Posts tagged ‘wall street’

Well, I Told You So

Global markets are tumbling this morning and that will be reflected today in our stock market. Now the reasons for this are many, but the reality is the stock market is a creature of fallible human expectation and herd mentality (animal spirits). Either a company is solid, and growing or it is not. Its stocks should be a reflection of that. But when the market gets over heated, which is a term for over optimism for the economy, prices get out of line with reality. So what shakes investor confidence? Well, the fear of inflation and rising deficit. Hey, guess what. The Republicans and President DFF have added to the deficit by the massive tax cut and that 1% with all their extra cash drive inflation. Don’t see wages going out of sight do you?

But while, and yes if you can believe it, Fox (Hannity) blamed all this on Obama, a little reality was thrown on Hannity’s bull shit”

Jay Carney, Obama’s former press secretary, wrote on Twitter on Monday: “Good time to recall that in the previous administration, we NEVER boasted about the stock market — even though the Dow more than doubled on Obama’s watch — because we knew two things: 1) the stock market is not the economy; and 2) if you claim the rise, you own the fall.”

There is so much is this little statement. The first one, “the stock market is not the economy,” is really important to understand. Republicans have been using it as a metric to measure the economy and it has nothing to do with Main Street. When the reality of the last tax cut sinks in (no flow down), middle America will get the message. And all that money they just pissed away to the wealthy is what we needed to invest in infrastructure, education, healthcare, R&D, and our safety nets. It is the foundation that then makes the economy run.

The second one is taking responsibility for good things, not understanding as economists (not partisan hacks) that there is a cycle, and then trying to blame a down cycle on someone else. The reality in America right now is that people don’t really think things through and if they have a job and their income is rising, well hell yeah the President is great. This is what you might call the beginning of the fall. President DFF has been riding a wave and claiming he created it. It just broke on the shore and may leave him face down on the beach. If people sense a malaise in 2018, out go the Republicans. Note yesterday President DFF was out touting his tax cut, using anecdotal examples and claiming the magnificent stock market was his creation.

Then he said something true. Democrats will tax you. Yes we will. We will as a nation need to decide what programs we want and won’t pretend tax cuts will pay for everything. There is a real systemic problem with the world economy in that it is growing economic inequality. That inequality makes the world economy unsustainable and America’s economy is the leader in that. Systemic changes have to be made so that economic growth is shared by all and it is done in a way that does not destroy our future. The problem with implementing those changes is that those who benefit from the present system are in charge or buy those who are. That is why growing inequality is so dangerous. There is a breaking point where revolution breaks out.

One last thing as everyone who has a portfolio checks it. Economists have recognized the cycle of the market as unavoidable. But they instituted policies and procedures to ensure that these variations were not severe like the Great Depression. Yet Republicans have tried to circumvent these measures to bring back the unregulated market place. The thinking of John Maynard Keynes and others is still operative today if we care to learn from history. But in today’s world, corporations underwrite economic think tanks and universities so that group think can decide none of that is operable, then we have a crash. See 2008 and the Great Recession where all the economist who got it wrong never admitted they got it wrong.

We can hope that this fluctuation in the market is not too bad, but bad enough to wake people up to the film-flam artists of President DFF, Paul Ryan, Mitch McConnell and the hordes they lead. There is no free ride, we have to pay our way, and you think conservatives would understand that. The Stock Market is a place where people place bets on expectations, and in most cases it is a herd mentality game instead of a rational bet placing. So no it is not the real economy, but it tells you something about how secure people feel. This is the beginning of the reckoning for the fools we put in office.

It’s Always About the Money

No, today is not about our “stable genius” who is neither.  Just as an aside, most of us know we are way smarter than he is (don’t equate being a successful salesman and crook with being smart, i.e. acquiring money) because we know we would never be smart enough for the job of president.  But that is again a sign of how we use the acquisition of wealth as a sign of intelligence and success.  Seeing and listening to most of the billionaires that back President DFF, their one identifying characteristic is not intelligence, but an outlook on life and facts through the lens of greed and selfishness.  Maybe a dash of lack of compassion for their fellow-man necessary to their greed and selfishness.

