Category: Economy

DARK KNIGHT MEETS REALITY

So much for funny Friday. I woke up to the news below. A crazed gunman methodically and systematically slaughtered 14 young people and wounded 50 others at the midnight opening of The Dark Knight Rises. He had multiple weapons and used tear gas to disorient his victims before murdering them. It was clear that he planned this well in advance. The authorities have not released his name or any details about his motive. I’m going to go out on a limb and guess his background. I bet he is a 20 year old white guy. We will find out he was a loner in high school. He never had a girlfriend and had few or no friends. His parents are probably divorced. He doesn’t have a job. He’s felt alienated from society and has been living in a fantasy world for years. Somebody probably assessed his mental state within the last two years and concluded he was a danger to himself and others, but the system did nothing. In retrospect, there will be a list of clear signs that he would eventually go off, but no one wanted to get involved.

I think his choice of this movie was purposeful. He didn’t choose Hangover 2. He chose a movie about alienation, pain, societal collapse and darkness. This was done as a statement about our increasingly degenerative society. People communicate on electronic devices. We hole up in our houses or apartments, cut off from human contact. There are evil villians sucking the last vestiges of wealth from the lowly serfs. The anger, pain and disillusion are palpable throughout society. People are confused. They can’t figure out the enemy. Government can’t protect you. Government is the main reason for this alienation. The kneejerk reaction of the liberal dogooders will be to ban guns, as if guns caused this slaughter. Banning guns will not stop the slow methodical decline of our society. It is much larger than guns. It is our entire culture. Materialism, greed, selfishness, profit at any cost, isolation, lack of personal responsibility, and delusional willfull ignorance have overwhelmed our country.

Fourth Turnings always reach a climax when those on the perceived side of good have a final showdown with the perceived side of evil. We are likely a few years from this showdown, but there is no guarantee that good will vanquish evil. A revolution is on the horizon. Everyone will need to choose sides. There will be no one allowed to stand on the sidelines.

My son and his friends went to the midnight premiere of The Dark Knight Rises last night. He arrived home safely. My heart goes out to the mothers and fathers in Colorado whose children will never return. 

 

WHY ARE GAS PRICES SOARING ON EAST COAST?

The price of gas at the station near my house has gone from $3.45 to $3.64 a gallon in the last 10 days. This is a 5.5% increase in less than two weeks. Gasoline usage in the U.S. has been plunging all year. The war rhetoric with Iran has been subdued. The economy is clearly in recession. WTF???

Oil prices and gas prices should be declining. But oil topped $89 per barrel this morning, back to the levels of late May, and $11 higher than 3 weeks ago. The three charts below paint an odd picture. East coast cities like Boston and Philly are experiencing a much larger surge than Chicago and LA. Of course, prices in Chicago and LA are still 6% to 8% higher than East Coast prices, likely due to taxes. I’m baffled by the relatively flat prices in Chicago and LA. Maybe someone out there has some insight.

The last chart shows the lag in prices rising for oil versus gasoline. Within the next month people on the East Coast will be paying $3.70 per gallon and the Midwest and West Coast will again push above $4.00 per gallon. This will be a further boost to food prices, as all those drought stricken crops need to be transported by truck to your local Piggly Wiggly.

With a full blown recession and surging food and energy costs, how Obama gets re-elected in November is beyond me. As he grows desperate, will he purposely generate either a war or social unrest in our cities? His only chance to retain power will be to distract the masses from their economic plight.

 

TRUST US

The Roger Waters concert Saturday night at Citizens Bank Park was almost too spectacular to put into words. Fighter planes crashing into the stage and exploding, flying pigs, enormous hideous teachers towering over little children, Waters dressed as a Nazi and firing a machine gun into the audience, and a notable anti-corporate fascist state, anti-war theme. During the intermission literally hundreds of photos of humans killed in war since 1900 were projected onto the massive Wall with their birth date, death date and short biography. The pictures and stories were sent in by fans from all over the world. It was truly touching and personalized the human result of endless war.

Waters dedicated the show to  Jean Charles de Menezes, a Brazilian man shot in the head seven times at Stockwell tube station on the London Underground by the London Metropolitan police after he was misidentified as one of the fugitives involved in the previous day’s failed bombing attempts. These events took place two weeks after the London bombings of 7 July 2005, in which 52 people were killed. On the day of the shooting, the police were hunting four men believed to be involved in the failed bombing attempts the day before. Intelligence had linked the men to a block of flats in Tulse Hill, south London, the same building in which Menezes was living. Police put the communal entrance under surveillance, and on the morning of the shooting, saw Menezes leave the building. Plain clothes officers, armed with pistols, followed him as he took a bus to Brixton tube station, before boarding another to Stockwell tube station because the tube station at Brixton was closed. Specialist firearms officers were called to Stockwell. Just after Menezes entered a train, several officers wrestled him to the ground and fired seven bullets into his head at point blank range. The train was still at the platform with its doors open, having just been evacuated by officers.

File:Menezes.jpg

NO ONE WAS EVER CHARGED OR HELD ACCOUNTABLE FOR HIS WRONGFUL DEATH.

The entire show was visually overwhelming and a powerful statement. Roger Waters is the ultimate showman. He said that he hated performing live in his youth. He seems to have grown into it. He plays the evil dictator with panash.

The band he assembled was stellar. David Gilmour is irreplaceable, but the combination of G.E. Smith, David Kilminster, and Snowy White on guitar and Robbie Wyckoff handling Gilmour’s vocals was just fine as you will see in the videos taken by my son Kevin. The stage and Wall was immense, taking up the entire outfield. The gates opened at 7:00 for the 8:45 show. We arrived at 7:15. I wanted to soak in as much as possible, plus I wanted a Tony Lukes cheesesteak before the show. We chowed down on fine Philly fare and then bought four overpriced concert shirts. I wore my BurningPlatform.com shirt to the show. I didn’t run into anyone else with a TBP shirt.

The show opens with Outside the Wall and I was immediately amused by the graphic on the wall. It said:

If at first you don’t succeed, call in an airstrike.

I knew I was going to like this show. While the show progresses the roadies are building the wall.

The local children brought on stage to perform Another Brick in the Wall with Waters and fight back against the 50 foot teacher were thanked by Waters in one of his more sedate moments.

http://youtu.be/NNBFKXM0hEw

The show is a combination of concert and movie. The visuals and symbolism are stunning.

The Wall becomes a canvas for Waters’ art and visionary view of the world.

Waters is able to get his anti-war message across through the use of music, images, film, quotes and cartoons. His use of film showing soldiers hugging their children, interspersed with the words of a general and pictures of starving children is powerful, as you can see.

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” – Dwight D. Eisenhower

 Goodbye Blue Sky is a haunting song with visuals of birds flying and being replaced with thousands of bombers dropping blood red symbols like dollar signs, the hammer & sickle, Chinese star, Shell Oil sign, Mercedes sign, crosses and the Jewish star. The message was that our corporate fascist military state kills for profit.

One of the highlights of the concert for me was Waters performing a duet with himself from 1980 on the song Mother. As you can see from the video, people are losing faith in governments across the globe. The crowd was a mixture of old farts like myself, people in their 20’s and 30’s, and teens dragged to the concert by their old man. When Waters sings the line, “Do you trust the government?”, the stadium erupted with a thunderous NOOOOO!!!! See for yourself.

The guitar work by GE Smith on Comfortably Numb and Hey You is phenomenal. Waters doesn’t have much to do except strike the Wall near the end of this piece with the predictable outcome. 

http://youtu.be/GGS63DEPAGo

The imposing fully built Wall stays in place for all of Act 2, which opens with Hey You. 

http://youtu.be/Ct37LF6wgBY

 At the end of the concert during the finale of Outside the Wall, the entire wall comes crashing down. The message I took away from the concert was that our civilization is under the control of corporate fascist warmongers. Profits at any human price is the mantra. The fact that Waters is still free to use his artistry to reaveal the truth to 40,000 people gives me hope. The fact that I can write about it and have thousands read the message gives me hope. The fact that my three Millenial sons get the message about government tyranny and corporate malfeasance gives me hope. If enough people see the light and begin to resist, we can tear down that wall.

Most of the videos and pictures were taken by my sons Kevin & Jimmy. Michael, my youngest, is now a Pink Floyd superfan.

