OCCUPY WALL STREET – GET ANGRY!

The moronic apologists of the Establishment press dismiss the nation-wide flashmob called Occupy Wall Street with the same  attitudes that greeted vehement anti-war protestors, the Civil Rights Movement, and the earliest stirrings of Second Wave Feminism in the 1970s.

The pundit attitudes are contemptible and contemptuous, the sure sign of Establishment panic. Evidently, knowledge of recent history is no prerequisite for drawing salary from a major newspaper. Either that, or shame has these apologists tongue-tied: what can you say when  people make an ethical demand, they are right, and if your bosses change their ways it might cost them power? If you write that, you’ll be out on the street on your keister, and everyone knows that traditional journalism is something less than a growth industry.

The desperate logic goes like this: Wall Street Activists are patronized and characterized as “naïve”  for having no program. Like spoiled children, since the movement has no program, it cannot be taken seriously: after all, with no program, there is no compromise possible. They are leaderless: to whom should the powers that be (PTB) talk?  Better to dismiss the whole nightmare. With luck, they will get bored and it will go away.

It isn’t going away.

From New York City, the idea has spread like contagion to other cities where 3^rd rate columnists and local hacks make the same complaints: Do they really have to block traffic? Where are they going to the bathroom? Does anyone think carrying signs and amorphous demands will change anything?

Only Martin Luther King, Jr.

Vehement, loud, obtrusive, inconvenient protesters do not write legislation. They  do not negotiate with Evil. They occupy lunch counters. They ride buses to bring pressure to bear on elected officials to do their jobs. They put themselves in harms way until shame grips elected leaders.

If your name is Gandhi, you do not negotiate.

Liberty is not parceled out in increments. Compromise with PTB is to enter a corrupt system. When just demands are made; nothing less than justice will do. You block traffic. You get arresed. You fill the jails.

If your name is Thomas Paine or Thomas Jefferson or Samuel Adams, or Benjamin Franklin, you negotiate only so long. The tactic of every radical movement is the same: evacuate the middle. Make reason and compromise untenable positions. Demand immediate radical,  permanent change.

And on Wall Street?

The world economy has been wrecked. The prosperity that brought peace toIrelandhas vanished.Iceland is broke.Greeceis tottering. Portugal is on the brink. Retirement funds everywhere are bankrupt.

Make no mistake, in an effort to squeeze out one more dime, Wall Street has declared war on the world, yet not a single Wall Street Buccaneer has been indicted, not a single Wizard is in prison, and Weasel apologists continue to dismiss demands for justice as inchoate.

Here is a platform. No compromise is needed.

Jail the bastards.

GOVERNMENT MOTORS

Citizen

US Citizens still own 33 percent of the new GM, a corporate entity that was sustained by TARP money. In a non-lead front page story today, The Wall Street Journal notes that GM’s expansion plans  include the construction of several auto plants in China.

More jobs for the Chinese.

China requires foreign companies to partner with Chinese firms, in GM’s case, Shanghai Automotive Industry Corp (Shanghai GM). That arrangement has existed since 1997, more than a decade before the bailout.

More wealth creation in China.

The typical deal in China is that the technology, capital, and expertise being brought to the table by a US company is being matched by a grant of access to Chinese markets.

The temptation is great: Chinese markets are currently growing ay 9.4 percent per year. There are more cars and trucks sold in China than in the United States.

GM’s Chinese investment will probably make the company a lot of money, but after its split with Shanghai Automotive Industry Corp., GM will never bring what’ left of its profit back to US shores for domestic investment. They’d be crazy to do so: repatriating overseas profits will cost GM 35 percent in US taxes.

The Chinese investment in bailing out GM: $0.

GM can’t bring the profits home to Detroit, so what GM will do is plow its profits back into China.

Daniel Akerson, the CEO of GM, and was named to the Board of Directors in 2009 by the US Treasury in July 2009.

