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.
A number of brewers announced recently that the price of beer that the consumer pays will be going up citing rising costs. In the CNN story above the reasons given are less vague. The brewers claim to be raising prices to offset rising commodity prices and fall in volumes. Though, commodity prices have fallen recently and have caused farmers and dairies to worry about staying profitable this year. Also, ten days ago Anheuser-Busch InBev announced that their second quarter profits had grown despite the drop in volume because of cost cutting measures. One has to work through the maze of business doublespeak in these non judgmental articles regarding price increase and increased profitability to understand that cost cutting and "synergies" in these cases refers to job cuts as a result of the InBev takeover of Anheuser-Busch.
If you are the kind of person who likes to buy American and support American jobs, it is gettingharder and harder to find an economicalbeer. Though some of the big brewers still employ Americans.
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.
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.
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.
It was interesting to me to observe the tone of media coverage regarding the Bailout over the last week. Prior to the rejection of the first bill by the House the coverage was neutral with most coverage being directed at explaining just what the legislation was supposed to do but there was almost no coverage of popular opinion which was vastly opposed to the measure. After the shock subsided from the precipitous drop in the stock markets following the vote by the House, and it was found that the sky had not fallen and business continued as normal, the MSM started covering the vast negative public sentiment. This was mainly as a means of explaining why the Representatives voted as they did and attached to the old adage that the House is the more populist body. Suggesting that the real people of the country are only actually represented in government at the national level in the House of Representatives.
Until this morning the MSM was freely using the term "Bailout" to describe this massive gift of taxpayer dollars to the greedy rich motherfuckers that got us into this crisis in the first place. However this morning, the MSM has started referring to the bill as the "Rescue Plan." Yes, the Bailout that passed the Senate in the dark hours of the night when noone could see their shame has been spun. Instead of being a colossal failure of leadership, this is now a plan. Instead of being a giant burden of over $10,000 on every taxpayer, this is being called a "Rescue."
How long will this kind of transparent bullshit go unchallenged? Where is the voice of the American people? We, the people of the United States are overwhelmingly opposed to this legislation but if you look at the MSM you would think that we all accept this bill as a necessary evil. This is exactly the same failure of the media that got us into Iraq. Where are the pointed questions? Where are the experts holding the feet of the members of congress to the fire? Why is Kucinich the Keebler the only person that sounds sane? It takes a vegan who thinks he was abducted by aliens to raise concerns about the artificial haste with which this bill is being forced through congress? What about the old adage that the Senate is the more deliberative side of the Legislature?
Where was the thought process yesterday? It was clouded by fear and greed. Fear that there is an imminent catastrophic collapse in the future, and greed motivated by all that money. Why think about rational solutions when you can slip in a rider that directs funds back to your pet projects? If you are going to alienate millions of people by voting "yes" you might as well buy the votes of a few back home.
Like 9/11, this is another crisis that was easy to foresee but once it materializes people in government are using the ignorance of those that did not see it coming to create an unjustified panic in order to gain unfettered power. I cant' believe that exactly the same trick is working on the same people just six years later. I guess Lincoln was wrong.
I wish that was all I had to say about this but I want to highlight the behavior of the presidential candidates and I want to single out a particular economic pundit who has been causing me great personal outrage for the last three weeks.
The H-pod has been getting increasingly aggravating with his constant reliance on the trickle down theory of economics as if it is still a valid method of thinking. As if trickle down hasn't been clearly disproven by the recent recession. As if he isn't just fattening us up for the slaughter. Velshi is just trying to keep the taxpayers calm and encourage acceptance of the vastly flawed Bailout.
As for the candidates, they have both failed to show leadership in this crisis. Neither candidate has even attempted to deliver a strategy for solving this problem. Neither candidate nor their VP nominees have given concrete examples of things they would do if elected that differs from anything they have been saying since June of '07. To me its painfully obvious that they could follow FDR and his lead that propelled us out of the last Great Depression. They start a massive public works project. How about one that creates energy independence? Then you solve two national problems at once. OK, its four problems is you include oil wars in the middle east and energy's impact on the environment. Massive building projects that create super solar farms in the sun belt, wind farms in the great lakes and off the Atlantic coast, factories that produce the new solar power generating windows. The government can spend some of the seven hundred fucking billion dollars of U.S. taxpayer rape on investing in our technology future. The U.S. is falling behind. It was the lack of foresight of congress that caused the Large Hadron collider to be built in France and Belgium.
