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The more with which time passes, the more one sees how some things always stay the same.

This is something unrealized by youth… I certainly couldn’t see it, though many elderly tried to project their insight into me.. I simply lacked enough background to understand.

But seeing the return of things you fought to vanquish and were once successful, as well as expanding ones knowledge-base across many cultures, times, and distances, one tends to see a larger pattern in effect that probably is conducive to our survival…

Here is how it relates to conservatives and liberals, democracy and our ultimate survival…. .

No matter who you are, when you are, or where you are, if you are comfortable in your position, you tend to lean towards conservatism… Why wouldn’t you?  It’s what enabled you to get and keep what you have… On the other hand, when you have nothing but dreams listed as your assets, you’ll insist on change, or newness, or something better than what you have.. Why shouldn’t you?  Who would want to stay in the same decrepit conditions one finds themselves when they don’t have to?

And so democracy is simply a mechanism that allows for the ebb and flow of fortunes to change policy so parity is maintained for the most part…

When a majority of people are doing better than those who are not, then keeping what is working now is best for that society as a whole.  On the other hand if it it not working, then changing ones course is better for that society.  That makes so much sense, does it not?

So being a liberal in a time of economic well being is, how should we say politely, being “very forward thinking”?… Likewise being a conservative in a time of turmoil, could be rather dangerous, being so outnumbered so… you better hope you are “well liked”….

It is rare that events outside the human experience impact us on a large scale. Most of what affects us drastically (wars, Depressions, power grabs) usually comes from mankind’s own doing:… acts where we consciously chose to go a certain route, and more or less, damned all the torpedoes that got in the way.

Today we are in a bru-ha-ha of our own making…. Most of it directly came from our choosing to go towards giving the top 1% all of our money and keeping less for ourselves… It was a conscious decision on our parts.  We elected enough Republicans to allow them to do what they told us they would do.  It was no secret. We made a bad decision.

The experiment failed.  They kept all the money and none trickled down, at least here within our borders… Our wealth actually built up China, which is great for them, but that hasn’t helped us much.

When one finds out one is losing something important, one hangs onto it harder… Which means someone has to try harder to take it away, right?… This gives insight into the harshness and lack of decorum in politics today… The ugliness we see today in Conservatives, and the hard clenching tenacity we see in Liberals, we’ve seen before in this country.  We had it in the 1820’s between the old guard wealth of the Eastern Seaboard, and the wide individualistic wealth newly available across our national heartland.  We saw it in the 1850’s as slavery hit the hot button and both sides became bitterly entrenched as support for slavery evaporated into a cauldron of gunpowder.  It only took one spark.  We saw it in the 1890’s as the capitalists grabbed up more and more companies, crushed workers rights, and the workers in cities became less and less empowered. Finally Republican Progressivism broke out of the chokehold. Then WWI flipped the scales back to big business and an investment boom followed by a Great Depression again created the necessary environment for another total sweep of old for new.  That “new” lasted 60 years until it succumbed to having been so successful so that so many numbers who had previously benefited from liberal policies switched allegiances to keep their assets to themselves… And that leads to today, where our individualistic efforts to improve ourselves simply were not enough to balance ourselves comfortably against wealth and power and we are again looking at more government interaction…

So rawness and candor have always been part of politics.  Always will be. Some things never change. (Some of us love it, btw.)

So what is happening today is that the post Republican Depression economy has made mockery out of those “traditional” Republican values and the only thing they have to hold on to power right now, is their appeal to the prejudiced.  Against this direct solicitation, Progressives continue to offer a new vision of hope to millennials, or the return to the old vision of what actually worked well for 60 years to those still alive who actually lived it.

The conservatives count the votes and know their time is numbered.  Population trends have pointed this out for many years. Which readily explains why they focus on ways and methods to limit large numbers of those voting, and have vacated all plans to appeal to new members… No surprise here.

In this election conservative policy has been reduced to stem complete annihilation of their party… For whereas they have failed over the past 16 years, Progressives have succeed across that same time. By going hog-wild on bigotry, they are using the only tactic with which they know how to keep some members in their party from flipping…

Bigotry is a “thing” unfortunately… And right now…. it is the only “thing” Republicans have to garner one single vote this November…  Unless of course, it is ….. “wild hair”…

Donald-Trump-Mocks-A-Reporter-With-A-Disability-And-Says-He-Doesnt-Remember

 

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Quite often you can see things otherwise invisible when you look at a big picture.. For example if you were flying from San Fran to Bangor, ME, no one in your interactions along the way would be able to tell you what was happening across the entire route in real time.  You simply trust that and hope all will end well.

But if you are at a console watching air traffic control across the entire United States, and noticing how suddenly those little plane shapes disappear whenever they cross the Mississippi anywhere between Memphis and Cedar Rapids, you know from that anomaly that something must be wrong… You don’t know what, but only you see it from looking at the macro picture, a hole developing into which those entering, never return.