To sum up:

• YOUR money saved General Motors from bankruptcy.
• GM’s reorganization maintained union contracts but dissolved stakeholder claims–that would be your retirement fund’s investment;
• CHINESE participation in the bailout = $0
• YOU still own 33% of GM;
• YOUR profits are building factories and creating jobs in China.
• GM’s CEO is a US Treasury appointee representing YOUR interests.

TARP—a great deal for the Chinese, a great deal for GM.

Citizens?

Screwed.

SNAPSHOT OF A NATION

It’s official. Those of us not yet in the poorhouse are on the way.

Yesterday’s US Census Bureau annual report will not surprise anyone who works for a living. For the third year in a row, adjusted for inflation, the average household income fell, more people are living in poverty, more children are living in poverty, and gains have been made been women, though not in any way the make anyone should for joy.

No matter how you slice and dice the data, the news is grim. The story is that same for all ethnic groups, pretty much the same for every state and region.

If you’ve been feeling the pinch, that’s because your household income is off more than 7% since it peaked in 1999. Welcome to the land of opportunity.

That’s 11 years of decline.

Dollar$ is glad you asked why.

In a world of rising population, economic activity has to increase, right? Babies get born and cribs get made, diapers get consumed, houses build additions, food is produced. It goes on and on and on, the basic driver of all economic activity. Oh, sure, on the short term, people might pull in their belts a bit, maybe borrow a used crib, dress the kid in hand-me-down to save a few bucks, but in the longer term population pressure has to spur economic activity.

Dollar$ is sorry for your shallow understanding, but seeks to illuminate.

Alas, an increase in economic activity does not guarantee equal distribution of the fruits of that activity.

Economic policy is an umbrella term that suggests we have some control over the distribution. We do. That’s called Political Economy. Economists disagree on the political economy’s components, but they agree on two things:

• Politics is the power to make others do one’s bidding; and
• The power to tax is granted to the US Congress by the Constitution.

Some will champion monetary policy as the key to all policy decisions. Others believe that tax policy is a tool to right social injustice. Chief Justice John Marshall in 1819 in McCulloch v. Maryland noted that “the power to tax is the power to destroy,” when the state of Maryland decided to tax only banks chartered outside its own borders. Some will claim the key to the Political Economy is fiscal policy, the national budget and such. Others will point to  the realities of the Global Economy and claim that foreign policy is the key to the Political Economy. NAFTA? Tariffs?

Dollar$ is no Solon, and like most ordinary Citizens is sure the key to the Political Economy is a mix of all of these.

Citizen

However, he notes that with the ongoing, persistent, pressure of population growth, these matters should take care of themselves. The reach equilibrium if left alone.

All bets are off, however, when Foreign Policy includes a money pit into which a nation throws wealth it does not have into wars on shepherds an goatherds.

It costs the average opium farmer in Afghanistan a few cents each year to wage war on the US. It costs the average US Citizen $30,000 in a decade to wage a war against people with bombs in their underwear.

That’s money sucked out of the economy that returns nothing to us. We are no more secure, no wealthier, no richer for it.

What we are is screwed.

WAR WASTE

Dollar$  urges readers to note that yesterday the bipartisan congressional Wartime Contracting Commission has released a 240 page report about widespread waste, fraud and abuse by the US Defense Department. It’s a good thing we don’t have a War Department, bcause everyone knows war is even more expensive than defense.

Your Tax Dollars at Work

The story has yet to be picked up by American media, probably because the War Between Weasels about airtime for speeches and whether the President of the United States dares piss off the NFL predominate American consciousness.

Though Dollar$ knows we will be debating whether caring for old people and educating youth is what is bankrupting America, he p[resent this material in hopes that Citizen might awaken.

Here are some passages from the Executive Summary:

At least $31 billion, and possibly as much as $60 billion, has been lost to contract waste and fraud in America’s contingency operations in Iraq and Afghanistan. Much more will turn into waste as attention to continuing operations wanes, as U.S. support for projects and programs in Iraq and Afghanistan declines, and as those efforts are revealed as unsustainable.

