Worse than anyone believed

Remember all that dithering about "is-there-is-or-is-there-ain't" a recession last year around election time? Until the bank crisis in late October, the general consensus was that "there ain't." Well, a new report from Department of Commerce tells us that while gasbags were dithering, the US economy shrank at an astounding annualized rate of 6.2% in the last part of 2008, a rate not seen since the depression of 1982. How exactly did the all those alleged experts fail to notice such an enormous decline while it was happening all around them?

Worse, there is not the slightest reason to suppose that this decline will not continue indefinitely into the future. We're in a vicious circle: people sharply reduce their consumption for fear of losing their jobs, businesses go bankrupt causing people to lose their jobs, people reduce their consumption even more, more businesses tank, etc. Where does this process stop? Why will it stop? And even if we do hit bottom sometime in the near future, why would a "recovery" occur? What are we supposed to recover with?

Mr. Obama thinks that a borrow-and-spend spree will fix our problems, but what were we living through these last eight years if not the biggest borrow-and-spend spree in human history, and look where that's got us! Mr. Obama just can't grasp the real problem: a country that has replaced its once-great industrial base with the pursuit of wealth by accumulating debt-based financial instruments has discovered the hard way that, first, borrowing-and-spending as a way of life is a dead end and, second, that we have no way of stopping the debt-based financial pyramid schemes from collapsing and taking the country down with them. Mr. Obama doesn't know how to create new wealth; he only knows how to consume existing wealth and how to spread it around to his cronies and cohorts. His policies are exactly the opposite of what we need. That's why we'll see lots more shrinkage in the US economy.

Read it here

A voice from the rubble

Here's a snippet from an email that appeared on the blog I look at occasionally:

"I am a quality engineer at an automotive trim supplier in Michigan. Since our customers are 95% domestic, we have been hit quite hard by the automotive downturn. Due to rotating layoffs and pay cuts, I am now making less than I was in 2000. I have a house in Flint which is in foreclosure after being on the market for 4 years. I'm 35 with a 4-year degree and an MBA, but I feel powerless as I watch my career and wealth disintegrate."

The author goes on to wonder whether the economy could survive the failure of one of the "Big-3" US automakers and to wonder what he and his family can do.

I share this man's desperation. He and I are both powerless as we watch our careers and savings disintegrate; both he and I will have to start over from scratch as best we can. He's got a family to take care of; I'm on my own. Our country has been stolen from us; now our very means of making a living are being snatched away, and even our homes. And there are tens of millions of American families in the same state.

I'm especially sorry for this guy because he really hasn't got a chance in his present situation. GM has just posted a $9.6 billion loss in its 4th quarter for an astounding $30.9 billion annual loss! This in a company that as of today has a total market capitalization of only $1.45 billion. How did this once-great company fall apart? Ford and Chrysler are both going down as well. Their vendors and suppliers are going to crash as well. This poor man's troubles are just beginning. For us too.

Just plain nuts!

Mr. Obama has presented his FY 2010 budget goals and projects for future budgets. Let's do some arithmetic based on the article below.

The FY 2009 budget deficit will total at least $1.75 trillion. Mr. O's FY 2010 budget deficit will be at least $1 trillion; ditto the FY 2011 deficit. For some reason Mr. O thinks that the FY 2012 deficit will "fall" to $581 billion and the FY 2013 deficit will be $533 billion. Whatever. In any event, all this adds up to $4.864 trillion in budget deficits in a mere 5 years. Hello? Where's the money coming from to finance all this debt? And remember that we've already accumulated about $10 trillion in debt that must be continually refinanced by borrowing and continually paid for with enormous interest payments.

And worse, Mr. O is vastly expanding the size of the federal budget--to $3.94 trillion this year and $3.55 trillion next year! Since not a single budget or deficit projection has ever been correct in the past, all these figures are mere fictions; the actual values will certainly be much larger--probably enormously so.

The debt burden is unsustainable now, yet Mr. O plans to vastly expand it. We are well on the way to becoming the Argentina of North America.

Read it here

Here's why Mr. Obama is full of it

The stocks of America's once-great companies are selling for peanuts--actually less than peanuts, which are still pricey at the grocery store. America's industrial base has been gutted, and the corporate welfare handouts our alms-giver-in-chief fancies are the cure for all our ills will not restore American industry or save what's left of it from failing. That will take an entirely new approach to government--radical reduction in size, cost, and regulatory power--that Mr. O can't even begin to imagine. President Pollyanna can babble about hope all he wants, but reality requires sound thinking, not happy-talk make-believe. Our economy is being crushed by the weight of government, and Mr. O has just piled on the tonnage.

Read it here

Holy Crap! Even God is laying off!

The Billy Graham Ministries is laying off 55 people. If God's got to do belt tightening, then we're all doomed.

Read it here

If we have no press, who needs the 1st amendment?

The San Francisco Chronicle is about to go under. The Rocky Mountain News publishes its last edition on tomorrow. Newspapers across America are going under or teetering on the brink. Our Founding Fathers thought that a free press was essential to our freedoms. Totalitarian states suppress their press with threats and violence; we American suppress our press by letting it go out of business. The effect will be the same: we will know less and less about what our government is doing to us and doing to other people in our name.


Read it here

Read it here

More from the man--Paul Craig Roberts

Whodunnit? Who killed the American economy? Read Paul Craig Roberts' latest piece and you'll find out.

Read it here

A crash is a crash is a crash

Today the Dow Jones average fell to a point not seen since 1997. In effect everything penny of equity anyone earned between 1997 and today has been eliminated, wiped out, erased, obliterated, and expunged. Poof!

Such is the financial world's vote of absolutely no confidence in Mr. Obama's crack-pot stimulus plan, his bank rescue plan, his mortgage rescue plan, his fatuous hope to halve the deficit by 2013, and anything else he and his troupe of know-nothing pseudo-experts want to promise.

Reality is making short shrift of this guy. The horror of it is that Mr. O has no Plan B. If his spending spree doesn't save us (and how could that possibly happen), this guy has not a clue what he'll do next. The speed at which this collapse is accelerating is astounding. Paul Volcker, one of Mr. O's pals, says that things are falling apart faster now than in the Great Depression.

My take on this: I think governments and their financiers in Washington, New York, London, Paris, Zurich, Tokyo, and other capitals know that this time everything's different. They know that they are powerless to stop the crash and subsequent ruin of countless millions. And they know that something else is crashing--their legitimacy. Raw brute force will soon be the only thing keeping governments all across the world in power. The governed will soon stop consenting, then start rioting, then start shooting. As O'Shaughnessy wrote: "For each age is a dream that is dying,/Or one that is coming to birth."

The old world cobbled together after the Second World War has wrecked itself, and a new world is being born out of the rubble. That new world will not be a happy place.

Would you buy a used car from her?

Secretary of State Hillary Clinton is in China pleading with that country's totalitarian, Marxist government, which is still fervently committed to Communism, to buy more of capitalist America's bloated government debt. We once proud Americans are reduced to begging alms from people who used to call us "the running dogs of capitalism." For the Obama administration, Karl Marx and Mao Tse Tung are the last, best hopes of capitalist America. Either the Communists save us or we're doomed. Do we live in absurd times or what?

Read it here

Hold the mayo

The grim economic news and the mind-boggling statistics that go with it may confuse, but the following is one sign of the times that is easily understood and expresses perfectly where we are.

