The Nature of Money

Changing the Nature of the Economy from Scarcity to Abundance

I strongly recommend Stirling's article on Open Left.

Ian Welsh and Stirling Newberry are writing brilliantly about the crisis.

I've been writing on the now arrived crisis for over a year. Including...

• I'm Top of the Food Chain. You're Dinner.
• Stocks Continue Fall; Bonds Rise.
• The Great Depression (v2.0) Starts Now
• Three Raids on the U.S. Economy

Again, I strongly urge you to start by jumping to Stirling's article before continuing.

My takeaway from Stirling is, THE NATURE OF MONEY IS BROKEN.

Obama screwed up in backing the bailout. Once he's in office -- maybe before if the market doesn't stop crashing -- we (Obama) need to change the very nature of money.

This has happened before.

Back in the days before the Great Depression, money was Gold based. Then it became Asset based, that is, money is now based on how much "stuff" you have, how many buildings, how many factories, cars, computers, and real estate. This is the "book value" of what you own. Some of it appreciates. Some of it depreciates. Put together everything you've got at "book value", take away everything you owe, and that is your net worth.

Before the Great Depression the key to all of this was Gold and other minerals, dug out of the ground. Now it is how much "stuff" a nation (or you) can make/create. Ultimately, because we take stuff from where it doesn't cost much, and ship it to where it costs a lot, where we then make it into something else, this manufacturing economy I will say -- Newberry doesn't precisely say this -- is an economy of scarcity. There is a limit on how much stuff we can make. There is a limit on how much real estate there is. There is a limit on how many cars people need. There is a limit on how much oil we can drill out of the earth. Because we've reached those limits, just as roughly 80 years ago -- a lifetime ago -- we reached the limits of Gold, we now have to change.

In more ways than one, that is why this election, we have a candidate of change. This is a generational candidate, the kind we see roughly every 22 years between generations. The wipeout of LBJ over Goldwater with 44 states + DC and 61% of the vote showing the rise of the GI Generation, and the switch the other way in 1984 with Reagan winning every state but one plus D.C. with 58.8%. This is FDR wiping out Hoover 42 states to 6 with 57% of the vote in 1932, (that's 32 years after FDR... the wartime leaders really hung in there for a while before the generational POP.)

But Obama is more than the generational change candidate that falls between generations, in this case between the Boomers and the Xers. He is the candidate who comes once a life-time, at the start of a crisis. He will not still be president when the crisis ends, some 20-25 years from now, as FDR was, as Lincoln was. But he is here at the start of the crisis and how he sets us up will determine our options in large part for the next 80 years, the next lifetime. Just as we are now living out the options which FDR set us up with in 1933 with the New Deal as he came to power.

The old money is broken, Newberry tells us. As Gold was in the Great Depression.

WE MUST CHANGE THE FUNDAMENTAL NATURE OF THE ECONOMY, FROM SCARCITY TO ABUNDANCE. (I do not mean this in some woo-woo California airy-fairy way.)

FDR took people's Gold away, shifting the economy from Gold to oil/dollar/scarcity-assets.

"If you build it, they will come" and your book value will increase.

That was appropriate then.

We'd reached the limit of how much Gold could be dug from the ground in order to keep the world moving forward, and here was all this OIL, much of it in great big reserves under the United States.

Now, we've reached the limits of all this OIL, as well as real estate (more or less), so we need to shift the fundamental nature of money once again.

The new economy -- since the old one was SCARCE OIL/ELECTRICITY -- will likely be based on ABUNDANT GREEN ENERGY, although it could be based on other stuff (but it won't. Pay attention. School's in session.)

ABUNDANT X, where X is something which can be monetized throughout the world, but still (because the U.S. will be setting the standard, as we control the dollar and the rest of the world owns gad-Zillons of dollars) gives the U.S. an edge. Thus X will be technological in nature, in a field where X is something the

• U.S. truly needs, and the
  
• entire world is going to need.

By creating the fundamental market and tech on X, we will lead the world for another century as we do in

• software
• music, movies, and
  
• high-speed pizza delivery.

(Yeah, I stole the line. Want to make something of it?)

Also X must have inherent war-making potential, i.e.: the energies must be HUGE.

The point is, it has been roughly 80 years since the Great Depression started, and almost that long since the world switched from Gold to Oil, as Stirling explains.

Open Left

What is to be done? The answer is not found in the equations of macro-economics. Economics can optimize for the problems we set it, but it cannot decide them. What is necessary is to recapitalize the financial system. This means not an infusion of money, but expanding the basis of what money is. It is simplest to argue by analogy.

In the late 19th century the global financial system came to be based on gold. Gold worked because it was easy enough to transport between distant places, and the amount of gold was organically related to the basic activities that drove the economy. It was not money itself, but it was a good proxy for the things that people did that created capital concentrations. However, with the internal combustion engine, this proxy nature was broken. Capital could produce more than gold could value, and the scramble for resources, which gold encouraged, was at it's limits.

What replaced gold based money was asset based money. Banks could lend if they could show that there were good assets, the "book" value of what they were lending for, involved. A mortgage, a business loan. The assets, such as factories and houses, were what the economy could produce. This encouraged people to make assets, such as houses and factories. As the pool of assets expanded, so could the amount of money.

However, in the present hard assets are failing in a number of ways. First, they do not address the basic scarcity. Just as gold encouraged state actors to invade, and private actors to concentrate capital and dig for resources, at a time when there were no more Africas to conquer, and wealth was no longer mined, asset money encourages people to burn oil, at the very moment when the limits of oil are being reached. Second, the hard assets we can create are increasingly not making people in the developed world happy. We have reached the point of diminishing returns on what internal combustion engines can do for our lives, as much as the coal economy reached the point where ships could not be built larger economically. It is possible to add any number of other points, but they amount to the same thing: macroëconomics is about how fast or slow to run the engine that converts scarcity into goods that make people happy. However, if that engine is already running as hot as it can, running it faster does not help.

To recapitalize is to convert asset money into some other kind. Since both the scarcity part, and the happiness part are, empirically, broken, it also means that we need to look at the engine itself. That engine is the analog petroleum-electrical economy, and running that engine faster or slower does not fix either the scarcity of energy, or the fact that people don't need more internal combustion engines in their lives.

This means that the future must reset on the creation of other kinds of basic capital, to change what is scarce, to change what is produced, and to change the engine that converts them.

The temporary step has always been to replace the old basis with fiat. The government promises that it can tax, grants itself powers over the economy to change the shape of output, and then guarantees that money will be worth something on the other side. Then it must produce the actual proxy, silver, gold, assets or whatever else. The challenge for the present it is to get rid of the function of derivatives, that is stabilizing the rates of return, and replace it with a government based insurance and regulation regime, as was done during the New Deal, and in fact during the Civil War in the US, and, to reach back to a different place, the Napoleonic Wars in Great Britain.

What we have now is paper money, whose objective, as in 1925, is to allow the global economy to be suspended in the air, and hope that time will allow an eventual collection of debts in the form contracted. To ignore that there isn't enough housing asset base now to collect in the event of default, and but keep mortgage debts at the inflated numbers so as to collect back the money loaned. With interest. Real above inflation interest.

The alternative is not just a different policy regime, but to announce that the objective of the temporary suspension of the asset base is not to reassert the old one, but to establish a new one. Once this is done, and the immediate crisis stabilized, the new basis for revenues can be asserted, and a new banking system built on the ashes of the old. The manifest failure of the bail out, politically and economically, means this moment will come soon. The political landscape indicates that there will be a very brief tide for the Democratic party to be the instrument of this change.

There's more...

Again, I strongly urge you to read the entire article if you have not done so already. Stirling and Ian Welsh have been doing amazing work.

Ian points out the historical basis for the DOW under these circumstances could be as low as 6,000. Ouch.