This sobering, but conservative, estimate flows from nearly three years’ work by the Commission on Wartime Contracting in Iraq and Afghanistan, an independent and bipartisan panel created by Congress in 2008 to examine waste, fraud, abuse, accountability, and other issues in contingency contracting, and to make recommendations for improvement. Much of the contingency-contract waste and fraud could have been avoided. Unless changes are made, continued waste and fraud will undercut the effectiveness of money spent in future operations, whether they involve hostile threats overseas or national emergencies here at home requiring military participation and interagency response. Responsibility for this state of affairs lies with Congress, the White House, federal departments, the military services, agency leadership, contractors, and individuals who abuse the system.

Criminal behavior and blatant corruption sap dollars from what could otherwise be successful project outcomes and, more disturbingly, contribute to a climate in which huge amounts of waste are accepted as the norm.

In Afghanistan, for instance, carrying out stabilization-and-reconstruction projects in insurgent-contested areas with contractor employees has led to deaths, delays, and waste.

The use of private security companies can present especially sensitive risks, because their armed employees can become involved in incidents that injure or endanger innocent civilians. In addition, their use for convoy security in parts of Afghanistan invites pay-for-protection extortion that diverts taxpayers’ funds to local warlords and insurgents.

The Commission’s conservative estimate of waste and fraud ranges from $31 billion to $60 billion based on contract spending from FY 2002 projected through the end of FY 2011.

 

PWE – Permanent War Economy

Seymour Melman

On March 15, 2003, Seymour Melman (b. 1917, d. 2004) gave an interview still online at CounterPunch.

Every Citizen needs to read In the Grip of a Permanent War Economy.

“The United States has endured since the end of World War II in 1945. Since then the U.S. has been at war–somewhere–every year, in Korea, Nicaragua, Vietnam, the Balkans, Afghanistan–all this to the accompaniment of shorter military forays in Africa, Chile, Grenada, Panama.

So it should come as no surprise that there is no public “space” for dialogue on how to improve the quality of our lives. Such topics are subordinate to “how to make war”. Congress under both Republican and Democratic control has voted the same war priorities into the federal budget.”

 

There is more. Do not miss it.

MURDOCH’S MINIONS RIP-OFF DOLLAR$ AGAIN!

Master Wizard Apologist

Dollars is getting downright smug at the frequency with which his in-bred skepticism coupled with a compulsive need to speak out beats the fabled Wall Street Journal to the punch.

The Journal is owned by Master Wizard-Apologist Rupert Murdoch and his News Corporation, chiefly known these days for scandal-mongering, tapping the cellphone accounts of murdered teenagers, and corrupting law enforcement in Great Britain.

August 18, 2011, page C1’s lead story in the Journal is about speculators in the oil commodities markets. The Journal notes that the Commodities Futures Trade Commission, a federal regulatory agency, has produced a list of speculators that includes Yale University, several global banks, Microsoft Corporation, and other “secret” investors who were dabbling in the futures markets as the price of oil reached record heights in 2008, heights never since matched. You may remember your pain at the gas pump.

Journal reporters note, “The list could fuel calls for a crackdown on oil speculators, a label critics apply to those who trade in oil but don’t use or produce it.”

August 17, 2001, one day earlier than the Journal, Dollar$ subscribers read the short course on commodities and saw this opinion:

“Dollar$ suggests that speculation can be controlled by requiring that all traders in future contracts be required to show the capacity to take delivery of the underlying commodity. If you aren’t a cruise line or airline, what the hell do you expect to do with 5 million gallons of fuel other than drive up the price?”

Hey, Rupert, how about lending me 100 researchers so I can make the case elegantly with numbers?

COMMODITIES – THE SHORT COURSE

The Yokel Party - A Moral America for Hogs

Dollar$ is betting on Governor Perry to win the candidacy of the Yokel Party, those stern citizens whose understanding of the human heart endorses warfare against short, swarthy non-Christian goatherds abroad and here at home abhors government interference with our private lives, the exceptions being conduct by God-cursed Sodomites in their a bedrooms or any woman’s control of her reproductive organs.