I went to Alberton's the other day to pick up a jar of mayonnaise. Every time I grocery shop I am struck at the rising prices: just the other day this item or that was 50 cents or a dollar less. You know the feeling. As I picked up my Best Foods mayonnaise I noticed that the jar was different; it seemed smaller. The regular price was also more than I remembered, but that day it was on sale. I didn't think much about it since I had to pick up other things. But when I got home, I looked at the label and sure enough my quart of mayonnaise was no longer a quart but only 30 ounces! I had been scammed by Best Foods and Alberton's.

Less for more--that's our life now and will be our life indefinitely into the future.

We've heard this BS before

Mr. Obama intends to reduce the budget deficit by half come 2013. His goal is a deficit of some $500 billion. He will achieve this non-miracle by (1) winding down the war in Iraq; (2) taxing more; (3) eliminating government programs that don't work.

(1) Mr. Obama is widening the war in Afghanistan, which means more money spent on that ruinous war. Mr. Obama has yet to wind anything down in Iraq, and there's no particular reason to suppose he will. I see no reason to think that Mr. Obama will save even a penny by reducing anything to do with the military. More likely, military expenditures will rise, just as they have risen in the last eight years.

(2) Mr. Obama is raising taxes on people making over $250,000. States are raising taxes. Counties are raising taxes. Cities are raising taxes. All this in a depression! Raising taxes on declining economic activity will not raise more revenue. Higher taxes will depress economic activity further.

(3) Mr. Obama's campaign for president lasted two years during which, as far as I know, he did not name a single government program that he intended to eliminate. Why should we believe him now? Ronald Reagan promised to eliminate "waste, fraud, and abuse" in government, but time has instead eliminated Mr. Reagan and left the "waste, fraud, and absue" in place. Mr. Clinton promised to reinvent government, but bequeathed his successor the same old government he started with, except that it was but fatter and more costly; Mr. Bush promised us conservative government yet gave us the biggest expansion of government cost and power in human history. Why will Mr. Obama be any different?

In truth, Mr. Obama will not reduce the budge deficit by a penny. In a single month, he has vastly expanded government spending, which he can finance only by borrowing. He has plans to spend more on new national health care among other things on his to-do list. Since the tax base of the United States is rapidly shrinking, he will have to borrow indefinitely into the future to finance his grand plans for the country. Beyond Mr. Obama's spending spree, government expenditure is now rapidly increasing because as every day passes, more people move onto the Social Security and Medicare rolls. Nothing Mr. Obama has proposed or thought of will cope with that relentless, ever-growing demand on government funding.

Mr. Obama faces an insoluble problem: government expenditures are exploding while sources of revenue are shrinking. What to do? Answer: borrow and then borrow some more! But our foreign creditors have reached their limit with American debt. Russia has recently stopped buying American debt; China and Japan are both plunging into depression; low oil prices are playing havoc with Saudi Arabia; Europe faces a catastrophic banking crisis; Britain's economy is crashing. Who will pay for Mr. Obama's spending spree? Mr. Obama's intentions are mere fantasy. Reality has other plans for this guy.

Read it here

California is a preview of America

Here's an interesting piece comparing California to the country every American seems to love to hate--France. Both are bloated welfare states incapable of reforming themselves, both are bleeding money, both are suffering without respite in this depression, and both have governments captured by money-hungry political groups which politicians bribed for votes in the first place.

And that describes another place--America.

Read it here

Too late for anything but talk

It has come to Mr. Obama's attention that the government of the United States in on the hook for more money than the country is worth. Mr. Obama has a plan to deal with this problem: he will convene a summit to talk about it. That should do the trick, don't you think?

Mr Obama will host a bipartisan summit on fiscal discipline next Monday that will aim to address America’s long-term struggle to control entitlement costs in healthcare and social security. For most economists, it cannot come a moment too soon. “We are now looking at fiscal deficits of over a trillion [a million million] dollars every year for the next decade,” says William Gale of the Brookings Institution. “And that is without adding all the trillions of dollars in contingent liabilities of the Federal Reserve and the Treasury, which show up nowhere in the budget or national debt numbers.”

Mr. Obama has just added more than $800 billion to the national debt and plans to add lots more. And now he wants to talk about fiscal responsibility? This is like throwing a cocktail party on the stern of the Titanic just after the last lifeboat has rowed away. It's too late, pal Obama. You've sealed your fate and the country's too. Bankruptcy, insolvency, financial paralysis, run-away inflation, political chaos, social upheaval--these are on the menu now. Jabber all you want on Monday as if yet another pointless meeting will do anything but provide photo-ops and a 30-second spot on TV news. There won't be trillion-dollar deficits year after year because nobody's going finance them, starting with the $2-3 trillion deficit that Mr. O is running this year. Mr. O has been in office only one month, yet he is already the most reckless president we've ever had. He's taken all the worst politics of the Bush administration and amplified them.

We're in trouble so bad that there aren't words powerful enough to express it.

Read it here

So much for rational expectations

In the second year of the Great Depression of the 21st century, Google stockholders are suffering doubts about their investment. As well they should be. Why would anybody buy Google stock? The stock has lost half its value in two short years. The peak price in 2007 was an artifact of the wacko credit bubble spending spree that has since exploded. Factor in the decline of the dollar, and anybody who bought that stock and held it has suffered an enormous loss with more losses to come.

This morning, the stock has a price-to-earnings ratio of of 25.55, which means that given all the shares outstanding, you'd need to wait 25 years for the company to earn enough in profit to buy those shares back--and that statistic assumes for simplicity that the value of money holds steady for those 25 years, as if that's ever gonna happen! Other than hosting web sites and providing a perfectly ordinary search engine, Google produces nothing of any real market value. It is basically an electronic billboard for advertisers decorated with lots of pointless cyber gizmos to lure web surfers to snazzy advertising sites so that they can click on the ads and earn Google some money. Well, that worked during the inebriated credit bubble frenzy of yesteryear; but now that sober, reality-based economics is asserting itself, cyber window shopping by paupers just ain't the fun it used to be. Thus the halving of Google's stock, the recent layoffs, the declining revenues--all the stuff that nobody at the Google playpen-cum-headquarters in Mountain View ever imagined could happen.

Everybody should have known better. I used to live in the valley and bicycled every morning around Mountain View for hours before going to work. The glorious Google-plex (or whatever they call it now) was not built by Google. No, originally it was the palatial headquarters of the once-great computer manufacturer Silicon Graphics. You remember that company, don't you, one of the hottest properties of the high-tech 1990s bubble? No? Small wonder, since the once-great is now a long-forgotten has-been. That building was vacant for years before Google moved in. How long before it's vacant again, I wonder.

Google stock was the equivalent of houses in the valley--an asset with an inflated price that speculators and dorks bought hoping that the price would rise more so that they could flip the stock and sell for a quick profit. That's why Google reached a price high of some $700 before the long crash began. The price was not an affirmation of the quality of the company; it was just the consequence of a pack of rapacious speculators bidding against each other, each hoping to sell before anybody else caught on to the scam. Well, the party's over. Google's remaining stockholders have stopped free-basing fantasy; they've gone to detox and started a 12-step recovery program; and newly sober, they are comparing their portfolios to the real world and do not like what they see. Too bad for them. And I really, really mean that, I do, I do, I really do.