Both parties have failed. Both houses of Congress have failed. The Bush administration has failed. Local governments have failed. Wallstreet has failed. Individual investors and property buyers have failed. Foreign governments and corporations have failed. There is plenty of blame to go around but little understanding of the full scope of the failure. This colossal failure of leadership is not likely to be cured by panic and a rush to pass the first piece of legislation proposed by an administration that has showen itself to be power hungry and incompetant. We need to vote every one of these selfish beureaucrats and politicians out of office. We need to finish the job of cleaning house that we started in 2006.
It hasn't been often in the last 7 plus years of the Bush Administration when one could truly say that the power of people defeated the people of power. When special interests took a back seat to those who really run the country, Mr. and Ms. Average. Since the bailout was originally announced, there have been numerous campaigns to stop it, academic disputes, and even the rarest of the rare, a public battle among the normally tightly disciplined Republican party. But, in the end, those who have to face up to the voters on November 4th realized that voting yes was potentially one of the biggest threats to their political careers, regardless of party. If you look at the list of how people voted in this historic vote, those on the 'yes' side will probably have a rough time of it, if not lose their seats to those who chose not to approve the still horrible re-negotiated version of the bailout proposal. In particular, I'm sure Dennis Kucinich (OH-10th) is feeling a little smug, knowing that he predicted the outcome of the vote.
On a slightly different note, I'm not sure why everyone in the world of pundits is characterizing this rejection of the bailout proposal a failure of governance. In common parlance, bills are said to have failed, but that is almost a bureaucratic term. In real terms, this bailout was an ideological battle between those who are in favor of and those who are against nationalization and similar bailouts in the United States. Moreover, this is not a vacuum of leadership in which the U.S. government is flying down a country road like a '62 Corsair without a driver., as that has been happening for the last 7 years.
Of course, in a vacuum, comes the punditry. Perhaps the most offensive piece I've read thus far about the political process that brought about this conclusion comes from Rupert Cornwell from the U.K.'s Independent. My favorite metaphor in the article compares the mechanisms of American democracy to Alice Through the Looking Glass. Putting that aside, though, the author clearly doesn't understand the huge popular backlash against the bailout. Sure, in the U.K. and other parliamentary democracies, the Prime Minister isn't approved by the people at large, but in the U.S. the leaders need to be especially accountable. And to say that the bill died in partisan sniveling is obviously disregarding what was essentially a bipartisan effort to keep the American people from having to shovel out $700 Billion or more on a plan that was only designed to correct the dangerous excesses of the richest segments of society. Perhaps, too, the American people have become wary of those who warn about apocalyptic disaster and offer a solution that meets a certain biased politican agenda.
Kevin Connolly from the BBC, in looking at the reasons behind the bailouts defeat in the House of Representatives, expresses a strange sentiment, that after this bill's defeat and the sense of crisis that it engenders will offer a way out for the bailout proposal, that Main Street hasn't suffered yet. Unfortunately, the people of the United States have been suffering, which is the underlying cause for this economic crisis. With the inflationary impact of cheap money, combined with tepid job growth, primarily in the services sector since the recession of 2001, people were forced to choose between living and surviving, which meant that the mortgage had to go unpaid. Thus, in a trickle up fashion, the banks and other financial institutions, who were holders of arcane financial securities into which these poorly written mortgages were conglomerated, began to suffer the counsequences of their poor lending practices. I think Mr. Connolly underestimates the intelligence of Mr. and Ms. Average and their understanding of this situation, as Mr. or Ms. Average are probably already unemployed, underemployed, or facing the prospect of losing their job in the failing economy.
From the campaign trail in Iowa, Sen. John McCain who, infamously, suspended his campaign to not show up in Washington for negotiations, has called upon Congress to return to the drawing board and to get back to work right away. Sen. Barack Obama, from a rally outside of Denver, called for calm, saying that things in Congress are never smooth, and instead of imploring or demanding that his colleagues work on the proposal to shore up the wealth of the financial sector, he used a baseball metaphor.
So panic thus gripped the financial markets, and the Dow Jones suffered its worst lost ever in terms of points. But, have no fear for liquidity, because Helicopter Ben Bernanke has come to the rescue, increasing the amount of dollars in the global financial system by a whopping $630 Billion dollars. To show you a frightening graph that indicates inflation, perhaps even hyperinflation, is just around the corner, here is the Adjusted Monetary Base, courtesy of the St. Louis Federal Reserve. The highlight of a series of moves in the banking industry, Citigroup has purchased Wachovia, after the stock lost more than 80% in trading on Monday.