On January 23, 2008 I wrote this. (Bold added):

Group News Blog

Stocks Continue Fall; Bonds Rise.

In Europe, the Central Banks refused to join the Fed in cutting rates, and markets continue to fall.

AP News via MyWay

NEW YORK (AP) - Stocks fell in another rocky opening Wednesday, with investors uneasy about the health of the economy and corporate earnings after disappointing reports from big names like Apple Inc. (AAPL) and Motorola Inc. (MOT) In the first minutes of trading, the Dow Jones industrial average fell 261.10, or 2.18 percent, to 11,710.09.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 28.97, or 2.21 percent, to 1,281.53, and the Nasdaq composite index slid 53.19, or 2.32 percent, to 2,239.08.

I'm fully out of the market, as of the end of trading yesterday.

Everything is liquid, cash, money-market accounts, certificates of deposit. All backed up with the full faith and force of the U.S. Government. Could I get hurt? Yeah. Inflation could hurt. I might move 10-15% to physical gold, but I should have done that two years ago. I knew it then too, when I saw this coming. I just didn't have the cash then to buy gold in any real volume. I still don't, actually.

Here's what I predict. TAKE THIS AT YOUR OWN RISK. I am not a broker or a licensed professional of any kind. It's your money, not mine.

Oh... and if you are going to read one person, read this guy, The Bonddad Blog, who not only has his own blog but publishes at Huffington Post as well. Bonddad isn't saying what I am saying. (I am responsible for my analysis.) But I like his thinking.

I believe China is way over-extended. They have been keeping their economy over-heated and will try to keep it up and looking good through the Olympics. At some point, for sure after the Summer 2008 Olympic games, possibly before, China's economy is going to melt down. When that happens, they won't be positioned to keep loaning the United States $2 billion dollars a day in the bond market.

China will go into their equivalent of the U.S. Great Depression, and take the rest of the world with it, including the U.S. I believe this will happen about mid-2009, roughly 18 months from now. Lots of people will be out of work, everywhere. Could it happen sooner? Sure. Later? Yep. Could I be wrong? You bet.

Do I think I'm wrong? No. And I'm putting my money and actions behind what I'm telling you. But take my analysis at YOUR OWN RISK. I don't back anything I'm telling you up with a damn thing. It's all on you to check this out for yourself, and make up your own mind what to do.

The most important thing will be to have a six-month supply of food and clean water (or better, a good water filter) stocked up. I'm not kidding. Then have gold and silver, which have real value which will hold, even as paper money inflates away. Physical tools of good value. A good bicycle you can get to work on. An adequate supply of medicines. If your home mortgage is underwater, make sure you've sold it before spring a year from now. Hard times are a-coming. Prepare for them. If you're going to ride things out where you're currently living, a wood stove to heat the place wouldn't be a bad idea, and make sure it had enough room on top for you to cook, maybe even including an oven.

Do I know this is going to happen. Of course not. No one knows the future to a certainty. But just as we can be sure that earthquakes will happen along known fault-lines at some point in the future, I look at what the Fed is doing, the over-heated economy in China, the defaulting mortgages all across the land, and even someone as ignorant about money as I am, can say, hard times they are a coming. We've been living in a bubble for a while, and it's going to burst in a big way.

If I'm wrong, well, you'll miss out on some upside appreciation in the market. Oh well. If I'm right, you just saved yourself possibly losing a third or more of your life savings which you have in the market, plus made sure your family has enough to eat, tools to make a living with, and a warm house during the cold months, a year or two from now when it gets tough.

That's what I'm doing. And that's what I'm advising those close to me to do.

I wrote the above last January. The day after I pulled all my money out of the market.

If you are still in the market, well, I have different recommendations today.

I recommend you go to The Bonddad Blog and pay attention. There will be buying opportunities on the way down. And obviously you want to dump your crap as the market unwinds. If it's true crap, dump it now. Don't wait, just go. You're going to take a loss so take it.

You're in the U.S. probably, so take advantage of that. You can see opportunites folks not here won't.

Energy stocks are going to be worth a lot, especially green energy. What will be the winners? Can't tell you. But ten years from now, we're going to be off foreign oil. Energy is going to be huge. So is infrastructure and supporting components for energy. All the way down to some small bio-tech thingy that lets us move from silicon to biogel and go faster and better. Comes the revolution it will overthrow lots of stuff. GREEN doesn't just mean tech. It means bio as well.

ABUNDANT GREEN ENERGY IS A NEW ECONOMIC BASIS FOR MONEY.

Our money right now is OIL DOLLARS or PETRO DOLLARS. If our money ten years from now is Solar dollars, Wind dollars, Hydro dollars, Tidal dollars, and Carbon-offset dollars, then we have an ABUNDANT GREEN ENERGY ECONOMY. With the United States having invented and controlling the key patents behind the new dollar, and having relegated the entire Arab world to third-world status overnight.

Oil will mean... NOTHING. Think about THAT. Oh, it will still be used in some industrial processes as a lubricant, and it may still be used as fertilizer, but with enough energy, we can convert other goods to fertilizer and to hell with oil. It gets us out of the Arab world and won't that be nice for national security?

In fact, people in many parts of the world may be FINED for using oil for fuel because of the damage burning carbon does to the environment. Which leads me to...

The WAR at the end of this crisis -- 2025-2030 -- will likely be fought between THIRD WORLD and FIRST WORLD nations over enforcement of environmental laws. We will insist they stop using oil and oil-based pollution and convert to the new green tech. They will say they can't afford the upgrade. Instead of fighting a war in 20th century style, the new President will simply shower their countries with free cars running on free energy from the sun, and unlimited free energy, medicines, crops. This will destroy their Third World governments and the old ways of doing things.

Near the end of this coming ten years oil will reverse course and be worth less and less, as fuel replacements are put into place, and abundant endless, NEXT TO FREE ENERGY comes into play.

Think about this....

Every economy, every unit of exchange -- dollar, yen, yuan, pound, euro, Gold, Salt, pelts -- the world has ever known, has been based on there being a fixed, limited supply which the Government can control.

What happens to the Economy (Capital E "Economy") when a ten year old girl can set up a solar panel and a windmill with her brother in their backyard, and make ENERGY, which they sell into the GRID? Enough energy to pay for all of their basic cost of living and I do mean ALL. And then some.

This coming economy is an economy of ABUNDANCE... unless folks artificially cap it in order to control it for the benefit of the Owning Class.

How about them apples?

There's more...

My Sympathy for AIG and All the Other Failed Companies Ends Here

We gave AIG another $38 billion. (On top of the $85 billion we already gave them.)

Here's where some of that money has gone.

They held a retreat at the St Regis Resort in Monarch Bay.

The break down:

$200,000 for Rooms
$150,000 for Catered Banquets
$7,000 for Golf
$23,380 for Spa Treatments (These are stressful times for AIG executives, they needed facials.)
$1,400 at the Hotel Salon.

This is insanity. Regular people losing their homes, big business taking "bailout money" and wasting it in our faces.

Look, I know, these kinds of retreats are common. But you couldn't downgrade to a non 5 start hotel? Seriously, the St. Regis is one of the most luxiourous hotels in the area and when you are talking about California and LA that is saying something.

100 people went to this retreat. That is 2000.00 per person for the hotel rooms alone.

You couldn't choose a cheaper hotel? Cut back a little? Forgo the massages and manicures in the face of the fact that your regular employees world wide are wondering if they will have a job tomorrow? Sick.

There's more...

Charile Rose Talks to Warren Buffet about the Economy

Interesting discussion of the financial crisis, in pretty clear language, watch Charlie Rose's interview of Warren Buffett.

I don't agree with him about big chunks of it-- but let's face it, this guy is smart about the economy and has consequently made more money than pretty much anyone. So It is interesting.

The plenty of flexibility is the scary part.

What do you all think about Warren?

There's more...