Read it here

We knew it was coming

We all knew that sooner or later supporters of Mr. Obama would play the race card against his critics and opponents; but, golly, here it is only mid-February and the race hucksters are already at it. A few Republican governors have been making noises about not accepting bail-out funds as a protest against the colossal debt that Mr. O's "stimulus" really is, so one James Clyburn, Democrat congressman from South Carolina, has branded their opposition as a "slap in the face" of black people. You didn't know that objecting to borrowing four-fifths of a trillion dollars makes you a racist, now did you? On Planet Clyburn, it does.

In this tawdry episode we see the future. As Mr. O's plan craps out, as it surely will, whose fault will that be? Answer: the fault of racist white people who wouldn't let a black man succeed. Just watch and wait; you'll see. Al Sharpton is already on the barricades protesting a political cartoon in the "New York Post" that uses that recent chimpanzee incident to score a point against the stimulus. Those racists at the Post are saying that Mr. Obama is a monkey, Mr. Sharpton wants us to believe. This is just the beginning. Racial politics are back.

Read it here

Nemesis is on her way

The goddess Nemesis is now packing her bags and will soon head to California to visit upon that state the consequences of today's passage of that preposterous budget. In a depression caused by the tax-borrow-and-spend policies of government, California's government has decided to cope with the depression by taxing more and borrowing more with some phony cuts thrown in for window dressing (not cuts so much as less spending than previously planned for).

According to Governor Arnold:

"This is the perfect medicine for our ailing economy, and it will boost public confidence in California, reassure the financial community and allow us to start selling bonds and rebuild our state."

So higher taxes and more borrowing in a economically depressed state that is already over-taxed and drowning in debt is the perfect medicine for its ills? What medical school do you think Governor Arnold went to, do you suppose? Voodoo U.? In life we get what's coming to us, and the goddess Nemesis is going to give Californians everything they've got coming. You go for it, girl!

Read it here

Gasbag gets his butt kicked

Gasbag loud-mouth Christopher Hitchens has made a tidy living publicly trashing all sorts of people he despises and picking fights with people who can't defend themselves, such as Mother Theresa whom he has called a "douche bag" and "liar" and whom he has accused of living off the criminal proceeds of assorted crooks and tyrants. On a recent pub crawl in Beirut he decided to pick another fight, but--undoubtedly to his surprise and horror--the people he attacked were more than able to defend themselves and kicked this marshmallow's butt a good many times. Good for them.

Mr. Hitchens is a lout who crassly exploits the civility of the people he viciously attacks. His carefully chosen victims have scruples, so they choose not to wallow in the gutter with this sewer rat. This time, he screwed up. It's one thing to beat up on a 100 pound elderly nun; it's another thing to go mano-a-mano with street fighters. I'm sure he's learned an important lesson. After Mr. Hitchens' bruises heal, our hero will no doubt be back to his old ways of beating up on elderly nuns. That is until they kick he ass, too.

Read it here

This man should be shot a dawn!

Why does Alan Greenspan have an atom of credibility with anybody these days? This fool couldn't expand credit fast enough in the 1990s and the 2000s. The printing presses at the Federal Reserve were red hot because they printed so many new dollars. This guy created one loony credit bubble after another, watched them burst, and then made more. More than anyone else, he is to blame for the economic catastrophe that has befallen us. He is a financial terrorist, and he's done more damage to this country than any al-Qaeda goon could even imagine, much less achieve. In a decent world, this man would be in prison. In our decadent world, this guy gets paid hundreds of thousands to talk crap, tell lies, and explain why this mess is everybody's fault but his.

Read about the jerk here

The butler did it--no, the MBA did it!

Below is a terrific column about the pernicious, malignant effect of a phony, pseudo-academic degree: the Master of Business Administration--the MBA.

Haven't you ever wondered how people like Henry Ford, Andrew Carnegie, Cornelius Vanderbilt, et. al., created the American industrial state when they didn't even have high school educations much less MBAs? By hard work, experience, good judgment, gumption--all the things you can't teach (and certainly won't learn) at business schools. Instead, at contemporary business schools you get taught the latest statistical methods and lots of opaque jargon and all sorts of legal arcana, and if you can stomach all this you get a fancy diploma that's supposed to be the gold standard in management, except for one unhappy fact: you have no actual business experience. You can get an MBA without ever having a job--or even running a lemonade stand. That's why it's a degree in "business administration." Any schmuck can be an administrator. What skill does that take? All you need is a job title. How many of these people coming out of the business schools can be good businessmen, much less great businessmen?

According to the column below, just about nobody. Instead they're the opposite of good businessmen; they're wreckers of businesses big and small precisely because they don't know how to be businessmen. That's why these high-priced, over-educated, untalented, know-nothing incompetents wrecked America's financial system and are now wrecking what's left of America's manufacturing, transportation, construction, and retail industries.

Henry, Andrew, and Cornelius must be rolling over in their graves!

Read it here

America: Going out of business

On many subjects, particularly those dealing with social issues, Pat Buchanan is lame if not down right dumb. But on America's economic plight, he's right on target in this piece, which is a quick precis on why America has fallen apart and won't be put back together again.

Fact: during the entire 8 years of the Bush administration only 407,000 net jobs were created. (That's new jobs created minus old jobs lost, and this number doesn't begin to tell you about the high-quality, high-paying jobs that were lost and replaced by low-quality, low-paying jobs mostly in domestic services.)

Fact: in the last year of the Bush administration, 3.5 million jobs disappeared (and they won't ever be back--they're gone for good).

Fact: "From Jan. 31, 2001, through Jan. 31, 2009, 4.4 million manufacturing jobs, 26 percent of all of the manufacturing jobs in the United States, disappeared."

The legacy of the Bush years is appalling: trillions of dollars in home-owner and investor equity lost; trillions of dollars in new debt acquired by all levels of government, businesses large and small, and private citizens; millions of jobs lost; entire industries out-sourced and off-shored. And Mr. Obama proposes policies exactly like those of Mr. Bush. Bush wrecked America, and Obama will finish America off.

Read the column here

No charges for Michael Phelps

The dimwit sheriff of Richland County, South Carolina, one Leon Lott, has decided that he can't make the case of the century against Olympic swimmer Michael Phelps and thus win a place in the Crime Fighters' Hall of Fame, or whatever bit of glory two-bit country sheriffs aspire to these days. This guy sent a swat team to attack the house where many months ago Michael Phelps attended a party and was photographed holding a bong. For all their efforts (and no telling how many thousands of tax dollars), the sheriff's goons captured not more than 5 joints and maybe only 1. What did they think they were going to find? Since he could find no evidence, the sheriff put his thinking cap on his pointed little head and figured out (all on his own or perhaps with help) that he had no case and thus couldn't charge Michael Phelps with anything. So Sheriff Leon Lamebrain gave up, and Michael Phelps will remain a free man in a free country--until that is we're overrun by the Leon Lotts of the world and the country is turned into a giant prison camp run by rednecks.

Read it here

Economist John Williams tells all

I am loath to post this, not because of content, but because it comes from that toxic waste dump of right-wing-cum-fascist non-thought called WorldNetDaily, a latter-day cyber version of "Völkischer Beobachter." But it offers in detail critically important ideas from the indispensable John Williams of ShadowStats, a fellow whom any American ought to read and read again.