Which is why some of us like to look at macro math.  Basically it is stuff that no one else thinks is important and for most of daily living, they are correct.  But if you are used to looking at the same picture every day and one day it is different, a person familiar would notice that.  No one else would.  Imagine waking up one morning and walking through your house and quickly looking up from your footsteps, seeing that portrait you have hanging on the wall has its subject facing left, instead of right… You would be unnerved, right?  Yet a visitor to your place, would not notice.

Here is where we are. We are already in a free-fall towards another financial crises which if not addressed quickly, will repeat 2008-9 and possibly be bigger. It is strongly possible that this summer quarter’s financial reports leaking out in October, will cause a crash similar to what happened 8 years ago….

I’m sure this is a surprise to you as it was me. I sure you are as skeptical of my telling of it, as you would be my insisting I saw my portrait whose image had been flipped during the night..  Main stream’s financial media and both political parties are still asleep and dreaming of the promise that the economy is buoyed and is roaring back.  Just like how we all get surprised when acquaintances of ours, actively healthy people, suddenly confide they’ve been diagnosed with terminal cancer.  That is the cruel side of life. Sometimes the outside does not properly show the hidden condition on the inside.

What has not been shown in all our financial reports, is the massive amount of quantitative easing buoying these glowing results.  QE for short, is where government prints money costing nothing, and then spends it on something. They could loan it.  They could donate it.  They can buy stock with it. They can do anything with printed money that can be done with circulated money… And in a recession, this policy works… (which is why we do it)… Businesses get loans and stay afloat; banks get loans and keep their doors open. But the last recession was 8 years ago, and across the world’s financial markets, certain actors still are doing it…

So in our newscasts we appear to have a great recovery just before the elections. Our stock market is high, our unemployment is quite low, and our corporate profits continue to rise.  Is their any other way to measure it?

But does it make a difference to you if the reason the stock market is high because many of the stocks are now owned by government entities involved in quantitative easing, bought at low times to boost prices keeping plummeting crashes from continuing?  Does it make a difference that corporate profits are continuing because of massive increases in corporate debt primarily taken on to avoid showing a negatively balanced profit sheet, debt often owed to government entities which bought them up when no one else would to help keep their prices high… Does it make a difference if I told you that despite all the newly minted private sector jobs now being generated at reduced wage levels from skeletons of the older jobs now gone, the entire total income now being generated by all those working, is less per person than was before the great recession of 2008-9?  But you knew all this, right?

When put all together, the bottom line is that our economy is actually in a recession if measured by “real” corporate profits being down,  by “total amount of generated wages” impacting the economy being down,  by corporate “revenue streams” across our business world, being down,  by our “stock market minus QE infused purchases” being down,… but the supports provided by QE hide these facts from us all.  And it is not just here in the US. It is even a bigger global problem. There is the EU who prints money for every Southern European economic crises.  There is Japan who prints money to prop up everything. There is the ongoing problem in China. There is Britain who is now pumping to keep Brexit from collapsing its economy. Globally in just one quarter, we witnessed QE soar to never-before-seen levels. and it hasn’t stopped climbing.

Have you noticed how even with bad economic news, stocks go up?  That should not be — a reality which is obvious to grasp when parsed this way….

“Uh-oh, looks like you are going to lose a lot of money/  Oh! No problem, I’ll just buy more stocks at a higher price then..”  Time in and time out, this is exactly what happens.

QE is buying those stocks… and we’ve reached the level where there are so many, there is no one there to sell them too… Bond yields are negative and yet they keep buying.

“We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale” —Chairman Lord Jacob Rothschild of Rothschild Investment Trust

Asset Purchases Global
Notice how across the globe, governments are now buying up $180 billion a month or $30 billion per month higher than all the QE in the world at the peak of the Recession (2009).

Now jump to the crux of the problem.

Negative Interest

Did you notice the climb of negative yield debt just in the past 8 months. Aren’t negative yields dangerous?

Can be. Already one third of all sovereign debt yields negative interest rates. That means that investors are effectively paying borrowers to lend to them. The Bank of Ireland and Royal Bank of Scotland already charge depositors interest, as opposed to paying depositors interest.   That’s bizarre. Not to mention unsustainable.

At the current rate of decline, the entire global market will be in subzero land by the end of the year.

 

Around 45% of the global “fixed income” market is now “compromised” by central bank buying.” 

This is compounded by the new fact that nearly half of the bond buyers in the world don’t care about price because they print money out of nothing.   So what does this look like? Take Japan, for example.

Japan’s biggest banks are running out of room to sell their government bond holdings, pushing the central bank closer to the limits of its record monetary easing.   Finding willing sellers is a headache for Governor Haruhiko Kuroda as the central bank prepares to review policy at next month’s board meeting, amid growing concern among economists that he has few tools left to revive the economy. Record bond buying has already saddled the Bank of Japan with more than a third of outstanding sovereign notes, draining liquidity from the market and making it more volatile.