Here is a link to the complete setlist, with accompanying videos:

http://www.setlist.fm/setlist/roger-waters/2012/citizens-bank-park-philadelphia-pa-5bdcb77c.html

 

CONSUMER DEBT REACHES NEW ALL-TIME HIGH

The Federal Reserve reported consumer credit outstanding as of the end of May. Great news. Consumers added $17.1 billion of new debt to their balance sheets and now owe a record $2.573 Trillion. Whatever happened to that deleveraging storyline being pushed by the MSM? It was a load of crap from the get go. Here is the link to the Fed report:

http://www.federalreserve.gov/releases/G19/current/

Here are my observations:

  • It seems non-revolving credit for autos and student loans jumped $9.1 billion in one month. It seems 70% of this increase was directly from the Federal government, meaning YOU made the loans to subprime students and subprime auto buyers in West Philly. Based on my observations, they are leaning towards Cadillac Escalades with your money. When the student loan bubble and subprime auto loan bubble burst you’ll be on the hook – AGAIN.
  • The really interesting data point was credit card debt surging by $8 billion to the highest level since 2010. This debt is 70% attributable to the Wall Street criminal cabal. Something doesn’t really add up. Gasoline prices were plunging in May. The consumer should have had more disposable income. But we know for a fact that retail sales sucked in May and June. So, why would credit card debt surge? Here is why:

 

      • 1.2 million people have fallen off the 99 week unemployment rolls and are now trying to survive on their credit cards.
      • The few jobs that have been added are part-time crap jobs with no benefits and people are using credit cards to try and make up the lost income.
      • The 8 million people that have “voluntarily” left the workforce may have left too soon and are enjoying their leisure time on their credit cards.

We have entered a recession, food prices are rising, real wages are dropping, and job losses are mounting. Surging credit card, student loan, and auto loan debt at the outset of recession is surely a good sign. The Wall Street banks sure look smart having reduced their loan loss reserves for the last two years. No bad debt on the horizon – right Jaime?

 

WORST GENERATION EVER???

Neil Howe with a new post. A Boomer telling a Millenial she is part of the worst generation ever and then describing why America isn’t the best anymore based upon the results and leadership of his generation. The irony and hypocrisy is palpable. Blaming 20 year olds for problems that really got rolling over 30 years ago is laughable. But, I would expect nothing less from Boomers.

 

“You are the Worst. Generation. Ever.”

I’ve run a few posts recently on older generations running down Millennials, so I thought—before moving on—that I ought to add this clip.  It’s from the new HBO series, “The Newsroom,” written by Aaron Sorkin (first-wave Xer, born 1961, creator of “West Wing”) and starring Jeff Daniels (Boomer, born 1955) as the cynical yet philosophical news anchor.  In this clip, Millennials are portrayed as callow, shallow, and out of their depth.  The starring Boomer, on the other hand, comes across as deep, passionate, heartfelt—and the flagrant insults he flings at his Millennial audience (e.g., “if you ever wandered into a voting booth”) would be rude only if he weren’t speaking truth to power, which in the Boomer mind justifies any manner of offensive behavior.

I’d be curious about what you all think:

 

 

One complaint about Sorkin as a screen writer is that he loves to create set-piece dialogue situations which sets up his favorite character to rhetorically vanquish an opponent, sometimes lending his shows a preachy tone.  That certainly happens here.  I’ve never in my life heard a Millennial ask a Boomer a question like, “Could you say why America is the greatest country in the world?”  That’s like pitching underhand to Ty Cobb.  As one might expect, it triggers this Boomer to unload a truckload of venom.  (His initial reluctance, I guess, makes his explosion seem more authentic.)  Did you feel you were on the side of the preacher?  Or did you feel preached at in this scene?

And what about the substance of his remarks?  Are they on target?  Here’s a Boomer who no doubt recollects America’s First Turning greatness in the 1950s with the rising G.I. Generation at the helm–when we were “number one” in everything because the rest of the world was staggering among the rubble of WWII.  But, as I recall, it was the explicit intention of the leaders of that era to raise the rest of the world up to our level of productivity, affluence, and education precisely because we thought this would make the world a safer and better place.  Among other things, we thought it would foster liberal and democratic values worldwide.  That’s why we funded the Marshall Plan and created the UN, IMF, World Bank, Bretton Woods, etc.  In terms of geopolitical power, we remain the global hegemon.  But in other respects, we are merely one of many.  Would this result have really disappointed the leaders of the American High?  Does it bother Millennials today?

One last point.  Jeff Daniels (as anchorman Will McAvoy) does not talk so much about what his own generation has done that embodies a “greater” America (though he does talk about how we once did things for “moral reasons”).  Rather, he talks mostly about what he recalls of greatness from the elders of his youth.  Here, he epitomizes the Prophet Archetype, which seldom moralizes by invoking its own deeds—but rather by invoking memories of the Heroes it recalls from childhood.  There’s a wonderful book by George Forgie (Patricide in the House Divided: A Psychological Interpretation of Lincoln and his Age) about how Lincoln’s Transcendental Generation–an extreme example of the Prophet Archetype–was forever talking guiltily about their parents’ nation-founding greatness.  They kept wringing their hands about it even as they led American into the Civil War.

Or, if you want to go back to the Ur-Model of all Prophet Archetypes, look at passages by the wise old Nestor in Homer’s Illiad.  He complains that all the Achaean warriors arrayed against Troy are mere “boys” compared to the right stuff he recalls from his own youth—the age of Jason and the Argonauts.  When I first read this passage from Nestor, it made me think of all those fake re-enactments—like Mike Tyson versus Joe Louis in his prime.  I’m suddenly thinking, did some ancient young Dorian wonder, after hearing the Nestor stanzas, about who would have won—Jason or Achilles–if they had been put in the same ring?

 

ECONOMIC REPORT CARD – FAIL

We are now three and one half years into Barack Obama’s presidency. I thought a few pertinent charts would help us assess the success of his economic policies. Upon his election he demanded an $800 billion stimulus package in order to keep the unemployment rate from surpassing 8%. The $800 billion was to be spent over two years we were told and then government spending would be scaled back to pre-stimulus levels. There were 145 million Americans employed when Obama was elected. There are 9 million more working age Americans today than there were in 2008. There are now 142.4 million employed Americans. So, we’ve added 9 million potential workers and still have 2.6 less Americans employed. We have the same number of Americans employed as we did in early 2006, when there were 17 million less working age Americans.

The Obama stimulus plan was passed with everything he wanted. Democrats controlled the House and Senate and gave him exactly what he proposed. By October 2009, the unemployment rate was 10%. Obama’s stimulus package and economic policies have been so successful that he has been able to get the unemployment rate all the way down to 8.2% after three and one half years, even though he said his stimulus package would keep the unemployment rate under 8%. And all it took to get the unemployment rate down to 8.2% was for 8 MILLION Americans to leave the labor force. A critical thinking person who doesn’t swallow the crap peddled by the BLS and the rest of the government propaganda machine might question WHY 8 million Americans would leave the workforce when people desperately need income. If the labor participation rate had stayed constant, the current unemployment rate is 10.9%.

070612rbjune

The long-term chart below tells the true story. The BLS classifying millions as not in the labor force is a crock. The Obama apologists and sycophants peddle a false storyline about Baby Boomers retiring as the cause for this labor force decline. The fact is people over the age of 55 have the highest participation rate in history and it continues to rise. Of the 142.4 million employed Americans, only 114 million works more than 35 hours per week, with 28.4 million working part-time. That means that 20% of those employed are part time workers with no benefits. In 2008, prior to the ascendency of Obama, there were 125 million full-time workers and 20 million part-time workers. Obama has been able to increase the percentage of part-time workers from 14% to 20% in just over 3 years. Remember this fact when Obama touts the 3 million new jobs he’s created since 2010.

If you were wondering what the 8.5 million Americans who have left the labor force since 2008 were doing, look no further than the millions of bedrooms now functioning as classrooms for the University of Phoenix and the other on-line, for profit diploma mills that have proliferated with the doling out of hundreds of billions in cheap government student loans. These for profit diploma mills know how to game the system and get their money even if the students drop out after a few months. They educate 12% of students, receive 25% of federal student aid and account for nearly 50% of loan defaults. Sounds like a great business model.

Low interest Federal government loans have skyrocketed from $100 billion when Obama took office to $450 billion today. Total student loan debt has surpassed $1 trillion, with the average student graduating with $25,000 of debt and many more burdened with $100,000 or more of debt. Those part-time jobs making lattes at Starbucks aren’t cutting it. Default rates are already at a ten year high and are poised to skyrocket as more people graduate into a jobless job market. Not only is the American taxpayer on the hook for the $450 billion of direct Federal student loans, but the Federal government is guaranteeing another $450 billion. When the student loan bubble pops, the taxpayer financed bailout will be epic. And this is all being engineered by the Obama administration in order to artificially reduce the unemployment rate. Does this graph remind you of another bubble that resulted in a few problems for the American taxpayer?