In short, the American government owes more debt than the entire country is worth--some $65 trillion to date. How did we run up such a tremendous sum, you ask? Well, every year the government's promise to fund Social Security and Medicare in the future amounts to about $4.5-5 trillion. These are not actual expenditures for the fiscal year; they are promises to spend in the future. That's basically what you see on that statement you get from the Social Security Administration; your "account" is nothing more than the government's promise to pay you in the future. You have no actual money in any "account;" just numbers on a piece of paper. What, you say, but I've been paying Social Security taxes every year I've worked! Yes, and the government has spent every penny it collected from you and your employer and left behind a bunch of IOUs in that fabled Social Security lock box Al Gore babbled about in the 2000 presidential campaign.

How will the government pay such a colossal amount over the years? The same way it will pay for Mr. Obama's "stimulus" spending spree--by printing money, by debasing the currency, by inflation, double-digit inflation, triple-digit, and then hyper-inflation. Do you know much about the history of the Weimar Republic? Now is the time to bone-up on some 20th century history before you have to load a wheelbarrow full with 100-dollar bills to go grocery shopping.

One inescapable fact you will glean from reading John Williams: everybody's bankrupt--the government, the banks, the corporations, and you! You just don't know it yet.

Read it here

They give Nobel prizes for this?

Paul Krugman, winner of this year's Nobel prize in economics, has you going right up to the end in this column. He's talking sense about America's miserable economic mess; you nod your head and think that this guy has finally seen the light. Then he pulls this chunk of stupidity out of the air and shoves it in your face:

If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression. The war didn’t just lead to full employment. It also led to rapidly rising incomes and substantial inflation, all with virtually no borrowing by the private sector. By 1945 the government’s debt had soared, but the ratio of private-sector debt to G.D.P. was only half what it had been in 1940. And this low level of private debt helped set the stage for the great postwar boom.

Is it possible that Mr. Krugman does not know what happened during that "large public works program" called World War II? 100 million people died; entire nations--the most advanced in the world--were reduced to ruin and rubble; scores of millions of men were drafted into armies and sent to die by the millions on land and sea; civilian citizens of these countries suffered horrifying privations while their governments diverted their productive abilities to making war planes, bombs, tanks, artillery pieces, mortars, rockets, and war ships for the sole purpose of destroying the war planes, tanks, artillery pieces, and war ships of enemy nations. And Mr. Krugman thinks that this state of affairs was a good thing (economically speaking)? Tell that to the ghosts of the dead in bombed-out London, Dresden, Leningrad, Stalingrad, and Tokyo.

That America managed to preserve its industrial capacity is the consequence solely of geography: none of our enemies had sufficiently large navies to take the fighting to our shores and, fortunately for us, the technologies of nuclear weapons and ballistic missiles that have nullified this geographical advantage didn't become available until the late 1950s. American industry profited greatly in the post-war decade because the rest of the industrial world was in ruins. Government "public works" had nothing to do with it. Even a nitwit like Paul Krugman could have succeeded under those circumstances. This happy condition persisted (but with ever- decreasing annual returns) until about 1968-1970 when the rest of the world, having recovered from the war, began out-competing American industry in every field. Today's America is a hollowed-out shell of a once-great industrial nation. We've been living on debt for the last generation to disguise the fact that our real incomes have stagnated or fallen because of our diminishing production. And now Paul Krugman, who oddly can diagnose the problem correctly, bizarrely advises us to borrow and spend more in order to fix the mess that our previous borrowing and spending spree created.

And this guy gets the Nobel Prize for such nonsense!

Read it here

American, then China, now Japan!

Incredible! Japan is now in "the worst economic crisis in the postwar era" says the government's economics minister. And these are the people on whom Mr. Obama is betting the fate of our nation to finance his colossal borrow-and-spend "stimulus." Fat chance of that happening now.

We all ought to be really frightened and take some time to read the history of the late 1920s and the 1930s. People nowadays don't realize that Japan was a parliamentary democracy in the 1920s. Then the depression hit. The civilian government floundered; the military took over the government; Japan began a ten-year war in China; its aggressive foreign policies eventually led to conflict with the United States.

The world economy is crashing all around us. Things we used to think were safe, sound, and secure have cracked and crumbled. Nothing's normal any more. What happens when nations go bankrupt and families by the tens of millions are left destitute? History tells us the ugly tale of the 1930s the consequent catastrophe of the 1940s--world war. What has history got in store for us?

Read it here

Dumb and getting dumber in California

According to the article below:

California's deficit has exploded in the face of a worsening recession that has seen the state's unemployment rate rise to 9.3 percent, a 15-year high. Sales, property, capital gains and income taxes have plunged in recent months.

Now, if tax revenues have fallen in sunny California, does it not follow that there is less economic activity to tax--fewer jobs, fewer sales, fewer profits, less income, etc? Taxes are costs that businesses and individuals incur, so would it not follow that raising costs during a recession/depression when businesses and individuals have less income to meet their expenses is counter-productive (unless, of course, you are perversely trying to make the recession/depression worse) because imposing more costs requires businesses and individuals to reduce their spending and reduced spending means that tax revenue that could have been realized from this spending will not be realized. In other words, raising taxes in a recession/depression means that the state will get less tax revenue.

This seems logical to me. In Sacramento, it's an insoluble paradox. Governor Arnold and the Democrats insist on raising taxes by $14.4 billion in their attempt to deal with the $42 billion budget deficit. That's not actual money; that's merely an estimate of what they hope to raise by imposing these new taxes. How much will these taxes actually raise? Who knows? In a state that is suffering radical declines in property values, huge layoffs, bankruptcies, and serious increases in demands for public assistance, it's perfectly conceivable that the net effect of these new taxes will be negative--that the state will lose money by trying to impose higher costs on businesses and individuals who simply can't pay them. All the state may succeed in doing is to drive productive business and individuals out of the state. Or drive productive business and individuals out of business altogether. One thing's for sure: increasing the cost of doing business (a.k.a, increasing taxes) will not encourage more economic activity, which is California's only hope for survival.

But Governor Arnold and the Democrats think that somewhere out in California there's a giant cache of bucks just waiting for them to raid. They're focused entirely on solving the budget problem and have given not a moment's thought to the effects that their actions are likely to cause. The budget deficit is all they know; coming up with $42 billion is all they care about; screwing the citizens of California is the only "solution" they can think of.

And what is happening in California is also happening in Washington, D.C.

Read about the antics here

The beggar is at the door again

Do you recall that in the first stimulus frenzy last October, the "Big 3" US automakers came to town looking for handouts (some $25 billion)--which they got. Now GM wants more--lots more--or it threatens to file for bankruptcy. I think this is on the order of a mass murderer standing on a bridge threatening to jump after being cornered by police. "Jump!" I say and spare us the costs of trial and incarceration.

Evidently, GM wants to "wipe out" $28 billion in debt. For "wipe out" you should read "screw its bondholders." GM sold bonds to people, and now it apparently wants those people for toss those bonds in the trash. The bondholders did not give GM $28 billion in free money and, sensibly enough, want their money back. Nix that, says GM, and the company now got its army of lawyers poring over bankruptcy law trying to figure out how to legally commit this fraud. And then some.