It Ain't Over Till the Fat Lady Sings... but...

she might be warming up.

The New Republic makes some excellent points about the demise of Brand McCain.

Republicans and Democrats have been arguing over the proper role of government for a century. In 1980 voters sided with Ronald Reagan and Republicans that government had become too big and intrusive. Then the economy worked in the Republicans' favor. Today the pendulum has swung in our direction. Republican philosophies have been discredited by events. Voters understand this. This is a big election about big issues. McCain's smallball will not work. This race will not be decided by lipsticked pigs. And John McCain can not escape that reality. The only unknowns are the size of the margin and the breadth of the Democratic advantage in the next Congress.

McCain has appeared at best erratic, at worst, dangerously flawed and out of touch. Not any sort of behavior that would engender trust in his leadership at a time when people are looking for a steady hand and a keen mind. At such a time, what does John McCain give us, clueless denial and Sarah Palin. All this, plus a promise of continuing the the policies of the last 8 years. Great.

There's more...

Michael Moore's Bailout Plan

Michael has a good plan and a great bit of background info on his site this week about this corporate welfare bailout!

Below is the short version, but for sure go to his site and read the whole letter.

Here's How to Fix the Wall Street Mess ...from Michael Moore

Friends,

The richest 400 Americans -- that's right, just four hundred people -- own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion -- the same amount that they are now demanding we give to them for the "bailout." Why don't they just spend the money they made under Bush to bail themselves out? They'd still have nearly a trillion dollars left over to spread amongst themselves!

I would like to propose my own bailout plan. My suggestions, listed below, are predicated on the singular and simple belief that the rich must pull themselves up by their own platinum bootstraps. Sorry, fellows, but you drilled it into our heads one too many times: There... is... no... free... lunch. And thank you for encouraging us to hate people on welfare! So, there will be no handouts from us to you. The Senate, tonight, is going to try to rush their version of a "bailout" bill to a vote. They must be stopped. We did it on Monday with the House, and we can do it again today with the Senate.

1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE.

2. THE RICH MUST PAY FOR THEIR OWN BAILOUT.

3. BAIL OUT THE PEOPLE LOSING THEIR HOMES, NOT THE PEOPLE WHO WILL BUILD AN EIGHTH HOME.

4. IF YOUR BANK OR COMPANY GETS ANY OF OUR MONEY IN A "BAILOUT," THEN WE OWN YOU.

5. ALL REGULATIONS MUST BE RESTORED. THE REAGAN REVOLUTION IS DEAD.

6. IF IT'S TOO BIG TO FAIL, THEN THAT MEANS IT'S TOO BIG TO EXIST.

7. NO EXECUTIVE SHOULD BE PAID MORE THAN 40 TIMES THEIR AVERAGE EMPLOYEE, AND NO EXECUTIVE SHOULD RECEIVE ANY KIND OF "PARACHUTE" OTHER THAN THE VERY GENEROUS SALARY HE OR SHE MADE WHILE WORKING FOR THE COMPANY.

8. STRENGTHEN THE FDIC AND MAKE IT A MODEL FOR PROTECTING NOT ONLY PEOPLE'S SAVINGS, BUT ALSO THEIR PENSIONS AND THEIR HOMES.

9. EVERYBODY NEEDS TO TAKE A DEEP BREATH, CALM DOWN, AND NOT LET FEAR RULE THE DAY.

10. CREATE A NATIONAL BANK, A "PEOPLE'S BANK."
Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

There's more...

Three Raids on the U.S. Economy

Pieter Aertsen (1508-1575). The Adoration of the Shepherds. Oil on Panel. Rijksmuseum, Amsterdam.

Stealing from the Poor, Working Class and Middle Class and
Giving to the Owning Class

This is EXACTLY like Iraq all over again. (Thank you Diane.)

It is a con, a series of lies designed to screw us out of our money.

The Bush/Cheney administration has committed three major thefts on the U.S., to benefit themselves personally, and the richest one percent of Americans.

Many members of the Senate and Congress are directly included. Due to the lack of Campaign Finance Reform, all members of Congress and the Senate (excepting the rare birds who refuse PAC money) have a vested interest in all three of these thefts, as they receive campaign contributions from the OWNING CLASS in exchange for stealing from the U.S. Even the good Democrats, almost all of them, win in this game.

It's a rigged game, everyone plays thanks to Income Tax, and everyone but the richest 1% and Congress, loses.

Here is how it works...


THEFT #1 - TAX REFUND TO THE RICH

The moment Bush/Cheney came into office (on 527 votes in Florida AFTER the Supreme Court stopped the rest of the votes from being counted), they demanded the surplus the United States had in our treasury, be given to the wealthiest Americans in the form of tax rebates. That surplus was there not from the rich; it was there because the middle-class has paid and because President Clinton had managed the country well in a good economy (the Internet boom.)

Bush got his way. (We did not yet know he was a thief... unless you'd read Molly's books.) Taxes were cut for the rich. People like you and I got back a few hundred bucks. The rich got hundreds of thousands to millions and tens of millions of dollars.

It was theft on a grand scale. They stole from the poor, working and the middle-class and gave to the OWNING CLASS with a little extra to the upper class (and not too damn much. The Owning Class want the money for themselves, and fuck the hindmost. Truly, fuck the hindmost. The Owning Class are into anal a lot as well. Something about being tops and bottoms just turns them on, big time. Someone should write a paper. I'm sure there is at least several doctoral thesis' there.)

The TAXES THEFT is now complete. It will expire in a year or so, assuming it isn't renewed, assuming the Democrats don't roll over like puppies when the Republicans give their mating call, "Tax stimulus, tax stimulus..."

Theft #1, the Taxes Theft, along with the war in Iraq, financed entirely Off Budget with emergency appropriations and by stealing from the militaries seed corn, that is by raiding their capital equipment and stored goods without appropriating ANYTHING to replace all of the seed corn or the rapid exit of an entire generation of trained mid-level NCOs and mid-level officers, eliminated the entire surplus and gave us the deficit.

The borrowing also gave us market sector swings which allowed people in the know to make FORTUNES. That is, if you had inside knowledge, even general direction that was CERTAIN of what was planned, you could make FORTUNES... As Cheney's "blind trust" did several years ago when it moved all of Cheney's money out of the dollar and into Euros and off-shore investments, with the exception of course of gold, oil and oil-based stocks which as sectors continue to rise. "Blind trust" my ass.


THEFT #2 -- IRAQ WAR

This theft (on false data and lies) caused:

1. Oil Prices to sky-rocket; personal stock of self, friends, family, and colleagues going UP, including entire market sectors; inflation, gold, euros, and so on; contributions given in return but who the hell needs them when there are direct stock market rewards not to mention (for Cheney) a million-dollar a year salary plus benefits
   
2. Military contracts to cronies, and campaign contributions and campaign support given in return
3. Direct loot through untraceable funds shipped to Iraq; bribes and support given in return, not to mention looting an entire country on military flights sent all over the world
   

That thousands of soldiers died, 50,000 were wounded, and hundreds of thousands if not a million Iraqis have died and been wounded... fuck them.

The rich got richer and the poor got butchered. The purpose of the POOR, WORKING & MIDDLE CLASS, is to go where the UPPER CLASS tells them to go and do what they are told no matter what it is, so that the OWNING CLASS makes money. So mote it be forever and ever, in Allah and Jesus' name, Amen.

Thefts #1 & #2 are fundamentally DONE. (No pun intended.)


THEFT #3 -- REAL ESTATE/BANK FRAUD

The third and final raid is now being completed -- the raid on real estate and the banking system.

The first half of this theft is DONE.

The first half of this theft was a massive run-up of housing prices through fraud.

Property and home prices were intentionally over-stated. This allowed everyone in the financial systems -- the banks, brokerages, hedge funds, savings and loans, EVERYONE -- to make money four to five to 10 to 20 times as properties from homes to commercial real-estate, but especially HOMES were purchased and flipped with over-stated values without any vetting. (Sound familiar?)

