It's now a year since the market bottomed out. Therein lies a tale, which I will proceed to spin. This is a tale of tax fiddling, specifically capital gains. Stock sold earlier than one year from acquisition is taxed as regular income, so those who loaded up their trucks with really cheap shares, especially in the financial services (aka, banks and insurance) sector, are now free of that regular income tax.
Whether these folks believe that the recovery is real will go a long way to determining the extent to which the recovery is real. It's kind of like that ouroborus thingee, you know, the snake eating its tail. It could also be considered a self-fulfilling prophecy. If the early buyers are feeling secure, they won't convert to cash in a mad rush, starting, well, now. If they're not so secure, then the rush to cash drives down the market a second time, with those of us who've kept cash just waiting will be around to pick up the pieces.
The only saving grace to this, sort of, is that financial services companies (some of them) is the sector that bounced back with the largest multiple, so any sell off might be restricted there. Let's hope so. And let's hope that Bernanke, Geithner, and Volker and their collective minions have figured this out, too. And have plans to keep those folks secure, and a plan to keep them so for another six months or so.
30 March 2010
24 March 2010
China, Inc.
With all the Google and India and Rio Tinto and such going on, I thought it opportune to ruminate on China, and where it is headed in respect to the USofA. I don't see a happy ending.
Some of the Right Wingnuts are now lambasting Google for standing up to China; they see this as $$$ lost. Right Wingnuts would, of course, take this point of view, as they are not really Patriots when there isn't a Gummint Contract to be had. Which brings us to the core issue: Right Wingnut Capitalists are so in love with China (and India to a lesser degree, only because India is just a tad less fascist) just because it is anti-democratic.
American Capitalists moved so much of their business to China just because it represses its citizens, thus making for cheap labor. The problem for both China and American Capitalists is that this industrial production has to be consumed here, since Chinese earn not enough to buy the things they make. One of the logic errors made by free trade apologists is to extrapolate from the British experience in the 19th century. The Brits were a small population, newly industrializing, and producing far more than their population could absorb, so they exported.
China (and the rest of BRIC) is assuredly not in that situation; China has more than enough population to be a self-sustaining domestic economy, if the Chinese overlords deemed it so. But they have no interest in the welfare of Chinese, only of the oligarches. The question: what does the future hold for the two countries?
First and foremost, China is a fascist country, the Communist moniker only a head fake. If one reads Marx, neither Russia nor China were countries he was writing about, either specifically or generally. He was writing about Britain, where he wrote the book. China, going forward, is intent on domination, both of its people and the planet. It is no accident that China is reaping commercial coups in Afghanistan while Americans (and a few Europeans) die for the "cause of Democracy", and such propaganda.
In the near term, the financial pas de deux must continue: China won't absorb its industrial output internally, so it has to export to middle class economies. The USofA has to figure out a way to re-distribute income such that we, on the whole, can continue to buy these imported goods. Without this arrangement, both countries suffer; China more so. In the long run, if China gets its way, the planet will die, but only from the point of view of humans. The planet will continue on for billions of years, just without humans in the billions. Here's some numbers. The USofA (about 5% of the planet's population) consumes about 25% of the planets raw materials. Of that 25%, 1% of the USofA's population consumes about 1/4. It is this 1% which is presented as "the American dream", oft times as just our Middle Class. The situation cannot be sustained. As I wrote in an earlier essay, what we need to do is nuke most of the developed world in order to get to a point where humans can be a sustaining species. That's not going to happen, of course (well unless Israel decides to).
Populations move in geometric and exponential ways, not linearly. In 1950, the USofA had about 150 million; today it's about 330 million. Yet, these 330 million expect to consume not just as much as their grandparents, but more. It's insane. It won't happen, and the degradation will be gradual for a few years, then will be terminal in less than a generation. Climate scientists worry that global warming will raise sea levels dramatically by 2100; as if there'll be any kind of structured society left by then. That's fantasy.