In bankruptcy GM might try to reorganize itself by screwing everybody it does business with--vendors, suppliers, stock holders, creditors, labor unions, car dealers, and just plain employees. Isn't modern capitalism wonderful? Who needs honesty when you can get the law to give you cover for your crookedness? I say better GM screws them than GM screws us, the taxpayers, again. This literally worthless company should not be saved. Let the bankruptcy court hack it up, sell the parts for scrap, and be done with it.

Read about it here

High point reached, all downhill from here

The adjusted stimulus bill has passed both houses of Congress; Mr. Obama will sign it; everything will then come up roses.

Hardly. The stimulus is simply a gigantic pork barrel spending spree. The reasoning behind it is this: the country needs more spending (in Keynesian jargon, "aggregate demand"), so why not spend a gazillion dollars on our political allies, our political support groups, our contributors, and all of their aunts, uncles, and cousins whom they reckon out by dozens. All of this new spending, of course, is debt. Yes, we will live high on the hog on somebody else's money--until the money dries up. I like what the article below says: a record-busting stimulus plan. Well, yeah, since the last record-breaking stimulus plan in October. Remember that one? It certainly made all the difference in the world, didn't it? Between the two record busters, we're now about $1.5 trillion in the hole. As Paul Craig Roberts has asked, who's going to pay for all this stimulus? Not the Americans since we need it. Who else? And why?

The article calls this "shock and awe." Do you recall where that phrase came from? Some dimwit general coined it just before the Iraq invasion. That endeavor turned out well, too. The only real shock we're going to experience is the awe-inspiring economic wreckage the Depression of 2009 will inflict on all of us. Mr. Obama had his chance. He sealed his fate in October when he voted for the preposterous stimulus scheme of Mr. Bush; now he has a preposterous stimulus scheme all his own. The reviled Mr. Bush is hiding out in Crawford, Texas. Mr. Obama is at ground zero in the White House. Which will history tag as the worst American president? Will it be a tie?

Read about it here

Kinder, gentler mass murderers

Times are tough all over. It seems that Blackwater, the mercenaries-'r'-us company that sends mad-dog killers all over the world "to protect" clients, has had to change its name because of all the bad press. Henceforth it will be called "Xe" (pronounced "zee"). Killing unarmed Iraqi civilians--men, women, and children--will indeed earn you a bad notice or two on Page A27 of your local paper, assuming that it's a slow news day and that the editors don't need the space for stories on local dog shows or out-breaks of termites or a heart-warming tale about a three-legged alley cat being adopted by children. This private army of thugs for hire has been bleeding hundreds of millions from the US government because George Bush thought it a grand idea to outsource the slaughter of helpless people to psychotics. Killing for profit was something the Mafia used to do; now it's big, profitable business with fat government contracts. These are the times we live in.

Read it here

The pseudo-demigod that is Ronald Reagan

In his latest column, Paul Craig Roberts defends (sort of) the deficit spending of the Reagan administration in which he served for a time as Assistant Secretary of the Treasury. He does so to contrast the crazy deficit spending (a.k.a. "stimulus") of Mr. Obama (and by implication of Mr. Bush). I frankly don't buy the argument. Ronald Reagan's reckless disregard for sound government financing is the root of our troubles. The twelves years of Reagan-Bush (daddy, not junior) added $3 trillion to the public debt and set the stage for the limitless borrow-and-spend financing that has reduced federal, state, county, and city governments to penury.

Reagan cared not a fig for balanced budgets (he never tried to balance any of the eight federal budgets he submitted) or sound money or prudence or the long-term. For all his government-is-the-problem blather, he vastly expanded the government (particularly the military-industrial complex) and left it more powerful, more intrusive, more arrogant, and more irresponsible than he found it in January 1981. It is he who principally established the prison-industrial complex that now incarcerates more people in both absolute and per capita terms than any government on earth. His loony pseudo-free market rhetoric disguised a politically-oriented manipulation of the private economy favorable to vast private wealth and consolidated corporatism (provided they kept the Republican party awash with campaign donations any truthful person would have to describe as pure bribes). A new book, "The Man Who Sold the World" by William Kleinknecht, is an important contribution in clearing minds of the glittering fantasy that is the common image of Ronald Reagan and an honest look at the man's bleak record and its malignant consequences from which we now suffer. "Morning in America" turned out to be the twilight of America; now it's nightfall; soon it will be midnight in America. Thanks in considerable measure to the vapid Ronald Reagan.

Read Paul Craig Roberts here

Read about Reagan here

Revolution in the making

Things are bad, getting worse, and becoming dangerous in America and Europe. In China, the fuse has been lit; there's going to be an enormous explosion in the near future. The numbers are astounding: 26 million workers unemployed in just a few months; 40-50 million this year are likely to become unemployed as the depression worsens. Millions of these people are migrant workers from rural areas; they went to the industrial cities to work and sent much of their wages back home to their families. Now they're out of work, and their families have next to nothing to live on. Would you calmly watch your family slowly starve? The horror gets worse: China is suffering the worst drought since 1951. Millions of small farmers will certainly be forced off their bone-dry land. Mass hunger (that's the modern euphemism for famine and starvation) is now more than just a possibility.

And the human stories are just appalling. The brutality desperate people suffer from their rapacious employers, the callous unconcern for their lives--these stories sound like Charles Dickens wrote them except that they are true right now in the 21st century in the country that until just yesterday (or the day before) was supposed to be the world's economic miracle. Capitalist miracles aren't worth much these days.

Read about China here

Read about coming food shortages here

More good thinking from Governor Arnold

Do you need move evidence that our world is absurd? Check this out from California. It seems that the runaway prison-industrial complex that is today's penal system in the Golden State is violating the US Constitution because it houses scores of thousands of people in indecent, inhumane circumstances. Soon the state may be forced to release up to 57,000 people. Governor Arnold is proposing various ways to make this possible huge release of inmates tolerable.

Quoting from the article below:

"Gov. Arnold Schwarzenegger already has asked lawmakers to take a number of steps to reduce the inmate population:

_Ending parole for former inmates not convicted of a violent or sex-related crime. That would lead to fewer parolees being sent back to prison because they violated rules.

_Raising the monetary limit for property crimes to be considered felonies. That would send more petty thieves to county jails instead of state prisons.

_Giving inmates more early release credits for completing educational or vocational programs."

Arnold wants to end parole (meaning stop state supervision of parolees--they'd just get out of prison without supervision). Huh? The purpose of parole is to re-integrate people into society under controlled circumstances, not just throw them into society unsupported and see what happens. People violate their parole when they lapse back into crime and get caught. Arnold wants to end supervision and let ex-inmates fend for themselves, so when they do lapse back into crime the state won't have to spend a penny until somebody catches them and prosecutes them (after preying on us for goodness knows how long!). How's that supposed to make things better?

Arnold wants to finagle the definition of felony so he can dump criminals into the county jails and make counties, not the state, pay for their room and board. Yet the counties are just as broke as the state is! How are a bunch of smaller bankrupt governments supposed to bail out a larger bankrupt government?

Arnold wants to give more convicts early release if they'll go to school while incarcerated in the big house. Hello? Let's game the system, OK, and forget anything about the penalty fitting the crime, and justice for victims, and all that other expensive stuff having to do with law and civil society. We can't afford civil society these days, so you'll just have to do without!

Had enough proof of the aburdity?

