about being liberal or conservative anymore y'all. That is a hype offered by the fascist whores who want to confuse the people with lies while they turn this country into an aristocratic police state. Some people will say anything to attain power and money. There is no such thing as the Liberal Media, but the Corporate media is very real.
If you read the business and even the political press, you've doubtless encountered the claim that
the economy is a mess because the threat to reregulate in the wake of a global-economy-wrecking
financial crisis is creating "uncertainty." That is touted as the reason why corporations are
sitting on their hands and not doing much in the way of hiring and investing.
This is propaganda that needs to be laughed out of the room....
Commerce is all about making decisions and committing resources with the hope of earning profit when
the managers cannot know the future. "Uncertainty" is used casually by the media, but when trying to
confront the vagaries of what might happen, analysts distinguish risk from "uncertainty", which for
them has a very specific meaning. "Risk" is what Donald Rumsfeld characterized as a known unknown.
You can still estimate the range of likely outcomes and make a good stab at estimating probabilities
within that range. For instance, if you open an ice cream store in a resort area, you can make a
very good estimate of what the fixed costs and the margins on sales will be. It is much harder to
predict how much ice cream you will actually sell. That is turn depends largely on foot traffic
which in turn is largely a function of the weather (and you can look at past weather patterns to get
a rough idea) and how many people visit that town (which is likely a function of the economy and how
that particular resort area does in a weak economy).
Uncertainty, by contrast, is unknown unknowns. It is the sort of risk you can't estimate in advance.
So businesses also have to be good at adapting when Shit Happens. Sometimes that Shit Happening can
be favorable, but they still need to be able to exploit opportunities (like an exceptionally hot
summer producing off the charts demand for ice cream) or disaster (like the Fukushima meltdown
disrupting global supply chains). That implies having some slack or extra resources at your
disposal, or being able to get ready access to them at not too catastrophic a cost.
So why aren't businesses investing or hiring? "Uncertainty" as far as regulations are concerned is
not a major driver. Surveys show that the "uncertainty" bandied about in the press really translates
into "the economy stinks, I'm not in a business that benefits from a bad economy, and I'm not going
to take a chance when I have no idea when things might turn around."
The "certainty" they are looking for is concrete evidence that prevailing conditions have really
turned. But with so many people unemployed, growth flagging in advanced economies, China and other
emerging economies putting on the brake as their inflation rates become too high, and a very real
risk of another financial crisis kicking off in the Eurozone, there isn't any reason to hope for
things to magically get better on their own any time soon. In fact, if you look at the discussion
above, we actually have a very high degree of certainty, just of the wrong sort, namely that growth
will low to negative for easily the next two years, and quite possibly for a Japan-style extended
The problem with the "blame the government" canard is that it does not stand up to scrutiny. The
pattern businesses are trying to blame on the authorities, that they aren't hiring and investing due
to intrusive interference, was in fact deeply entrenched before the crisis and was rampant during
the corporate friendly Bush era. I wrote about it back in 2005 for the Conference Board's magazine.
In simple form, this pattern resulted from the toxic combination of short-termism among investors
and an irrational focus on unaudited corporate quarterly earnings announcements and
stock-price-related executive pay, which became a fixture in the early 1990s. I called the pattern
"corporate dysmorphia", since like body builders preparing for contests, major corporations go to
unnatural extremes to make themselves look good for their quarterly announcements....
Despite the cliché “employees are our most important asset,” many companies are doing everything
in their power to live without them, and to pay the ones they have minimally. This practice may
sound like prudent business, but in fact it is a reversal of the insight by Henry Ford that built
the middle class and set the foundation for America’s prosperity in the twentieth century: that by
paying workers well, companies created a virtuous circle, since better-paid staff would consume more
goods, enabling companies to hire yet more worker/consumers.
Instead, the Wal-Mart logic increasingly prevails: Pay workers as little as they will accept,
skimp on benefits, and wring as much production out of them as possible (sometimes illegally, such
as having them clock out and work unpaid hours). The argument is that this pattern is good for the
laboring classes, since Wal-Mart can sell goods at lower prices, providing savings to lower-income
consumers like, for instance, its employees. The logic is specious: Wal-Mart’s workers spend most of
their income on goods and services they can’t buy at Wal-Mart, such as housing, health care,
transportation, and gas, so whatever gains they recoup from Wal-Mart’s low prices are more than
offset by the rock-bottom pay.
Defenders may argue that in a global economy, Americans must accept competitive (read: lower)
wages. But critics such as William Greider and Thomas Frank argue that America has become hostage to
a free-trade ideology, while its trading partners have chosen to operate under systems of managed
trade. There’s little question that other advanced economies do a better job of both protecting
their labor markets and producing a better balance of trade—in most cases, a surplus.