Then the properties and the homes sitting on them were reduced to a deed of trust or other financial instrument, which itself was then broken up into strange and weird financial papers which almost no one understood.

Wikipedia

Traditionally, banks lent money to homeowners for their mortgage and retained the risk of default, called credit risk. However, due to financial innovations, banks can now sell rights to the mortgage payments and related credit risk to investors, through a process called securitization. The securities the investors purchase are called mortgage backed securities (MBS) and collateralized debt obligations (CDO). This new "originate to distribute" banking model means credit risk has been distributed broadly to investors, with a series of consequential impacts. There are four primary categories of risk involved: credit risk, asset price risk, liquidity risk, and counterparty risk. Each of these risk types is described separately in the background information.

There's more...

These obligations were then washed through multiple financial institutions -- indeed, that was the purpose of these obligations, to wash the underlying non-vetted and poorly secured obligations so no one would truly be responsible when the whole house of cards collapsed -- and sold eventually to EVERYONE, even to the ordinary investor through these new-finagled financial instruments to the point that damn near every bank and indeed, most likely even portions of your 401K, has become vulnerable all the way down.

Part of the reason for making this final theft the theft of home and property values, is the Bush/Cheney administration had already raided the Stock Market through Theft #2. If you failed to see that one coming and moved your 401K to the right stocks, you got hosed.

Worse, the destruction of the U.S. economy had been going on since Theft #1 via the war economy. Normally in a war, we pass taxes. Not this time. This time President Bush told people to go shopping and stole the surplus for the super-rich with so-called tax rebates -- really just taking tax payments made into the system by the middle-class and giving them directly to the mega-rich. Accordingly, the U.S. economy was in a recession already.

The surplus had been stolen. The stock market had been stolen. All that was left was people's homes. So the Bush/Cheney administration set out to steal it as well. Theft #3.

Many people in the middle-class, especially the upper middle-class and even the lower parts of the upper-class, anyone who is not in the OWNING CLASS, knew that their homes, especially any homes purchased in the last five to six years, had not been properly assessed. They didn't care. All they cared about was getting a home. The market was going up, and people wanted in.

This was part of what was good for this theft -- people who have lied on their application, are not quick to complain when things go bad. They worry they too may be called to account for having participated in the great robbing of American wealth. But this theft was planned and executed high above everyone. It was designed and planned to con everyone, leaving everyone out in the cold except the super-rich, the bankers themselves.

The way to sting EVERYONE, is to scare the hell out of everyone. Convince them they are dead meat if they don't do PRECISELY what you say.

In the end, after all the trading and dealing, and after all the fortunes already made in the first half of the Theft #3, only three points matter in the back half:

1. People's homes are vastly over-valued AND the people know they are complicit in the over-valuation.
2. The entire economy is ready to crash because of all the loans to China to finance the war and because we have no surplus due to the war and the tax giveaway -- thefts #1 & #2.
3. And finally, the banks are unstable because their financial core now rests on a pack of real estate and housing valuations which are lies -- the first half of theft #3.

Based on this, the Bush/Cheney administration are scaring the hell out of everyone, and demanding the Middle Class pay out RIGHT FUCKING NOW:

• $250 billion right now
• $100 billion on the say-so of the Treasury secretary (with a report to the President)
• $350 billion on the request of the Treasury secretary with the approval of the President, so long as Congress does NOT veto within 15 days with 2/3 majority; which will NEVER happen.

Or they'll shoot the economy in the head.

'Cause that's how you work a con. SCARE people into shutting up and doing EXACTLY what you say.

At a minimum, the Middle-Class is now on the hook for $350 billion before Bush leaves office.

Probably we're on the hook for all $700 billion because Congress lacks the balls to stop the last $350 billion, especially if Paulson/Bush hit them with the call note say, 20 days before the election.

It takes TWO-THIRDS of BOTH houses of Congress to veto. In other words, the last $350 BILLION is cash we are on the hook for, WHENEVER Bush/Paulson call for it. Period. Full stop.

We've already been screwed with the first half of the con.

This is the second half of Theft #3 -- ripping the money out of the Treasury to pay off the bankers. This is money which has already made fortunes 5-10 times in the rising real estate markets.

Now, that they have made as much money as possible from the housing market on the way up -- and stashed it away -- they are intentionally and deliberately, JUST BEFORE THE ELECTION WHEN EVERYONE WILL PANIC THE MOST (because if they fuck it up, they will get thrown out of office; and the Bush/Cheney people don't care... They're LEAVING office, so they're ripping everything out of the White House and Country they can, all the way down to the wiring in the White House bathrooms).

Now that Bush/Cheney and the OWNING CLASS have made a fortune from the real estate market on the way up... they have pulled the plug, and are going to make a fortune ($700 Billion to be precise, plus interest) ...on the way down.

This is just one more round of "fleece the suckers." This is Theft #3.

Congratulations, and thank you for playing.

• Theft #1 -- TAX REFUND TO THE RICH
• Theft #2 -- IRAQ WAR
• Theft #3 -- REAL ESTATE/BANK FRAUD

If we let Congress pass this bill, if we let Bush/Cheney steal from us one more time...

There will be NO money left for President Obama to put in Health Care, College funding, or help people in there old age with suplemental Medicare or Veteran's Benefits. ALL the money will be gone from people like you and I; Bush is stealing it for the OWNING CLASS.

Four months from now, the richest 1% will own damn near all of the United States, with China, Japan, and the Saudis owning the rest.

You and I will be in debt the rest of our lives, and our children and grandchildren will be DEBT SLAVES to Bush, Cheney, and McCain's children, to pay off the debt.

Is that what you want? Your children working as debt slaves?

Obama will be President In Name Only -- holding the bag for Bush's THEFTS, the largest thefts of any government in history.

This bill must NOT pass.

Everything we have said it needs, the Democrats gave away to the Republicans.

THIS BILL WILL RUIN YOUR FUTURE, the future of your family, the future of your community and country.

• Call your Senators.
• Call Congress (general number.)
• Call your Congress person.
• Here's Roll Call (with look-up for Senate/Congress.)

Call, write, REACH your Senators and Congressman/Congresswoman now (and not by email; they ignore email.)

This is the single most important bill to come before Congress in your lifetime, unless you were alive in December, 1941. It was then that the resolution of WAR passed because it was necessary to fight evil for the future of the world.

It is necessary now that this bill NOT pass, that we NOT give away the next 30 years of our future, just as it was necessary 67 years ago that the United States went to war.

This bill is EVIL. Stop it. Anyway you have to, anyway you can.

Do what it takes. Make. It. Happen.

Vote NO on the Bailout. Vote NO now.

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The People are Against the Bailout (of Course!)

From True Majority;

On September 25th 2008, progressives came together in 251 emergency rallies in 41 states saying NO to the $700 billion Bush corporate bailout for Wall Street. As a result, the tax giveaway, assumed to be a "done deal" only a few days earlier was stalled and being reconsidered by lawmakers who are stunned by the speed and scale of America's reaction. Instead, Congress turned to work on an economic recovery package for Main Street.

See the videos, photos, and read more here.
crossposted at fighting liberals

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Walking and Chewing Gum

He said, He said;

McCain says they should suspend the debate this Friday eve. so that they can go and work on the economic crisis.

Obama says it is now more important than ever for America to hear from the candidates and judge their differences. And so, though he wants to work together this week/weekend in congress, His opinion is that the debate can and should still go on.

I want someone who can walk and chew gum at the same time. Hell yes, the debate should go on.

McCain is using this to hide his weakness on the economy and try to pivot this into "look how hard I am working during this crisis!"

pathetic

Update: Comments from Nancy and Harry calling McCain's bluff.
"The debate should take place as scheduled," Speaker Nancy Pelosi said in an interview with NPR to be broadcast this afternoon. "We have to be able to do a couple of things at once. That's what leadership requires."