If Arnold were really serious--and he most certainly has not been serious about being governor from the first day he landed in Sacramento--he would attack the root cause of the inmate population explosion--namely, the state's preposterous drug laws that send men and women by the thousands and thousands and thousands into prisons and jails. America's stupid, vile, indecent drug laws are the reason why this supposedly free society puts more of its citizens into prison than any nation on earth, including totalitarian regimes like Communist China. Why? Because the prison-industrial complex earns a very great deal of money, and these rapacious parasites bribe state legislators to create ever-more draconian laws and penalties, the only consequence of which is to keep increasing the convict population so that the prison-industrial complex gets more and more tax dollars ad infinitum. It's a system of pure evil that must be destroyed. If Arnold were serious, he'd attack this wickedness at its root. Instead, this perennial clown concocts absurd gimmicks that will solve nothing while countless thousands of lives are ruined and the state bleeds money.

California is getting exactly what it deserves.

Read it here

Paul Craig Roberts lets the morons have it!

This column from Paul Craig Roberts says it all, and he's been saying it for years and years: the country is run by fools for the benefit of fools with the approval of fools. A couple of years ago, Mr. Roberts wrote that he had pretty much given up trying get people to listen and was instead going to stand back and watch the train wreck. Thankfully, he hasn't given up yet even though the train wreck is in progress.

Read it here

Crack is a stimulus too

Apparently the Senate will pass the $827 billion stimulus bill on Tuesday. Since the House passed a different version, the leadership of both houses will convene a conference to hash out the differences, and then both houses will pass that revised version and send it to Mr. Obama.

Let's do some addition: Mr. Bush got a $700 billion bailout bill late last calendar year (but rolled up into Fiscal Year 2009) and now Mr. Obama will get another $827 billion for a total of $1,527 billion (that's 1.527 trillion dollars!). All of this is (or will be) borrowed money; in addition, Mr. Bush's final fiscal crime in office (so far as we know) was to submit a budget with a projected deficit of $482 billion, all of which is also borrowed money. So we're now at $2,009 billion (that's 2.009 trillion dollars!). For all you history buffs, the entire federal budget for 2001 equalled this sum. Since that Fiscal Year 2009 deficit was computed with lots of rosy hopes for economic growth that have been utterly invalidated by the crash-cum-depression, we can reasonably expect it to exceed the original estimate by scores--even hundreds--of billions of dollars. In addition, the costs of our ruinous wars in Iraq, Afghanistan, Pakistan, Sudan, and Iran are "off budget," meaning that these costs are tallied on a different set of books; the costs will be hundreds of billions, every penny of which will be borrowed. So we're really looking at borrowing $2.5 trillion or more in this fiscal year alone.

Mr. Obama hopes that foreigners will loan America this colossal amount cuz we Americans ain't got squat to spend on anything. Does he know foreigners we don't know? Does he know foreigners who aren't themselves caught in the crash-cum-depression and who are not trying to conserve every penny they've got? Does he know of foreign governments that are just wallowing in cash and have nothing to spend it on? Whom does Mr. Obama know with this kind of money? Do these people have names? Where are they?

But this is the plan--the only plan--to save America. When it goes bust, we do too.

A book for our times

Here's a book for our times: "Deadly Decisions" by Christopher Burns, a former journalist, editor, and now expert on information management. If you wonder why successful, smart, informed people with lots of money can wide up dead broke when Bernie Madoff's decades-long ponzi scheme is exposed, an inability to distinguish truth from mere information may be the answer (along with the old vices of wishful thinking and pure greed). We live in a world bursting with information, but truth is scarce. We settle for "virtual truth," the information age's version of the ancient "likely story." Today, in the ruins all around us, we see the high cost of "virtual truth" in finance, real estate, industry, government. "Virtual truth" may be the death of us yet.

Read about the book here

Here's why I'm trying to build a new career

I spent 25 years in IT. Once upon a time it was a good career, and I enjoyed it. I've got lots education and more experience. But nowadays in America, these don't matter. The only thing that matters is money. As the article below states, on average an American IT worker is paid $75,000 but an equivalent can be hired in India for $8000. This fact explains why a career in IT is now a dead-end. No amount of advanced education or depth of experience can alter this fact: money is the only thing that matters now. Higher paid workers will be replaced by lower paid workers, and absolutely nothing will prevent this from happening. This fact applies to all engineering fields, finance, the sciences, and even certain branches of medicine to name a few. Anything that can be done by cheaper foreign workers will be done. Higher paid American workers will simply stop being workers; their jobs will disappear. Incredibly practically nobody seems to care--except the victims.

America is allowing itself to be strip-mined by corporations. Paul Craig Roberts has been writing about this for many years. Our future, he argues, is to become a third-world-like economy consisting of low-paid, domestic services. Our industrial production will have been off-shored along with our professions. What's left will be 300 million impoverished people, bereft of hope and a future, ruled by a gang of rapacious plutocrats who enriched themselves as they destroyed their country. Anybody in IT knows this is our fate because IT people live this fate every day. That's why I'm building a new career.

Read it here and be amazed

Astounding numbers

Today the government announced new unemployment numbers: the "official" rate quoted in the press is 7.6%. In a previous post I explained that this number is the index "U3" and that the government itself produces the broadest index of unemployment "U6" (unemployed and underemployed) which is almost twice the value of the U3 index (it's 13.9% today). Also, at ShadowStats economist John Williams produces corrected statistics that remove the dishonest and misleading manipulations our government makes in the numbers to disguise its continuing economic failures. His recomputed value for U6 is now 18%. For comparison, I provide a link below to the BLS summary data about unemployment during the Great Depression.

The BLS reports that the average unemployment rate for 1931 was 15.9%. If you were unemployed in 1931 but wanted a job, you are included in the data. Today, the government excludes millions of unemployed people that it magisterially declares "out of the economy" because they are very long-term unemployed and simply can't find work; our government doesn't think that these people matter, so it takes a cue from Orwell and effectively redefines them as "unpersons." John Williams doesn't play that game, and he removes these falsehoods from the data to produce honest, reliable numbers. (By the way, he doesn't do this for free; he has many business clients who use his data for planning because among businessmen the government numbers are known to be worthless.) So here we are: America workers today are in worse shape than those in 1931, and the situation continues to deteriorate.

View ShadowStats data here

View Great Depression BLS data here

For the brave, the U1-U6 index data:

View BLS U1-U6 here

Note: The actual, unadjusted value of U6 is 15.4%; the "seasonally adjusted" value of 13.9% is an attempt to average things like temporary employment spikes during Christmas. Whatever the values, our government doesn't care about millions of unemployed and underemployed people; their lives and welfare don't matter. A government that callous is a government that does not deserve to survive and in the long term won't survive.

Another peeve

I'm really tired of reading the statement "we're not in a depression yet or any where near it." You see it all the time now, which alone is pretty good evidence that we are indeed in a depression, but people confidently assert otherwise.

To which I reply, oh yeah? The bottom of the Great Depression was 1933. But before you hit the bottom, you've got to fall. The Crash of 1929 was no where near the bottom, but who would say that 1929 did not begin the Great Depression? 1930 was a year like 2008 with layoffs, plant closures, declining profits, etc, but still a good way off from the bottom; yet who would say that 1930 was not part of the Great Depression? Back in the 1930s, people didn't know they were in the Great Depression until they were years into it with no hope of getting out. You'd think folks in the 21st century would take advantage of our better historical perspective, but most of what I read hasn't got a clue.