After three and a half years, Obama’s policies have led to 11 million less full-time workers and 8 million more part-time workers – just like he drew it up on the board when he committed $800 billion of your tax dollars to saving our economy through classic Keynesianism. Obama declared the stimulus would be a two year jolt to get our economy back on track. Federal government spending was $2.7 trillion in 2006, $2.7 trillion in 2007 and $3.0 trillion in 2008, the last three years of Bush’s administration. If spending stayed on a standard trajectory, it would have been $3.1 trillion in 2009, $3.2 trillion in 2010, $3.3 trillion in 2011 and $3.4 trillion in 2012. With the end of the Iraq occupation in 2010, it should have dropped by $200 billion, resulting in total spending of $3.1 trillion in 2011 and $3.2 trillion in 2012.

Obama declared the stimulus would be short-term. Federal government spending should have risen to $3.5 trillion in 2009, $3.6 trillion in 2010 ($300 billion stimulus – $200 billion Iraq withdrawal), and then revert back to $3.3 trillion in 2011 and $3.4 trillion in 2012. Let’s see whether Obama was honest in his promises:

Federal Government Spending

2009 – $3.5 trillion

2010 – $3.5 trillion

2011 – $3.6 trillion

2012 – $3.8 trillion

After three and one half years of stimulus spending, Cash for Clunkers, Home Buyer Tax Credits, mortgage modification programs, Fannie, Freddie & FHA accumulating billions in bank losses, zero interest rates, QE1, QE2, Operation Twist, unlimited student loans, wars of choice in the Middle East, mark to fantasy accounting standards for Wall Street, and hundreds of billions in bonuses for criminal bankers, we are left with a $5.3 trillion (50% increase) higher national debt and a $300 billion (2.3% increase) higher real GDP. That’s not exactly a big bang for your Keynesian buck. The response you will get from the Obama apologists is, “Imagine how bad it would have been if we didn’t spend the money”. This is a classic liberal response when their solutions are a total failure. Krugman will declare that if we had only spent another $2 trillion all would be well.

As you can see, Obama and all the politicians in Washington DC are really good at spending your money on pork projects, paying off campaign contributors and compensating their corporate cronies. Do you see any reversion back to normalized spending? How can current spending be $300 billion higher than the two stimulus years if Obama was telling the truth in 2009? The Obamanistas declare we are still in an emergency and must borrow and spend to save the economy. The emergency never ends for politicians of both parties. This is how they have bastardized John Maynard Keynes’ theory. They love to implement spending when the economy is in the dumper, but they forget his admonition to pay down debt during the good times. It never happens. There will always be another emergency. Even 2nd grade level Sesame Street fans can see the Federal government spending and debt accumulation never reverses. It couldn’t be any more obvious, unless you are an intellectually dishonest Keynesian ideologue hack (aka Krugman).

This brings us to the crowning economic achievement of the Obama administration. His most successful program is unequivocally the SNAP food stamp program. When Obama assumed power in January 2009 there were 32 million Americans on food stamps and the annual cost of the program was $44 billion. Today there are 46 million Americans on food stamps and the annual cost is pacing at $75 billion. He has been able to get fully 15% of the U.S. population enrolled in this fantastic program and the Department of Agriculture is even running advertisements to convince more people to join.

And don’t worry about any restrictions. You can buy as much soda, ice cream, cheetos, and fudge brownies with your SNAP card as you choose. Of course, you are still free to purchase higher end fare.

A cynical less trusting soul than me might even conclude that Obama’s goal is to provide government entitlements to as many people as possible in order to win votes in the upcoming election. One might ask how he can tout an economic recovery and the millions of “new” jobs he has created since 2010, when 6 million people have been added to the food stamp rolls since his economic recovery officially began in 2010. I’m confused by the Obama distinction between success and utter failure.

Not far behind the food stamp program, the SSDI program has been another resounding Obama success. He has been able to enroll twice as many participants in this program as jobs created since the end of the recession. There are already 10 million people on SSDI costing the American taxpayer in excess of $150 billion per year. There are 250,000 people per month applying for benefits and the program will be broke by 2015. In a shocking development, when people began to roll off the 99 week unemployment gravy train, the number of new SSDI applications soared. I guess they were depressed at not being able to collect unemployment for two more years.

Bob Adelman recently summed up the SSDI scam:

“The program, funded federally but administered by the states, is being milked by many who have run out of unemployment benefits and other resources and haven’t been able to find work. At present one out of every eight working-age, non-retired individuals receive disability payments, some for “mental disorders” and “back pain.” Claims for mental disorders, for instance, have more than tripled from 10 percent of cases in 1982 to 32.8 percent in 2012, with half of those based on “mood disorders” such as depression or anxiety. Back or neck “problems” have increased by 31 percent and were the top cause of disability for 50- to 64-year olds. Depression and anxiety and other emotional problems increased by 20 percent, and now constitute one-third of all disability claims. Once on the rolls, beneficiaries have little incentive to return to work because their disability entitles them to additional benefits such as food stamps, Medicaid, Section 8 housing, and student-loan forgiveness. As a result less than one half of one percent of those on disability ever go back to work.”

I’m depressed by the results of Obama’s economic policies. Maybe I should apply for SSDI.

It appears that former college professor Obama never paid attention in his macroeconomics undergraduate course. The “guns versus butter model” doesn’t enter the equation for a profound thinker like Barack. Why do hard choices need to be made when Ben Bernanke is manning the printing press? In the real world, a nation has to choose between two options when spending its finite resources. It can buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both. This can be seen as an analogy for choices between defense and civilian spending in more complex economies. Politicians and bankers have been ignoring this rational model since 1971 when Nixon closed the gold window. Why make difficult choices when you can borrow and print your way to prosperity? As a country we’ve chosen guns, butter, BMWs, McMansions, free unfunded healthcare, unfunded pensions, unfunded sickcare, and DHS implemented security for all. In order to prove himself tougher than George W., Obama, the socialist, has actually increased war spending by 23% to an all-time high. Fiat currency is an amazing invention. Guns, butter and healthcare for all.

Mainstream media liberals like Ezra Klein dutifully trot out charts and storylines trying to convince the ignorant masses that Obama is not to blame for the soaring national debt. They declare it was the Bush tax cuts and his wars. This blame Bush storyline is growing old as Obama has already extended the Bush tax cuts once, ramped up wars in the Middle East and cut payroll taxes for the last two years. The Office of Management and Budget has calculated the total increase in the national debt will be $7.8 trillion after eight years of Obama, 269% more than was accumulated during the Bush reign of error. I believe the $7.8 trillion is ridiculously optimistic. The national debt has increased by $5.3 trillion since Obama took office. It will go up another $200 billion by the end of this fiscal year. It will surely exceed $1 trillion per year during a 2nd Obama term as he would extend most of the Bush tax cuts, extend the payroll tax cuts, continue to increase war spending, and the hidden delayed Obamacare costs would arrive. His eight year report card will show a $9.5 trillion increase in the national debt, reaching the magic grand total of $20 trillion. The national debt to GDP ratio will be close to 120%.

This scathing assessment of Obama’s economic policies is by no means an endorsement of Mitt Romney or his economic plan, since he has never provided a detailed economic plan. After four years of a Romney presidency, the national debt will also be $20 trillion as his war with Iran and handouts to his Wall Street brethren replace Obama’s food stamps and entitlement pork. There was only one presidential candidate whose proposals would have placed this country back on a sustainable path. The plutocracy controlled corporate mainstream media did their part in ignoring and then scorning Ron Paul during his truth telling campaign. The plutocracy wants to retain their wealth and power, while the willfully ignorant masses don’t want to think. The words of Ron Paul sum up what will occur over the coming years as the interchangeable pieces of this corporate fascist farce drive the country to ruin:

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.” 

“A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.”

“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”

 

The politicians, bankers and corporate titans running this country are too corrupt and cowardly to reverse the course on our path to destruction. The debt will continue to accumulate until our Minsky Moment. At that point the U.S. dollar will be rejected and chaos will reign. The Great American Empire will be no more. At that time sides will need to be chosen and blood will begin to spill. Decades of bad decisions, corruption, cowardice, ignorance, greed and sloth will come to a head. The verdict of history will not be kind to the once great American Empire.