Leaders in the Senate were also quick to call McCain out for what they viewed as a political stunt, one that actually could impair rather than help pass a bailout package's passage.

"I understand that the candidates are putting together a joint statement at Senator Obama's suggestion," said Sen. Harry Reid. "But it would not be helpful at this time to have them come back during these negotiations and risk injecting presidential politics into this process or distract important talks about the future of our nation's economy. If that changes, we will call upon them. We need leadership; not a campaign photo op."

(cross posted from FightingLiberals)

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“Don't Mess With My Money”

“It's Stupid's Economy”—More Than Ever.

In the midst of last week's Depends™-bursting eruption in the economy and the financial markets, you had the typical spectacles—the obligatory shots of blue-jacketed floor-traders with hand to head, moaning “Damn! Damn! Damn!” alá Good Times' Florida Evans, dark jokes (that no longer get so much as a titter in a post 9-11 downtown) about high-flyers jumping out of windows in despair, and of course, the Monday-morning quarterbacking from the same idiots who championed every excess that led us into the abyss.

But there was one particular spectacle that got my attention...namely the video of Hardball's Chris Mattthews' ass-kicking / vivisectioning / ripping off the head and shitting down the neck of Bush and GOP shill, Rep, Eric Cantor (R-VA) for his and his party's craven complicity in the financial implosion through willful deed and benign neglect over the last eight years.

Now let me be blunt—I seriously dislike Chris Matthews. For a lot of reasons, but mainly for his sloppy willingness to take the scrotal imprint to his chin from too many avaricious Beltway shysters he calls friends and his pathological tendency to treat politics like it's fucking Pokemon and he just got his very first set of trading cards. If I went into his sexism and silly-ass, overinflated sense of importance too, it'd be an all day diss-fest. With all of that said about him, when he does decide to turn his rhetorical blunderbuss on someone he's playing Robin Hood against,...it's like watching a mixed martial arts fighter pounding a blindfolded rook from the audience around the ring. He's done it a few times before in this campaign season, but this particular little pas de deux was just brutal.

Bru-tal.

Here's the clip. And get thee behind the blast doors.



Note that Matthews' other guest opposite him, Florida Rep. Robert Wexler (of the DNC's Rules and By-Laws committee fame) didn't have to say a word. In fact, he couldn't say a word as Matthews was a one-man-gang against the talking-point drowning victim Cantor. Matthews' venom and indignation with the GOP and its unfortunate shill / abbatoir lamb that day was enough for two. Hell, it was enough for ten. But the thing you should really note here is that Tweety's outrage didn't seem manufactured.

He was genuinely, royally pissed-off.

He verbally beat Cantor like he'd stolen something. And I'm guessing in a way, Cantor probably did.

Matthews' anger seemed that of a guy who happens to look down and see some shifty-ass goniiff clumsily picking his pocket, and then when he looks the thief in the face, said thief is all like “What?”

Chris or somebody really close to Chris probably lost a boatload of dough last week. His animus was so deep and personal—unlike his typical “Devil's Advocate” game-playing—that there seems no other conclusion to draw from it. A friend of mine noted Matthews' rant smacked of Chevy Chase's Clark Griswold's losing his cookies in National Lampoon's “Christmas Vacation” when the big bonus he was counting on is arbitrarily withheld.


“Hallelujah! Holy Shit! Where's The Tylenol?!”

Good as that was, a better pop-culture brother to Tweety's call-out is one from sixty years ago. And yes, it's sports related.

In the halcyon days of 1950's New York baseball, the Yankees were in the World Series every year it seemed. (Unlike recent years including this one) But in those pre-free agency days, if a ballplayer made $30,000 a year, he was a superstar. So many players came to pray for a chance at the post-season, not just for the opportunity to go for the brass ring of a championship title, but to scoop up some of that extra dough—those World Series “shares” the top two teams got for making into the fall classic. That wasn't Cadillac money. It was buy a farm / put the kids through school / seed a post-career business money. That money mattered big time to the non-superstar players who ground it out every day and “left it on the field”. One such non-superstar player was the Yankees' rough-and-tumble left-fielder Hank Bauer. Bauer, a tough former Marine (11 campaign ribbons, 2 bronze stars and 2 purple hearts in addition to several bouts of malaria) was described as having a face “like a clenched fist”, and didn't suffer fools gladly.




He was a workaday, grind-it-out kind of player. Not a star, but not a marginal schmoe either. Bauer didn't make what Mantle, and Berra and DiMaggio made per year, so he valued those World Series shares (he would end up with nine of 'em for his career) in a big way, and didn't at all shy away from putting anyone who “didn't do right” in their place if their screwing about was going to cost him those dollars. For as much a good teammate as he was...

Bauer could be unforgiving, though, if he felt his teammates’ off-the-field activities were hurting the Yankees’ on-the-field performance. Pitcher Whitey Ford remembered how Bauer reacted when he thought players like Ford and Mantle were overindulging themselves after hours: “He pinned me to the wall of the dugout one day and said, 'Don’t mess with my money.’ ”

“Don't mess with my money.”

I get the distinct feeling that Chris Matthews' boiling rage was the result of someone “messing with his money”.

I don't think last week busted him to where he's doing commercials for predatory paycheck lenders, but his reaction was that of someone for whom too many zeroes disappeared from a financial statement for him to hold his tongue about.

But for all his indignation—fun as it was to see projectiled all over a Bush / GOP shill, there is a hollowness in its “ring”. And that hollowness is born of people like Mattthews turning a blind eye to Bush and his party's enabling corporate kleptocracy and encouraging the short-sighted policies that have no-lube buggered this economy.

Atrios warned us all about the “big shitpile” for months. And we said the following this past April...

It Burns. The Stupid And God Knows, The Money.

For the first six-and-a-half years of the delusional Bush presidency, in the face of a sea of blunders—The War in Iraq, Katrina/FEMA, The destruction of confidence in the Justice Department, to name but a few—the one thing he was able to point a poop aroma-ed finger at with a modicum of feel good-ism was “the economy”.

Now, saying the economy was “doing great” was always a dervish-necessary job. Regular folks' financial states have long been a red-headed stepchild to Wall Street performance numbers. They've also been eminently taffy-like when projected against often subjective pulse-taking through prisms like consumer confidence levels and the like. That said, there were just enough numericals out there to spout that could gloss over the pains that “Johnny Lunchpail” and “Susie Run-in-her-stocking” were experiencing while trying to make ends meet from month to month.

Bush himself was saying that the economy was “robust” as recently as five months ago, when it was evident to anyone with eyes and a wallet (which when opened, moths would fly from sickly) that our collective money situation was not “funny”.

(AFP) — US President George W. Bush predicted in an interview Tuesday that the battered US dollar will get stronger because the US economy is robust.

“If people would look at the strength of our economy, they'd realize why, you know, I believe that the dollar will be stronger,” Bush told the Fox Business Network.

Yes, Mr, President. If, if, if. And if your mother had wheels? Ma-a-a-a-a-a-a-nnnnnn, she'd be a bitchin' locomotive, too.

I'm no economic expert. I'm just a person like everyone not in the “Pioneer” rolodex who has felt the pinch for the last year or so, unlike those shielded from the reality of the price of a quart of milk's having gone up. This president would fail that test worse than his spiral-eyed father did when confronted with a question on it during his fateful re-election run. Ask Dubya the price of a “quart” and he'd probably say “Who cares? It's worth whatever you pay 'em when they hand you the presidency! (Insert all-too-familiar, wheedling “Muttley”-esque laugh here)

It's the little things you see, and have to live with—that hammer our country's financial health and then send it swirling turd-like down the “Trainspotting” toilet of insolvency. (NSFW)

Matthews and his ilk let this clown-in-chief and the rest of his buddies crammed into their silly little car of financial stupid ride around and mock everybody who called them on their injurious ways.

