Go Belly Up


By Kelly Evans

The loss of 263,000 jobs last month brings the total drop in U.S. employment to 7.6 million since the recession began — and revisions suggest the losses could turn out to be even steeper.

Total U.S. nonfarm employment as of March was probably lower by 824,000 than previously thought, or about six-tenths of a percent, the Bureau of Labor Statistics said Friday, reflecting the unusual severity of job losses during the first quarter. [Job losses that began in earnest during the final months of the Bush administration…]

“Most of the additional job loss… appears to be due to in part to an increase in the number of business closings,” said BLS Commissioner Keith Hall in a statement. [Which is pretty weird considering how badly the ‘birth/death’ model skewed the monthly figures with ‘make believe’ jobs…which begs the question, can a business that never opened its doors actually go ‘belly up’?]

The findings come from preliminary benchmark revisions released Friday along with the monthly employment report, which will be finalized and published on Feb. 5 of next year. The annual revisions, based on unemployment insurance tax reports, give a more accurate view of the labor market than the government’s monthly surveys. [As we have seen, there are huge discrepancies between the ‘new claims’ filings and the ‘estimates’ garnered from the ‘phone surveys…]

The benchmark revisions are typically small, raising or lowering employment levels by around two-tenths of a percent. But not this time.

The BLS’s birth/death model underestimated just how many businesses were folding — particularly during the January through March quarter — as the recession worsened. [Although this is NOT what they SAID the birth/death ‘model’ was telling them! I mean hell, hasn’t the whole ‘green shoots’ thing been based on ‘less worse’ results across the board?, less worse results that nobody could measure and that refused to show up on any known economic indicator except the (heavily manipulated) stock market?]

Economists had been bracing for a downward revision, but not necessarily one of this magnitude, which means the U.S. has likely shed more than 8 million jobs since December 2007. For example, in a note Thursday, Goldman Sachs economist Ed McKelvey said he expected the revision to be “on the order of -150,000 to -200,000.”

“It’s a huge number, much more than usual,” said Nigel Gault, chief U.S. economist at IHS Global Insight. The government’s models “tend to assume dying firms get replaced, but that didn’t happen.”

Mr. Gault said the revisions suggest the economy was doing even worse in the first quarter than previously assumed, and cast doubts on the recovery. [No shit, Sherlock! Where was this ‘genius’ back in March when this ‘totally unfounded rally’ began?]

One temporary silver lining: it could be good news for corporate profits in the just-finished third-quarter, since firms saw increased sales while continuing to cut back on wages and salaries, he said. “But then, where’s the future demand coming from?” [Um, in case nobody noticed, the price of energy has been rising constantly in ‘lock-step’ with equities…chances are damn good this accounts for the ‘increase’ in consumer spending…]

“Today tells us employment’s going down, hours worked are down, incomes are falling — so how can we sustain robust growth in consumer spending in that environment? The consumer doesn’t have to lead the expansion,” he said, “but the consumer has got to be part of it.”

How’s that for an ‘October Surprise’? It seems most government statistics have been ‘mis-under-estimated’ for quite some time.

I’m pretty sure this isn’t the kind of ‘bi-partisanship’ Mr. Obama was expecting when he failed to completely clean out the appointees of the previous administration…

Me? I don’t have anything else to add here, the story sort of speaks for itself.

Thanks for letting me inside your head,

Gegner

A Leap of Faith...

Greetings good citizen,

I’m glad I’m not the only one wrestling with tonight’s topic although, truth be told, I doubt many are ever troubled by the demons of ‘self-examination’.

If you never question ‘conventional wisdom’ then whatever challenges your worldview is simply discarded as a ‘superfluous curiosity’…interesting but meaningless.

Conversely, challenging one’s worldview too vigorously leads to a place few can tolerate for very long…those barren, windswept plains of truth.