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DID WAL-MART DESTROY AMERICA?

This is an interesting question. The author of this article blames Sam Walton for destroying the middle class in the U.S. I think her ire is misdirected. My knowledge of Wal-Mart began in the early 1990s when I was responsible for financial and economic reporting at IKEA. The management of IKEA in Europe was fascinated by Wal-Mart and their success in the U.S. At this time they were still relatively small compared to today. Their sales were still below $20 billion. Today their sales are above $450 billion. I was asked to write a report on Wal-Mart for the Swedes back at headquarters. It was well received. This was my first dabbling in writing about companies and economics. 

Wal-Mart changed when Sam Walton stepped down as CEO and subsequently died in 1992. The main advertising campaign of Wal-Mart in the early 1990s was Buy American. All of their goods were sourced in America. They touted this fact to the point of obnoxiousness. I know that for a fact. The CEO of IKEA North America in 1993 was a pompous prick named Goran Carstedt. He came from Volvo and thought highly of himself. The rest of us, not so much. He wanted to strike up a relationship with David Glass, the CEO of Wal-Mart. He sent a letter to Glass, along with two Swedish candle stick holders as a goodwill gesture. To my delight, the candlestick holders were sent back to Carstedt with a letter saying Glass didn’t care for cheap foreign made crap. We laughed our asses off behind Carstedt’s back.

But the irony is delicious. Once Wal-Mart came under the control of MBA types, foreign sourcing of products in order to maximize corporate profits became the mantra. Many of the ills detailed by the author are true. I do believe that the net impact of its thousands of U.S. stores has been negative for America. What if Sam Walton and future CEOs had decided to continue to source all their goods in America, foregoing maximum profits? That is an interesting question. I’d like to hear what the shit throwing monkeys think. 

50 Years of Gutting America’s Middle Class

Walmart’s explosive growth has gutted two key pillars of the American middle class: small businesses and well-paid manufacturing jobs.

By Stacy Mitchell

Stacy Mitchell

Sam Walton opened the first Walmart store in Rogers, Arkansas, 50 years ago this month. Sprawled along a major thoroughfare outside the city’s downtown, that inaugural store embodied many of the hallmarks that have since come to define the Walmart way of doing business. Walton scoured the country for the cheapest merchandise and deftly exploited a loophole in federal law to pay his mostly female workforce less than minimum wage.

That relentless focus on squeezing workers and suppliers for every advantage has paid off since July 1962. Walmart is now the second-largest corporation on the planet. It took in almost half-a-trillion dollars last year at more than 10,000 stores worldwide.

Walmart now captures one of every four dollars Americans spend on groceries. Its stores are so plentiful that it’s easy to imagine that the retailer has long since reached the upper limit of its growth potential. It hasn’t. Walmart has opened over 1,100 new supercenters since 2005 and expanded its U.S. sales by 35 percent. It aims to keep on growing that fast. With an eye to infiltrating urban areas, Walmart recently introduced smaller “neighborhood markets” and “express” stores.

While the big-box business model Sam Walton pioneered half a century ago has been great for Walmart, it hasn’t been so great for the U.S. economy.

Walmart’s explosive growth has gutted two key pillars of the American middle class: small businesses and well-paying manufacturing jobs.

Between 2001 and 2007, some 40,000 U.S. factories closed, eliminating millions of jobs. While Walmart’s ceaseless search for lower costs wasn’t the only factor that drove production overseas, it was a major one. During these six years, Walmart’s imports from China tripled in value from $9 billion to $27 billion.

Small, family-owned retail businesses likewise closed in droves as Walmart grew. Between 1992 and 2007, the number of independent retailers fell by over 60,000, according to the U.S. Census.

Their demise triggered a cascade of losses elsewhere. As communities lost their local retailers, there was less demand for services like accounting and graphic design, less advertising revenue for local media outlets, and fewer accounts for local banks. As Walmart moved into communities, the volume of money circulating from business to business declined. More dollars flowed into Walmart’s tills and out of the local economy.

In exchange for the many middle-income jobs Walmart eliminated, all we got in return were low-wage jobs for the workers who now toil in its stores. To get by, many Walmart employees have no choice but to rely on food stamps and other public assistance.

Walmart’s history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Walmart, we’ve more than paid for it in diminished opportunities and declining income.

And the worse things get, the more alluring Walmart’s siren call of low prices becomes. While the Ford Motor Co. once profited by creating a workforce that could afford to buy its cars, today Walmart profits by ensuring that Americans cannot afford to shop anywhere else. The average family of four now spends over $4,000 a year at Walmart.

Such market concentration is unprecedented in U.S. history, as is the concentration of wealth it has engendered. Sam Walton’s heirs own about half of Walmart’s stock and have a net worth equal to the combined assets of the bottom one-third of Americans — about 100 million people. This year alone, the Waltons will pocket $2.7 billion in dividends from their Walmart holdings.

They are among the few Americans who have reason to celebrate Walmart’s 50th birthday. As for the rest of us, the milestone offers a good moment to reflect on the company’s business model and where it might lead us if we allow Walmart’s growth to continue full-steam for another 50 years.

Stacy Mitchell is a senior researcher at the Institute for Local Self-Reliance and the author of Big-Box Swindle. She lives in Portland, Maine.

THE AUTO RECOVERY IS A TAXPAYER FINANCED SCAM

The two stories below tell me all I need to know about the great auto recovery. I bet you didn’t know that GM and the rest of the automakers record their sales when the vehicles are shipped to their dealers. Zero Hedge has been all over the channel stuffing being done by Government Motors for the last two years as they now have 60% more vehicles sitting on dealer lots than two years ago, even though sales are up less than 20%. And now we see that Obama is doing his union bretheren a favor and buying GM cars like they’re going out of style. You the American taxpayer are subsidizing GM, just as you took the $50 billion hit when Obama screwed bondholders using your money.

Lastly, we know for a fact that Ally Financial (aka GMAC) is still 85% owned by you. It is dishing out subprime auto loans like SNAP cards in West Philly. Moody’s is already warning about the coming disastrous losses that will be experienced by YOU the taxpayer when all these crap loans go bad. But that doesn’t matter to Obama. There is an election to be won. The losses to the American taxpayer will come in 2013 and 2014. Don’t expect the MSM to fill you in on the government scam. They are part of the scam, as their ad revenue is dependent on car ads. What a great country.

 

GM Finds Creative New Ways To “Stuff Channels”, Get Backdoor Taxpayer Bailouts

 
Tyler Durden's picture

Submitted by Tyler Durdenon 07/06/2012 12:53 -0400

Zero Hedge readers know that we have long followed channel stuffing trends at GM, whose month-end dealer inventory hit a record (for the post-reorg company which is completely different from the pre-bankruptcy entity) of 713K cars stuck in various dealer “channels” at the end of March 2012, and since then has been stagnant at just about 700K, with the most recent June number coming at 701K, an increase of 6K over May. It would be great to assume that the company has given up on cheap ways to cheat investors and the taxpaying public into believing it is doing better. It would also be wrong. As it turns out, GM has merely turned to more backdoor methods of stuffing channels, and getting money from its biggest shareholders, which still happens to be Joe Sixpack (and “superpriority” labor unions of course) by way of the US Treasury, with 32% of the common stock.

The NLPC explains:

 
 

It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

As a reminder, this is how GM’s general channel stuffing looked like for all its vehicles:

However there is a rather important data subset here:

 
 

According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

This is how pickup truck channel stuffing looked in the period that the company has released the data, or since December 2011. Not pretty.

And while we all know by now that the tried and true mechanism to channel stuff is a staple when it comes to fooling the buyside as to its business efficacy, the fact that its biggest shareholder has become a key marginal client of GM should make one’s head spin at the Ponziness of the transaction:

 
 

The government’s increased spending on GM vehicle purchases presents yet another conflict of interest as Treasury refuses to sell taxpayers’ stake in GM and Obama campaigns on the auto bailouts. It does not appear that any members of Congress (from either party) are questioning the increased spending. Also ignored was the Department of Energy’s gifting of $2.7 million of taxpayer money to GM to reduce energy consumption in its door manufacturing process by 50%. The DOE seems to be one of the main conduits to funnel taxpayer funds to cronies of the Administration. The $2.7 million contribution to GM comes after additional millions of dollars were spent by the DOE on advisory fees paid to legal firms that helped smooth the way for the GM bankruptcy process (as reported here); another move that went unquestioned.