But I get side tracked.  Look at Iran today and the real root cause of the unrest there is their financial insecurity as their expectations have not matched reality (and the failure of many of their financial institutions).  What got them out in the streets is not the Bill of Rights, but money or the lack thereof.  What will get Americans into the streets and probably finally end President DFF’s reign will not be that he is destroying the Constitution or a danger to our national security, but when the economy turns south as it inevitably will.

Money has become the currency of freedom and choice.  Maybe it always has been.  Think about the roots of the economic inequality we see today.  Money equates power and that power provides the method to acquire more money and tilt the playing field in your direction. And you can never have enough.  Money in a capitalist society like ours is security.  And hence we measure everything from success to intelligence in terms of money.

One off shoot of that is how many (dumb) Americans feel confident in President DFF because we now have a “businessman” with the reins of government.  A Trump fool commented the other day to look at the job growth under trump.  The economy is humming and Wall Street has never been higher according to them as a measure of his success.  If that were measures of our feelings of security (and it is for the 1%) then Trump is all set for a second term.

But let me burst a few bubbles.  Let’s take on the businessman assumption first.  A successful business man makes money (see, the ultimate metric for success and intelligence) and increases the value of the company for shareholders.  He does it in a way that out does his competition, not work with them.  In fact, as we watch the big guys, they do things that try to stifle their rivals.  It is called microeconomics and monopolies.  But the country’s success is based upon how we do in the aggregate, all businesses, not just one or two big ones.  It is called macroeconomics.  A business person is one who is least equipped to understand and facilitate that.  The competition is the enemy in their little minds and you can see that in President DFF’s idea about winners and losers.

Second on job growth, all we are seeing is a continuation of the job growth curve that was established under Obama.  We seem to forget (clouded by the security of our money today) that Republicans wrecked the economy and under Obama, both the stock market rebounded in giant leaps, but employment under Obama actually rose faster than it is under Trump.  To say it another way, all the “great business man” has done is not upset the Wall Street apple cart yet.  And that is a big yet.

And on that Wall Street thing, yes, if you own stocks and your income is dividend driven, happy days are here again, but what of the workers?  Is that wealth flowing down?  Are wages rising at the same rate as profits?  We still use the wealth of Wall Street to measure our wellbeing when the reality for most working Americans is that it has no measurable effect.  Sure if it crashed there would be an impact, but the wild profit taking on the ballooning price of shares may just be a troubling sign that a correction is coming.  Some measure.

So the key to upending both the Republicans and Trump is about money.  When enough Americans feel the pinch, only then will they go to the streets.  They may say it is about our Constitution or our rights, but it is their feeling that they are losing their security (read money in our society) under these nitwits.  I don’t mean to demean the Women’s march because it really did give us hope.  I am simply saying that until enough Americans feel their security threatened through their financial security, nothing really changes.

Here is the problem with all that.  Economies grow and contract.  Cycles are the universal accepted norm in a capitalist society.  Our approach to smoothing out these so we don’t have the Great Depression or the recent Great Recession was regulation (Glass Segal) coupled with monetary policy (interest rates and the supply of money), and thanks to the great economist John Maynard Keynes, government spending when private enterprise has rolled up into a fetal ball.  The later one is almost dead because Republicans are loath to spend on anything except themselves (tax cuts).

But they still happen and they have little to do with who is in office, only how we try to respond to them.  Thus, we swing back and forth between Democratic or Republican control of our government seeking security meaning a roaring economy that serves us all.  Sadly, we are focusing on the wrong thing, money instead of security because we equate the two.  Note that both parties have become “the party of business” as though this will solve anything.  Republicans are the Party of the big businesses, and Democrats got lost in entrepreneur politics to save us.  It offered no solution for middle America except move and get and education, neither realistic for the middle aged industrial worker. And neither solution, Democratic or Republican will ever solve the underlying problem, real security in a capitalist world.