At least...they did until they checked the status of their personal shit last week. And now, “It is on like Donkey Kong”, and everybody's looking for someone to slap upside the head with a tree limb.

What was so damned telling in that “exchange” (and that word is loosely used here) was Cantor's palpable fear of mentioning the miserable failure that is President Bush by name and even moreso his inability to identify the party he's “affiliated with”. It was shame. Not the timid shame of mild mortification, but rather, the tail-turned, mincing book-up of someone who shit themselves publicly, and noisily as the earthy stink cloud wafts up and expands. The same shame pushing many Republicans to abandon Bush's leaky bailout ship of fools. Ouch!

Now, you speak up. Now, you grasp the depth of things. Now, you flaunt your integrity.

Day late and a dollar short, brother.

But I'll laugh along as you fulminate, Chris. That's grown people talk for “spazzing the fuck out”, at the people who wiped the asses of Wall Street's most powerful with taxpayers' money, and then threw the used Charmin™ in our faces. Hell, Tweety...the way you went off on Cantor, I think they got a little bit of that tossed poop on your nose, too. Or was that already there thanks to previous behavior?

Hmmmmmmm...

All I know is that it's kind of fun to see a wingnut get taken apart—no. not taken apart...basket-cased like poor Rep. Cantor was. It was a bellwether for what we're seeing this week, as spines form where there were none, (“Evolution” as “Re-election Desperation”) and sharp voices ring where there was once deafening silence.

Because this thing is finally hitting home a little for the people who pooh-poohed this nightmare, oh like...forever

The Champion New York Giants' Michael Strahan said this last year about the supposedly unstoppable New England Patriots' shock when his squad smashed them in the Super Bowl.

“Everyone has a plan, until they get punched in the mouth”.

“POW!!!!”

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Obama Hitting Hard on Health Care

Ok, so clearly McSame and the GOP still don't think things are bad enough for the American people, yes... what we really need is to make the health care crisis even worse.

Glad to see this ad, hope it has an impact. It feels good to be pushing back, but not on stupid shit like celebrity, and made up fear lines-- but actually ON the issues. John McCain and Sarah Palin will absolutely make things WORSE in the USA and the world. Anyone who doesn't get that really has NO IDEA what is going on these days.

But it is not enough to know this, we have to make sure everyone who DOES know, gets to the polls.

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Fighting Liberals

Hey everybody, I am doing some blogging over at FightingLiberals with some other folks, including our old friend RedDan. He has a great post up. "No Pain, No Gain", he wishes capitalists all the best in their new careers. Come on over and give it a read...

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Cronism Key Pillar of Bailout Plan

Getty photographer Chip Somodevilla and NYT

So, I already expressed my SHOCK(not) at the idea that the estimated figure that Paulson was asking for was actually and underestimation and the predicted costs would be much higher.

So imagine my surprise to find out that Goldman Sachs, where Paulson was formerly CEO, is having an undue influence and an over emphasized benefit in their good buddy Hank's bailout bonanza?!

But the conflicts are also visible. Paulson has surrounded himself with former Goldman executives as he tries to navigate the domino-like collapse of several parts of the global financial market. And others have gone off to lead companies that could be among those that receive a bailout.

In late July, Paulson tapped Ken Wilson, one of Goldman’s most senior executives, to join him as an adviser on what to about problems in the U.S. and global banking sector. Paulson’s former assistant secretary, Robert Steel, left in July to become head of Wachovia, the Charlotte-based bank that has hundreds of millions of troubled mortgage loans on its books. By Kevin G. Hall | McClatchy Newspapers

Oh, and they will get more money than anyone else too-- also a shocker.

Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.- Bloomberg

Once again, it is clear that we got a "Brownie" at the helm in a crisis. I have an idea, let's create an Arabian horse show circuit where these guys can all go and work together. They can tour the world with their horses and leave the rest of us alone.

More on all things Hank and Goldman at Think Progress.
And thanks to Bagnews for pointing out the great ghost like fractured photo of Paulson. Makes me uneasy just looking at it.

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“Work To Do”

“Sang It, Ron!”

You may have noticed a sparseness in my posting of late. It was not without reason.

In my life outside of Group News Blog, things are changing. And the thing that changed most of all was I needed a new job and then got a new job. Thank God! And much of my time of late has been spent learning new things, and buffing some things I knew well in a hobby / fun sense to a high shine for application in my new gig.

Gobs of training. Technical stuff. Some travel to facilitate that learning, too. But I've done it, and I thank you all for your patience while I got my feet up under myself again—I thank you from the bottom of my heart.

One thing I have come to realize in a major, and deeply personal way as I have changed / enhanced careers is just how awful the job market really is out here. It's one thing to write about it. To read about it. To know the numbers on it (i.e. The country needs to create around 175,000 jobs monthly to keep pace with new workers seeking, and existing workers leaving the market—and we haven't been hitting that mark with any consistency under the Bush administration).

It's another thing to live that shit out in real time in one's own life. When you can attach faces—anguished faces and breaking voices to those numbers—folks like the guy I saw riding back to Brooklyn on the train quietly destroying himself over an apparent flubbing of an interview to manage a Popeye's Fried Chicken franchise, or the fellow angrily dumping the contents of his briefcase into a subway trash can at the 51st Street station on the “6” line, and as people slowed to gawk at the sight, fairly roared “I just got fucking fired, okay!?”—when you see these people, and then have anxiety roil your own gut because you're out there looking to hook on in the same market that is killing them, you don't just get the picture...the picture is burned into the back of your eyelids forever.

I have worked pretty much non-stop for the last twenty-five years, and what we are going through right now is the worst I have seen in that time in terms of an across-the-board economic meltdown involving falling stocks, failing banks, home foreclosures and yes...dwindling to the point of utter evaporation —of jobs.

I feel it as a writer for this blog as much as you the readers of it do. It's scary out here.

A week ago, I was coming home late from work—having bopped by to do the whole benefits enrollment thing on the work computer—when I was walking down Seventh Avenue in the fifties. There were a few odd lights up on the street—video lights I would later discover—and what seemed to be a “red carpet” procession coming out of a building. I automatically assumed industry or fashion biz “party” (as “Fashion Week” was in full swing here).

But as I neared the focal point, lights trained on the door of a seemingly non-descript glass tower, I noticed one man coming out of the place. He was holding four coffee mugs from four different financial institutions, the handle of each around a clenched finger of his left hand, while balancing a water-starved potted plant in his right.

“Well...that ain't Tim Gunn.”, I mused to myself. And then I noticed it was a steady trickle of just regular people—plain, old “cube rats” carrying all manner of strange shit out the door and down the block. Some walking to late-model cars or down the street to the subway a block away, and others to the curb where a waved hand beckoned a cab somewhere. And where I immediately realized that those cabbies tips would be a tad lighter than the usual.

These were the soon-to-be refugees from the hours-from-defunct Lehman Brothers.

They toted odd talismans of a finance industry gone sour like milk left out for a summer's fortnight. One woman carried a big, inflatable Wall St. Bull. Another carried huge, foam core-backed blow-ups of pictures of partying fellow Wall Streeters from more flush times. A haggard-looking fellow struggled with three laptop bags and a small box of papers—probably a stack of just-printed resumés.

Schadenfreude naturally prompts one to feel little for these people. We tend to see them all as Gordon Gekko-ish,“big, swinging dicks”. But the fact of the matter is that while a few of the people trudging dejectedly out of 745 Seventh Avenue may have been the contrast-collared bastards who led us into this abyss (most of the bigwigs stayed away lest they be the butt of catcalls—or worse from pissed off underlings), many more were just cube rats. Not rich. Not poor either. Just that nebulous in-between that puts in its hours and cashes a check for it. A shit load of 'em leveraged heavily against student loans for degrees that won't mean squat now as the industry gets a forced, financial “gastric bypass”, where there won't be the space anymore for that many jobs. The big guns are gonna be alright to a degree—much moreso than the Schmoes and Sues I saw carrying the trinkets of a better time down a midtown street.