The dangers of the U.S. approach are systemic. Real wages have been stagnant since the
mid-1970s, but consumer spending keeps climbing. As of June, household savings were .02 percent of
income (note the placement of the decimal point), and Americans are carrying historically high
levels of debt. According to the Federal Reserve, consumer debt service is 13 percent of income. The
Economist noted, “Household savings have dwindled to negligible levels as Americans have run down
assets and taken on debt to keep the spending binge going.” As with their employers, consumers are
keeping up the appearance of wealth while their personal financial health decays.
Part of the problem is that companies have not recycled the fruits of their growth back to their
workers as they did in the past. In all previous postwar economic recoveries, the lion’s share of
the increase in national income went to labor compensation (meaning increases in hiring, wages, and
benefits) rather than corporate profits, according to the National Bureau of Economic Analysis. In
the current upturn, not only is the proportion going to workers far lower than ever before—it is the
first time that the share of GDP growth going to corporate coffers has exceeded the labor share.
And businesses weren't using their high profits to invest either:
Companies typically invest in times like these, when profits are high and interest rates low.
Yet a recent JP Morgan report notes that, since 2002, American companies have incurred an average
net financial surplus of 1.7 percent of GDP, which contrasts with an average deficit of 1.2 percent
of GDP for the preceding forty years. While firms in aggregate have occasionally run a surplus, “. .
. the recent level of saving by corporates is unprecedented. . . .It is important to stress that the
present situation is in some sense unnatural. A more normal situation would be for the global
corporate sector—in both the G6 and emerging economies—to be borrowing, and for households in the G6
economies to be saving more, ahead of the deterioration in demographics.”
The problem is that the "certainty" language reveals what the real game is, which is certainty in
top executive pay at the expense of the health of the enterprise, and ultimately, the economy as a
whole. Cutting costs is as easy way to produce profits, since the certainty of a good return on your
"investment" is high. By contrast, doing what capitalists of legend are supposed to do, find ways to
serve customer better by producing better or novel products, is much harder and involves taking real
chances and dealing with very real odds of disappointing results. Even though we like to celebrate
Apple, all too many companies have shunned that path of finding other easier ways to burnish their
bottom lines. and it has become even more extreme. Companies have managed to achieve record profits
in a verging-on-recession setting.
Indeed, the bigger problem they face is that they have played their cost-focused business paradigm
out. You can't grow an economy on cost cutting unless you have offsetting factors in play, such as
an export led growth strategy, or an ever rising fiscal deficit, or a falling household saving rate
that has not yet reached zero, or some basis for an investment spending boom. But if you go down the
list, and check off each item for the US, you will see they have exhausted the possibilities. The
only one that could in theory operate is having consumers go back on a borrowing spree. But with
unemployment as high as it is and many families desperately trying to recover from losses in the
biggest item on their personal balance sheet, their home, that seems highly unlikely. Game over for
the cost cutting strategy....
So this haranguing about certainty simply reveals how warped big commerce has become in the US. Top
management of supposedly capitalist enterprises want a high degree of certainty in their own profits
and pay. Rather than earn their returns the old fashioned way, by serving customers well, by
innovating, by expanding into new markets, their 'certainty' amounts to being paid handsomely for
doing things that carry no risk. But since risk and uncertainty are inherent to the human condition,
what they instead have engaged in is a massive scheme of risk transfer, of increasing rewards to
themselves to the long term detriment of their enterprises and ultimately society as a whole.
These two long over due. Like 4 years overdue. I started putting together the songs in 2007. But
now that I've gotten a Roland 24 track music production system set up and running, the long delays
and procrastination can finally cease.
Well ... at least a man can dream, right?
This is the new CD. Check out that fog.
Hopefully I'll be done by the end of this year. It takes a while to perfect every thing that winds
up getting mixed in these songs. The songs that are just me singing with one guitar track are
easier. Its the harder songs with multiple guitar tracks that take time.
If you want to hear some of my stuff, you can check out the "My Audio" links in the left-hand
column. Its bright green. Scroll down below the red-bordered & black archived post links and you
will find it. Some of the songs are a bit raw and need re-mastering, but most of them are finalized.
Friday, 12 August 2011 at 9h 47m 35s
A Timeline of the Economy from 2004 to April 2011
Click here for
a very cool map of the United States and a lot of green and red circles indicating job losses/gains
in 200 Metropolitan areas from 2004 to April 2011.
You press play and the map changes month by month from 2004 to April 2011. The first big red circle
occurs in August and September of 2005 over Louisiana -- the twin Hurricanes of Katrina and Ivan.
Then watch out when 2009 hits. Huge red circles that encompass more than half of the Area of the
continental United States. Wow.