As proof of this trend, on August 9th, the Bank of England couldn’t find enough bonds to buy.

In plain terms it is as if you were now living solely off borrowed money and constantly getting new loans just to make the payments on your past due old loans and then suddenly, not being able to get any new loans anymore……

As we can see from the first chart above, Japan’s “need” is near $90 billion a month, which means once the loans potential dries up… there is an $90 billion dollar hole into which everything collapses…

Don’t underestimate what is happening here, the BoJ is buying a lot more than just sovereign bonds.

The Bank of Japan’s controversial march to the top of shareholder rankings in the world’s third-largest equity market is picking up pace.  Already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, the BOJ is on course to become the No. 1 shareholder in 55 of those firms by the end of next year, according to estimates compiled by Bloomberg from the central bank’s exchange-traded fund holdings.

 

Japan may be the extreme example, but they are hardly alone.  

The balance sheet assets of the world’s six major central banks hit a new all-time record, increasing to $16.9 trillion from $4.9 trillion 10 years ago, a 239 percent increase.  All the major global central banks are buying up financial assets to the point that global liquidity is drying up. In other words, the central banks are becoming the markets.  Markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all.”

Bad as this may sound, this is still not the real problem  Here is the REAL scary problem. These low negative rates in safe bonds are sending buyers out in droves to the unsafe markets to find any yield, even small ones of 5%.  In these markets the risk looms so large for so small a payoff, that one day’s trade can wipe a years of yield right off the books.

Volume in emerging markets have soared double their previous record in volume sold since March.

emerging markets 2016

But that is just one example

Junk Spike

Junk bonds, rallied 48% this year, even while junk bond defaults have hit five year highs.

Corporate debt.
Debt Corporate

Corporations are issuing record amounts of debt, and investors and QE are gobbling it up.

Companies worldwide are poised to raise more than $100 billion so far this month, the most for the period in Bloomberg data going back to 1999…. The average yield on sterling-denominated corporate bonds has fallen to a record-low 2.19 percent, according to Bank of America Merrill Lynch index data. Globally, the average is near the lowest ever at 2.3 percent, the data show.

More than $2.3tn of dollar-denominated debt has already been issued by companies and banks since the year began, including three of the ten largest corporate bond sales on record, Dealogic data show.   Which makes perfect sense…until you factor in that corporations are defaulting on debts at a near crisis level.

corporate defaults

The year is half over and we are already at the 60% level of 2009……….

According to a new report from Standard & Poor’s Global Ratings, corporate debt around the world is massively on the rise and could skyrocket to $75 trillion from the $51 trillion it’s at now…. What’s more – S&P estimates that two out of five corporations are highly leveraged (meaning they’ve taken on too much debt). About 43% to 47% of corporations globally are at a financial risk level.

Debt to EBITDA

EBITDA = (Earnings Before Interest,Taxes, Depreciation, Amortization)
Far, far above the 2009 recession levels…

But why are corporations the world over, all taking on debt at the same time (we are just finding out now because reports are filtering out from June 2016)?….

Because operating cash flow doesn’t cover it.

 

In Q2, companies generated $425 billion in operating cash flows. Only $151 billion was invested in fixed assets. The lack of investment is the bane of the US economy. And:

 $110 billion went into dividend payments.    

$61 billion was used for takeovers (OK, that’s down from last year)    

$137 billion was blown on financially engineering their earnings via share buybacks.

So operating cash flows were $35 billion short. That happened quarter after quarter. Hence debt ballooned to 32% of total assets at non-financial firms, the highest since 2008, another propitious year.

As you can see in order not to disappoint shareholders, corporate entities are taking on low interest debt simply to keep their profits looking pretty for the short term.  As seen above one could easily avoid debt by

  • a) cutting dividend payments,
  • b) stop taking over other businesses, or
  • c) stop buying back your stock to increase earnings/share…..

No, but none of these superfluous options got cut back, debt was taken on to cover them…

(As an aside, if anyone is wondering what is still wrong with the American economy, the number of whopping total of $61 billion applied to takeovers compared to an anemic $151 billion into capital investment, says it all… )

You must be wondering!  With all this bad news, why is the stock market climbing so precipitously?  Who would put money into a struggling company laden with debt (32% of assets) which cannot meet profit targets without taking on even more debt?  Let me guess. You? You are going to go out and buy some debt laden stock right now, correct?  Of course, you’ll put your whole retirement plan on it, correct?

Well, yes. If you have anyone minding your money, a mutual fund perhaps, I’m sorry, but this has already happened to you.  For in the short term, it has become the only way to get any yield at all.