And there is more:

 
 

GM claimed that sales increases did not rely on incentive spending, which appeared to remain in check, but one analyst during GM’s sales conference call questioned whether the company’s “stair step” incentive spending was accurately depicted. This incentive spending kicks in after dealerships report final sales figures for the month and may be yet another deceptive way for GM to fudge its numbers. Not mentioned was GM card rewards programs that do not get counted as incentive spending.

Why is GM forced to succumb to such increasingly more deceptive practices? Why simple presidential election politics of course: when a failed company like GM is destined to symbolize the “success” of one’s administration, there aren’t many straws one can latch on to.

 
 

The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. 

 

The article goes on to quote Kelley Blue Book’s Alec Gutierrez who stated “They’re (GM) likely going to have a relatively high days supply of trucks moving forward and they’re already placing some pretty aggressive cash incentives on the hood. It’s going to eat into their profit margins…”

 

GM’s earnings announcement comes on August 2nd. The main headwinds will be weak European operations and growing pension liabilities. The headline number for earnings should be viewed skeptically and an eye kept on the share price reaction after the conference call. Expect Government Motors to put a positive spin on its financial health as the stakes are now at their highest. The long-term health of GM remains in question and the true financial picture may not surface until well after voters decide who will be running our country. Eventually we will see just how successful GM really is.

At the end of the day, all of this is noise. If China retaliates in kind to the recen escalation by Obama vis-a-vis alleged Chinese deceptive trade practices, the GM will soon be able to kiss half of its top line, and who knows how much of its margin and bottom line goodbye. Because when half of your sales go to the one country which America’s non-existent (and unionized) manufacturing base loves to hate, the last thing you want is to bite the hand the pays the bills. Yet this is precisely what is going on as the politics of this country become so misguided that in the pursuit of a few extra votes, the administration is willing to sacrifice what little clout and momentum the recently bankrupted automaker may have generated.

In the meantime, looks for channel stuffing and direct government purchases to soar to unseen levels in the weeks and months heading into the presidential election as GM (and its 40% stock price drop since the IPO) will certainly be a key debate point between the Democrats and the GOP.

 

Moody’s: Hot US subprime auto lending market has parallels to the 1990s

 
Global Credit Research – 28 Jun 2012

 New York, June 28, 2012 — The subprime auto lending market in the US is developing a resemblance to its condition in the early- and mid-1990s, when overheated competition among lenders led to poor underwriting that drove up losses, says Moody’s Investors Service in a new report. As in that earlier period, capital is pouring into the sector and the issuance of subprime auto asset-backed securities (ABS) is booming.

“It is too early to predict whether today’s subprime lending market will deteriorate as it did in the 1990s, but the early similarities between then and now suggest that losses will climb if competition intensifies,” says Moody’s Vice President Peter McNally, author of the report “US Subprime Auto Lending Market Harkens Back to 1990s.”

Over the last two years, because of the sector’s profitability, a large amount of private equity investment has gone into the subprime auto lenders, many of which are relatively small, specialty finance companies, says Moody’s.

Moody’s says the interest of investors from outside the subprime auto market niche and the potential for increased competition carry the risk that losses could increase if a race for profits and market share lowers underwriting standards. The growth in the market can lead to capacity issues, says Moody’s McNally. “When losses rise quickly, inexperienced lenders have trouble servicing a loan portfolio that requires more attention.”

In the 1990s, the number of small lenders boomed, leading to intense competition for loans that in turn led to weak underwriting and high losses on securitized loans. Net losses in subprime auto ABS, according to Moody’s, jumped from under 3% in early 1995 to over 10% in December 1997.

For the past several years subprime auto loan performance has been strong, with the net loss rate currently below 4%. However, the credit quality of pools securitized in 2011 and 2012 indicate that credit has loosened since 2010, says Moody’s.

Issuance of subprime auto ABS is on pace this year to exceed the robust issuance of 2011, which comprised 24 deals, totaling $14.3 billion.

Moody’s notes several differences between today’ s market and the overheated market of the 1990s.

One credit positive for today’s market is that most lenders no longer practice gain on sale accounting, whereby lenders capitalized securitization gains and credited them to equity, which made their balance sheets look stronger than they were.

Another is that the market is not yet overcrowded with new lenders. Moody’s counts 13 active securitizers at the moment, compared with 34 issuers in 1997.

An important credit negative is that transactions are no longer backed by monoline guarantors. These bond insurers absorbed losses on transactions that would have otherwise defaulted in the 1990s and took over transaction servicing from failing lenders.

A SIMPLE DOCUMENT

The simple document below contains 1,333 words that changed the world. It is a succinct document that does not try to obscure, confuse or mislead anyone. In comparison, the Obamacare Bill (never read by any member of Congress) and subsequent regulations, that are now being implemented to improve your lives, is 2,800 pages long and contains 2,163,744 words. Obamacare is 1,623 times longer than the Declaration of Independence. The U.S. Constitution only contained 4,400 words. The King James version of the Holy Bible contains 830,314 words. What does this tell you? That Obama is wiser than God?

It harkens to a quote from Tacitus about the Roman Empire:

“The more corrupt the state, the more numerous the laws.”

This isn’t the only example of a government out of control and failing to act in the best interests of its citizens. The Glass Steagall Act was 37 pages long and effectively kept bankers from destroying the world for 60 years. Within 15 years of its repeal, the bankers had pillaged and raped the citizens of the world and destroyed our economic system. The toothless Dodd-Frank Bill, written by Wall Street, contains 2,319 pages. Has it stopped Corzine and Jaime Dimon from raping farmers and losing billions gambling with other people’s money? No.

Tacitus was right. Our entire STATE is corrupt. And when you read the first few paragraphs of Thomas Jefferson’s succinct and clearly written document, you realize what will be necessary. Our current government has become destructive to the majority of the people in this country.

“Whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established, should not be changed for light and transient Causes; and accordingly all Experience hath shewn, that Mankind are more disposed to suffer, while Evils are sufferable, than to right themselves by abolishing the Forms to which they are accustomed. But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security.”

Anyone with their eyes open and capable of critical thought can see that we are descending into absolute despotism, with a small group of oligarchs controlling our lives and dictating what we can and cannot do. It will be impossible to change the system from inside. These oligarchs are too powerful and have written the laws and regulations in a way to insure their continued control and wealth. It is the duty of every citizen of good conscience to resist this tyranny and throw this government into the ashcan of history. A new American Revolution is necessary. A new Declaration of Independence will be written. This Fourth Turning will sweep away the existing entrenched social order. The next fifteen years will again change the course of world history. The linear thinkers don’t see it coming. They will be crushed by the onslaught of real change. Our destiny awaits.

 

DECLARATION OF INDEPENDENCE 

In CONGRESS, July 4, 1776

The unanimous Declaration of the Thirteen United States of AMERICA.

WHEN, in the Course of human Events, it becomes necessary for one People to dissolve the Political Bands which have connected them with another; and to assume, among the Powers Of The Earth, the separate and equal Station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the Opinions of Mankind requires that they should declare the Causes which impel them to the Separation.

We hold these Truths to be self-evident, that all Men are created equal, that they are endowed by their CREATOR with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness. — That to secure these Rights, Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such Principles, and organizing its Powers in such Form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established, should not be changed for light and transient Causes; and accordingly all Experience hath shewn, that Mankind are more disposed to suffer, while Evils are sufferable, than to right themselves by abolishing the Forms to which they are accustomed. But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security. Such has been the patient Sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The History of the present King of Great-Britain is a History of repeated Injuries and Usurpations, all having in direct Object the Establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

HE has refused his Assent to Laws, the most wholesome and necessary for the public Good.

HE has forbidden his Governors to pass Laws of immediate and pressing Importance, unless suspended in their Operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

HE has refused to pass other Laws for the Accommodation of large Districts of People, unless those People would relinquish the Right of Representation in the Legislature, a Right inestimable to them and formidable to Tyranny only.

HE has called together Legislative Bodies at Places unusual, uncomfortable, and distant from the Depository of their public Records, for the sole Purpose of fatiguing them into Compliance with his Measures.

HE has dissolved Representative Houses repeatedly, for opposing with manly Firmness his Invasions on the Rights of the people.

HE has refused for a long Time, after such Dissolutions, to cause others to be elected, whereby the Legislative Powers, Incapable of Annihilation, have returned to the People at large for their exercise; the State remaining, in the mean Time, exposed to all the Dangers of Invasion from without, and Convulsions within.

HE has endeavoured to prevent the Population of these States; for that Purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their Migrations hither, and raising the Conditions of new Appropriations of Lands.