But fear not good citizen for such a forbidding tableau is not tonight’s destination…

A Priori versus Empirical Reasoning and Practical Decision-Making

[Purloined from: Jesse’s Crossroads Café ]

"In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists." Eric Hoffer


A Priori:

from Latin, literally "from the former." Reasoning that starts from accepted first principles or facts requiring no proof or foundation, being a self-evident assumption to the true believer

Empirical:

a. Relying on or derived from observation or experiment: empirical results that supported the hypothesis. b. Verifiable or provable by means of observation or experiment: empirical laws. 2. Guided by practical experience and not theory,

A Priori reasoning is often associated with religion and other belief systems, because it is 'top down' reasoning from a given, accepted fact that is judged to be self-evident and sufficient in itself. So for example, if one believes in an all-powerful and loving God, one can start making logical deductions from that first principle.

Empirical reasoning is often associated with the 'scientific method.' This is reasoning from the "bottom up" based on data, evidence and replicable experimentation and demonstrable relationships. Empirical reasoning can only take one so far, and generally follows the pattern of hypothesis - proof - re-examination - new hypothesis based on new data or insights.

In Economics, it never ceases to amaze how quickly people gravitate towards a priori reasoning once they have become wedded to a belief in an idea, a trading system, a school of thought, or a cult of personality.

If I believe, for example, that deflation is inevitable, no matter what else, then I will selectively choose data to support this view, even if unconsciously, and evaluate all information in the light of deflation as a given outcome, accept that which supports my belief, and rejecting or diminishing in significance the contrary data.

One can make the same case, for example, for those that believe that hyperinflation is an inevitable outcome in the near term. Or those who believe in the infalliblity of a particular trading system such as Elliot Waves, or some favorite indicator.

In less lofty terms, it is what we call a prejudice, although that term has become too specifically associated with racism in the modern world. It is literally a prejudging of situations, and fitting them all into a common pattern no matter what.

Sometimes the lengths to which true believers will go to hold on to their opinions becomes almost funny, if it is not so often accompanied by ad hominem attacks and rather nasty, immature behaviour when the true believer becomes cornered by reality. Or the tragedy of genuine loss when believers are led into folly and the consequences of their errors.

How funny is it, for example, to see a noted pundit keep drawing lines in the sand for the maximum price appreciation of a commodity like gold, and having to change them every year, ignoring past failures and pretending as though they have not been wrong, not daring to acknowledge their failure and attempting to explain it, to at least integrate it into their system in some credible manner. [This isn’t confined to economics, you can witness this across the ‘belief spectrum’ from religion to politics…]

There is always an alternate count, always the oddly possible but highly improbable excuse or rationale for their own mistaken belief, to avoid admitting that they or their system are imperfect, that they do not know the future with any certainty.

One can believe in something that might eventually become true, but for the wrong reasons. The 'belief' part is accepting the truth before any rational evidence would lead one to accept it logically. It really depends on the odds, and whether they get 'lucky.' People are therefore fooled by chance.

This, by the way, is the problem I have had with some of the adherents to the Monetarist and Austrian schools of economics, among others gathered in schools. They believe something, and are inclined at times to twist the data to support their pre-dispositions and claims, and reduce objections or alternate views to caricatures that are not correct on close examination by the unbiased mind.

A scientific approach is to assess what is, rather than what we would like things to be, and to draw conclusions carefully from it, calculating probabilities when the evidence does not support a single outcome, and a willingness to accept new data and act on it when it appears, even if it appears contrary to a current working hypothesis.

This does not mean it is wrong to carefully examine evidence that seems to be 'on the tails' of our existing body of knowledge, to see if an adaptation of the hypothesis is all that is required.

Why is this important to us here in this forum?

Because belief is in the realm of the spiritual and the philosophical. Even a statement like "it is self-evident that all men are created equal" is clearly an appeal to a philosophical stance.

Finance, business, trading are not worthy of belief excepting for the ethical implications of behaviour that is contingent on all realms of human endeavor, depending on what one believes.

