The United States Post Office

I think that the Post Office under charges for first class stamps. I am talking about the regular stamps you use to send a single regular letter, or in most cases a bill.

Here is my reasoning: Once, a few years ago, I was spending an evening with friends and we ordered out for sandwich delivery. Upon looking into my wallet I discovered all I had of any value was $2 in cash and four $0.37 stamps. I announced my cash situation to the group and asked if anyone would cover me. One offered to do so, and because I am the kind of person that does not like being in debt (even for $4, and even knowing I will pay it back tomorrow) I asked my friend if he would accept the stamps as payment of the debt. He asked essentially if the stamps were of the current value saying, "I put one of these on a letter and it will get delivered?" I replied, "Yes," and he agreed. So essentially I exchanged $3.48 in value (plus delay and uncertainty and lack of interest) for a $6 sandwich(plus tip).

The next step in my reasoning is what my father always told me about collectibles but extends as a rule to the entire economy. Something is only worth what you can get someone else to pay for it. The inverse of that principle is best exemplified by Starbucks, which has gotten people to pay ridiculous prices for coffee.

If you stop and think to yourself about what the Post Office actually does and their relation to the reality of communications technology, the Post Office really offers a premium service. If you need to get an original physical document or object to another location, that is a premium service given that it is such a rarity. The problem with that is that it is a rarity and if the Post Office raises their prices too much too fast then they will have fewer customers and those customers will be sending fewer things.

I really think the value of a stamp is somewhere between $1 and $2. What actually charging that value would mean to the operations of the Post Office is another matter. Unless situations like the one I described above start becoming common, where stamps are being exchanged as currency for three times their value, I think it is unlikely we will see large increases in the cost of a first class stamp.

Pay

As a result of the media focus on the crash of a commuter flight in Buffalo, NY it has been revealed that pilots starting out and breaking into the industry make about as much as the girl at Starbucks that hands you your coffee in the morning. Add on to that, the fact that the pilots work long days at a job that it is critical they maintain focus and composure and you get a mild national shock.

I was surprised also. I really shouldn't have been given the nature of corporate America that pays the people that actually do the work a pittance while the executives who have never worked a day in their lives rake in exorbitant salaries. Still when you think of a pilot, its the one job that you wanted as a child that even from adulthood still looks like it has the least chance of turning out like the soul crushing office work you wound up doing.

Now more than ever we need the minimum wage to be set to the actual living wage. There really shouldn't be a distinction between the two. Congress should act now because the old argument that raising the minimum wage would cost jobs doesn't fly when companies nation wide have already cut their staff down to bare bones, cutting labor down to workers with essential functions and then cutting just a few more. There aren't any more jobs to loose.

You might still be foolish enough to believe in the American Dream, that hard work pays off, or you might be an aspiring corporate raider and make the argument that this still increases overhead of even small businesses. Sure it does, but you are willfully ignoring the big picture. To be trite, the rising tide raises all boats. If everyone is being paid a living wage, suddenly you have a surge of new consumers that have never had disposable income before. They are buying their coffee from Starbucks instead of from Maxwell House, which increases the dollars in circulation and increases profits and liquidity.

Of course this only happens if Starbucks, forced to increase wages, doesn't increase the price of their already overpriced coffee. Theoretically this could cause an increasing spiral where the costs of goods is increases commensurate to the increase in the minimum wage creating an runaway spiral of inflation. But that's where the other market forces come in. First, not every company will simply raise prices to artificially keep wages low. In our global mega corporation economy where even the store brand discount paper towels are made by the massive conglomerate that makes the costly brand name ones it is easier for such companies to spread any cost increase out over a large population and over time. This doesn't even have to turn into a situation where Congress is robbing the rich to pay the poor.

This was what we once got from unions. We have them to thank for the weekend and the forty hour work week. Unfortunately now they have turned into a punchline about organized crime and an albatross around the neck of the poorly run auto companies. If unions want to become relevant again they need to seize on this recession and take big bold action that will carry us out of the recession. I don't see this happening. They protect workers who don't work and see themselves as the enemy of management. Even worse younger workers have to pay dues into the union and get little out of it by being relegated to the worst jobs not by the company but by the union that is supposed to be looking out for them, and they still get crap wages because the union had to sell out the decent wages of new employees to maintain the benefits of the retired.