HE has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary Powers.

HE has made Judges dependent on his Will alone, for the Tenure of their Offices, and the Amount and Payment of their Salaries.

HE has erected a Multitude of new Offices, and sent hither Swarms of Officers to harass our People, and eat out their Substance.

HE has kept among us, in times of Peace, Standing Armies, without the Consent of our Legislatures.

HE has affected to render the Military independent of and superior to the Civil Power.

HE has combined with others to subject us to a Jurisdiction foreign to our Constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

FOR quartering large Bodies of Armed Troops among us:

FOR protecting them, by a mock Trial, from Punishment for any Murders which they should commit on the Inhabitants of these States:

FOR cutting off our Trade with all Parts of the World:

FOR imposing Taxes on us without our Consent:

FOR depriving us in many Cases, of the Benefits of Trial by Jury:

FOR transporting us beyond Seas to be tried for pretended Offences:

FOR abolishing the free System of English Laws in a neighbouring Province, establishing therein an arbitrary Government, and enlarging its Boundaries, so as to render it at once an Example and fit Instrument for introducing the same absolute Rule into these Colonies:

FOR taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

FOR suspending our own Legislatures, and declaring themselves invested with Power to legislate for us in all Cases whatsoever.

HE has abdicated Government here, by declaring us out of his Protection, and waging War against us.

HE has plundered our Seas, ravaged our Coasts, burnt our Towns, and destroyed the Lives of our People.

HE is, at this Time, transporting large Armies of foreign Mercenaries to complete the Works of Death, Desolation, and Tyranny, already begun with Circumstances of Cruelty and Perfidy, scarcely paralleled in the most barbarous Ages, and totally unworthy the Head of a civilized Nation.

HE has constrained our fellow Citizens, taken Captive on the high Seas, to bear Arms against their Country, to become the Executioners of their Friends and Brethren, or to fall themselves by their Hands.

HE has excited domestic Insurrections amongst us, and has endeavoured to bring on the Inhabitants of our Frontiers, the merciless Indian Savages, whose known Rule of Warfare, is an undistinguished Destruction of all Ages, Sexes and Conditions.

IN every Stage of these Oppressions we have Petitioned for Redress in the most humble Terms: Our repeated Petitions have been answered only by repeated Injury. A Prince, whose Character is thus marked by every Act which may define a Tyrant, is unfit to be the Ruler of a free People.

NOR have we been wanting in Attentions to our British Brethren. We have warned them, from Time to Time, of Attempts by their Legislature to extend an unwarrantable Jurisdiction over us. We have reminded them of the Circumstances of our Emigration and Settlement here. We have appealed to their native Justice and Magnanimity, and we have conjured them by the Ties of our common Kindred to disavow these Usurpations, which would inevitably interrupt our Connexions and Correspondence. They too have been deaf to the Voice of Justice and of Consanguinity. We must, therefore, acquiesce in the Necessity, which denounces our Separation, and hold them, as we hold the Rest of Mankind, Enemies in War, in Peace Friends.

WE, therefore, the Representatives of the UNITED STATES OF AMERICA, in GENERAL CONGRESS, Assembled, appealing to the Supreme Judge of the World for the Rectitude of our Intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly Publish and Declare, That these United Colonies are, and of Right ought to be,FREE AND INDEPENDENT STATES; that they are absolved from all Allegiance to the British Crown, and that all political Connexion between them and the State of Great-Britain, is, and ought to be, totally dissolved; and that as FREE AND INDEPENDENT STATES, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which INDEPENDENT STATES may of Right do. And for the Support of this Declaration, with a firm Reliance on the Protection of DIVINE PROVIDENCE, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honour.

OBAMA USING YOUR TAX DOLLARS TO PROMOTE GREATER FOOD STAMP USAGE

 Obama is so proud of his most successful government program that he is using $3 million of your tax dollars to enroll even more people in SNAP. He isn’t satisfied spending $72 billion of your tax dollars so obese cretins in West Philly can gorge themselves on potato chips, soda, candy, and fudge brownies. I observe the people on food stamps every damn day as I drive through West Philly. There ain’t no starving people. The average weight of these SNAP recipients is about 250 pounds.

I thought we were in the 3rd year of economic recovery. I thought all these stimulus measures were designed to get us through the Crisis and then would be scaled back. That is what Obama and Krugman told me in 2009. When does their Crisis end? It never ends. This is the liberal agenda. It is a parasitic organism that grows and grows, like the tape worm in the stomachs of the obese SNAP participants.

This advertising program couldn’t be related to the upcoming election. Could it?

 

Obama Wants You on Food Stamps

Melissa Melton
June 30, 2012

If the Supreme Court upholding Obamacare left Americans with any doubts we are officially living in a debt-fueled social welfare state, the Obama Administration recently spent three million dollars to convince us we will all live healthier lives if we sign up for food stamps.

The U.S. Department of Agriculture has been running a Supplemental Nutrition Assistance Program (SNAP) propaganda campaign for several months now. Primarily aimed at Hispanics, the elderly, and the working poor and unemployed, ads include radio segments claiming that food stamps help beneficiaries “eat right”:

Woman #1: “I wonder how she stays so fit, what’s her secret?”
Woman #2: “Well she told me that food stamp benefits help her eat right, and she stays active too.”

(The full commercials may be heard here.)

Food stamp guidelines only require that items purchased with stamps are designated as “food for home consumption”. It should be noted the USDA does not station enforcement officers at grocery stores to ensure food stamp recipients’ shopping carts are filled with vegetables instead of potato chips.

Reality apparently aside, food stamp use has skyrocketed 100 percent in President Obama’s America, no doubt due in part to his stimulus act which made it easier for adults without jobs or children to receive food stamp aid. Obama also increased the total allotted benefit amount by 15 percent. Meanwhile, American poverty figures are absolutely staggering. A full third of the country’s population are considered working poor. One out of every seven Americans is on food stamps now, the highest number since the program’s inception. In fact, the USDA doled out $75 billion dollars in food stamps throughout fiscal year 2011, more than double the $34.6 billion spent in 2008.

The county is ripe with economic strife. Our national deficit is nearly $16 trillion dollars. While $3 million must seem like a drop in the bucket, federally funded food stamp advertisements raise an obvious and troubling question. At a time when more people than ever before are relying on the government to buy their food, why in the world would the USDA spend millions in an attempt to boost enrollment in an already overburdened program?

According to Agriculture Secretary Tom Vilsack, food stamps actually stimulate the economy and create jobs:

Nancy Pelosi shared Vilsack’s sentiment at a press conference back in 2010 when she claimed, “It is the biggest bang for the buck when you do food stamps and unemployment insurance.”

Following this logic, if more people are on food stamps than ever, then more people should be employed than ever, right? That must be why we have the highest long-term unemployment rates since the Great Depression.

The USDA’s radio ads are part of a newly released community outreach toolkit which its website explains is meant to “improve existing SNAP outreach to those who are eligible but not participating in the program.” This kit also includes a series of flyers that suggest “fresh ideas” to garner local offices more aid recipients, such as throwing food stamp “parties,” complete with entertainment and food stamp info-themed BINGO games.

Sounds super fun, right? Perhaps one of the game card squares should read “Road to American Serfdom.”

B-I-N-G-O!

FOOD STAMPS & OBAMACARE FIT TOGETHER LIKE A BIG GULP & OBESITY

Big agri-business, big banks and big bloated government are all colluding to keep the food stamp program growing to greater and greater heights – and weights. If the American taxpayer is going to pay $72 billion per year for the poor to get food stamps, is it reasonable to require they are used for food like milk, bread, cheese, meat, vegetables, fruit, etc? Should the American taxpayer be subsidizing the purchase of grape soda, cheetos, Ben & Jerry’s Cherry Garcia ice cream, and Snickers bars? Isn’t the purpose of food stamps to keep poor people from starving?

Isn’t it great that processed food companies like Kraft can team up with anti-hunger groups to “lobby” (buy off) Congress to keep the dollars flowing for crap food sold to the poor at Wal-Mart and other low end stores. Meanwhile, JP Morgan sucks off hundreds of millions in fees, while the rest of Wall Street takes their piece of the action at the point of sale transaction.

The side benefit of subsidizing the purchase of soda and processed crap food is more ignorant fat asses getting sick and needing decades of government paid for care in the Obama government healthcare system. Paul Krugman is having an orgasm as the $72 billion has all these add on benefits to our economic system. It’s a win win for everyone. I think we need to make food stamps eligible for liquor purchases and drugs.