So, in trading, one should try to avoid becoming a 'true believer' in one idea or person or system. They are all likely to be flawed, and will very often blind the believer to the reality of the situation, so that they can lose impressive amounts of money fruitlessly following a belief that has no validity in their particular case.

In other words, no one knows the future for certain. There are always probabilities involved in every situation, every outcome. Some are more easily discerned than others, but they tend to be in the long and short term trends. [There are no ‘absolutes’, trends can be observed and outcomes predicted based on those observations but this isn’t ‘fortune telling’, this is ‘cause and effect’.]

People naturally tend to carve the 'hits' or successful predictions based on their system or belief in marble, and write the 'misses' in sand. They tend to fool themselves as a portion of the belief in what they think must be true. It is a natural, but potentially deadly, behaviour.

In religion, faith alone can lead one to do outlandish things as in the South Seas cargo cults. So there is the thought in the western tradition that one relies on faith and reason together. But of course reason can only take one so far, and then one is faced with what Kierkegaard called 'the leap of faith.'

One might be willing to 'lose money' for the sake of righteousness by refusing to engage in unethical behaviour in their business activity. But foolish is the person who loses money because they have put their faith in human error, in party politics, in groupthink, and profane beliefs.

On an almost daily basis I see otherwise intelligent people making this mistake, and Wall Street takes advantage of it, to the max. I have made this mistake in the past. Overcoming it is one of the great steps towards becoming a successful trading and maintaining a balanced life of the material and the spirit. We render unto Caesar that which is Caesar's, but what is God's is God's.

When the leap of faith is applied to the deployment of a trading account it is too often results in a leap off a cliff. When faith is misplaced in an ideology such as naturally efficient, self-regulating markets, or state planned command economies, it can take whole nations into the abyss.

It’s a tough topic to keep ‘focused’ because it applies so broadly to so many aspects of both commercial as well as spiritual endeavors.

For example, this is the third summer in a row that I’ve predicted ‘blood in the streets’ and once again the ‘public’ has made a liar out of me. If we were to ‘split hairs’ the blood has indeed been spilled, just not on the scale predicted.

Yes, surprisingly enough things haven’t gotten ‘desperate’ yet (although I find myself wondering just how much more desperate they can get before it blows like a powder keg…and I guess that’s where the ‘unknown’ comes in, that random trigger event that starts the fire nobody can extinguish.

Do I feel ‘guilty’ or is anyone ‘disappointed’ that I’ve been wrong so far? I’d admit to being relieved, because once that line is crossed, it’s ‘on’ until its finished.

Worse, it may be ‘on’ right now, but like a lot of things, the infamous ‘they’ have successfully kept it in the background for the time being.

Remember the ‘news’ is whatever they say it is…nothing more and nothing less. If they say it ain’t happening, then for all intents and purposes, it isn’t….just look at the fuckin’ stock market and tell me the media isn’t ‘manipulating’ what you ‘believe’.

Thanks for letting me inside your head,

Gegner

Not so tough...

Greetings good citizen,

It’s difficult to tell for sure but it looks like the fourth quarter isn’t off to a very good start for Mr. Market, which dropped 200 points today, something that makes yesterday’s roller coaster ride look that much more suspicious.

Um, ‘economic downturns’ are a bit strange as not everybody suffers…equally that is. Most ordinary people have seen their retirement accounts shed 50% of their value and their homes have lost 30% (if they haven’t lost it outright!)

How do you suppose the 400 wealthiest faired? Well, tonight’s offering takes a look at precisely that topic…If you think the losses are brutal, think again!

What Recession? As the Economy Crashed Around Them, 400 Richest Americans Lined Their Pockets with $30 Billion

By Les Leopold, Huffington Post. Posted October 1, 2009.