We are in the crash phase of the Great Depression of the 21st century; we're still falling. Yes, you can play Pollyanna and keep optimistic--right up to the moment you hit bottom and go splat. It would be better, however, to assess the current situation realistically and respond appropriately instead of insisting that you cannot arrive at the destination to which the bus you're riding is taking you.

Overthrow the government

Radical times radicalize ordinary people. Here's a snippet from an article on EconomyInCrisis. Read it and then think what it really means:

The H-1B visa program was developed under the guise that foreign workers would only be brought in if there were not qualified candidates to fill available slots. Yet the H-1B visa program does not require employers to seek local talent before recruiting abroad for U.S. job openings. The Department of Labor's strategic plan for Fiscal Years 2006-2011 states that “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.”

The government of the United States conspires against its own citizens by allowing employers to import cheap foreign labor to displace American workers from their own jobs. Employers have bribed our elected representatives to legally permit screwing their employees out of work. And we ordinary Americans do nothing. We have no recourse. Or do we?

A government that wages economic warfare against its own citizens and betrays their trust deserves to be overthrown. Not merely voted out. Not removed from office only to let another pack of jackals gain power. No, overthrown in a new American revolution. Like the way the Romanovs were overthrown in Russia. Or the way the ancien regime of Louis XVI of France was overthrown. We have a government that is corrupt from bottom to top, inside and out. We need a new Bunker Hill, 2009 version.

More staggering numbers

Last week new jobless claims jumped higher than expected: 626,000, up from the already grim estimate of 591,000. Just one month! Add in a similar amount of job losses the month before, and we're talking something like 1.2 million jobs lost in a mere 60 days. That's 20,000 lay-offs per day! Tell me again that we're not in a depression.

On this sour note, I want to air a personal gripe about the stupid reporting we read concerning unemployment. For some dumb reason, journalists persist in reporting a deliberately understated number called "U3" as the actual unemployment rate when it most certainly is not. As a reminder, the government publishes unemployment rates in 6 indexes called U1, U2, U3, U4, U5, and U6. You can read details about these indexes here. U6 is the comprehensive index that represents total unemployment and underemployment. This number is currently almost twice the value of U3, and it is most certainly the number that should be reported in the press because it clearly shows the miserable state we are now in. According to U6, the unemployment/underemployment rate in the US is now about 14%. John Williams at ShadowStats adds in several millions of very long-term unemployed that were finagled out of Bureau of Labor Statistics during the Clinton administration to arrive at a total figure of more than 17%. You would agree that this figure is substantially greater than the "official" rate of about 7.5% incessantly quoted in the press. You would agree that while 7.5% is bad, 14% (or 17%) is appalling. A nation with so much unemployment and underemployment (and both increase each day) is in desperate trouble.

Why can't we get the truth about our current situation? How can we deal with our problems if we can't even get reliable information about them? Why is the press serving us so badly in these grim times? Newspapers and journalists are suffering big losses and big layoffs nowadays; considering the reams of disinformation they feed us, I'd say they're getting exactly what they deserve.

Read it here

Faith-based nonsense

In a nation full of finance industry alms seekers and Wall St. hucksters, religious folk supplicating the federal government for pelf are small fry, but they're trying! Mr. Obama intends to keep the faith-based money machine Mr. Bush created but with improvements, i.e., more dependants. If Mr. Obama is handing out free money (free to him, our costly tax dollars to us), then the prayerful will queue up with the rest of the serf-wannabes at the gates of their feudal lord's castle for a handful of the loot he stole from them to begin with. Give to Caesar what is Caesar's, to God what is God's. Nowadays in the USA, Caesar owns it all.

Read it here

Staggering numbers

The numbers are just staggering and they keep mounting: Panasonic is closing 27 plants and laying-off 15,000 workers. What does this fact tell savants? Answer: that Panasonic clearly expects the world-wide depression to be deep and long-lasting. You don't close one plant much less 27 just to cope with an ordinary recession. You certainly don't close plants if you anticipate a recovery that will require your pre-recession productive capacity ramped up to meet newly growing demand. Closing plants is serious, expensive business that you do if and only if you believe that such productive capacity is permanently redundant and must be written-off and discarded. You do that if and only if the market has fundamentally changed--in this case, it has seriously shrunk--and you believe that such a change is permanent. Obviously, Panasonic believes this to be the case. Since politicians won't tell the truth about the state of the world, we must depend on our observations of businesses--they can't afford to play the fool. This announcement from Panasonic shouts "great depression" to anybody with normal hearing. What a tragedy that the world's leaders won't pull their fingers out of their ears and listen and then respond correctly. We're falling down a bottomless pit.

Read it here

Oops!

Michael Kinsley once wrote that in politics a gaffe is when a politician inadvertently tells the truth. British Prime Minister Gordon Brown referred to the world depression (yes, he said the D-word) in a question session and has been trying to disavow it ever since. A spokesman claimed the the PM did not deliberately use the word and does not believe it. In other words, the PM does not know what his mouths says and disbelieves whatever it does say.

Yes, the world has fallen into depression and is falling deeper everyday. Why can't somebody finally say so? And once that truth is said, why can't somebody propose the necessary remedy: radically shrink the size, power, and interventions of government in order to free up the capital that the private economy needs to recover? Quit bailing out failures; write-off bad debts; let inflated prices deflate; deeply cut government spending; stop government borrowing; stand aside and let the private economy recover.

There's one thing good about this depression: the mealy-mouthed Gordon Browns of the world are soon going to find themselves out of power, out of office, in prison, and some will be swinging from nearby trees.

Read it here

Many economists predict...yada, yada, yada

Thousands more jobs disappeared Tuesday. You can read about this misery in the article below.

My comment regarding this article has to do with the incessant economic prediction quoting that pervades business journalism. An economist predicts this, another one predicts that, still another predicts both this and that. We readers are supposed to take this stuff seriously. I don't. Why? Here's a simple truth about the practitioners of conventional economics in America: they didn't predict this recession. They didn't recognize its existence for an entire year until last December the National Bureau of Economic Research took a retrospective look at 2008 and--surprise, surprise--finally noticed an entire year's worth of layoffs, bank failures, bankruptcies, repossessions, store closings--you know, all the evidence of recession that everybody but conventional economists knew about and could see in front of their faces. Now these same clueless nerds are busy issuing predictions about the extent and duration of the recession they previous denied and getting these pointless predictions registered in the press. Why would anybody listen to these clowns to begin with? They have a perfect record of uninterrupted error and missing the boat.

The only people who know what's going on are the Austrians, and that's because they're the only ones who've got sound economic theory. Bop on over to The Mises Institute and start reading. You'll never listen to a syllable from the conventional economists again.

Read it here

Coming to a community near you (yours!)

Here's a powerful video about Wilmington, Ohio, devastated by two enormous lay-offs. This town is the canary in the mine, a grim vision of what all of America is rapidly coming to look like. While America was off running the world, invading countries, killing countless thousands, setting up puppet governments, bribing politicians and warloards--in short creating and maintaining a vast empire by both brute force and corruption--we Americans forgot to take care of ourselves. Now it's too late. The empire is crashing along with the economy. Places like Wilmington, Ohio, are merely the first of tens of thousands of towns, communities, and cities that will fall into the abyss of inescapable depression. Soup kitchens and homeless shelters--for whole families! How did we let this happen to ourselves?