Yield Comparison

Today’s precarious stock market scenario only makes sense when compared to negative bond yields… From the comparison chart above, you can see that this is a new phenomenon.  Accounting for the negative bond yields, today, you make 70% more in stocks than you do in bonds…

With a bubble stretched this thin, and with ample covering up so much bad financial news, the danger becomes very real that a tiny pinprick from somewhere, whether coming from student loans, junk bonds, emerging market bonds, corporate bonds, equities, or sub-prime car loan bonds, causes negative losses more than the ability of one to pay……

When disaster finally happens there will be another rush for the exits everywhere, and that is where the fatal flaw in the system will be exposed: there is no liquidity in the markets….

The World Bank estimates the ratio of non-performing loans to total gross loans in 2015 reached 4.3 percent. Before the 2009 global financial crisis, they stood at 4.2 percent.     If anything, the problem is starker now than then: There are more than $3 trillion in stressed loan assets worldwide, compared to the roughly $1 trillion of U.S. subprime loans that triggered the 2009 crisis….

Mr. Businessman calls up his bank… I need a loan right now, quick!   ….. Sorry says the bank. We’re out of money…..

The one solution?  Pretty painful.. Raise interest rates,.  which will result in downward pressure globally on all portfolios, dropping overinflated stock like its hot, but… will dothe necessary job of stopping corporate debt-load from continuing to grow and return us to more accurate reporting. Raising the interest rates act like chemo therapy to the economy, providing long-term healing by actually killing off parts of the living body to keep a malignancy from spreading to healthy tissues… When given the choice, very few of us choose to die forthright, instead resign to taking the chemo.  As we struggle with the decision, at the end of our thought process we all succumb to choosing that option at the end, coming to the realization that either way, we die, and at least therapy provides us the option of more time….

These implications hitting in October are anyone’s guess to their impact on this election year.

Some days nothing happens.  Many for that matter. Or it’s the drip drip drip of attrition of small events one tries to blow up as huge cataclysms… as in portraying it as the Earthquake of the year…

THEN, there are days everything changes.

Right now, we have the WEIC bills shuffled into a different committee in the Senate, creating speculation they may be shelved, never to see the light of day.  They passed the House. This is important for all of Wilmington.  I was telling some school kids what it was about, and their eyes got HUGE!  (They had no idea)…   But it is the first change in New Castle’s School Districts boundaries since the famous Court desegregation settlement.  It has great impact on property values in Christina District… Woo Hoo!  No more thugs! That becomes the place to raise your kids. Red Clay’s housing prices begin their grand longterm slide… Pike Creek is a great neighborhood, but we now got thugs from Wilmington in our schools.

Secondly, we have the Democratic sit-in for common sense gun legislation… Going on 24 hours, this is amazing stuff.  We’ve had sit ins before, and the same outrages being social media’d regarding Paul Ryan, also took place when it was Republicans protesting and Democrats controlled the House… The Democrats even turned off the lights; the Republicans have not gone so far yet…. But this is destroying the Republican Party… Seriously, it is a wonder if it will be around November 11th.  We have Democrats demanding a vote on gun laws that will save lives… They may not win the vote, (there are a lot of Republicans) but they are demanding a vote… Obviously the Republicans don’t want a vote which will cause them to get attacked by both sides… I mean,… who wants to be attacked by both sides?

But unfortunately, I wasn’t able to pay attention to either of these… Today (yesterday) was the Brexit Vote.  Most of you don’t know what that is or what any implications of that might be…  Let us say:  global economic collapse.  Remember it was the collapse of Lehmann Brothers, one single firm, that triggered the Depression (falsely called a Recession) of 2008.

If that was a rogue wave, this is a tidal wave… While you slept, Britain lost 120 billion pounds sterling of net worth. most of it in a minute.  Their banks are down on the stock markets by 25%… You may wake up to the resignation of their Prime Minister.  Housing rentals stocks are now down 40%… Overall at this writing, the FTSE  is down 5%.. The German exchange is down 5%.. American futures are down 5%…

No one knows how it will end.  It could be the end and wipe out all wealth which means we are in for a long bitter and hopeless recovery.  Or we may, pull a save and people will relax. The answer depends on where the fear line lies, and that is something no one can know…. That is the line over which if collapse passes, emotions take over decision making and a free for all occurs…

So before you go in to work today, pour yourself a glass and raise it to “Yesterday”:  a normal day that may be the last normal day you’ll remember for the rest of your life.

Cheers. 🙂

 

Last December I’d stumbled across this interactive map put up by the PEW foundation,  which had accumulated each state’s research of how many people were unemployed long termed back then, and how many were slipping off the roles this upcoming year… What I want to show, is the economic consequences of not continuing unemployment benefits, and to show it on a state by state basis.   The economic cost is nothing to ignore….As you may remember, Walmart is reeling from the food stamps (SNAP) cutbacks last November.  Their figures for this quarter come out early April.  But having some of their biggest clients drop out of society’s economics, jolted them last quarter..

