Category: Economy

Time after time we see layoffs as the solution to a company’s woes.  For example, of the 598,000 newly unemployed individuals in the US in January of 2009, 163,000 of these were laid off from the 500 largest US companies.  Some lowlights:

Jan. 26: Following the acquisition of the small drug outfit Wyeth for $68 billion, Pfizer closes five factories and cuts 15% of total workforce (19,000 workers).

Jan. 26: Sprint Nextel pink-slips 8,000 workers–recording more than $300 million in severance charges but saving $1.2 billion a year in labor costs.

Jan. 30: Caterpillar increases previous layoffs from 20,000 to 22,110, and share price hits 52-week low.

Here’s the question: does this really help a company?

Here’s the answer: probably not.

Another question:  what would help these companies?

Another answer: replace the management!

We’ve heard some whining about President Obama forcing out GM CEO Waggoner.  Maybe he’s onto something?

In the ongoing media Battle of the Bulge of the finance oligarchs that has brilliantly sold idiot America the blatant falsehood that the economy has turned for the better (tell that to all the poor bastards in the tent cities that are sprouting up across the fruited plain) the big boys have struck back. In a masterpiece of propaganda only surpassed in recent history by the great General Petraeus led SURGE that flushed a bloody defeat in Iraq down the memory hole the same strategy has been applied in selling the notion that the zombie banks are alive and well. I am going to address this in far more detail in my upcoming piece that will be out in the next few days entitled Hooray! The Surge is Working…Again but I just wanted to chime in on this news.

There is increasing anxiety throughout the imploding banking industry that the Obama Administration might insist upon management changes if the stress tests of the 19 biggest banks, which are due to be completed within three weeks, indicate that they are still fucked up beyond all recognition, despite being handed God only knows how many trillions of dollars through the Fed and TARP.  

Aware that this FUBAR Factor and the gory details of their financial fuckery to the Nth degree will be exposed for all the world to see, and intent upon keeping their jobs, bonuses, private jets and all of their Superstar of Wall Street perks, many bankers want out of the TARP program, are criticizing the conditions the Obama Administration set for paying back the TARP money, and are calling them unfair.  

Digby summarizes this latest development quite well and observes that these bankers . . .

are such short sighted, greedy, self centered jackasses that they refuse to be saved unless they get to fuck things up all over again.  (Oh, and make a killing doing it.)  I’m not against these banks paying back the TARP money but they have to live up to the agreements they made when they took the money — just like I do when I have to pay a penalty for early withdrawal. After all, they have a rather nice alternative. They could just loan the money to someone, which was the intent of the program.  But then they’d have to live under the threat that the big bad gummint is coming to take their bonuses and that’s just unacceptable to these pampered princes.

“People who are my age have no idea what they are going to do,” Suter said, trying to angle a workbench into his trailer. “How they are going to live on $12 an hour without benefits when we’re used to $29 with benefits? You can’t make an economy on cleaning somebody else’s shirts or selling mutual funds. What are towns like Ypsilanti going to do?”

Ypsilanti is not the most besieged city in Michigan, but is an auto town, and its problems mirror those of the larger industrial Midwest. Just four square miles and 35 miles west of Detroit, it has lost more than 25 percent of its population since 1970. Schools have closed, as did its two other auto-related plants. Outside the Visteon plant, located on Factory Street in Ypsilanti alongside Interstate 94 and Ford Lake, the building that housed the UAW Local 849 is for sale. –snip–  

A New Rasmussen Poll reports a rather amazing decline in the support of Americans for capitalism:  

Bad news for those fearful of “creeping socialism” in the United States–only 53 percent of Americans now believe capitalism is the better system, according to a new poll Thursday. Fully 20 percent in the Rasmussen Reports survey said that socialism was their preferred economic system–a startling number that suggests growing disaffection as the “land of the free” fights its worst recession in decades.

Millions of wingnut heads will explode when they hear this.  Their formerly favorite pollster will be condemned as a socialist/fascist/neo-Marxist hack.  Obviously, he is in league with George Soros and vicious left wing hate sites like this one, has become a dirty fucking commie hippie, and is conspiring with those two notorious liberals, Beelzebub and Mephistopheles, to destroy capitalism.    