Some of the Right Wingnuts are now lambasting Google for standing up to China; they see this as $$$ lost. Right Wingnuts would, of course, take this point of view, as they are not really Patriots when there isn't a Gummint Contract to be had. Which brings us to the core issue: Right Wingnut Capitalists are so in love with China (and India to a lesser degree, only because India is just a tad less fascist) just because it is anti-democratic.
American Capitalists moved so much of their business to China just because it represses its citizens, thus making for cheap labor. The problem for both China and American Capitalists is that this industrial production has to be consumed here, since Chinese earn not enough to buy the things they make. One of the logic errors made by free trade apologists is to extrapolate from the British experience in the 19th century. The Brits were a small population, newly industrializing, and producing far more than their population could absorb, so they exported.
China (and the rest of BRIC) is assuredly not in that situation; China has more than enough population to be a self-sustaining domestic economy, if the Chinese overlords deemed it so. But they have no interest in the welfare of Chinese, only of the oligarches. The question: what does the future hold for the two countries?
First and foremost, China is a fascist country, the Communist moniker only a head fake. If one reads Marx, neither Russia nor China were countries he was writing about, either specifically or generally. He was writing about Britain, where he wrote the book. China, going forward, is intent on domination, both of its people and the planet. It is no accident that China is reaping commercial coups in Afghanistan while Americans (and a few Europeans) die for the "cause of Democracy", and such propaganda.
In the near term, the financial pas de deux must continue: China won't absorb its industrial output internally, so it has to export to middle class economies. The USofA has to figure out a way to re-distribute income such that we, on the whole, can continue to buy these imported goods. Without this arrangement, both countries suffer; China more so. In the long run, if China gets its way, the planet will die, but only from the point of view of humans. The planet will continue on for billions of years, just without humans in the billions. Here's some numbers. The USofA (about 5% of the planet's population) consumes about 25% of the planets raw materials. Of that 25%, 1% of the USofA's population consumes about 1/4. It is this 1% which is presented as "the American dream", oft times as just our Middle Class. The situation cannot be sustained. As I wrote in an earlier essay, what we need to do is nuke most of the developed world in order to get to a point where humans can be a sustaining species. That's not going to happen, of course (well unless Israel decides to).
Populations move in geometric and exponential ways, not linearly. In 1950, the USofA had about 150 million; today it's about 330 million. Yet, these 330 million expect to consume not just as much as their grandparents, but more. It's insane. It won't happen, and the degradation will be gradual for a few years, then will be terminal in less than a generation. Climate scientists worry that global warming will raise sea levels dramatically by 2100; as if there'll be any kind of structured society left by then. That's fantasy.
20 March 2010
America, Israel, and National Identity
I headed out to the laundry Friday afternoon, since it is usually deserted, leaving me access to dryers (insert Andy Rooney whine: why is it that laundries always have about half the dryer capacity of washers??) and quiet to read. This Friday didn't work out that way. It was also a Friday shortly after the latest cockup out of Israel over settlements.
While I'm trying to read, an Hispanic woman (from which country I don't know) sits on the other side of the room jabbering in Spanglish on a cell phone. Hmm.
OK, so here's the conundrum. The US government, and an increasing number of Americans, are less than thrilled with the situation in the Middle East (although the Israel lobby hasn't yet lost the majority). For our part, Americans have no use for illegal aliens, and not much use for any kind with Hispanic origins.
It gets more complicated. Demographers have figured out that non-Jews (Palestinians and Arabs) will eventually be the majority in land controlled by Israel and that Hispanics will do the same to the US (starting in the southwest, of course). Not that there isn't lots of contrary publishing on both sides of both country's problem. These two trends are driven mostly by breeding rates than migration, and that's the crux of the ancillary problems.
But that yakking woman rekindled the real issue: it isn't that foreigners are invading (or breeding in) a country, but what culture they bring with themselves. In both Israel and the USofA, the foreign culture is truly foreign. In the case of Israel, it's largely a religious conflict, as we all know and religion does tend to make for messy wars. Here, the question is whether Hispanic culture (if there is such a thing) is supportive or destructive of historic American culture.