Perry will no doubt insert his foot in his mouth as he did this week by accusing the Chief Wizard Bernanke at the Fed of “near treason” if he adjusts monetary policy by printing more money. Dollar$ can only stare and gape.

While we wait for how that will play out, Dollar$ takes the opportunity to educate, safe in his knowledge that the Texas textbook folks would never allow anything approaching accuracy and clarity to befuddle the children of The Lonestar State. In Texas, history and fiction are synonyms, a situations that permits school boards to consolidate English and History classes, thus saving millions for far more important matters, cheerleading and Friday night high school football.

DIRT

Commodities come out of the ground. Copper, iron, oil, and gold, are metals used to make other stuff. Making other stuff adds value, and how complicated and valued that making can be determines value. Telephone circuits, and roof flashing are made of copper, ideal for its purposes because copper doesn’t oxidize much. No rust, no replacement costs. Steel is made from iron. Gasoline, diesel fuel and kerosene are made from crude oil. Jewelry and state capital domes are made from gold.

American Commodity

Some commodities are renewable and are grown from the ground; lumber, oranges, marijuana, and corn, for examples, and by very small extension, hog bellies and beef. The reason burgers at McDonald’s are cheap, but steak at Morton’s is expensive, is the value we place on the making of the meal.

Generally, the price of commodities are purely set by supply and demand. If there is a frost in Florida, expect the price of orange juice to rise. The world will not run out of oil any time soon; but what will happen is that oil difficult to extract from remote places in the earth without great expense will become economically attractive because shortages will send the price up.

The price of commodities varies almost purely by supply and demand. When there is a lot of weed on the street, a joint is cheap. Same is true for hog bellies and fructose.

When supply increases, prices go down.

When demand rises, prices rise.

Corn is getting expensive, for example, doubling in a year, because the demand for sweet drinks in the growing consumer culture of China is large, not to mention the growing demand pork dinners in Shanghai and Bejing—those hogs have to be fed corn. In the West, Weasels have deemed the introduction of grain alcohol into gasoline. They are rejoicing in Des Moines, or, and Dollar$ apologizes for this one, they are living high on the hog.

MARKETS

The people in industries that use gold and lumber and oranges and fuel and corn syrup all face the same problem. They rely on a steady inflow of commodities, but cannot rely on a steady price. Hurricanes in the Gulf of Mexico frosts in Florida, hailstorms in Kansas will send the prices of oil, orange juice and wheat spiking or plummeting in an instant.

Well-meaning Wizards invented Futures, a speculative investment that guaranteed a delivery of a quantity of commodity at a future date at a specified price. Sellers were guaranteed a specific price; buyers were guaranteed a specific price. Risk was reduced all around.

EVIL WIZARDS

Commodities Speculator

But there is a secondary market in those commodity futures. That’s not a bad thing: suppose you are Juggernaut Airlines and have stocked up on airline fuel futures just before President Shrub goes in pursuit of non-existent Weapons of Mass Destruction in an oil rich country. As CEO of Juggernaut, you make more money selling your futures at a profit to competing airlines than you would by taking delivery and flying airplanes, or you sell a lot of very inexpensive seats while your competitors have to charge more.

If you doubt this scenario, check the history of Southwest Airlines.

This is just good business, and Dollar$ wishes more businesses were clever enough to make more by charging consumers less.

Where Weasels, Buccaneers, and Wizards fail Citizens is by not regulating speculators, Buccaneer traders of the underlying commodity by rumor and financial maneuvering trade those highly leveraged future contracts. They have no intention of ever taking delivery. Famously, the Hunt brothers tried to corner the world market on silver, at one time controlled 50% of the world supply, and when the bubble burst nearly succeeded in bankrupting Peru. Those of us who paid $4.00 pr gallon of gas a year ago when oil itself was plentiful know the feel of a speculative squeeze.

Most of this trading takes place in Chicago at the Mercantile Exchange.

POLICY

The problem is not that people make money.

The problem is not that people make a lot of money.

Dollar$ suggests that speculation can be controlled by requiring that all traders in future contracts be required to show the capacity to take delivery of the underlying commodity.