The Gross Domestic Product is the total monetary value created by a nation as a measure of all goods
and services used by that nation within a year or span of time. This shows up as goods & services
purchased by citizens and institutions of the nation minus purchases of imports. Profits from
exports are a net gain. Investment occurs when assets are created or purchased that will obtain a
future value, either at a future point of sale, or as a future source of regular revenue and
potential profits. Savings are accounts that are not spent, probably sunk into interest-bearing
accounts that have a future value. Government spending is usually in the form of payments &
subsidies (tax breaks are subsidies) which can either get spent or invested; unless the government
directly spends or invests -- rather than through surrogate citizens and businesses that get tax
incentives and subsidies.
We can simplify this equation by merging the private and government spending and investment, as follows:
Doing this avoids the conflict of what private and government spending and investment does. The
Consumption = private + government. The Savings = private + government. The Investment = private +
government. The allocation, or ratio of private to government, is dependent upon the culture and
history of the particular nation. There is no nation which is 100% private. There is also no
nation with 100% government, because even in the most totalitarian government bureaucracies there is
leakage in the form of corruption and black market economies.
Now if we subtract consumption investment and savings from both sides we get the following identity:
This equation means that whatever is left after subtracting consumption, investment, & savings
equals the difference between exports and imports.
A lot has been debated about the significance of this identity. In a world of
high-wage/high-productivity-per-worker economies and low-wage/low-productivity-per-worker nations,
this identity involves the dynamic of excess savings from the high-wage nations financing the
creation of factories and products in the low-wage nations. The out-sourcing and moving production to
East Asia, Mexico, China, and India is a familiar theme to Americans. But what does this do to
Assume a low-wage nation gets a massive increase of foreign investment. This would cause more
negative value on the left-hand side of the above equation; but that doesn't necessarily mean the
right-hand side becomes more negative. Consumption can go down, savings can down, exports can go
down, imports can be increased, or some combination of all the above. If there is more negativity on
the left-side induced by a massive increase of foreign investment, consumption can up if savings
goes down; or there could be some combination of a decrease in savings and exports with an increase
of imports. Exports can go up without an increase of imports, but then some combination of a
decrease in savings and consumption would have to balance the increase of Exports. If foreign
investment is to produce an increase in Export income, this is like subtracting ten on one side but
adding five to the other side -- the net imbalance would then be a minus 15. Hence, foreign
investment creation of export wealth produces reduced consumption and savings along with an increase
The form of the investment
and the type of socio-economic relationships within each nation determines the effect of the new
massive increase of investment. What happens in Mexico, is quite different than what happens in
Vietnam, India, or China, because the current income distribution and political economies of these
nations are not the same.
Lets analyze this reaction to the increase of foreign investment in a low-wage nation. One reaction
could be less consumption and less savings. Profits from the foreign investment will most likely
leave the low-wage nation and return back to the foreign investors as profits. Not all of the gains
will remain in the low-wage nation. Potential increases in exports are thus siphoned off and
returned back to the investors as profits. The investment might also crowd out internal
competitors, who now have more expenses and this would result in a decrease in savings.
Suppose however that the foreign investment did not exit back to the investors and instead remained
in the low-wage nation as increases in savings and consumption, because the profits get dispersed to
workers or because they cause an increase in average wealth. Maybe the profits get further
invested, and there is an additional increased negativity for investment. In this scenario, the
increased negativity on the left-hand side of the equation can (and probably will) cause an increase
in the GDP to counter-balance the negativity, but not all of the negativity will be balanced by the
What percentage of the increased negativity gets balanced by an increase in GDP doesn't necessarily
affect the "exports - imports" right-hand side of the equation at all unless the GDP increase does
not absorb all of the increased negativity from consumption, investment, and savings. Any leftover
negativity can cause a rise in imports. If the various increases in savings and investment is NOT
managed effectively, by default, any increase in negativity on the left-side of the equation results
in an increase in imports.
This is a youtube video of a youngturks.com episode on Friday, 5 August 2011 with Cenk Uygur, Sam
Seder, and Jimmy Dore.
Saturday, 6 August 2011 at 23h 35m 48s
The new figures indicate that corporate profits accounted for 14 percent of the total national
income in 2010, the highest proportion ever recorded. The previous peak, of 13.6 percent, was set in
1942 when the need for war materials filled the order books of companies at the same time as the
government imposed wage and price controls, holding down the costs companies had to pay....
The latest figures indicate the smaller businesses’ share of national income fell to a 17-year low
of 7.7 percent in 2009, but recovered to 8.3 percent in 2010 and in the first quarter of this year.
Employees have always received more than half the total national income, until now. In 2010, the
percentage of national income devoted to wages and salaries fell to 49.9 percent, and it slipped a
little more to 49.6 percent in the first quarter of this year....
Nonetheless, President John F. Kennedy’s observation that a rising tide lifts all boats is no longer
as true as it once was.