Aye, matey, there's the rub. Western hemisphere Hispanic history is largely colonial, autocratic, plantation and Roman Catholic. American success has been largely democratic, industrial and Protestant. To put it simply: Hispanic emigres come from cultures where repression and reproduction are major factors of life. Historically, intergenerational economic progress comes from more education and fewer children. There is not much evidence that the Hispanic community has figured this out. Do we really want a USofA where a growing number of the population grew up with dictators and drug cartels as a normal part of life? Do we want the USofA to be just Greater Mexico? Can there be any objection to merely asking the question?
Well, just asking the question raises the hackles of many, even those aligned with the Israel Lobby; asking the question is implicitly impugned to be ethnic cleansing or another Final Solution. But America should be for Americans, shouldn't it?? Now, as it happens, my earliest ancestor came here in 1638, so I'm in no danger of being found to be a recent interloper. Phew.
Israel has a similar problem, only times two. Not only do the Arab populations reproduce faster, so do there own leisure class of Orthodox; not a pretty sight. Just to be clear: Orthodox men spend their time just reading a book or two; they don't work, and they do keep their wives pregnant most of the time. They don't produce lots of Einsteins, just more Orthodox rabbis, and demanding places to live. Religious welfare is still welfare, nonetheless.
Both countries face a difficult question: does a society have the right, or even obligation, to preserve its basic traits? Who decides what those traits are? In the case of the USofA, certain elites either imported (black slaves to plantations, Chinese to build railroads) humans or encouraged trafficking (agribusiness in our time) in them without much, if any, regard for the impact on the society and culture. Ghettos and Chinatowns sprung up. Surprised??
The hypocrite alarm goes off during such musings, naturally. For both versions of ultranationalism, ours and Zionist, history doesn't start and stop at necessarily convenient points. If it's proper that jews post World War II, from anywhere on the globe, have a right to live on ground they claim was theirs a couple of thousand years ago, then what of native Americans?? Their descendents have a greater right to this ground than do jews to Palestine by virtue of exclusively living on the land for tens of thousands of years, while that area of the Middle East has been controlled by numbers of conflicting tribes over the millenia. Fair's fair, is it not?? The land called Palestine has been Arab for a millenium. The jews lost control during generalized contemporary warfare those thousands of years ago; they just lost their war. Native Americans lost to a technologically superior invader; war of the worlds, from their point of view. Who has the greater claim to the land?? I'd say the native American. How many of the Israel lobby campaign to restore the land to native Americans? None that I know of.
If immigrants refuse to assimilate, enforcing their notions of societal structure on the "host" country, they shouldn't complain about being rejected. It isn't their country.
While I'm trying to read, an Hispanic woman (from which country I don't know) sits on the other side of the room jabbering in Spanglish on a cell phone. Hmm.
OK, so here's the conundrum. The US government, and an increasing number of Americans, are less than thrilled with the situation in the Middle East (although the Israel lobby hasn't yet lost the majority). For our part, Americans have no use for illegal aliens, and not much use for any kind with Hispanic origins.
It gets more complicated. Demographers have figured out that non-Jews (Palestinians and Arabs) will eventually be the majority in land controlled by Israel and that Hispanics will do the same to the US (starting in the southwest, of course). Not that there isn't lots of contrary publishing on both sides of both country's problem. These two trends are driven mostly by breeding rates than migration, and that's the crux of the ancillary problems.
But that yakking woman rekindled the real issue: it isn't that foreigners are invading (or breeding in) a country, but what culture they bring with themselves. In both Israel and the USofA, the foreign culture is truly foreign. In the case of Israel, it's largely a religious conflict, as we all know and religion does tend to make for messy wars. Here, the question is whether Hispanic culture (if there is such a thing) is supportive or destructive of historic American culture.