It's great to know that during the worst economic crisis since the Great Depression, the wealth of the 400 richest Americans, according to Forbes, actually increased by $30 billion. Well golly, that's only a 2 percent increase, much less than the double digit returns the wealthy had grown accustomed to. But a 2 percent increase is a whole lot more than losing 40 percent of your 401k. And $30 billion is enough to provide 500,000 school teacher jobs at $60k per year.

Collectively, those 400 have $1.57 trillion in wealth. It's hard to get your mind around a number like that. [Picture it as roughly ten percent of the annual US GDP…] The way I do it is to imagine that we were still living during the great radical Eisenhower era of the 1950s when marginal income tax rates hit 91 percent. Taxes were high back in the 1950s because people understood that constraining wild extremes of wealth would make our country stronger and prevent another depression. (Well, what did those old fogies know?)

Had we kept those high progressive taxes in place, instead of removing them, especially during the Reagan era, the Forbes 400 might each be worth "only" $100 million instead of $3.9 billion each. So let's imagine that the rest of their wealth, about $1.53 trillion, were available for the public good.

What does $1.53 trillion buy?

It's more than enough to insure the uninsured for the next twenty years or more.

It's more than enough to create a Manhattan Project to solve global warming by developing renewable energy and a green, sustainable manufacturing sector.

And here's my favorite: It's more than enough to endow every public college and university in the country so that all of our children could gain access to higher education for free, forever!

Instead, we embarked on a grand experiment to see what would happen if we deregulated finance and changed the tax code so that millionaires could turn into billionaires. And even after that experiment failed in the most spectacular way, our system seems trapped into staying on the same deregulated path.

Instead of free higher education, health care and a sustainable economy, we got a fantasy finance boom and bust on Wall Street which crashed the real economy. We have our 400 billionaires, and we have 29 million unemployed and underemployed Americans. We have an infrastructure in shambles. We have an environment in crisis. We have a health care system that would make Rube Goldberg proud. And we have the worst income distribution since 1929. [and sadly that’s only part of the problem!]

I hazard to guess that each and every Forbes 400 member could get by with a net worth of $100 million. I don't think that would kill their entrepreneurial drive or harm our economy--in fact it would be a major boon to the economy to step back from the edge of such massive concentration of wealth. The real problem is getting there from here. A wealth tax that kicks in when you become worth more than $100 million would be a good start. The Eisenhower tax rate on adjustable gross income over $3 million a year would help as well.

And please let's not call it socialism, now that we've placed the entire financial sector on welfare to the tune of over $13 trillion in subsidies and guarantees. (By the way, the yearly budget outlays for means tested programs for low income citizens is about $350 billion per year. So Wall Street's welfare is about 37 times as large as welfare for poor.)

So if narrowing the income/wealth gap isn't socialism, what is it? It's the America that thrived in the 1950s and 1960s. It's the America that created a middle-class and vowed never to let the financial gamblers return us to another depression. It's an America that put its people to work and built an infrastructure that was the envy of the world.

Where's Dwight David Eisenhower when we need him?

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It

Ugh! It gets a little ‘revisionist’ at the end there where it falsely supposes high taxes rather than our virtual monopoly on production around the globe was responsible for the prosperity of the post war decades…

But that’s part and parcel of the Republican Disease, especially when viewed through liberal eyes! It probably never occurred to Ike to slash taxes like his Democratic successor would before being assassinated!

But I digress, the train wreck known as our economy has had many engineers and most of them weren’t ‘elected’.

In fact it is less than helpful to continue to look in the rearview mirror when it comes to addressing this crisis, never mind solving it. What’s done is done, the only thing that matters is what we do going forward.

But we can’t move forward without, er, ‘correcting’ the past, if we fail to ‘undo’ what has been broken, we have no hope of restoring a solid foundation under our society.

Naturally, I want to remind you good citizen that the $1.57 trillion (as in ‘thousand billion’) represents raises you never got and lower prices you never paid…

If that don’t piss you off, you’re not thinking about how you and yours have been/are being ‘abused’…

Thanks for letting me inside your head,

Gegner