Perry Glasser

Archive for August, 2011|Monthly archive page

PWE – Permanent War Economy

In Business, Economics, Economy, EDUCATION, Finance, MILITARY, Politics on August 20, 2011 at 8:08 pm

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!

In Business, Economics, Economy, EDUCATION, Finance, Personal Finance, Wall Street on August 18, 2011 at 10:21 am

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

In Business, Economics, Economy, EDUCATION, Finance, Politics, Wall Street on August 17, 2011 at 12:23 pm

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

In Business, Economics, Economy, Finance, Politics, Wall Street on August 16, 2011 at 7:24 am

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

In Business, Economics, Economy, EDUCATION, Finance, Politics, Wall Street on August 15, 2011 at 8:33 am

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

In Business, Economics, Economy, EDUCATION, MILITARY, Politics, TAXES, Wall Street on August 15, 2011 at 6:39 am

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?

TURNING JAPANESE – I REALLY THINK SO

In Business, Economics, Economy, Finance, Politics, Wall Street on August 13, 2011 at 12:10 pm

Once again, Dollar$ readers could get the idea before the Wall Street Journal figured it out.

FactSet Research Systems, from the Wall Street Journal

On August 11, Dollar$ pointed out the scary parallels between the US and Japan on the verge of 20 years of deflation.

Today’s Wall Street Journal on page B1 has a headline: This Time, Maybe the US is Japan. The lead reads, “ It is a comparison that underlines the current plight of the US economy.”

Dollar$ does not get weary of being right, sooner.

RAMBO THE CAT SELLS SHORT

In Business, Economics, Economy, EDUCATION, Finance, MILITARY, Personal Finance, Politics, Wall Street on August 13, 2011 at 8:00 am

Dollar$ wants everyone to know that selling something before you own it is a time honored and honest investment strategy which even a Wizard could present blamelessly.

Short-selling does not send markets into tailspins. Banning short-selling, as has recently happened in Italy, France, Belgium and Spain, is a vain attempt by local Weasels to blame local Wizards for the mayhem in their markets.

The theory is that short-sellers will spread false negative rumors and create a wave of selling. Why these same nefarious type cannot spread false positive rumors is left unexplained by Weasels whose grasp of financial matters is about

Weasel IQ Test

the same as a carrot’s.

Who would suggest that world markets are staggering like drunks on Saturday night because the largest economy in the world has mortgaged its future to spend wildly on wars waged against shepherds? We require drone airplanes and assault helicopters to defeat a foe boarding airplanes with box cutters or plastique up their behinds. Why, just last week, the entire Pentagon was hot on the trail of an errant housefly, pursuing the slippery sumbitch relentlessly by deploying 250  Marines howling through the corridors wielding Louisville sluggers.

THE SHORTS

Well, enough politicking. Here the lesson for today.

Say your neighbor on your left is leaving for 10 days and asks you to feed her cat while she is gone. Her cat, Rambo, is picky, and only eats Finicky Cat Food.  The cat devours a full can of this mixture of grain, chicken, and horse each day. You say, “Sure.”

Ten days later your neighbor texts you with news: volcanic activity in Iceland means she will be delayed five days. Wouldn’t you know it? You opened the last can of Finicky that morning. The pantry is bare.

Since you are short of time, you run to your neighbor on the right, another cat lover.  Good news! She has five cans of Finicky to spare! Each is marked $1.29, and when you tell her you are desperately short of cash, since she is a shut-in, she requests that all you need to do is replace the five cans at your leisure.

Five days later, your wandering neighbor descends from the clouds, hugs Rambo, and sees the five empty cans. She immediately gives you $6.45.

You amble over to the Pet Shop. There’s a sale on Finicky!  It is marked down to $.79 per can! Wahoo!  W00t!

You pick up 5 cans at a total cost of $3.95, and then hightail it to your amiable neighbor to return the 5 cans your borrowed.

RAMBO THE CAT

As you amble down the walk, you enjoy the pleasant feel of $2.50 in your pocket.

How DID that happen?

You

  1. BORROWED 5 CANS.
  2. SOLD 5 CANS.
  3. BOUGHT THEM BACK AT A LOWER PRICE.
  4. REPLACED THE BORROWED CANS.

Look at that list again. You sold before you bought.

Instead of cat food, understand that you are trading stock. Your amiable shut-in neighbor is a brokerage house. The Pet Store is the Stock Exchange. Your traveling neighbor is, like you, a stock trader.

There are some other rules about shorting stock—Who gets the dividend on borrowed shares? How long can they be borrowed? What if the owner wants to sell? — but those technicalities are not what’s at issue when Weasels call for a halt to the practice.

CAVEAT: Generally, unsophisticated traders should stay away from this trading practice without thorough knowledge of the rules. Think of it this way: if you go long on a stock, it can rise forever, but if you go short and have guessed wrong, you potential losses are infinite. There is also a limit to your potential profit, the limit being when the stock hits zero.

SCROOGE MCDUCK AND HIS MONEY BIN

In Business, Economics, Economy, EDUCATION, Finance, Personal Finance, Politics, Wall Street on August 12, 2011 at 3:00 pm

Money and horseshit, my father used to like to say, both stink and are equally worthless unless spread around.

Evidently, the Wall Street Journal knows a good idea when it reads it in Dollar$.

On August 7th Dollar$ noted that Apple Corporation, purveyors of technology and music to the under-16 set, was sitting on a $73 billion dollars in cash, paid no dividends, and so, effectively, was siphoning money out the economy.

Four days after the Dollar$ post, the  Journal,  Wall Street’s biggest apologist, noted that corporations are sitting on $1.2 trillion dollars. The Journals scribe mentions, “Yet the validation of companies’ conservatism may ultimately be bad news for the economy.”