Aye, matey, there's the rub. Western hemisphere Hispanic history is largely colonial, autocratic, plantation and Roman Catholic. American success has been largely democratic, industrial and Protestant. To put it simply: Hispanic emigres come from cultures where repression and reproduction are major factors of life. Historically, intergenerational economic progress comes from more education and fewer children. There is not much evidence that the Hispanic community has figured this out. Do we really want a USofA where a growing number of the population grew up with dictators and drug cartels as a normal part of life? Do we want the USofA to be just Greater Mexico? Can there be any objection to merely asking the question?
Well, just asking the question raises the hackles of many, even those aligned with the Israel Lobby; asking the question is implicitly impugned to be ethnic cleansing or another Final Solution. But America should be for Americans, shouldn't it?? Now, as it happens, my earliest ancestor came here in 1638, so I'm in no danger of being found to be a recent interloper. Phew.
Israel has a similar problem, only times two. Not only do the Arab populations reproduce faster, so do there own leisure class of Orthodox; not a pretty sight. Just to be clear: Orthodox men spend their time just reading a book or two; they don't work, and they do keep their wives pregnant most of the time. They don't produce lots of Einsteins, just more Orthodox rabbis, and demanding places to live. Religious welfare is still welfare, nonetheless.
Both countries face a difficult question: does a society have the right, or even obligation, to preserve its basic traits? Who decides what those traits are? In the case of the USofA, certain elites either imported (black slaves to plantations, Chinese to build railroads) humans or encouraged trafficking (agribusiness in our time) in them without much, if any, regard for the impact on the society and culture. Ghettos and Chinatowns sprung up. Surprised??
The hypocrite alarm goes off during such musings, naturally. For both versions of ultranationalism, ours and Zionist, history doesn't start and stop at necessarily convenient points. If it's proper that jews post World War II, from anywhere on the globe, have a right to live on ground they claim was theirs a couple of thousand years ago, then what of native Americans?? Their descendents have a greater right to this ground than do jews to Palestine by virtue of exclusively living on the land for tens of thousands of years, while that area of the Middle East has been controlled by numbers of conflicting tribes over the millenia. Fair's fair, is it not?? The land called Palestine has been Arab for a millenium. The jews lost control during generalized contemporary warfare those thousands of years ago; they just lost their war. Native Americans lost to a technologically superior invader; war of the worlds, from their point of view. Who has the greater claim to the land?? I'd say the native American. How many of the Israel lobby campaign to restore the land to native Americans? None that I know of.
If immigrants refuse to assimilate, enforcing their notions of societal structure on the "host" country, they shouldn't complain about being rejected. It isn't their country.
08 March 2010
This Way to the Egress
I'm always amused when folks (not necessarily due to stupidity or cupidity) make long essays about what happened and how to fix it, when the cause (and its concomitant solution) is quite simple: beginning with Reagan and Thatcher, western governments set in motion an historic shift of income and wealth from the many to the few.
In the US, the top 1% went from 8% of national income in 1980 to 24% in 2008. Anyone who bothers to review economic history will see that shifts of such magnitude *always* lead to depressions. The first major one in American industrial economy was the Gilded Age following the Civil War, and was the Panic of 1873.
The Right Wing then complains that Government is AntiBusiness, and should reduce taxes and regulation still further, all the while complaining that "there is no demand for our goods and services". Well, yeah Idiot; the Middle Class has been destroyed and has no income. Reducing income to labour only strengthens the downward spiral: give aways to capital do nothing to restore demand. The reason the bailouts and stimulus haven't engendered inflation (which the Right Wingnuts have been complaining about) is that all that money didn't go to people who can consume goods and services. The only aspect which has kept some semblance of demand, and thus not collapsing altogether, is unemployment insurance payments. Right Wingnuts are willfully ignorant of the consumption multiplier. Even if the "stimulus" did not create one job by direct hiring, the consumption multiplier saves or creates half a dozen. But the Right Wingnuts won't admit that, since the fact doesn't support their zealotry.
So: the only way out is to reverse the flow of national income, and send it back to the middle class. It makes no difference how that is done, overtly or covertly work equally well.