I don't know what that guy was gonna do with all those extra mugs he was toting. Maybe fill 'em all with coffee all at once so he doesn't have to get up for refills as he stays up late re-doing his C.V.? Who knows?

What I do know is that people are hurting out here. Big time.

When a place like Lehman Brothers closes and the late-night cleaning crew that emptied all the Starbucks™ Double Shot cans and Clif™ bar wrappers from the trashcans doesn't have to do that anymore, the cleaning company lays off people who are “in excess”.

The “grease” trucks and vendors who sold bananas, muffins and coffee for breakfast, and hot dogs and sandwiches for lunch on the street in front of these places, counting on three to four hundred people from the building every day to stake a profit on, will have to move somewhere else. You don't waste money cooking food in front of a “dead” building. And decent vendor spots are like gold here in NY. You move too close to someone else's selling territory and you get scalding-hot sauteéd onions tossed in your face.

“Times is tough.” The lovely Mrs. “LM” works on Wall Street in insurance (a major firm)—so you can imagine the trepidation she and her co-horts felt when it became clear that AIG, the industry's biggest wheel, was not just at death's door, but was being invited in for Strychnine cookies and a spot of Hemlock tea, that trepidation seeped into my house, too, right after I'd (thankfully!) just gotten the new job.

It wasn't pretty.

In fact, it's ugly all over.

But, we're coping.

Through the half-assed bailouts of connected pals and entities while regular folks are told to pound fucking sand, we're all coping.

So, I'll be here more often now that things have settled a bit, thank goodness—ready to analyze, and share and just plain old talk again.

And speaking of talking, feel free to take this opportunity to share any stories about how this economic meltdown is affecting you or anyone you know. We're all going through this collectively it seems—we may as well get it off our chests collectively while we're at it. Keeping it in is bad for ya. dontchaknow?

Now, you sang it Eddie, Walter and William...“For The Love Of Money!”

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Shocked, I say, To find out that the proposed bailout will cost more than they said it would!

IN a development that should surprise absolutely no one, Hand-out Hank (h/t HS) has underestimated the actual cost of the bailout he is requesting from congress and the American tax payers.

WOW they asked for one amount but it will really be much much more. That sure sounds all to familiar too me.

The U.S. Treasury submitted revised guidance to Congress on its plan a day after first submitting it, as lawmakers and lobbyists push their own ideas. Officials now propose buying what they term troubled assets, without specifying the type, according to a document obtained by Bloomberg News and confirmed by a congressional aide.

The change suggests the inclusion of instruments such as car and student loans, credit-card debt and any other troubled asset. That may force an eventual increase in the size of the package as Democrats and Republicans in Congress negotiate the final legislation with the Bush administration, analysts said.

``The costs of the bailout will be significantly higher than originally considered or acknowledged,'' said Josh Rosner, an analyst with independent research firm Graham Fisher & Co. in New York. ``How, given these changes, can the administration and Federal Reserve believe they are being forthright in their unrevised expectation of future losses?'- Bloomberg

This isn't really a government anymore, it actually just a band of highwaymen and the country has become a money pit.

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Marcy Kaptur Gets It

h/t Tanbark

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The Numbers That Say McCain Loses in November...

48 > 14

A CBS News/NY Times poll released on the 17th says that 48% of voters think "the economy and jobs" is the most important issue in deciding whom to support for President. 14% think "terrorism and national security" is most important, followed by 10% concerned about "gas prices and energy" and 10% worried about "health care". Only 8% of registered voters cited the Iraq war.

Conventional wisdom says that Democrats win when elections are about the economy and Republicans win when elections are about national security (quote from 2008.01.23):

Voter attention is now on the U.S. economy, buffeted by a housing market that is threatening to tip the country into an election-year recession.

"If the economy is sliding into a recession that would favor the Democrats," said Andy Smith, political science professor at the University of New Hampshire.

But a campaign about national security would favor Republicans, he said, particularly if Republicans nominate McCain, a former Vietnam prisoner of war and a critic of Bush's handling of the Iraq war.

This is not a reason to get complacent. It is a reason to feel better about the upcoming election.

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Bennigan's Liquidates in Huge Restaurant Chapter 7 Filing

Chicago Tribune photo by Tom Van Dyke / July 29, 2008

Bennigan's, Steak and Ale To Liquidate as Glutted Restaurant Industry Shakes Out

After filing for Chapter 7 bankruptcy, the parent company of national chains Bennigan's and Steak and Ale on Tuesday shut hundreds of restaurants, putting thousands of employees out of work.

The filing marked one of the largest Chapter 7 bankruptcies of a restaurant chain in recent history, according to restaurant consultancy Technomic, and is the most extreme sign yet of how midprice, sit-down restaurants are undergoing one of their worst periods in decades. Challenger, Gray & Christmas says the resulting layoffs constitute the sixth-largest mass job cut of the year.--JEFFREY MCCRACKEN and JANET ADAMY

This is bad in so many ways. While I am no fan of big chains the 9,000++ folks that just lost their jobs are going to be hit hard. Students, struggling families, these are the folks busting their asses for minimum wage. And according to the story staff were given no notice at all of the shut down.

Bennigan's, owned by privately held Metromedia Restaurant Group, collapsed in a particularly dramatic fashion Tuesday. Managers of restaurants across the country were awakened by midnight phone calls telling them to shutter their stores immediately, according to interviews with several restaurant managers.--By Michael Hughlett

That part pisses me off even more. No chance to go try to find other work. No warning at the end of the month with rent due and bills to pay. I know in my restaurant this year has been tough. But my staff and I are working together to get the company and ourselves through difficult times. I wonder if Bennigan's had more respect for their employees and communities-- they might have been able to avoid this liquidation?

Anyway, this is just the beginning. As I mentioned in an earlier post, the F&B business is the canary in the coal mine during a bad economy. People struggling to pay bills, or in danger of losing their homes are going to stop eating out as a first line of defense. And so the dominoes begin to fall.

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Take The Money And Run

C.R.E.A.M. (“Cash Rules Everything Around Me”)

The year was 1971. I was eight years old. And the things I was into most were model car kits (My pride and joys were my Don “The Snake” Prudhomme dragster and a souped-up police-issue Plymouth Duster called the “Cop Out”), Star Trek TOS re-runs, and...finishing up a thirty-three volume series of books, an illustrated history of the United States. I'd blazed through Plymouth Rock, Colonial America, The Civil War, Lincoln, Woodrow Wilson's hushed-up stroke and the folly of Herbert Hoover, and the crash that snatched chickens out of a lot of American pots—and then repo-ed the cheap tin cookware itself.

I was now into the volume on the coming of FDR and The New Deal. Oh, the Huey Long stuff in that book was cool, as was the chapters on John L. Lewis and the flowering of the union movement in America, but it was The New Deal that utterly fascinated me. Those initials for country-changing agencies embedded themselves in my head—the TVA (Tennessee Valley Authority), the WPA (Works Progress Administration), the good NRA (National Recovery Administration: “We Do Our Part”). And mainly, it was the way FDR just handled things when he stepped into office. It was...a desperate time in America. Institutions we as a nation had put simple faith in were failing before our eyes and taking hope away with them.

And in many cases, “hope” equalled money, as the FDIC as we know it was not in place at the time, and banks having gambled with depositors' money found themselves being overrun by fearful account holders when news would leak out about them not being as solvent as they could have been. I remember reading about those frightening bank runs—long before “It's A Wonderful Life” became a TV staple depicting that panic. Almost 4000 banks went belly-up, and I remember the photos of people mobbing bank doors, crushing one another in a panic to get at their money that in many cases—was no longer there.