If you aren’t a cruise line or airline, what the hell do you expect to do with 5 million gallons of fuel other than drive up the price?

FLASH MOBS, BLACK BOXES, AND VANDALS

Welcome to Philadelphia

The United Kingdom, Chicago, Philadelphia, and Cleveland are suffering from the same illness that has shaped the stock markets for a decade: a mob mentality that spreads at the speed of light with no purpose other than to make vandals rich.

Remember when there was such a thing as “investors?”  Show Dollar$ a hedge fund manager interested in investing for the long term, and I will show you a money manager going broke. Those wealthy clients want high returns, 20 percent or more, and no one survives with a buy-and-hold mentality. The mentality is epidemic, and Citizens with memories extending back further than breakfast will recall notions of “rational markets.”

Rationality has nothing to do with a flash mob. They dance, they sing, they clap, they cheer, but when they get surly they burn and loot.

And in the stock market, they do it for the same reason: profit.

My algorithm can beat up your algorithm

INSIDE THE BLACK BOX

“A special class of algorithmic trading is “high-frequency trading” (HFT), in which computers make elaborate decisions to initiate orders based on information that is received electronically, before human traders are capable of processing the information they observe. …. As of 2009, HFT firms account for 73% of all US equity trading volume.” Algorithmic trading is  also called black-box trading.

Kids on the street who text the time and place of an imminent raid on their favorite retail outlet know that law enforcement is helpless in front of a spontaneous mob. They strip shelves of what they want, and then run like hell.

Algorithms signal each other of a raid on markets, strip pennies from value that on leveraged derivatives become millions, buy and sell in an instant, know that regulatory agencies are helpless, and then run like hell.

Dollar$ dares to suggest that any Wizards and Weasels who believe market stability is a healthy climate for investment, innovation, and general macroeconomic non-monetary policy that might create jobs to get those unruly youth off the street, may want to stop the flow of bullshit about how such markets are open and fair.

Dollar$, never shy of suggesting policy, simply asks that all stock and derivative orders in excess of $5 million be limited to any single entity to no more than two per hour.

Let’s level the playing field by tilting it toward traders with blood in their veins.

SCREW THE FIREMEN

Screwed

Over in Rhode Island, a bankrupt municipality is trying to cut benefits to cops and firemen, but will pay bondholders in full. If a municipality goes broke, Weasels have ruled that Wizards get paid first!

The place is called Central Falls.  You might want to write the city council a letter. Try not to throw-up when you note the town’s motto: “Never Doubt that a small group of thoughtful citizens can change the World.”  They are quoting Margaret Meade, the famed anthropologist. They are screwing cops and firemen.

Dollar$ tries, but could not make this stuff up.

Weasels write the rules; Wizards create the vehicles; Buccaneers reap profits; Citizens get screwed.

No one blushes.

This national scandal will spread across the US as borrowing rates climb.  In Alabama, after 14 months without pensions, pensioners with 20 – 30 years on the job had their benefits cut from $1,000 per month to $350. The town is being sued, of course. Their legal strategy seems to be to delay and hope for petitioners to die.

Perfectly legal. Pensioners are by federal bankruptcy law defined as unsecured creditors, whereas banks and others are secured.

Your best strategy?

• Never get sick.
• Never grow old.
• Never stop working.

DOLLAR$ LOVES WARREN

It is an easy reflex among Dollar$’s  progressive friends to just assume that wealth curdles the soul and we are forever engaged in perpecual class warfare.

Responsible and rich

Warren Buffet, CEO of Berkshire Hathaway, “The Sage of Omaha,” stands as a role model, a man who understands that with great wealth comes great responsibility, a testimony to the fact that extremism is the refuge of the moronic, while good sense is not the exclusive property of the poor.

Buffet is a Citizen who makes his money by investing. He seeks no special treatment; he is no Buccaneer.

In his opinion piece in yesterday’s New York Times, Buffet calls for higher taxes on the rich, correctly noting that “Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends. I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.”

Bravo Buffet!

Are any DC Weasels listening?