05 Sep

No One Knows What To Do

By Walter | 1 comment


Last week, reporting on the latest meeting of the US Federal Reserve Bank, NY Times reporter, Catherine Rampell, opened her story with this line: “No one knows what to do to fix the economy.”

How frightening is that? The US and the rest of the world are being sucked into a vortex of political, economic and social chaos and no one knows what to do!

In his NY Times column this morning, the liberal Nobel economist, Paul Krugman, noted that

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24 Aug

It’s Capitalism, Stupid

By Walter

The cause of the debt crisis is to be found in the essence of capitalism itself: competition, which – surprise! – produces losers as well as winners.

The primary mechanism through which this contest is engaged is the corporation, which the US Supreme Court recently declared to be the legal equivalent of a person. Here is how it works: corporations hire workers to produce widgets for which they are paid $8.75 each. Later, when the workers become consumers and buy the widgets they produced they are charged $10. The difference: a profit of $1.25 each. That’s a 12.5% skim off the top, a house advantage that would thrill any casino operator.

Here’s how those numbers work out nationally. The monetary value of US gross domestic product (the total of all the various kinds of widgets produced) during the first quarter of this year amounted to an annual rate of $15 trillion. Corporate profits for the same period came in at an annual rate of $1.8 trillion. There it is, the culprit: 12.5% skimmed right off the top. It shouldn’t take a degree in higher math to see that this is a game with a short life expectancy. Before long, the workers will find it more and more difficult, and finally impossible, to keep buying the widgets they make.

Now this is where debt makes its appearance. The only way to keep this game going is for corporations to lend some of their profits back to their underpaid workers and overcharged consumers so they can keep buying those corporate products, but on the promise that those loans will be repaid – with interest. In the long run, of course, this only accelerates the process until finally, as now, it is no longer sustainable.

Meanwhile, the government is also called upon to borrow

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08 Aug

The Curtain Rises on Act Two

By Walter

The houselights dim. The audience scurries to their seats, now with heightened anticipation. A new political force has gained ascendancy, with an anti-government, anti-regulation, anti-tax, anti-entitlement, pro-corporate, free market agenda. What will the future hold? The curtain rises and . . . .

On Thursday, the Dow Jones Industrial Average plunged over 500 points, dropping a total of 1,350 points, or 10%, over 10 trading days. This drop in stock prices represented a loss in value of $1.5 trillion. During the same period, European stocks took a similar beating, with a comparable loss in value. For comparison purposes,

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04 Aug

The Curtain Falls on Act One

By Walter

Phew! That was exciting. It had me on the edge of my seat. But what a setup for Act Two. Given the plot so far, this is going to be a bumpy ride. This is a situation in which everyone is behaving badly. Consider John Boehner, chief Republican negotiator. During the entire drama, he regularly complained that the president wasn’t giving enough. Then when the deal was done, he boasted that he got 98 percent of what he wanted. When Obama addressed the nation to report that a calamity had been avoided, he felt it necessary to assure his disappointed supporters that, even though he had given up so much, they would have another bite of the apple when the Special Joint Committee meets during the next several months because tax revenues will be on the negotiating table along with additional spending cuts. Suckered again! Boehner and associates made it clear that

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19 Apr

The Scandalous Tax Code

By Walter

Well, the taxman made his annual visit to collect his due, and while we made it through another year, we’re also another couple of trillion dollars deeper in debt. As we are forever reminded, there are but two remedies for excessive debt: cut spending or raise taxes, one or the other, or a combination of both. Managing the national budget, therefore, is a matter of establishing a sustainable balance between those two efforts. Unfortunately, looking at the “raising taxes” part, the outlook is not promising. Even if the Tea Party/Republican anti-tax debt hawks come to understand the need for increased taxes, the system by which those taxes will be collected does not instill confidence that the taxman will be fair and equitable. The abuses and inequities are well known, underscored by the recent revelation that giant General Electric paid no taxes while realizing $14 billion in profits. Clive Crook, writing in the Financial Times, cited the tax code’s “lunatic complexity” as evidence of “legislative incompetence.” “It is something,” he wrote, “that you cannot gaze into too long without falling into despair.”

When Congressman Paul Ryan issued his controversial Roadmap for America’s Future,

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17 Apr

How Debt Saved Capitalism — Temporarily

By Walter

All this bad-mouthing of debt is downright ungrateful. The criticism of individuals and governments who can’t seem to live within their means ignores the fact that if they had not gone into debt the economy would have ground to a halt a long time ago. It’s debt that keeps the capitalist Ponzi scheme going. As long as the Federal Reserve continues to pump money (and debt) into the economy, collapse will be avoided until …

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16 Apr

And the Squeeze Goes On

By Walter

As the world’s political and financial leaders seek to reinvigorate economic activity, it is no surprise that the greatest sacrifices and the largest contributions are being demanded from the workers, the laborers who actually produce stuff. As the economy begins to lurch forward in one sector or another, lack of confidence in the sustainability of the recovery is causing employers to delay hiring more workers to satisfy increasing demand. Instead, as reported in the Financial Times, “manufacturers have found that they are able to increase productivity by getting their employees to work harder or more efficiently.” If you are not squeezed out of your job, more work is squeezed out of you.

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February 2018
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