That being said, I have worked for companies that hate unions, ones that just aren't unionized, and ones that have a large powerful union and ones where the union is a minor impact on a portion of business, and I have seen that the big powerful unions still have a beneficial impact on more than the quantifiable benefits and wages one gets.

Finding a New Dealer

With the announcement that GM and Chrysler will be slashing their dealer networks over the coming weeks it is obvious that thousands of family owned small businesses will be going out of business. This will of course exacerbate the current recession. Clearly this will cause a similar chain of events that the auto giants threatened us with when they blackmailed Congress into bailing them out. The dealers go out of business, sending their employees out into the street and into unemployment and into the worst employment market in decades. Auto repair technicians who were making a middle class living will now be changing your oil at Speedy Lube for minimum wage. This cuts into the spending power of the community at large, and greatly reduces local tax revenues, which are already having the carpet pulled out from under them because of the housing market collapse. I hope you are getting ready for monthly garbage pick up instead of weekly because as the purse strings tighten municipalities all over the country are going to start looking as dilapidated as Detroit and Cleveland.

The closing of auto dealers also helps to worsen the recession by directly adding to the liquidity problem that got us into this recession in the first place. All those acres of cars that the dealer can't sell anyway will not be packed up onto trucks and hauled back to the manufacturer. Oh no. These cars will continue to sit in your dealers lot.

The dealer doesn't own those cars either. The dealer has huge loans to keep those things on property. The longer they sit there the less profit they make. More seriously for the rest of us though, is the probability that these cars will now be sold at fire sale prices by dealers desperate to unload unpopular merchandise and avoid bankruptcy. Which is exactly like those assholes that were flipping houses in Vegas and Atlanta. Except auto dealers know how to unload cars and house flippers couldn't tell their own ass from a hole in the wall.

The real threat is that banks might wind up owning these unwanted cars. That's something no one wants so hopefully they will all see their own best interest is in making credit available to dealers to keep the cars profitable and by making auto loans available to buyers so the dealers can unload these heaps of smoking steel and glass on us. Somehow I don't see that happening, and what we end up with is a sub prime mortgage and credit default swap sundae with bad auto loan sprinkles.

The Walk Of Shame: Paulson

It looks like Paulson's greatest career attribute is the ability to beg. Perhaps that is how he got installed as the ineffectual treasury secretary. He got down on one knee to beg Nancy Pelosi to support the $700,000,000,000.00 BBBBBBBBBBillion Bailout, and on Monday he begged the banks not to horde the cash he is handing them. He is doing this while expressly stating that there are no strings attached. Paulson said,

At a time when events naturally make even the most daring investors more risk-averse, the needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it.

The free market has been dead since FDR, but the Bush administration has found a way to revive the same trickle down economics that got us into this recession, distract everyone by saying you are resorting to socialism. The awful truth behind that scary buzz word is that they are socializing the financial industry's losses in order to insulate their profits from market forces.

Global Food Crisis: Corn Prices

Now we have the numbers. This is probably the start of the predicted rise in corn prices from the midwest flood that will push all foods and comodoties higher globally. Because not only is there less corn now, we will be exporting less.

The World Food Crisis

The world food crisis entered the perception of the average American this week when Costco and Walmart started rationing rice. I came upon rice at half the market rate today in the grocery store and bought up the thirty pounds you see to the left. I also snapped up a gallon of vegtable oil since land used for rice has been converted to the palm oil cash crop and will rise in parity with rice.

The prices of all foods, and all comodities, are linked in this global economy. The staples Wheat, Rice, and Corn have all drasticly gone up in price over the last year. The rise is due to a number of factors that feed back on one another because of the global economy.

In the United States the farm lobby has pushed congress to invest in corn based ethanol. This created an incentive outside of the market for U.S. farmers to dedicate feilds that had been used for producing rice and wheat for food in the past, to corn, that is being burned for fuel. The President spoke of using switchgrass but the money has gone to corn. So this decreases supply of staple foods that the U.S. would otherwise export to the world. With the falling dollar our exports would be very attractive except the cost of rice is fixed to the dollar so it faces the pressures of inflation. The cost of fuel feeds back into the cost of food because of the energy used in transport and processing.

