Independent News and Politics

There’s no rally in the stock market to commemorate the victory of Scott Brown in Massachusetts.  Between Obama’s newly found tough rhetoric against “too big to fail” banks and questions about whether or not Bernanke can muster enough votes to be confirmed, investors are feeling a bit shaky about the future value of American equities.

In three days, almost 600 points have vanished from the Dow – nearly a 5% drop.  Of course, a lot of this is just the natural result of continued deleveraging despite federal attempts to inflate housing and stock markets with access to cheap and freshly minted money.

As the Congress reveals itself to be increasingly paralyzed and more states fall into budget crises of their own, expect stock markets to stumble once again.

A lot of people (rightfully) blame the Federal Reserve and its member banks for causing and exacerbating the still unfolding financial crisis, and as a symbol of the Fed Bernanke has come under increasing fire from the grass roots, then media, and now from members of Congress themselves.

In a stunning revelation, it has been announced that Bernanke may not have the number of votes required to confirm his re-nomination by Obama.

Many liberals had blasted Obama for his decision to appoint Bernanke for a second term, and his party members in Congress are taking heed of this lesson in the wake of the unexpected Massachusetts Senate race.

The question then – if not Bernanke, who?

If you’ve got a bunch of money in the stock market, the rise in the Dow Jones Industrial Average might actually be good news for you.

For the rest of us, the technical movements behind this recent surge paint a much bleaker picture of what’s going on.

The primary mechanism driving equity prices at the moment is the continued fall of the dollar.  At this time, gold is testing prices near $1100 per ounce and oil is back up over $80 a barrel for the first time since the great crash first undid runaway inflation.

For workers, anything short of a huge payraise is actually turning out to be a pay cut.  As the cost of living continues to ramp up, people continue to lose jobs and the government continues to run up our debt.

In a few months, as the incentives and stimulus spending is exhausted, we will also face a new round of mortgage crisis as option-ARMs mature and commercial real estate continues in its downward spiral.

Hold on tight, this economic ride isn’t over yet.

The real reason our economy is so weak today is actually the same reason why it had been so strong over the last 20-30 years. A massive acceptance of debt spurred new jobs, new consumption, but very little in terms of long term investment in education, infrastructure, or really anything that can produce future wealth.

For a better sense of relative debt loads, notice the strong resemblance between our current debt bubble and the last massive debt bubble that kicked off the start of the Great Depression.  This second chart is in terms of GDP percentages, rather than nominal (inflation-distored) dollar amounts.

Unfortunately, we’ve got a tough ahead of us in terms of paying back debt relative to our GDP and income. With government borrowing and creating new debt, the responsibility will be left to private corporations and individuals. Some public debt may help cushion the fall, but at some level we’re going to have to deal with what we already spent and consumed and promised.

Whether its through stock support through dollar devaluation, or direct injections of public capital into private balance sheets, the top banks and banksters to get us in to this mess are also the ones making loot in America’s worst financial crisis in decades.

Granted, Goldman Sachs wasn’t left holding subprime paper when TSHTF.  They led the way in to that mess but quickly dropped the hot potato on to sucker banks and puppet corporations.  When the dust cleared and only Goldman looked good, the government tripped over itself to hand them cash directly and through AIG.  I’m sure this has nothing to do with the string of Goldman Executives to find themselves at the Treasury Department…

• -200 Thursday,
• -100 at Friday’s open,
• Employment is down by a quarter million,
• Dollar is down…

Are you enjoying your economic recovery yet?

I hope so, because another crash in housing is about to get started all over again:

Or are they planning another oh-so-successful bailout for every one of those coming spikes?

Just in case you were wondering, the economy still sucks.

Don’t be fooled by the stock market numbers – those guys are playing with a stacked deck.  Even if they lose a hand, they’ll get bailed out by the Fed and/or treasury.

For the rest of us, you know, the people who get paid by doing actual work, the economy pretty much sucks.

Unemployment is just under 10%, but it takes a whole lot of creative accounting to even make that happen.
My advice is to find or build a product you believe in.  Then sell it.  Make your own job.  Don’t sit around waiting for someone else to make one for you.

A lot of unemployed Americans want to blame people in China for the fact that no one wants to hire them for $40,000 and full medical/dental/retirement.

What they’re not willing to do is go back to college to get an education that’s updated to the day’s most in-demand jobs & skills. What they are willing to do is start a global trade war because of the mistaken belief that cutting off a huge part of our economy will somehow make them richer.

In the meantime, everyone in a business that actually makes stuff people want around the world will suffer in order to protect some of our low-skilled labor.

In the long run, a breakdown of international trade can lead to increasing military hostilities. There was a whole decade of global economic depression and trade wars before WW2 broke out.

Meanwhile, there are still no jobs available and the value of your dollars have just begun a brand new fall off one of the steepest cliffs seen yet.

Indeed, the recession is over – and the depression is now starting to kick in!

Gold and oil show big gains today as the US dollar continues to fall.

While the devaluation will make existing debts theoretically easier to pay back, it also diminishes American’s wealth and drives up the cost of basic living expenses such as food and transportation.

The net effect for most Americans, despite the nominal gains in equity values, is a reduced standard of living.