Bill Moyers Journal:

In an explosive interview on PBS’ Bill Moyers Journal, William K. Black, a professor of economics and law with the University of Missouri, alleged that American banks and credit agencies conspired to create a system in which so-called “liars loans” could receive AAA ratings and zero oversight, amounting to a massive “fraud” at the epicenter of US finance.

But worse still, said Black, Timothy Geithner, President Barack Obama’s Secretary of the Treasury, is currently engaged in a cover-up to keep the truth of America’s financial insolvency from its citizens.

Gosh.  Why would a Wall Street insider like Geithner be reluctant to admit that Wall Street criminals turned the US financial system into a giant Ponzi Scheme?

I’m stumped.

Fortunately, Professor Black has an explanation . . .

The absolutism of the key tenets of neo-liberalism: privatisation, deregulation, balanced budgets have all been rejected by all but the most dogmatic. Apart from one that is: the primacy of free trade.

So writes Noreena Hertz, economist and author, in her op-ed at Spiegel Online: “Is Protectionism Really All that Bad?”

Despite the nationalization of banks, calls for increased regulation, and massive trillion dollar deficits amassed, the status of free trade remains “basically sacrosanct”, she writes. “‘Free trade is good’ continues to be presented as a totemic truth, ring-fenced from debate or interrogation.”

An examination of the G-20 communiqué (pdf) from this week’s meeting seems to confirm Hertz’s assertion.

The G-20 leaders stated: “We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.”

 

This is not a joke.

The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

Yes. According to Bloomberg News tally, 90 percent of America’s GDP is now promised toward filling the financial black hole.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

And What I Really Think Of Eric Holder, too.

I suspect, or hope rather, to give them the benefit of the doubt, that what they might be trying to do is rather than fight or go head to head with the plutocracy that has them surrounded and controls foreign and economic policy and the judiciary and the CIA and the NSA and the military and the media, is to find a way to coopt that plutocracy, get them to see that it is also in their best interests to stop all the looting of society and warmongering, and get them on their side.

I don’t know if they have a chance in hell of accomplishing that though, if that is what they are trying, or if they will end up with everyone simply throwing their hands up in disgust and concluding that it is Obama and Holder on the plutocracy’s side, as it looks so far.

Barack Tells Detroit to Drop Dead . . .

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.  President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever.

But American taxpayers are supposed to keep spending untold billions more to keep those predator banks on Wall Street open forever, aren’t they, Barack.  GM and Chrysler aren’t viable according to you and your fiend Tim at the Treasury Department, but those big banks that imploded and turned America’s financial system into a black hole of toxic debt are still viable.  Yup.  They’re as viable as it gets, they’re so viable they only need a trillion dollars every few months so they don’t China Syndrome themselves right through the planet, blast the Great Wall of China into rubble on the other side, and soar off into space to boldly go where no Masters of the Universe have ever gone before.        

Let’s summarize what’s been happening, shall we?  The big banks tell Barack to jump and he asks them how high. They tell Barack to fetch a stick and he fetches a stick.  They tell Barack to hand them another trillion dollars and lay back down by his dish like a good dog, and he hands them another trillion dollars and lays back down by his dish like a good dog.        

Real News – March 28, 2009

Obama held hostage by PPPIP

Pepe Escobar: If Geithner’s plan does not work, the President sinks

President Obama’s destiny – more than his foreign policy decisions – will be sealed by how he deals with the US financial crisis, argues Pepe Escobar.

The verdict of top economists on Treasury Secretary Tim Geithner’s new PPPIP (Public Private Partnership Investment Program) has not been auspicious.

Some speak of taxpayer rip-off while Nobel Prize winner Paul Krugman foresees a “lost decade of zombie banks”.

The President has been trying to appease Wall Street while at the same time appeasing America’s anger directed at anything bank bailout-related.

On a global level the Chinese have made it known their patience with America’s addiction to debt has limits.

The upcoming G-20 meeting in London is bound to discuss more radical steps, while back in the US some already dream of a new saviour, post-Geithner.

Geithner’s Treasury $500 Billion to $1 Trillion Plan to Purchase Legacy Assets PPPIP Whitepaper is here (.PDF)