Think about it.  In recent history we careened from George H. Bush to Bill Clinton to George W. Bush to Barack Obama, and now to President DFF, and when you step back, none of them solved the underlying problem of security and a better life for our children.  Economic inequality just kept increasing. All the solutions proposed simply tinkered with the existing system that favors the wealthy, one more compassionate than the other, but still tied to the big banks and Wall Street as the measure of success.

There is a glimmer of hope.  Bernie got it.  It’s not about the money, it is about the security.  Many European countries get it. Sure capitalism is the engine of prosperity, but not uncontrolled.  Uncontrolled it damages everything around us while it produces money for the few. It is simply a tool and one of many.  Let capitalism be capitalism constrained only when it hurts us (economically, socially, or environmentally), but then more fairly share the profits toward building security and a better tomorrow.  That would be a guaranteed healthcare system, retirement system, safety net, and advanced education.  That would be infrastructure investments for our future that allows that constrained capitalism to grow and prosper, not for the few, but for all of us. That would be a government who invests in R&D, and takes science and data seriously.  That would be a complete rewiring of our economy.

Our economic system is presently wired to increase economic inequality, which then produces a distribution of power to affect that economic system unevenly in favor of those that have. The gross economic inequality we see today drives so many of our problems like unaffordable cities, politics controlled by money, stagnation of wages, and the lack of inertia to change the system.  Racism whose power to hurt comes from the economic disadvantages of those it is used against gets nullified.  It goes on and on.  Right now the Republicans, in their belief that fewer restrictions on a system already grossly unfair to us will work better for all of us, are in charge. See the latest tax bill and its consequences for who it really helps.

Soon the reckoning will occur and the Democrats will have the government again.  But if we fail to recognize that it is about security and how government can establish that baseline security for all of us, that levels the playing field where the truly exceptional can be exceptional, we will just keep pinging back and forth between parties while our future just gets dimmer and dimmer.  That is really what it is all about.  We don’t need to just throw out the Republicans in 2018, but to throw out those Democrats who are still too wedded to the old system.  Yeah, change, real change, is very, very hard.

Note: Republicans believe self-servingly that the best way to help everyone and grow the prosperity for all (that is not the same as growing the economy) is an unrestrained market place.  That is their whole flow down approach to the economy.  Make me rich you will be too.  It is also informed by the view of mankind where there is a level playing field out there so if you are suffering you deserve it.  Then throw in that they are basically fearful people, resist change, and underlying all of it is I got mine, fuck you (selfishness breed by fear), and you get a world viewed through lenses that filter out reality.  Of course it is hidden underneath hammocks for the poor and removing regulation and freeing the market place will make us all better off.

But the market place already operates by rules or their would not be a market place, just chaos.  And the important thing for you to note here is that those rules favor the wealthy.  So when you hear don’t regulate the market place, it is smoke and mirrors for don’t change the rules that favor me.  It really is that simple.

General Kelly and Seeing the Real Problem

After the FF (Fat F*ck, aka President Trump) turned the killed servicemen into a political issue, and then totally botched  the call after the Press had asked if he had made any calls (where he lied about other presidents), Generally Kelly came out and made an impassioned plea to depoliticize the whole issue, explaining what happened.  Now this should have both been pointed at his boss and ended the issue, but then he turned around and made a partisan political attack on the Congresswoman in the car where call was made (at the request of the grieving parents).  Trump of course lied about all this instead of saying, I botched and I am truly sorry, to which Kelly did not deny the conversation, but attack the Congresswoman for making a “private” call public.

Well, bull shit.  First she was asked to be there and it was put on speakerphone.  Was the President alone when the call (No)?  Secondly he offended them with his lack of empathy, which is just another instance of why he should not be president.  But then Kelly made a partisan attack on the Congresswoman, racial in undertones, showing he is not the steady hand that some were hoping for.  Kelly even made references to “other” gold star families who have spoken out and he had no right to tell them they cannot use their First Amendment rights. Then there was what was sacred discussion that let you know this man is so far removed from reality that he too is dangerous. I think Lawrence O’Donnell took his attack apart better than anyone because he had the guts to.