[Note: This posting was authored by TheRedKap, who is currently behind the Great Fire Wall, and is unable to post directly.]
For those of you at home who are worried that the American economy is crumbling beyond repair, take heart in the fact that the United States is still the arms supplier to the world. All of the usual types of equipment are involved, namely the M-16 assault rifle, the F-16 in various configurations, and the C-17 military transport plane. However, there are a few new surprises. For instance, the United Arab Emirates is reportedly considering purchasing Black Hawk helicopters and Hellfire anti-tank missiles.
Details of the record $32 billion year enjoyed by the Pentagon include a package of various weapons systems to countries in the Persian Gulf region. But, don't worry, all of these weapons are going to our friends, such as an advanced missile defense system for the aforementioned U.A.E., helicopters and tanks for Saudi Arabia and Egypt, , and most interestingly technology to help Jordan secure its border with Iraq. Iraq, soon to be flush with billions of dollars in oil revenue is in the market for modern military equipment, including F-16s, armored vehicles, attack helicopters, and mortar systems. An upgrade to the PAC-3 and munitions for Israel is also in the works, along with at least 25 F-35 Joint Strike Fighters, with options for up to 50 more, with an eye to getting the planes to the IDF "as quickly as we possibly can."
Meanwhile, Russia's 21% of global arms sales, which partly go to Iran and Syria, were recently characterized by the Israeli Ambassador to Washington, Sallai Meridor as "dangerous and destabilizing to Israel and for peace in the region." Sure, the US and Israel were cooperating with the Georgian military prior to the recent 5 Day War, to the tune of $300 million dollars last year alone, but clearly the Russians were unjustified in their reaction to the Georgian offensive into South Ossetia and Abkahzia. The ambassador, for his part, couldn't understand why anyone would see these arms supplies as threatening or destabilizing. Looking through the old crystalline prism of spheres of influence, the Russians are very concerned about the threat upon its borders.
Do not be confused into thinking that these arms sales are entirely funded by the recipients of these weapons systems. The U.S. government, according to numbers from the BEA, spent approximately $3.8 billion dollars in the first quarter of 2008 financing foreign military sales. While this may be a drop in the bucket compared to the monthly deficit our government is currently running, such as the $111.91 billion dollar deficit for the month of August, arms sales are the classic example of foreign diplomacy that has the biggest potential for unintended catastrophic results.
Apparently the tax law is so complex that even the guy in change of writing it doesn't understand his own obligations under that law. Or maybe he just forgot to report tens of thousands of dollars in income over two decades. Somehow, I think that if I made a similar mistake there would be gruff men in dark suits knocking on my door.
Speaking of money owed to the government. Days after the Interior Department received an award for high standards of integrity the Inspector General of the Interior Department issued a detailed report describing inappropriate conduct among the minerals management services who collect royalties from oil companies. The sordid dealings include contract fixing, inappropriate sexual relationships between regulators and oil company execs, and regulators being on the payroll of oil companies as consultants. The missing money comes in where the MMS has failed to pursue thousands of dollars in royalties owed to the government by the oil companies while they have been racking in record profits and growing fat off of huge tax subsidies. Subsidies which also don't seem to be doing anything to keep gas prices low. At least the "MMS Chicks" had a good time.
Pelosi seems to think this will effect the nature of the debates regarding increased offshore oil drilling. By which she doesn't mean that this information revealing that the Bush administration could have done something about the rising cost of oil will be used to take increased drilling off the table. (Drilling that wont do anything to reduce the cost of oil since it will take decades for there to be any production and that production will be so small as to not make any impact at the pump.) No, this will just result in some language being added to the bill regarding integrity. This new information won't change anything because it has already been decided to go ahead with drilling. In fact congress has decided to go ahead with a worse plan than that suggested by Paris Hilton.
According to the U.S. Census Bureau, Cleveland is the second poorest city after only Detroit Michigan. The downfall of both cities is linked and ongoing but at least Cleveland doesn't have a mayor under indictment for perjury. Local news outlets are trying to cut the sting of the numbers by pointing out that the same report states the average household income in Cleveland grew over the same period. What they either don't realize or are deliberately not saying is that this means the gap between the rich and the poor is widening at the expense of middle income families.