The numbers for my state were estimated lower than reality.. PEW underestimated in December what Delaware actually reported in January by about 10%… Therefore these numbers should be considered baseline conservative estimates only, and very believable..  If they shock you, the reality is probably much worse….

As you know, all those already  on long termed unemployment  stopped receiving benefits on December 28th of last year.  Subsequently each week, every state has some members on its state’s unemployment roles who expire, and normally would get dumped into the federal program and continue being able to contribute to our economy while they look for work…That number gets bigger each week…

The idea occurred to me (and I did a piece on my own state),  that we could figure the economic damage relatively easily by finding the number of unemployed, calculating their economic worth by extending the average check amount, and applying a multiplier to account for the increase economic activity that unemployment creates. These multipliers are all over the map. The Dept of Labor predicts a 2.0 multiplier. and Moody’s predicts a 1.55 multiplier… Every dollar given through unemployment, creates $2.00 (1.55) in overall economic benefit as it continues to filter up the economic ladder to the top….

So I took it upon myself to show  how many people were initially cut, how many more increased the totals weekly, how much economic loss this costs each state,  and where the states will be at the end of this week, the beginning of March… The next step, since I won’t have the time, would be for someone to compare these estimates of people getting booted off an income, with each individual’ states data on weekly new hires. simply to prove whether or not unemployment was due to laziness and not the lack of good full-time paying jobs…  It would be easy to determine,.  If one would find that 10,000 are getting the boot, and if the state is showing no new hires, that we are creating a large class of people who will soon be creating large problems, stemming from simply the necessity of survival…. Call it our Third World Quotient. (I used this source for each states unemployment benefit)

===

Alabama   12.100 lost benefits on Dec. 28th.  925 added each week. Total off roles as of March 1st =20,425 @ $265 Alabama benefit = now hitting with impact of $5.4 million per week.  March 1st -Dec.28th Cumulative Lost Income Damage.= $43.9 million. Times 1.55 Multiplier effect, $68,045,000 dollars

Alaska    23,300 lost benefits on Dec. 28th.  448 added each week.  Total off roles as of March 1st =27,332 @ $442 Alaska benefit = now hitting with impact of $24.1 million per week.  March 1st -Dec.28th cumulative Lost Income Damage = $111.9 million  Times 1.55 Multiplier effect, $ 173,439,916 dollars

Arizona   17,100 lost benefits on Dec. 28th.  1288 added each week.  Total off roles as of March 1st = 28,962 @ $240 Arizona benefit = now hitting with impact of $6.9 million per week.  March 1st -Dec.28th cumulative Lost Income Damage = $55 million  Times 1.55 Multiplier effect. $ 85,173,120 dollars

Arkansas  9,300 lost benefits on Dec 28th.  775 added each week.  Total off roles as of March 1st = 16,275 @ $ 451 Arkansas benefit = now hitting with an impact of $ 7.3 million per week.. March 1st -Dec.28th cumulative Lost Income Damage = $57.6 million times 1.55 Multiplier effect $89,39,018 dollars.

California   214,800  lost benefits on Dec 28th.    16,078 added each week.  Total off roles as of March 1st = 359,502  @ $ 450   California benefit = now hitting with an impact of $161  million per week.. March 1st -Dec.28th cumulative Lost Income Damage =  $1.29 billion times 1.55 Multiplier effect $ 2,002,878,225 dollars.

Colorado   17,900 lost benefits on Dec 28th.  1400  added each week.  Total off roles as of March 1st =  30,500 @ $ 466  Colorado benefit = now hitting with an impact of $14.2   million per week.. March 1st -Dec.28th cumulative Lost Income Damage =  $37.7 million times 1.55 Multiplier effect $ 58,434,070  dollars.

Connecticut  26,000 lost benefits on Dec 28th.   1636  added each week.  Total off roles as of March 1st =   35816 @ $ 665 Connecticut benefit = now hitting with an impact of $23.8  million per week.. March 1st -Dec.28th cumulative Lost Income Damage = $221.8 million times 1.55 Multiplier effect $ 343,878,815  dollars.
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Today's Tea Party

Image Courtesy of HannaBarbara Productions.

Delaware Liberal has running commentary here…… 

Forcing ID’s on people to vote is simply wrong.  Every normal American thinks so.  Turning away voters who have no ID but are registered, only has one purpose.  To misrepresent the vote.

One man in Texas was denied the chance to vote (updated: almost denied)… He was 90 years old and didn’t, and couldn’t while living in a nursing home, get the proper paperwork to get an ID under the new Texas law that was immediately passed after the Supreme Court decision on Affirmative Action.

Problem was this 90 year old man’s driver’s license had expired.. He doesn’t drive anymore except up and down the nursing hall hallways. His second photo ID was a Texas University faculty card, but that is not a legal form of identification in Texas…  He doesn’t need a current faculty card to teach his elders in the nursing home.