We haven't seen anything like that since those fateful Depression days where FDR closed all of the banks for a business week to settle things down. Your money's guaranteed these days, right? What can go wrong?

Cue Jimmy Stewart frantically explaining what a bank does:

Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation's largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.

Now, as the Bush administration grapples with the crisis at the nation's two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation's largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.

But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans.

And just a little more of ol' Jimmy going “Wa-wa-wa-wa-a-a-a-a-l-l-l-l-l, it's like this...”

Moving quickly to bring an end to its troubles, Wachovia, the U.S. banking giant, reported an $8.9 billion loss Tuesday and sharply reduced its dividend for its first quarter under new leadership.

Wachovia also said it would eliminate about 10,750 jobs, including about 6,350 positions in its mortgage business.

Wachovia's second quarter included a $6.1 billion write-off tied to overpaying for several deals. The bank set aside another $5.6 billion to cover current and future losses. It also cut its quarterly dividend by 87 percent, to 5 cents a share, to save about $2.8 billion a year.

That last little Wachovia tidbit of trouble echoes deeply. As usual, in those 10,000 or so jobs that are just going to “disappaear” it's going to be 90% “the little guy”—people that have nothing to do with the goof-ups that have cement-shoe-ed the company. But then, another piece of news hit closer to home. The kind of thing that makes John Q. Public gulp a little harder and consider the ol' Posturepedic as a safer alternative to the good ol' column-fronted bank. I was sitting in the atrium of the Austin Convention center on Thursday morning during Netroots, surfing a bit for fresh news beyond our little hothouse of progressivism when I clicked over to CNN Money.com on a lark and discovered a breaking news bulletin.

Wachovia's St. Louis securities headquarters had just been raided (later PR spin would dial this back to “inspected” in many news reports) by state regulators from six states over their decidedly peculiar handling of the auction-rate securities markets. Basically, that market had pretty much imploded, and Wachovia was stonewalling investors wanting to find out what had happened to their money. Ten aluminum briefcase-toting agents rolled in with subpoenas blazing, grabbing info and preventing what info that could not be grabbed from being destroyed by desperate execs looking to cover their big, doughy asses.

I'm sitting next to Jesse reading about this and I exhaled a breathy “Oh, shit.”

“What? What's going on? Your computer okay?”, he asked, his head deep into what he was composing on his laptop.

“My computer's fine. It's Wachovia that's fucked. The feds raided their St. Louis headquarters a few minutes ago.”

About forty minutes later, we were at a panel hosted by David Neiwert, Pach and the fine folks at FireDogLake when the subject of money and consumer confidence came up in the discussion.

I piped up and said “Well, it doesn't help when you have the feds kicking in the doors of places like Wachovia earlier today.”

It got so quiet you could hear a pin drop. There were a few gasps and “wha-a-a-a-ats?” of disbelief, (Folks had obviously been in on a few panels in a row and had missed the breaking news.) so I reiterated the story. The Feds had raided the joint—America's fourth largest bank.

There was that sound of uncomfortable shifting in chairs, like people wanted to get up right then and there and rush to the nearest ATM just to make sure their ducats were still there. More than a few sighs issued forth, and there were heads shaking in disgust.

“Wachovia?” one woman questioned in some disbelief.

“Wa-chovia”, I responded. Hitting every syllable so it couldn't possibly be mistaken for the much less prestigious Uncle Ned's Bank and Plumbing Supply of Sucka Falls.

It was then, over my left shoulder that FDL's / Our Future's Isaiah Poole ruefully muttered to no one in particular, “That's the perfect name for 'em. Wac-hovia. 'Cause that's what they do—walk-over-ya”.

It got me to thinking again about the pictures of all those panicked Depression folk clawing at the bank doors for the money they trusted to what they would find to be utterly compromised institutions.

We're in that situation again.

Here.

Now.

In 2008. Some seventy-five years after that rank avarice and callous disregard for the futures of millions of Americans. People are living in mortal fear of their once-trusted banks flying by night like a Five-O spotting three-card-monte dealer. What with the helpful-to-but-a-few banking de-regulation championed by the greediest among us, and the tax-break hand-outs to the selfsame few, while neglecting the backbone of the American economy—it's teeming middle, the working class, it's no wonder the people we see getting their hopes and dreams wood-chippered to bits are who they are.

These bank failures is the last of the Four Horsemen of the Bush Millenium™ now riding in to salt the earth with his blight.

Under the dominating, and unfeeling GOP over the last decade we've seen:

The Military—our defense—broken in a senseless conflict as if they were little plastic “Army Men” stomped under the foot of a petulant child.

The Application of the Law—what allegedly separates us from military juntas and dictatorships—twisted beyond comprehension with the hyper-politicization of the Justice Department and the craven embrace of torture as a part of what we will do.

Our Personal Rights—the expectation of a simple thing like privacy—evaporate under the heat of a false fear stoked to white hotness by an administration that barely hides its laughing contempt for the people under a gossamer mask of “caring” and “security”.

And finally...OUR MONEY—the thing no one can do without—mis-managed, mis-handled, and mis-appropriated for years. HealthSouth. Tyco. Enron. That so-called “corporate” malfeasance bled into (or more likely, upon being discovered, served to eventually highlight) the supposedly less-risky institutions we have come to blindly trust since those dark Depression days...our banking system.

People feel this stuff. They may not sense a tapped phone...or feel the immediate result of justice sneaking cheating glances from behind her supposed blindfold of equality. They may never even grasp the national security nightmare of a shattered defense with a military they rarely get to see. But when the ATM screen reads “Better luck next time—thanks for playing!” instead of doling out their grocery / rent / gas money—that's a hit the American public feels like a salted knife to the gut. The moment you fuck with people's money—THEIR ACTUAL MONEY!—what puts the food in the kids mouths and keeps a roof over their heads, you are messing with the people's tenous hold on what remains of “The American Dream”. Sparking a crisis of confidence in the banking system is the kind of thing that leads to people fighting in the Goddamned streets.

This is George Bush's legacy, folks. The very last thing he was half-way crowing about after eight miserable years—his precious economy—now is as big and sad a joke as that now Cheney-shredded, land-fill buried “Mission Accomplished” banner.

Government-fostered pocket-picking. People don't forget that sort of thing easily. Like who aided it, and who pooh-poohed it.

“Whiners.”, I believe the unfortunate word was? Yes...“whiners...”



Just another word that means, “What the hell do you mean all of my hard-earned money is gone?”

I don't envy the next president at all. “Hope” is going to have to carry a lot of people a lonooooooooonnnng way...especially since the present administration seems to be dead-assed set...on stealing every single piece of “change” folks have left.

There's more...

Where Can we Go for our Cup-a-Joe?

Starbucks to close 600 stores in response to world wide slow down.



This is not new news, but pretty big news, especially if you are like me and work in the business. The thing is-- when people start worrying about gas prices and even worse home foreclosures-- one of the first things to go when tightening the belt is discretionary food and beverage spending. That $4.00 cup of coffee starts to look a bit too needlessly extravagant. This slow down in F&B has been world wide and started to really take root just after Feb. 1st as the depth and breadth of the subprime market crisis started to become more clear.

Sadly people who work in and run most food and beverage establishments are among the hardest working, lowest paid people you are going to find. Many people were probably working part time jobs in these Starbucks outlets to pay their rent or go to school. This 600 store closure is going to be equal to approximately 12,000 jobs minimum. And industry analysts say we are just beginning to see the slow down. It will get far worse before it gets better. No restaurants or cafe owners will be spared.

On top of fewer customers basic food costs are going up. Most estimates put the rise in food costs for basic ingredients between 20-40% in the last 18 mons. Base costs rising, customer count falling... going to be a bumpy ride, mostly downhill.

There's more...