I want you to note one other thing.  What General Kelly heard and told the FF to say is not the same thing he said.  It is a classic example of how little understand the FF has of the human condition.

Meanwhile the Republicans passed a budget bill on all Republican votes that most of them do not know what is in it.  It was to get a win.  So far the reasonable experts tell us a couple of things.  It busts the budget and like Kansas, may create a fiscal disaster. Tax cuts don’t necessarily equal growth.  Meanwhile Wall Street is doing great and the FF is taking credit when what is really driving the economy right now is low interest rates, set up in the Obama Administration.  If as most of us think, giant deficit spending that the budget bill and the follow on tax cut will create become a reality, the interest rate will go up, and kiss the economy goodbye.

The other part of this is that less than 52% of Americans own stocks, and the majority of the FF’s supporters do not.  How Wall Street does has little with working Americans, and let’s just review, Bank of America just downgraded Chipotle stocks because they think they pay their employees too much.  Bring back slavery!  That is the mentality we are dealing with.

Meanwhile, ex-Presidents Bush and Obam took on the FF finally.  Of course there is some real hypocrisy here, but at least major figures are starting to stand up.  I am off to Oakland for a Van Morrison concert and will try to ignore the madness that is our government these days.  Happy Friday.

Not the Only Game in Town

With the federal government gridlocked into doing nothing (thank you Republicans) I picked up the San Francisco Chronicle this morning to see that the City of Richmond is ready to take on the banks. The gist of the story is that they have 624 underwater properties in their city limits. So the City sent letters to 32 banks and mortgage companies offering to buy the properties at discounts, indicating that if the banks and mortgage companies won’t play, it would use eminent domain to seize the properties at court set fair market prices and then refinance them at the lower rates with the home owners.

Continue reading ‘Not the Only Game in Town’ »

Who Said it Best Today: Robin Wells and Paul Krugman

If you really want to understand the world around us today (political and economic), I believe that Robin Wells and Paul Krugman’s review of three books in the New York Review of Books probably encapsulates the whole sorry mess from how President Obama got captured by Wall Street,  our failure to do anything to help ourselves, to the austerity push and the radicalization of the Republican Party.  The three books they reviewed are:

The Escape Artists: How Obama’s Team Fumbled the Recovery
by Noam Scheiber
Simon and Schuster, 351 pp., $28.00

Pity the Billionaire: The Hard-Times Swindle and the Unlikely Comeback of the Right
by Thomas Frank
Metropolitan, 225 pp., $25.00

The Age of Austerity: How Scarcity Will Remake American Politics
by Thomas Byrne Edsall
Doubleday, 256 pp., $24.95

In addition they use Thomas Mann and Norman Ornstein’s work, It’s Even Worse Than It Looks to explain how  bad the Republican Party has really gotten and it is not both sides.  If Americans really want to understand how we got to where we are  and how false the arguments for going forward with austerity are, then this summary review is a must read:

Getting Away with It by Paul Krugman and Robin Wells

Totally Not Getting It

I wrote a serious of blogs titled “It really is Just about the Economy”, and our whole future is really just about the economy, both ours and the world’s.  It is the most important thing we should be thinking about right now.  The next election will be about our future, voting Republican and bringing on policies that got us into the mess we are in, or voting Democratic and barely treading water. Either way, unless we take bold action this Lesser Depression will go on and on.   It is clear to me now that Washington simply does not get it (See Note 1).  In the vote for President Obama’s jobs bill, which is really a band-aid on a major wound, while they got their 51 vote majority, they did not get the 60 votes needed to debate the bill.  No surprise there, but what really opens your eyes is that these people have no clue of the mess we are in. Some Democrats stated that they voted to consider it, but would vote against this small package because we can’t afford more debt or in Jim Webb’s case, taxing job creators (The Hill) (See Note 2).