View it here

Crack-up in China

The global depression has left 26 million Chinese workers unemployed. Contemplate that staggering number. Years ago these millions left desperate lives in rural China and moved to the industrial cities in what was the largest human migration in history. The economic boom of the 90s--the age of credit bubble after credit bubble--led investors to out-source whole industries to China to exploit this colossal population of cheap labor. As von Mises explained long ago, the boom phase of credit expansion is really mass malinvestment that cannot be sustained when the boom craps out. The present desperate plight of 26 million unemployed Chinese ex-factory workers is stark proof of that explanation. These people are now stranded in their own country--there's really no place to return to in the rural areas and they'll slowly starve in the industrial cities without work. And, as I keep writing, we're only in the beginning stages of this depression, which will last for many years, probably decades. Millions more will soon swell the numbers of the unemployed. Apparently social violence has already broken out despite the best efforts of the government to suppress any word about it. This is a disaster in progress and nothing good will come from it.

As a post script, I think the problem is much worse than the Chinese government publicly states. I thoroughly disbelieve the government's claim of a 6.8% growth, for example. Exactly how is China's export-intensive economy growing in the midst of world-wide decline in growth and consumption--which is, after all, what a recession/depression is? And unless the Chinese government is substantially more truthful than the American (which is possible), the 26 million figure must be in actuality much higher. The American government continually lies about real unemployment here in the USA. John Williams at ShadowStats computes that at present we have an true unemployment/underemployment rate of about 17%, which was the unemployment rate in 1931. I don't expect bad news gets reported objectively in Beijing but not in Washington, D.C.


Read it here

A grim view from the left

Here is a grim assessment of our plight by the indispensable Chris Hedges. Violence is heating up in failing states all across the globe. It will get much worse as the fatuous pretensions of governments are exposed and as their preposterous policies fail one after the other. The simple truth is that we have only one way to recover our prosperity: restore a genuinely productive private economy in a state with small, limited, frugal constitutional government and an honest, gold-backed currency. Fat chance that's going to happen! Governments everywhere intend to hang on to power by hook or by crook, by fear or by coercion, by truncheon or by bullet. That includes the federal, state, county, and city governments in America. That's why your local police force looks like a branch of the military nowadays. Under the guise of anti-terrorism, we've become a militarized, pseudo-civilian state. These quasi-military police forces will soon be deployed against domestic "terrorists" otherwise known as angry citizens marching--and probably rioting--in the streets. Remember the street violence of the Vietnam era and race riots like Watts way back in the 1960s? That past is our future.

However, we haven't yet suffered the violence now erupting in other countries because despair and desperation, although growing daily, have yet to reach a critical mass here. Citizens of other countries are fast losing whatever illusions they once held; stark reality can't be avoided there. In America the magical thinking that has dominated our civil life and led us to make borrow-and-spend a way of life is still hanging on in its final form--Obama optimism. "Yes, we can!" No, we won't, but cheerleading-as-governing needs a few more brutal months of butting up against an implacable reality of depression and impoverishment before we at last sober up and see how decades of government-countenanced looting and swindling have left us powerless to save ourselves from economic ruin.

Read it here

Pension fund crash in progress

So much for a "guaranteed" state pension. Like everything else having to do with government, state pension funds depend on the private economy; when the private economy tanks, so do the pension funds. Californians, as if they didn't have enough misery to date, are now facing huge losses in state pension funds for retired government workers and teachers. Since these funds are "guaranteed," guess who will be making up the difference with new "contributions?" Answer: currently employed state government employees (until they're laid off), currently employed teachers (until their contracts are cancelled), and various local governments assuming that they can bleed more money out of taxpayers who themselves have suffered losses in their pensions and 401k's approaching 50 percent. Will the taxpaying chumps in California let themselves get robbed yet again so that retired bureaucrats and teachers get their full "guaranteed" pensions? Let's wait and watch and see.

Read it here

Are people just nuts or what?

Q: What's the solution to unemployment in the private economy?

A: A government job.

Or so people seem to think judging from this article. Tell that to the 23,000 New York City employees Mayor Bloomberg is firing. Tell that to the state employees of California who are hanging by a fraying thread (Governor Arnold has already fired the part-timers and the temps and soon he will fire thousands of full-timers because there's no money to pay their salaries). Tell that to the thousands and thousands of employees--state, county, city, town--all across the country who have been laid off and are soon to be laid off.

Government jobs are not secure because government exists only as long as it can be a parasite on the productive private economy. When the private economy goes under, it takes government down with it. The solution to unemployment in the private economy cannot be government jobs because government jobs are financed by the private economy. If the private economy could pay for more government jobs, wouldn't it be able to produce private employment too?

Read it here

Listen to this guy again

As we sink deeper into the abyss of unrelieved depression and economic ruin, savants ought to listen closer to Igor Panarin and ponder the possibilities he envisions. Nations are not held together with super-glue; the bonds that keep disparate people together are economic, social, and political. The fundamental bond is economic. Not to get all Marxist on you, but the material means of wealth production determine everything else in society--its politics and social arrangements and law and even religion. Economic realities are fundamental; they are the foundation of everything else.

In America these economic realities are crashing. While we were busy watching TV and shopping, our so-called leaders in government and private industry during the last 25-30 years changed the economic reality on which 20th century industrial America was based. We stopped being a production-oriented economy and became a finance-oriented economy. We out-sourced and off-shored our industrial base and decided to live not by production of wealth but by the magic of compound interest. Why work for a living when you can "invest" for a living and live off the compounding profits?

Of course, like all magical thinking, the "magic" of compound interest income is nonsense. As Michael Hudson has pointed out for years, your compound interest income is somebody else's compound interest debt payment. You, the investor (and for that term you should read "creditor"), can prosper indefinitely only if other people go deeper into debt indefinitely and keep up their interest payments. This "magic" system craps out the moment debtors default. That moment for America is right now. Since we have eviscerated our once-great industrial infrastructure, we have nothing to fall back on.

When the foundations crack up, the building collapses. The economic foundation of modern America is cracking up, and the social, political, and legal superstructures resting on it cannot stand unsupported. Thus Igor Panarin envisions the consequences of this crack-up, and what he sees is pretty grim--at least for Americans. Maybe the most startling aspect of his ideas is how quickly he anticipates the crack-up of America to happen. 2009 will be a year of misery and despair and lost illusions; 2010 will be the year 300 million dispirited, impoverished Americans go their separate ways. Think it can't happen here? When Mr. Panarin made his original predictions in 1998, people laughed. There's not a lot of laughter these grim days.

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Word leaks out

At last we're finally hearing people begin to make sense about Mr. Obama's loony plan to fix America's problems with a multi-year, multi-trillion dollar spending spree financed by borrowed money. People outside the USA wonder where he's going to get all that money. Since they're wondering who's going to pay, evidently they don't plan to pony up the cash. So if not them, who? Not you, surely. Certainly not me. So if there are no chumps willing to buy Mr. Obama's bonds, his only alternative is to crank up the dollar printing press and buy his own bonds with worthless dollars hot off the presses at the Federal Reserve. Inflation will cure America's ills. Borrowing will cure America's ills.

Mr. Obama will finish us off with either crushing debt or crushing inflation or both. And we're just sitting on our behinds watching him do it. You'd better have a family survival plan ready because you will soon need it.

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