Do you think???

You’ll remember Scrooge McDuck, Donald’s skin-flint uncle who liked money more than anything. He kept it in a bin and comforted himself by counting the stuff.

The next time some  Weasel urges Citizens to spend a few dollars for the sake of the economy, tell them to take a flying leap into  McDuck’s bin.

American Corporate Life

with apologies and thanks to Walt Disney Co.

THE END OF THE AMERICAN CENTURY

In Business, Economics, Economy, EDUCATION, Finance, MILITARY, Personal Finance, Politics, Wall Street on August 12, 2011 at 10:00 am

In the long run, we’ll all be dead – John Maynard Keynes

We owe a debt to the future; we must act in the present; our only compass is the past.

Gather round readers, as Dollar$ kicks back, pours another Woodford (one ice cube, thanks) and contemplates the melancholy long view.  The floor is littered with newspapers making dire comparisons. Is the  economic crisis of 2011 a continuation of the economic crisis of 2008?  ( when Dollar$ began.)  Iin 2008, the same pundits asked, Are we still in the  throes of the Internet Bubble-Bust of 1999?

Terrified of the Military

Fact is, the US economy is in a downward spiral for nearly a generation, a spiral accelerated by Wizards and Buccaneers. The pity is that the causes are well known. The criminal fact is that our Weasel leaders could act, but will not.

We are sticking to the initial mission or Dollar$,  as Noam Chomsky put it in 1967, “It is the responsibility of intellectuals to speak the truth and to expose lies.” I don’t always agree with the professor on details, but that sentiment is irrefutable. I was a college boy when I read it The New York Review of Books. It still sounds right.

American Political Concern

Dollar$ asks readers who recite a daily mantra for positivism and munch  mood enhancers rather than look at reality, those who withdraw to the very private, very definite pleasures of gardens, grandchildren, video games, zombie movies, or the happy falsehoods of self-help books and memoirs where harried women travel the world, eat brown rice, and settle down to bliss with a swarthy Brazilian, to consider that pharmacological peace and self-induced blindness is immoral.

Inaction mortgages the future by tolerating the Weasels who borrow money our children can never hope to repay.

THE AMERICAN CENTURY

The American century began with the end of World War I. In Europe, a generation of young men lay dead in trenches on the Eastern and Western fronts, while North America remained unscathed, the only country in the world with the resources and infrastructure to grow to be an economic superpower.

The peace was botched. Twenty-five years later, the war resumed, this time a true world conflagration, different from the first installment of a World War because technology had advanced to enable  civilian populations to be slaughtered.  The dead piled up in London, Dresden, Stalingrad, Hiroshima.

But not in North America.

It’s important to note that in the subsequent peace, Germany and Japan were forbidden to arm themselves.  Consequence? Despite being in ashes, Japan and Germany rose to become the second and third most formidable economic powers in the world.

At the same time, the United States began 70 years of the Cold War with the Soviet Union, a “cold war” that became brush fire avatar wars in Korea, Vietnam, Iraq, Israel, and Afghanistan.  The ruling notion of American policy was MAD — Mutual Assured Destruction. We closed missile gaps, launched spy satellites, manufactured warheads, deployed Star Wars defense systems, and set nuclear submarines and aircraft carriers into every ocean of the world.

None of that weaponry has ever been deployed against any foe with similar capabilities. We DID get some Navy Seal snipers to drop some sorry-ass Somali pirates, but we never went as far as kicking the ass of the ports from which  they set sail in rubber boats.  This is like killing mosquitoes with baseball bats–it can be done, but why would you? and why not drain the swamp from which they came?

The Soviet Union collapsed, unable to afford competing with the US military. Its citizen on bread lines, those citizens dissolved that union into a half dozen warring states based on regional and long-standing ethnic identities, now at each other’s throats in Chechnya and the former components of Yugoslavia.

RECENT ADVENTURES

Lacking any real foe, since the fall of the Soviet Union the US has invented a few. Instead of the kind of enlightened leadership that made the lives of people in Germany and Japan trading partners by depriving them of the military parasite, we have pursued policies that have created Islamic fundamentalistsintent on inflicting harm upon us.

They fight with bombs in their underwear, hijacked airplanes, box cutters, and bombs in their shoes. They finance their war effort with oil money from sympathetic states or from the proceeds of poppy fields. As a matter of policy, the US does not firebomb the sources of heroin that poison our youth; as a matter of policy, we support medieval kingdoms like Saudi Arabia; as a matter of policy, we turn a blind eye to Pakistan that harbors enemy leadership in wifi and porno-equipped mansions.

All so the United States can continue to feed the tapeworm on the body politic, the US military.  What’s our purported  justification?

Well, we engage wars to pre-empt the use of weapons of mass destruction, find none, hang Saddam, and then hang around for a decade or more defending no real or imagined American interest.

We prosecute a war at a cost of billions in Afghanistan to find and bring to justice the leader of the Taliban, find him with the aid of intelligence, kill him by deploying 20 or so brave, well-trained men, and then hang around more defending no real or imagined American interest.

US military expenditures account for 43% of all military spending IN THE WORLD. Do you think we could do with half of that?

We have no bread lines yet, but 10% of Americans are unemployed. Cities in the United Kingdom are burning because idle youth see no opportunities. At home, our policy makers debate how to afford senior citizens who persist on living too long, and how much we must reduce compensating the teachers who train our most important asset, youth.

WHAT NOW?

  • Drop your Prozac.
  • Get pissed off.
  • Organize.
  • Circulate this note.
  • Circulate notes like it.

Change the national dialogue from “entitlements” to  military expenditures.