What this tells you is that the folks in Washington are oblivious to the precipice we are on, understanding basic economics, or understanding that the solution must be to grow out of our debt, not try to pay it off by cuts and taxes which has never worked.  This also indicates they don’t understand history.  I will grant you that understanding economics is not a simple exercise.  Many of the concepts are complex and that leads to oversimplified sound bites for the media instead of really looking at the economic tools at our disposal and analyzing them in our present circumstance.  The first thing to understand is this crisis we are in is not just an extended business cycle problem, and secondly, it is a world crisis.  It is not just that what happens in Europe could domino to us, but that these austerity policies in Europe, and the lack of demand in Asia for American products is part of the overall problem that got us here (driving wages down and moving jobs off shore).

The bottom line here is that Washington is still unaware of what caused our problems and why the usual tools are totally ineffective.  I tried to address that in my blog, but a much better analysis was provided to us this week in a paper for the New American Foundation (The Way Forward).  They started from the same place I did, “Answering these questions correctly, we believe, requires a more thorough understanding of the present crisis itself – its causes, its character, and its full consequences.  Regrettably, in our view, there seems to be a pronounced tendency on the part of most policymakers worldwide to view the current situation as, substantially, no more than an extreme business cyclical decline.”  They then moved to why the tools applied have been ineffective, and finally proposed the way forward.  Their solution identified  that along with a major (5-7 year) infrastructure investment to provide good long term jobs, we need an attack on overhanging debt that is depressing demand, and finally we need to be looking at what needs to be done in the world economy to stop the bleeding of jobs off-shore, and the rush to the bottom for wages and benefits.  Hear any of this discussed anywhere in the political/media world?

This paper may not be the final word, but it is a starting point for looking at the true complexity of the problem and getting real about what it is going to take to start fixing our economy, and dragging the world along with us.  If our elected officials don’t even understand these concepts or the seriousness of the problem we are in, we are never going to fix ourselves as we wallow in continued unemployment and stagnation.  Republicans have a simple minded idea that this is all about supply.  If the government would just get out of the way with taxes and regulations, business would supply jobs and goods.  The paper correctly identifies the problem as demand, an American public depressed and in debt which cannot afford to buy, a European Union who is further depressing demand with their austerity program, and China and other Pacific Rim nations who have not raised wages and have too much savings to create demand in their own countries.  If all of your solutions are based upon the wrong diagnosis, we are going to sink into oblivion.  Please read the paper.  This really is all that is important right now and the future of our country depends on us starting a rational debate about our economy, not the sound bites we are getting from the media and Washington.

Note 1:  The protests against Wall Street are a reflection of our confusion about our economics.  The protestors know that what we are doing is not working for them.  The media has made a big deal about their lack of particular demands.  That is because until a large part of our population including our media gets an education on the real causes of our economic doldrums, all they can do is protest the outcomes.

Note 2:  The media wants to know what the plan is now that the Obama Jobs bill failed.  They want to know how it can be repackage to get through Congress.  They never seem to get the point that nothing that will do any good will get through the Congress.  Breaking it up into pieces that will have little effect is just what the Republicans want in order to be able to say that Obama’s approach won’t work.  If Obama breaks it up to get some pieces through, he is playing into their game plan. But then what else is new.  I doubt he has read the paper either.

Say What? Wall Street will decide our Energy Future?

I was watching MSNBC and they were discussing the future of nuclear power, once again without a cost/benefit analysis of other sources of power, and the claim was made that there was no future because Wall Street would not lend the capital to build the new generation of reactors.

I find this highly interesting and once again mindless. Somehow the great Wall Street that never saw the financial crisis coming is now the great arbitrator of the future. These people think in a rut and short term. Whether the next generation of nuclear power outweighs the risks needs a rational hearing, but depending on Wall Street to plan our future is a guaranteed way to fail.