Marion Nestle on The (Big) Business of Food Stamps: “Here’s Where the Profits Come in”

In 2011, a record 46 million people – or 1 in 7 Americans — participated in the Supplemental Nutrition Assistance Program (SNAP), better known as Food Stamps.

The increased use of Food Stamps is a huge social and political issue for America, and it’s also big business. In 2011, the U.S. government spent $72 billion on Food Stamps.

Among the beneficiaries, food producers such as Cargill, PepsiCo. (PEP), Coca-Cola (KO) and Kraft (KFT), as well as retailers like Wal-Mart. Of course, Wall Street gets a cut too, led by JPMorgan Chase (JPM), which administers the SNAP benefits in 24 states.

In the accompanying video, I discuss the (big) business of Food Stamps with Marion Nestle, professor of Nutrition, Food Studies, and Public Health at New York University and author of several books, most recently Why Calories Count.

Generally speaking, Nestle is a supporter of the program, calling it “the only safety net we have left for the poor.”

However, with obesity rates rising among the poor — and obesity a huge factor in rising health-care costs — Nestle and other health experts wonder whether there should be restrictions on what kind of foods can be purchased with Food Stamps.

Currently, there are few restrictions on what can be purchased with Food Stamps, other than alcohol and prepared foods.

Here’s Where the Profits Come In

“Here’s where the profits come in,” Nestle says. “A vast percentage of Food Stamps’ money goes into the pockets of soda companies and snack food companies…and also the stores that sell these foods.”

Wal-Mart “gets a large fraction of Food Stamp dollars,” which contributes 25% to 40% of revenue at select stores, according to Nestle. “These companies, therefore, have a vested interest in making sure Food Stamps are allowed for any purchase at all.”

Funding for Food Stamps comes from the Farm Bill, which is currently being debated in Congress. “You can bet the food companies like it just the way it is and they are lobbying” to prevent restrictions on how Food Stamp dollars are spent, Nestle says.

Citing a recent report by public health lawyer Michele Simon at EatDrinkPolitics.com, Nestle recently made the following observations on her blog about “some of the politics behind efforts to maintain the status quo”:

  • Food industry groups such as the American Beverage Association and the Snack Food Association teamed up with anti-hunger groups to oppose health-oriented improvements to SNAP.
  • Companies such as Cargill, PepsiCo, and Kroger lobbied Congress on SNAP, while also donating money to America’s top anti-hunger organizations (who fear any changes to the Food Stamps program will result in benefit cuts).
  • At least 9 states have proposed bills to make health-oriented improvements to SNAP, but none have passed, in part due to opposition from the food industry.
  • Coca-Cola, the Corn Refiners of America, and Kraft Foods all lobbied against a Florida bill that aimed to disallow SNAP purchases for soda and junk food.
  • Banks and other private contractors are reaping significant windfalls from the economic downturn and increasing SNAP participation.

“The point here is that banks that administer SNAP have a vested interest in keeping SNAP enrollments high and makers of junk foods have a vested interest in making sure that there are no restrictions on use of benefits,” she writes.

As you’ll see in the accompanying video, one other thing stands out when discussing these issues: There is no public data available on how Food Stamp funds are being spent.

“If there are data on what Food Stamps are spent on, they are proprietary data the companies have and either the government doesn’t know, doesn’t have access or isn’t saying,” Nestle observes.

Whatever you think of the program or whether there should restrictions on Food Stamps, we have a right to know how (and where) these taxpayer funds are being spent.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at [email protected]

BEAUTY & BRAWN

Our last two days in Wildwood turned out to be somewhat eventful. On Thursday, Avalon and I were able to get out by ourselves. We headed over to Coconut Cove at 8:00 to see the Raggae band, have a few drinks and watch the sun set over the Wildwood Bay.

It was a little too mellow for Avalon. She prefers more upbeat dance music. We decided to go back to the condo at 10:00. We all knew what would happen next. All roads lead to The Shamrock. We were surprised to find it crowded on a Thursday night.

They had a DJ playing some good tunes. I ordered a Coors Light and Avalon ordered a cherry vodka and club soda, her new favorite drink, from Brooke the fairly hot blonde bartender. She had been there during our two previous Billy Jack visits and had been unfriendly and kind of nasty. But tonight she was happy, talkative and smiling. Avalon noted how she seemed to be making her drinks with 50% vodka and 50% soda. After my first beer, I figured out the reason the place was crowded. It was $2 Pitcher Night. You gotta love The Shamrock. I ordered my pitcher and the fun started. Brooke gave me a glass. Avalon noticed that the guys to our left didn’t have glasses and were drinking directly from their mini-pitchers. Avalon told me that Brooke must have thought I was a dandy and not man enough to drink from my pitcher. After two more really strong drinks, Avalon was chatting with everyone.

She was becoming good friends with Brooke and told her how pretty she was and that she reminded her of someone. Brooke said that some people told her she looked like Blake Lively. She pulled up a picture on her phone and showed it to us. There was definitely a resemblance.

The Shamrock had done a major upgrade since the previous Saturday. They added two deodorizing cakes in the men’s room urinal trough. The aroma was delightful. While I was in the men’s room Avalon was getting to know the two pitcher guzzling dudes sitting next to us at the bar. They were enthralled that any female would actually talk to them. Attractive females are not a common sight in The Shamrock. The guy on Avalon’s left also looked like a movie star, just not quite as good looking or well dressed. She has a way of attracting the downtrodden.

The two dudes needed to get back to the trailor park, so they guzzled their pitchers and got up to leave. The dude told Avalon she was hot and he was sorry she was married and shook her hand. I hadn’t heard the farewell as the music was playing loud. He then shook my hand. After they left, Avalon told me what he said. I laughed hysterically and asked if I should have beaten him up. We staggered out of the bar at 2:00 am and survived the few block walk home, passing riff raff and gang bangers on our trip.

We told the kids we were going to do the waterparks on Friday, so we had to get moving early. It wasn’t easy. We were at Raging Waters by 10:30 am.

I stuck to the Lazy River and let the kids do the super slides. We ended up at Ocean Oasis and our swim up bar at the end of the day. There would be a huge fireworks display at our block at 10:00 pm. I was running on empty and ended up falling asleep before the fireworks. I missed all the fun.

My two sons Jimmy & Michael, along with Jimmy’s friend we brought down for the week were walking on the boardwalk with the thousands of other tourists at about 9:30. Jimmy had bought a Pittsburgh Pirate retro hat earlier in the week at the Boardwalk Mall.

As they were leaving the boardwalk at our block, a black teenage juvenile delinquent, who will eventually inhabit our fine prison system, struck up a conversation with Jimmy. He asked him where he was from. Jimmy told him Pennsylvania. The kid said he went to North Penn, which is our school district. He came closer to Jimmy and then grabbed his hat and ran back onto the boardwalk. Jimmy started to chase him, but besides having low IQs, no work ethic, and no sense of shame, black teenagers can run like the wind. It really helps when they steal things.

Jimmy came back to the condo and told Avalon what had happened. Avalon is generally a passive non-violent person who tries to find the good in all people. Not tonight baby. She was infuriated by this crime. The fireworks were almost ready to start. The boardwalk was packed with people. There were Wildwood police on the boardwalk. Her and the boys headed up onto the boardwalk looking for the punk. She lectured Jimmy that the kid had bad parents and would eventually end up in jail. They searched for 30 minutes with no luck. Then they spotted him with 4 other black scumbags. They were getting ready to watch the fireworks. Jimmy’s hat was hanging from his belt. Avalon told Jimmy to go get the cops that were a block away, but her rage got the better of her. She charged up to the punk and grabbed the hat, but it was hooked and she couldn’t get it off. She started yelling at the piece of shit for stealing the hat. He was startled and scared. His posse didn’t make a move. Jimmy came up and unhooked the hat. He was mouthing off to her but she gave it right back to the dirtbag. She then took the boys over to the cops and asked them to stay with them for the fireworks. It was too crowded for the cops to find the future criminal element of Wildwood. Avalon had started the fireworks a little early.

Meanwhile, I slept through all the festivities. To top off the night of crime, someone stole the Ron Paul 2012 bumper magnet off the back of her car in the middle of the night. They are lucky she didn’t witness this crime, or there would have been hell to pay. So ends the story of Avalon – superhero with beauty and brawn.

No Overtime for Pharma Sales Reps. WHAAAAAAH.