The crises was solved with his $65 dollar payment to the Texas Department of Vital Statistics and the $35 dollar next day air shipped FED EX package and he now, with a certified copy of his birth, will be able to vote today….

But it caused him to ponder…. worried that others of his age may find the obstacles and inconvenience encountered so off-putting that they just don’t vote.

“Sorry, kids, you’ll have to only eat at school this week.  Mommy had to spend $100 to get her right to vote…”

There has never since the Jim Crow laws been a more blatant attempt to rig American elections….

Even if one knows the person, even if that person is obviously the person they purport to be… if there is not current valid ID for that person, they are discouraged from voting….

And everyone knew this man… He was the former Speaker of the US House of Representatives… , Jim Wright….  He had the position John Boehner has now…  They wouldn’t let him vote…

In war, when a village is harboring terrorists who can come out at will and shoot at you… you burn down the village.  Any Republican I’m afraid, by their allowing the Tea Party to live under their roof, is tainted.  America can not grow beyond its current stagnation until every Republican is ousted out of being able to make any of the decisions so necessary to the daily functioning of our lives…..

If one is driving southbound down the Pacific Coast Highway and comes to the cliff where Jimmy Dean’s character went over, and your passenger grabs the wheel, turns hard to the right, stomps on the gas….. whose fault will it be if the car goes over the proverbial financial cliff?

Exactly, all you Republicans out there.  Exactly.

If the US economy tanks because our ratings get lowered one more time… It won’t be the fault of ANY democrat.

The now famous high stepping Wal*Mart video  mentions that point….

Now, the meme of bashing Wal*mart  and fast foods has gotten a little blaze and to be honest, when I first saw the flash mob at Walmart on the national sites, as a person with little time, I passed.

But on Delaware Liberal, I opened it in another tab, and was listening to it as background and all of a sudden…..  it stopped for a half second and then…

“Hold It! Did You Know? It Is Your Right To Form A Union!”

The answer in my head was … “no, i didn’t…”

The second answer was… “of course I did.” which made me more intrigued by my original answer.  Why on earth did I think it was bad for these people to interrupt business as usual to demonstrate for something affecting I think, one person?

As this “wow moment” started to dawn on me, I realized I’d been brainwashed’… Over time.  it had really happened.  My gut, had been  over-ruling my head….  it’s a business. They should call the police. They should fire everyone involved…   Demonstrations are really ineffective blowing off of steam…

“Hold It! Did You Know? It Is Your Right To Form A Union!”

How many others out there would say “no” … How many others out there really don’t know it is their right to form a union?  That anyone can form a union?  It is legally protected.

Oh, they can threaten to fire you if you join… And they can fire you….

But if they do… you can sue… and even better, under current law, you can sue them and win.  Win big!

You can make them pay you for all back wages you lost.  So finacially it is just like you were working but having the entire time off.

You can make them pay all your damages, including late fees on bills you couldn’t pay because the illegally fired you. You can make them pay interest on all loans you took out to live on, even if they came from family.  If you Dad gives you a loan at 1000% interest, they have to pay that… and to your Mom, your brothers, your sisters, your aunts, and uncles…  Your whole family and friends can get rich off them because they fired you for forming a union!

“Hold It! Did You Know? It Is Your Right To Form A Union!”

The business may respond to the legal judgment ,  “Screw you , we are closing”.  But if they close they will still have to pay you for all the damage they cause you because they fired you for forming a union… You still win! And win BIG!

“Hold It! Did You Know? It Is Your Right To Form A Union!”

How is it that our newspapers don’t remind us of this.  How is it that Unions are painted to be the bad guys, because they make a business lose money?  Why isn’t the business painted as the bad guy, for stealing potential earnings out of each and every employee working for them…

Some may think forcing a union on a business is unfair.  Racist states often use this argument.  Why should White owned businesses pay more for black people’s labor?   That is why ALEC (in Delaware associated with Patty Blevins) was invented:  to protect White Businesses’ interests.   And still unfortunately, in some states, there were enough white people still agreeing that black people as well as to  those whites who associate with them, should be paid inferior wages,so much so that with ALEC’s help, enough votes were mustered to pass state anti-union laws..

But historically there were laws that once said: slavery was legal. Despite bad law, morally it was still everyone’s right to be free….

“Hold It! Did You Know? It Is Your Right To Form A Union!”

It is your right to form a union.  Existing law is crystal clear.   Why was this decided?  What is the moral argument behind it?

Simple.  You have to eat.  Bottom line.  If someone says  I have to pay you $6.00 an hour because I’m not making enough money, and you can’t get money anywhere else, you work for $6.00 and hour.  If he counters that he can only pay $5.00 an hour, and you can’t make money anywhere else, you will  do his bidding for $5.00 an hour.  Why not $4 then?  Why not $3 then?  Why not $2 then?  Why not $1 then?  Why not .25 cents then?