One other thought about the big bad government.  It is becoming more and more apparent that some of the problems at Fukushima were due to short cuts and worrying about the bottom line instead of doing what was right.  But we don’t need no stinking regulators and government oversight because the profit motive is always the best motivator, right?

In the Bubble

Back in the Katrina Days we watched as President Bush was totally oblivious to the fate of the hurricane victims.  It wasn’t because he didn’t care, he simply did not know about it and his staff finally had to show him video the rest of us had seen watching 24/7 news.  I have come to the conclusion watching President Obama that maybe this is a systemic problem for Presidents and they need a new cabinet position, Secretary of Reality.  Since almost everyone in Washington is a toady to power, and sooner or later falls into the trap of telling them what they want to hear, the only way this would work is that this person be totally detached from the whole Washington scene.  Just call in on Skype wearing shorts and a t-shirt from time to time, beer/wine in hand, and just launch on a “What the f@&k, over” diatribe.  Here is how mine would go:

Oil Spill – Yo, Mr. President, I understand you are now “in charge” of the oil spill so where is the national mobilization?  How come we still have all these different agencies giving different directions?  What is our long-term plan?  Is there a backup plan if, as some scientists have suggested, the well pipe may be compromised and a relief well won’t work?  There are reports of dead animals being rounded up and hidden from public view, press being prevented from access to many sites, and scientific data being withheld. So are you in charge of this?  You think money is going to fix this damage as if a price could be put on what is lost?  Nice to know you are unafraid to eat the local fish caught before the real damage hits the beaches.  Hey, the water is fine, come on down, just don’t breath the air or swim in the water.  If you are in charge of this train wreck, I want another train.  Oh by the way, while you are down there talking to those Southern governors, why don’t you remind them that they want the federal government out of their lives and you are just doing your part.

Republicans – You know the guy/gal who keeps trying to pet a rabid dog and gets bit every time?  At what point do you get it?  They are tilting more and more to the crazy side and you still treat them like they are not foaming at the mouth, pretending that this is just politics as usual.  Time to call a rabid dog a rabid dog and put them out of their misery.  Drool is drool, not responsible public policy.

Wall Street – Are you nuts?  These guys are the enemy and you keep painting yourself in a corner with them.  Ask yourself, does Wall Street make money playing Russian Roulette with derivatives or lending money to innovative start-ups?  Hello, are you there?  Everybody in country gets it that to continue these guys in power is to kiss Main Street goodbye.  Quickly and with great since of purpose, walk away from this bunch and support real reform.

Energy Policy/Global Warming – Okay Mr. President, say the words, Global Warming.  All your scientists tell you it exists yet you still bow and scrape to the deniers.  Tolerating morons just begets more morons.  We are looking at the result of oil as our only alternative and if the spill tells us anything, the risks are too high.  The one thing your opponents have right is that the market place does work sometimes.  Time for the old carbon tax to make alternate energy price competitive.   Set the money aside to rebuild the planet after the oil guys have destroyed it.  This is the real cost of oil.  Get a grip.

Gays – I thought you were a constitutional lawyer.  Heard of civil rights?  You have been hanging around fat old white guys who are afraid of their latent feelings and want to study this thing to death.  Most of us out here in the real world could give a flip about sexual orientation.  It doesn’t threaten us normal people, so just get on with it and do the right thing.

Secrecy – Oh, Mr. President you are such a fool.  Stuff about our torture tactics just keep coming out so why not just get on with it?  Right now you are aiding and abetting conservatives who want to return to those good old days of George Bush so why don’t you just expose those days for what they were.  Oh, and this witch hunt you are conducting for “leakers”, what ever happened to an informed electorate?  You are starting to look like a paranoid Republican.  Oh, I am sorry, that was below the belt.

Well I could go on, but you get the drift.  They are so busy calculating the political consequences, they lose sight of what is really going on and what is really good for the country.  I like that: Secretary of Reality.  Maybe I will change my blog to Secretary of Reality and see if I can register it as a .gov site.