Do you know the annoying, pushy people that try to jump ahead of you in the doctor’s office when you’re there for a real reason? like a health issue? Yeah, those people. In between buying lunch for the doctors and schmoozing the receptionists, apparently, a few sales reps found time to conjure up a lawsuit that they should be entitled to overtime from their employers for all their hard work.

Well, the verdict from the Supreme Court with a 5-4 vote is finally in and they are NOT entitled to overtime. According to the suit, a couple sales reps felt entitled to overtime and filed a class-action lawsuit based on the following:

 

“Their jobs required them to meet with doctors in their offices, but also to attend conventions, dinners, even golf outings.”

 

No, this is not a joke.  Seriously.

White collar professionals wanted overtime to play golf.  Here are my thoughts as someone in the industry who knows many pharma sales reps, other industry sales reps and someone as having held a prior white collar overtime eligible job.

First off, cry me a river…

…Continue Reading Why Overtime for Pharma Sales Reps is Ridiculous

OBAMA WINS; AMERICAN PEOPLE LOSE

The consensus had been that the Supreme Court would overturn Obamacare. Upon the announcement that it was upholding the law, the stock market tanked. My biggest problem with Obamacare is that it was sold to the American people on the false pretense that it would reduce healthcare costs for the average person and would be deficit neutral.

The truth is that the provisions already implemented have made health premiums and copays go up dramatically, as covering kids until they are 26 years old costs money. There is absolutely no doubt that Obamacare will result in the National Debt going up by trillions of dollars. You cannot add 30 million people to the healthcare system and not drive the costs up. Doctors will be screwed as more government bureaucrats and IRS agents run the healthcare system. Care will be rationed. Only rich people will get excellent service. Why would any bright teenager decide to become a doctor?

Let’s hear your opinion. I’m especially interested in our doctor member opinions.

U.S. SUPREME COURT UPHOLDS CORE OF OBAMA HEALTH CARE

Tyler Durden's picture

Submitted by Tyler Durdenon 06/28/2012 10:08 -0400

Here we go:

  • OBAMA’S HEALTH-CARE OVERHAUL UPHELD BY U.S. SUPREME COURT
  • 5-4 decisions, with Roberts joining the court’s liberals.
  • Court says federal government can’t threaten to withhold money from states that don’t fully comply on Medicaid extension
  • CHIEF JUSTICE ROBERTS SAYS MANDATE IS NOT A VALID EXERCISE OF CONGRESS’ POWER UNDER COMMERCE CLAUSE AND NECESSARY AND PROPER CLAUSE
  • HEALTH LAW’S MEDICAID EXPANSION LIMITED BY U.S. SUPREME COURT -RTRS
  • ROBERTS, JOINED BY TWO JUSTICES, SAYS MEDICAID EXPANSION VIOLATES CONSTITUTION -RTRS
  • FOUR JUSTICES DISSENT, SAYING THE PATIENT PROTECTION AND AFFORDABLE CARE ACT GOES BEYOND -RTRSCONGRESSIONAL POWERS UNDER CONSTITUTION -RTRS
  • ScotusBlog conclusion: So the mandate is constitutional
  • The bottom line: the entire ACA is upheld, with the exception that the federal government’s power to terminate states’ Medicaid funds is narrowly read
  • The ACA is upheld as a tax, not a penalty

The bottom line from the WSJ:

A quick overview of the ruling: A divided Supreme Court upheld the constitutionality of the Obama administration’s health-care law, in one of the most anticipated high-court rulings in a generation. The court said Congress was acting within its powers under the Constitution when it required most Americans to carry health insurance or pay a penalty—the provision at the center of the two-year legal battle. It upheld the mandate as a tax, in an opinion by Chief Justice John Roberts.

 

The ruling is a victory for Democrats and President Barack Obama, who had passed the biggest reworking to the health system since the creation of Medicare in the 1960s and faced the prospect of the court nullifying their effort. It also averts disruption for hospitals, doctors and employers who have spent more than two years preparing for changes in the law.

 

Even as the law’s fate was in doubt, the administration moved ahead with implementing its provisions. It has been negotiating with states to set up exchanges where consumers can buy subsidized insurance policies and sign up millions of lower-income Americans for Medicaid. Some states, including Florida and Texas, refused to cooperate because they expected the law to be overturned.

 

For Mitt Romney, the high court\’s decision basically means he won\’t have to change his stump speech. Expected to speak later today, Mr. Romney is sure to promise to repeal the law if he\’s elected. It also means he\’ll face less pressure to offer specifics on what he\’d replace the law with — a positive for a campaign that tends to shy away from details.

And more from the WSJ’s Brent Kendall

More from inside the court, from our Brent Kendall, who will be going through the ruling line by line: The court’s ruling is largely a victory for the Obama administration.  The court’s 59-page opinion rejects the government’s primary argument that Congress’s power to regulate interstate commerce gives lawmakers the authority to require citizens to buy insurance or pay a penalty.  But the court goes on to uphold the insurance mandate on other grounds.  “It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance,” Chief Justice Roberts writes.  “Such legislation is within Congress’s power to tax.”

JAMIE DIMON – SMARTEST GUY ON WALL STREET?

Nope. It’s now up to $9 billion of shareholder money lost by Jamie Dimon on one freaking trade. ONE FREAKING DERIVATIVES TRADE!!!!

Dimon is the superstar of Wall Street. He is Obama’s best buddy. Once Corzine got caught fucking his shareholders and depositors, Dimon went to the head of the list for next Treasury Secretary. Based on his recent performance he would make a perfect Treasury Secretary. We lose $9 billion dollars every three days. It took him a few weeks. Now for the best part. Check out JP Morgan’s total derivatives exposure. It is $10 trillion more than WORLD GDP. It is more than 4 times the U.S. GDP. This is one freaking bank!!!!

These parasitic bankers are going to blow up the entire world and we sit idly by watching it happen and doing nothing to prosecute or rein in these criminals. How can the JP Morgan Board of Directors allow this shithead to destroy their company and the world economy. It’s because these Boards are nothing but cronies of the CEO who are part of the criminal conspiracy.

When these derivatives bets start going bad across the board (because all the Wall Street banks are lemmings and make the same exact trades) we will again be subject to the fear mongering politicians screaming that we must save the economic system before its too late and bail these fuckers out again. When will it stop?

 

Latest Press: JPMorgan Loss As Large As $9 Billion

Tyler Durden's picture

Submitted by Tyler Durdenon 06/28/2012 07:38 -0400

We have long said that the maximum potential loss of the JPM CIO trade based on the blow out in IG9 10 year (and associated trades complex), which has about a $200 million DV01, is far beyond not only the $2 billion that Jamie Dimon estimated on May 10, but above our own estimate which was $5 billion on that same day. Today, the NYT “according to people who have been briefed on the situation” which translated means just more media propaganda because all the news on the topic in the past month has been leaks by axed parties, says that ‘Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation.” Also according to the NYT, and roundly refuting what the other leak had told Bloomberg and other media outlets, “The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year.” Obviously, this refutes media “reports” also based on “people familiar” or “conflicted sources” that JPM has unwound its trade, either by novating, or by transferring it over to helpful hedge funds. Bottom line: take everything with a grain of salt until Dimon himself gives an update in two weeks, as this could easily be an upper bound loss estimate starwman to set expectations very low, sending the stock soaring when the “final” announce loss comes in at ~$5 billion, courtesy of other well-known “masking” techniques such as loan loss reserve release and DVA benefits.

More:

As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.

 

With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.

 

Nonetheless, the sharply higher loss totals will feed a debate over how strictly large financial institutions should be regulated and whether some of the behemoth banks are capitalizing on their status as too big to fail to make risky trades.

 

JPMorgan plans to disclose part of the total losses on the soured bet on July 13, when it reports second-quarter earnings. Despite the loss, the bank has said it will be solidly profitable for the quarter — no small achievement given that nervous markets and weak economies have sapped Wall Street’s main businesses. To put the size of the loss in perspective, JPMorgan logged a first-quarter profit of $5.4 billion.

 

More than profits are at stake. The growing fallout from the bank’s bad bet threatens to undercut the credibility of Mr. Dimon, who has been fighting major regulatory changes that could curtail the kind of risk-taking that led to the trading losses. The bank chief was considered a deft manager of risk after steering JPMorgan through the financial crisis in far better shape than its rivals.

 

“Essentially, JPMorgan has been operating a hedge fund with federal insured deposits within a bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner.

 

A spokesman for the bank declined to comment.

In other words: the world’s largest prop trading deks, with a $200 million DV01, as Zero Hedge readers have now known for just under two months.