You have to eat.

There is no bargaining chip in your favor…  Your employer if legally allowed, would pay the lowest rate possible to still have employees. When there are more employees than positions,  wages could drop very low…. because you have to eat.

America went through the Great Depression primarily because of this… Even business leaders realized from that experience that by making their employees so poor, no one was buying the products they were making…

And so they agreed: “If we make our employers have disposable income, they can buy our products and we can again make money”.  So the legal basis was almost unanimously approved  by both businesses and labor, to make the right to strike just that.  a basic human right protected by the full force of the law…   Simply because paying workers higher wages is good for increasing overall demand. and that is what drives economies forward.

“Hold It! Did You Know? It Is Your Right To Form A Union!”

Basically, a union is the answer to this counter argument:   “why should you, the investors, get all the money off our labor, and we get none?” Admittedly both of us should get something decent from our arrangement….

And there you go.  America did do very well… that is, until our media became influenced by investors (who now own them btw) and started painting unions as a scourage…  Missing from all press coverage, was the simple fact that one has to act scouragingly when bargaining with fellow scourages…  Sort of like not realizing that your hero prize fighter has to hurt people.  It’s necessary to stay in the ring…

So I encourage all reading this to now begin talking up unions in your workplace… Because if you get fired for any reason afterwards, you can blame it on the legal right to form a union….  it is like a wonderful vacation in which you still will get paid, probably even more than if you’d put up with the bosses crap the whole damn time….!

Now… you know!   It Is Your Right To Form A Union!”

Yeah.

It really is your “right.” and it is protected by law.  Now, go get them tigers!

Economic theory, which is basically bullshit, is often coached in mathmatical terms to disguise the fact that it is pure bull.  However there are some very simple concepts which make very good common sense, and if one looks at that, instead of how to use current data to justify one’s action politically, one comes up with obvious surprising results.

Labor Demand < Labor Supply

That is why so many people are out of work.  Now here are the players.

  1. Workforce Market
  2. Corporations
  3. Commodity Market
  4. Foreign Investments
  5. Financial Markets
  6. Households
  7. Government

Government is our last option.

So our workforce if we compare the same counting today as was during the Great Depression, is running at 85% capacity.  Meaning 15% are unemployed.

Going down the list then,

Corporations are at their best ever. Corporate profit the highest percent of GDP ever.

Financial Markets also are at their best ever.  Dow Jones is at record highs.

Commodities are performing well, all indications are of a long term bull market.

Foreign Investment is at an all time high.  Never have we had this much outside money.

Real Household Income is declining.  We are headed downwards and are currently tied with 1994 as it rose out of the 91 recession, and prior to that, tied with 1984 as we were coming out of the 1982 Recession.

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Bottom line with government out our equation, we have the investment side of our economy all doing spectacularly well, and the household side going down.

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Proof enough that the free market system, or capitalist system does little for the good of any nation, just as little good it did prior to the legislation that became law after the crash of 1929 when Democrats swept the Federal Government.

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Government is the great equalizer.  For a fix, government needs to step up and side with We the people (or households), and as a referee would in any sporting event, make the playing field fair.

It can to it in either of two ways. It can impose necessary restrictions upon businesses which increase their demand for labor at the expense of their corporate profits.  For example, pass legislation to imprison CEO’s for malfeasance. Only then in order to keep their heads out of hot water, they hire environmentalists, social engineers, accountants, and other highly trained personnel whose prime function is to make sure the company is not doing anything shady.

It can also split the corporations into multiple smaller ones, each now requiring a new president, several new vice presidents, new HR’s, new financial planners, etc and with one fell swoop, increase the demand for labor.  This too, comes at the expense of corporate profits, which are currently huge primarily due to economies of scale.

And it can indirectly create demand by raising taxes.  When taxes go up on profit- earned, less profit gets earned by design; less “reported” profit, less money handed over in taxes.. Meaning the bulk of that money is now spent being reinvested into the business just so it can’t be taxed.  Building projects, higher wages, more R&D gets spent into the economy,  This too, comes at the expense of corporate profits on the books.

But that is why higher tax rates are actually the best alternative.  Higher tax rates tend to create less taxes, so government still needs to stay small.  The revenue collected is lower for the simple reason that if there was absolutely no tax, all the money earned would belong to me.  But if more of what I earn goes to you, then I will figure out a legal way to keep more for myself, and report less.  So whereas as tax rates go up, total tax revenue comes down;  the net effect is that more money goes into our economy thereby creating more demand.

The demand for labor then gradually rises to equal the supply and if it continues on its upward path, yes, yes, so there are more jobs than workers, then competition begins pushing the individual wage rates higher.

Which adds to the increased demand.