In the US, the top 1% went from 8% of national income in 1980 to 24% in 2008. Anyone who bothers to review economic history will see that shifts of such magnitude *always* lead to depressions. The first major one in American industrial economy was the Gilded Age following the Civil War, and was the Panic of 1873.
The Right Wing then complains that Government is AntiBusiness, and should reduce taxes and regulation still further, all the while complaining that "there is no demand for our goods and services". Well, yeah Idiot; the Middle Class has been destroyed and has no income. Reducing income to labour only strengthens the downward spiral: give aways to capital do nothing to restore demand. The reason the bailouts and stimulus haven't engendered inflation (which the Right Wingnuts have been complaining about) is that all that money didn't go to people who can consume goods and services. The only aspect which has kept some semblance of demand, and thus not collapsing altogether, is unemployment insurance payments. Right Wingnuts are willfully ignorant of the consumption multiplier. Even if the "stimulus" did not create one job by direct hiring, the consumption multiplier saves or creates half a dozen. But the Right Wingnuts won't admit that, since the fact doesn't support their zealotry.
So: the only way out is to reverse the flow of national income, and send it back to the middle class. It makes no difference how that is done, overtly or covertly work equally well.
01 March 2010
Hometown Buffett
Warren Buffett is a jerk. Today he calls health care "a tapeworm eating at our economic body". As if he knows what he is talking about. Fact is, health care is one of the few sectors of the economy which is growing, which is to say: providing new jobs. What Buffett and his ilk assume is that any economic activity which *he* decides is not a potential source of personal profit is, ipso facto, a waste of economic resources.
Well, lets look at the basic question: what activities are unproductive. For the sake of argument, I'll define "unproductive" as any activity which 1) doesn't provide a good or service *directly* to specific citizens and 2) does provide income to any citizen. The result of such unproductive activities is inflation, since income goes to labor and capital, but no saleable good or service is placed into the market; what goods and services are produced by capital and labor are bid up in price due to the excess cash. Health care does provide a service directly to citizens. Oops.
By such a definition (one that I'd wager is difficult to refute), financial services, defense expenditures, and space exploration all qualify as unproductive. Some, such as defense expenditures, we as a society accept as being needful anyway. But these are still not productive, from a strict economic point of view. It should not come as any surprise that China spends vastly less on such activities. It works for them.
What Buffett is doing is channeling the Inner Social Darwinist of the aristocrat, let them eat dirt. In particular, only the rich deserve good health. The rest of the industrialized world manages to provide public health at a fraction of the cost, but no matter.
Recall that the *things* Americans want to have are largely made not by Americans, these days. The Buffett's of the world have de-industrialized the economy, and now have the gall to complain about the only growing sector of the economy, and one which actually makes life better for the populace; Wall Street Banksters have never done that.
Warren, you're a jerk.
Well, lets look at the basic question: what activities are unproductive. For the sake of argument, I'll define "unproductive" as any activity which 1) doesn't provide a good or service *directly* to specific citizens and 2) does provide income to any citizen. The result of such unproductive activities is inflation, since income goes to labor and capital, but no saleable good or service is placed into the market; what goods and services are produced by capital and labor are bid up in price due to the excess cash. Health care does provide a service directly to citizens. Oops.
By such a definition (one that I'd wager is difficult to refute), financial services, defense expenditures, and space exploration all qualify as unproductive. Some, such as defense expenditures, we as a society accept as being needful anyway. But these are still not productive, from a strict economic point of view. It should not come as any surprise that China spends vastly less on such activities. It works for them.
What Buffett is doing is channeling the Inner Social Darwinist of the aristocrat, let them eat dirt. In particular, only the rich deserve good health. The rest of the industrialized world manages to provide public health at a fraction of the cost, but no matter.
Recall that the *things* Americans want to have are largely made not by Americans, these days. The Buffett's of the world have de-industrialized the economy, and now have the gall to complain about the only growing sector of the economy, and one which actually makes life better for the populace; Wall Street Banksters have never done that.
Warren, you're a jerk.
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