High Gas prices wouldn't effect the hungry as devistatingly if their own countries produced enough food to feed them. Then they wouldn't have to import the food they need from the U.S. Around the world farmer's decisions about what to plant have been influenced by the U.S. economy over the last few years. The black hole of ever increasing imports to America due to ample credit have encouraged foreign farmers to switch to cash crops. Farming has always been a poverty industry since the beginning of time and how can you begrudge an Egyptian farmer who chooses sugar over wheat when its ten times the price?

This global trend to switch to sugar and oil instead of rice and wheat, or poppys in Afghanistan, has driven world food supply even lower. But it has done so in a highly localized way. Major rice exporting countries have cut shipments to ensure they can feed their own people and the major rice importing countries now face a crisis where the whole supply thretans to go into the black market. When the bottom dropped out of the U.S. economy and the falling value of the dollar started an upward trend toward inflation the whole world suddenly realised they had been catering to U.S. luxury demands instead of feeding themselves.

Bush Sending Mixed Messages on Economy

Its as if Bush believes the economy will do what he says as long as he refuses to admit there are problems. So we get speeches like he delivered today that send mixed messages about the economy.
Compare, http://money.cnn.com/2007/12/04/news/economy/bush/ with, http://hosted.ap.org/dynamic/stories/M/MORTGAGE_CRISIS?SITE=DEWIL&SECTION=HOME&TEMPLATE=DEFAULT

Feeling Sub-Prime?

The thing I want to point out here, that hasnt been mentioned except as denials that it is a consern, is that when the subprime mortgage market is allowed to push off its horrid investments on Fannie May and Freddie Mac this amounts to welfare. This is fucking corporate welfare. These are opportunistic people who took advantage of poor optimistic people who only wanted in on Bush's "ownership society." These subprime lenders were only conserned with making a buck and they all knew they were making a bad investment, which is why they hid these in larger investment packages and passed them off like hot fucking potatoes. Now that the investment has turned out to be a bad one they want to pass the burden of cleaning up the mess on to you and me, the fucking tax payers, and they want to leave the Joe and Jane Doe holding the bag. The poor people that got suckered into these predatory loans are still going to loose their home, while the fucking asshole real estate "flippers" got rich off of over inflated house values.

The big point again is that you and I are going to have to pay for the bad investments of some selfish dickheads. This whole thing strikes me as hypocritical bullshit. the people that wer making these investments are the kind of assholes that bitch and moan about the cost of social services and demand we privatize everything, but as soon as trouble looks their way and they go crying to the government for help. Every aspect of this makes me sick.

This whole thing is made worse because its tied up with the falling dollar, droping consumer confidance, falling manufacturing, inflation, falling wages, increasing unemployment, vastly increasing deficet.

That Sucking Noise

Apparently, the confluence of record oil prices, a financial fallout in our primary sector for economic growth for the past decade or so, and creeping inflation is too much for the U.S. Economy to bear. The main indicator of the turbulence, the poor dollar has in the past day tumbled to a new record low against the Euro, as well as for the most part falling back to pre-Clinton exchange rates against other world currencies, notably the Canadian dollar. The Chairman of the Federal Reserve, Ben Bernake, one of the masterminds behind this rapid currency devaluation, has signaled that he expect the economy to slow for the rest of the year, and regain momentum in the beginning of 2008. What might be slightly worrisome is that he mentioned that they have not even calculated for even the possibility of a recession. The European Central Bank, for their part, are worried about the potential impact of cheap American exports on the world market, with Bush's new best friend Nicholas Sarkozy going so far as to mention the phrase "trade war." All of this makes me wish that the Fed still published statistics about the growth of money supply.

Oil, on the other hand, is not nearly as interesting, it only hit an amazing high just over $96 per barrel, as opposed to actually eclipsing the $100 price range. Between the price of oil being up 42% since August and "I think the market is due for a correction," I would say that we need to start car pooling more, or perhaps look into public transportation.

In other news, the primary builder for expensive homes in the U.S., Toll Brothers announced that their sales are going into tailspin, bringing up the question of whether the leg that is consumer spending is wobbling... Hopefully, it's only wobbling.

The New York Stock Exchange and most other world indices were pushed down today by poor results in the tech sector.

By far the most worrying aspect of all of this is the mention by Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress and the other mastermind, that the American dollar is losing its status as a world currency.

I hope the managers at brokerages are telling their people to lay off the coke.