Using tax rates works best for now instead of the government interfering with day to day operations of all businesses, it actually creates an environment where each business can operate independently to its own best interest, and as they do, the demand for labor rises even more…..

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Anyone who argues for less government input into the economy is in the wrong century and can’t read economic figures that are plain as day.  So how does one interpret the cries for less regulations that are hurting corporate profits?  Easily. One realizes that sooner or later corporate profits have no choice but to fall, so our household income can increase. Loss of corporate profits is a “good thing”.

One should mention in the same breath, that labor’s percent of wages is deteriorating all across the world.  It is a world wide phenomenon.  The answer is simply that deference of all governments over the past decade and a quarter, has been given to those in charge of investment.

Policies favoring Investment must now take a back seat to those which put people back to work, which if done, raise the incomes of all of us… Even those of  the 1% , though not as much as they have been lately been accustomed.  But everyone still benefits.

Raising taxes is where we need to go.

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The tycoon wishes to remain anonymous because he is one of the most solid Republican monetary supporters.

But when asked how he reads this chart, here is his compelling answers….

“Aside from the obvious, that we have had 39 months of continuous private sector job growth, something not seen since the Clinton Era, I suppose the biggest question remains as to “why” the glitches. Why are there parts that drop down in the recovery and seem to go backwards?

Here, let’s just go through the time-line. Let’s start at the bottom of the inverted pyramid… The general climb out of the hole was due to TARP money which jump-started construction projects and the big infusions to banks which kept the economy from falling off the cliff into the pit of no return. It culminated with a big push of Census hiring in March of 2010. Most attention was on Obamacare at that time and with everyone’s lack of attention from the president, congress, and corporate, things languished for several months. Also one must remember that the Republicans looked like they would make big gains in 2010 and turn all Obama’s directives around. That would be very bad if it were so, and no one sank any money into investment until the election determined things.

Those who figured Obama would win, (Northeast and California) invested heavily in October only to be mistaken and with the Tea Party rattling their sabers upon their win, no one invested anything at all. We all thought the economy would crash and burn again. Up until the election we fully expected the Bush Tax Cuts to be eradicated, so our goals had been to move our funds over into areas where they would not be taxed, primarily investment into our own companies. As the tax laws became extended, many of us were not in the right zone at the right time to take advantage of the two year grace period that tends to better reward those investing in liquid assets as opposed to longer term job creating ones.

By 2011, in February we realized the Tea Party was nothing but a boil, a cyst, a sham, and things would hold current at a status quo. February, March, and April we made plans to go forward and grow. Then in May, the first debt crises occurred and shocked, we all pulled back. The Tea Party did not vote on its unceremonious raise and emergency measures were begun to be implemented by the Federal Treasury. In June, we rode our previous success fully betting that no one, not even the Tea Party would be foolish enough to destroy America’s credit rating for their own political gain. By July, we knew we were horribly wrong. We pulled back on every investment option we possibly could.

The Grand Design ($4 Trillion Budget Arrangement) never did come about. If it had we would have thrown everything into getting on the ground floor of the next boom. But by August 2011 we were confident enough to begin putting some of our extra money now trickling in over to self-investment and it continued straight through January 2012.

That was when Republicans began their Primary campaign in earnest and the Democrats were silent by having no primary or no opponent to which to reply; all bets were that the Democrats were very vulnerable. In fact, it looked like it could be a clean sweep of both Houses and the Executive. This would mean all new investment was futile. The Fed would raise interest rates according to all these Republicans against soft money, costing banks billions and overall investment would slow to a crawl. This slide lasted until the juxtaposition of the two party conventions back to back, which gave us all a clear idea of who would win. I mean who would you want behind the shoulder advising the policy of the next president:  Bill Clinton or Clint Eastwood? The fruits of our investments through Sept and Oct. paid off through November and December. Although we too had quite a scare after the first debate.

Then came the Sequester. It is hard to remember now that we really thought we were going off a cliff back then. Once settled, January’s hiring was alread done but February received the spike of top money shifting from taxable investments over to job producing non-taxable investments. The stock market jumped  as world money became content that America had finally finished with its infatuation that the top 1% carry the economy as a whole and should be taxed less, jumped back in. Problems in China and Europe made sure we were the world’s safest investment at the time.

Currently it appears that our entire economy has matured in 2013… if anyone looks at the chart, you see that the spike in February almost perfectly cancels out the dips in January and March, and that the average across all 6 months is very consistent, almost the same number.

In fact, we have plateaued. This is where our economy is right now, growing steadily with population growth and nothing more. There is nothing any more that anyone can do to increase private sector hiring.

Nothing will change I figure until the House of Representatives gets enough democrats and government hiring can begin anew.”

“Oh” I said, “so now you are a Democratic supporter?” lol.

“NEVER!” he responded. “However I’ll admit that Republicans are absolutely worthless when it comes to growing economies.”

And there, you have “the rest of the story….”