There have been 10 years when corporate profits as a share of national income exceeded 13 percent —
1941, ’42, ’43, ’50, ’51, ’55, ’65, ’66, 2006 and 2010. In eight of those years, the economy, as
measured by real gross national product, grew at a rate of greater than 6 percent.
The exceptions were 2006, when real growth was just 2.7 percent, and 2010, when it was 3 percent.
Similarly, in the past, unemployment was generally low when corporate profits were high. In 2006,
the unemployment rate ended the year at 4.4 percent — and that was higher than it had been in other
postwar years when the corporate share of national income was high. At the end of 2010, the jobless
rate was 9.4 percent. On Friday, the government reported that the rate was 9.1 percent in July.
[SOURCE:Floyd Norris | New York Times | 5
I guess that since the percent of GDP accruing to corporate profits is at an all-time high, we
should expect massive re-investment by such profits in all of the areas that the nation needs
re-investment. Isn't that what the "theory" says should happen. Excess capital leads inherently to
investment that benefits all of society.
Except that the history of the human species is one of massive misallocation of resources due to the
whims of dictators and kings; or the derelictions of paradigms beholden to the oligarchy. Extremely
rich people spending more and more on extravagance with no redeeming value litters the history of
mankind. Yet whatever and wherever
the origin, the ignorance is promoted as the national ethos because concentrated wealth always
promotes itself, and the sanguine wounds of pride
deteriorate the wealth and strength of the nation despite the grandiose jargon.
This comes from a comment left by rktbrkr on the comment thread which sponsored my lambast below.
Many people misunderstand how the program operates. Payroll taxes stream into the trust fund that is
used to pay current retirees’ benefits. When there is a surplus, that money is invested in a special
type of Treasury bond that pays interest to the trust fund. At the end of last year, the trust fund
had about $2.6 trillion. And though last year was the first year since 1983 that the fund paid out
more than it received in tax revenue, it still continued to grow because of the interest accrued —
and it is estimated to continue to grow through 2022.
Since the money in the trust fund is held in Treasury securities, taxes collected are essentially
being lent to the federal government to pay for whatever it wants (and this allows the government to
borrow less from the public). That is where some of the confusion comes into play about how Social
Security is used to pay for things that are unrelated to the program. But it is really no different
from China lending the government money by investing in Treasuries. (So the Fed by printing money to
buy 75% of Treasuries is undercutting SocSec revenues. So the Fed is punishing SocSec as well as
private savers with their policies!!!)
“Social Security does not, and cannot by law, add a penny to the federal debt,” said Nancy
Altman, co-director of Social Security Works, an advocacy organization that promotes the
preservation of the program. “It, by law, cannot pay benefits unless it has sufficient income to
cover the cost, and it has no borrowing authority to make up any shortfall.”
Monday, 1 August 2011 at 10h 46m 33s
The so-called crisis
I am so sick of this nonsense (or is it deliberate obfuscation.)
Why is the above graphic adding Social Security and Medicare taxes into the the total revenue? Why
are they also lumped together as total government liabilities?
These two programs are payed for by separate payroll taxes. Leftover funds for social security are
saved in the form of bond purchases. The tax revenue streams are separate, and the expenditures are
also separated from the general revenue stream, so why are the lopped together? No business would
do this with their subcontractors or sub-corporate entities.
This is like taking the revenue earned from a cafeteria and saying its the same revenue stream as a
furniture store merely because the two businesses both put their money in the same bank. On the
banks asset sheet these two separate businesses are summed together to get the total banks assets.
But the banks business is separate from the cafeteria and the furniture store, as equally as the
two businesses are separate from each other.
So when the bank goes into default, do the auditors raid the assets of the furniture store and count
the revenue stream of the cafeteria as resources for the bank merely because they have accounts with
This is exactly what the dishonest bundling of all government revenue and liabilities means. Social
security liabilities have nothing to do with medicare liabilities and the interest payments
necessary because of funding government revenue deficit shortfalls on the yearly fiscal budgets.
THEY ARE SEPARATELY FUNDED PROGRAMS. The government does not borrow to pay for social security, and
government payments to social security come from separate accounts. Payroll taxes do not fund
anything other than social security. So why are the payroll taxes added to total revenue?
The people paid for the social security insurance program into a collective separate account through
payroll taxes to create a huge asset fund that will be able to pay 100% of benefits to at least 2042
by the most conservative of projections. That is no exactly a major crisis situation. And all we
have to do to raise funds is raise the income cap on the payroll tax another $100,000. Problem solved.
This massive drumbeat of fiscal "crisis" is intended to provide smoke for an ideological agenda. It
is also short-sighted and very stupid. All that happens is you push older citizens onto the backs
of younger generations already strained income; you also force older people to have to compete with
younger people for fewer jobs. All it does is drain the economy of spending, investment, health,and
social stability just so the upper one percent can earn 20 times more than they will ever need in
their entire lifetime.