This is the kind of thing one would expect to see in a major urban center that is still experiencing flight of the middle class out of the city into the suburbs. It is also an increased threat to the American Dream. In a city where poverty is increasing and which has been hard hit by the collapse of the housing market it seems increasingly unlikely that this is a place where a working family can get a leg up and advance their financial standing. Which would explain why people are leaving the area.
All of these things combined cut down the tax base while increasing the demand on government services. This isn't just more people becoming a drain on the welfare state. It's vacant buildings becoming bastions of criminal behavior causing a drain on the under staffed police force. Those same vacant buildings are also a drain on the fire department due to arson, which increases response to emergencies and costs of investigation. Lastly, the city has to buy those buildings and demolish them creating costly legal work on top of paying out settlements to the banks that have foreclosed on these houses. The roads are in bad need of repair, and communities region wide have to replace their sewage systems because they violate clean water standards, spewing human waste into lake Erie. The steel industry is dead, but its rotting corpse is lying unburied across the rust belt of America.
Today is Labor Day, the Sunday night of all summer. Its still warm out but kids are back in school and the leaves will soon start to turn. That doesn't stop main street from thinking about the big sales figures it draws in for the Christmas season. Especially given the struggling U.S. economy. All summer long they groan in board rooms about slagging sales and strain their little MBA minds to come up with something original and every year the answer is to try to make the holiday season as long as possible.
This is all shit you have heard before. I am just here to vent my rage at seeing Halloween advertisements and sales on fucking Labor Day. All year long I wonder to my self why I have an irrational hatred for corporations despite being "libertarian" and then this shit happens and my rage boils up and I don't have a memory problem any more.
Look at that shit! Discount Halloween candy? That shit won't make it till the end of the month even if you don't eat it. But who fucking cares about that, you are giving it to other peoples kids. Why should you bother to have candy that isn't filled with moth larva after sitting in your kitchen for two months?
That's what they used to call Wal-Mart where I grew up. I worked for Wal-Mart for two years in various departments so I know first hand about their anti-union practices, among other things. When I was first hired I was taken into the HR office where I was shown some orientation videos. These were poorly written propaganda where the opinion the company wished you to have was told to you with the not so subtle undertone that your job depended on not openly disagreeing. Mostly these videos cheered how great the founder was and how powerful and efficient the company is. Next they claimed that the dead-end job you were hired into was a golden ticket to the high life as long as you keep your head down and keep your mouth shut. The most inelegant of the propaganda videos was the anti-union video. It laid out Wal-Mart's corporate line on unions: unions will lie to you, you will pay huge dues and loose all your company benefits, unions don't help workers they are just out to run national political campaigns that are against your best interest. Even as a kid the threat wasn't lost on me. Wal-Mart was saying directly to each new hire, if you try to unionize we will take away the meager benefits we have graciously seen fit to give you. Any idiot could see that the benefits were terrible, dead peasant insurance and health care that only the management could afford. Wal-Mart is so anti union that they even closed a store where the employees voted to unionize in order to prevent the unions from getting a foot hold in the company. The Wall Street Journal recently ran an article detailing how Wal-Mart warned its employees against voting Democratic this fall while matching that with a renewed parroting of the company line against unions. The funny thing is that these speeches are probably the first thing most of these employees heard about the Free Choice Act. From my experience working at Wal-Mart the people there aren't particularly political and would have to be pretty fed up with working there to even be considering the union option enough to know about the Free Choice Act. I know its the first I have heard of it and extra publicity for the act is probably the last thing Wal-Mart wanted. What can you expect from a company that has such an unrefined propaganda machine?
It is repeated many places on the log cabin so I wont go into much detail here but it is important to recount what is bad about Wal-Mart. The low prices at Wal-Mart aren't from some magic that Sam Walton pulled out of his ass. Lowering prices to out perform your competition is an old tactic. the problem with it is that you cant do that forever unless you have some way of making your cost go down. Two ways Wal-Mart saves cost(lowers overhead) is by getting lower prices from manufacturers and reducing labor costs. They cut prices from manufacturers first by buying in huge volume, Wal-Mart is the largest retailer in the world and has the power to negotiate(dictate) their own prices from their suppliers. The problem with this is that the suppliers and manufacturers have their own costs to cover and in order to lower prices they have to close factories in the U.S. and send them overseas. Master lock is one brand this happened to, Wal-Mart also drove the entire television manufacturing industry overseas. This is one way Wal-Mart destroys American jobs and lowers the wage of the American worker. Wal-Mart keeps its labor costs low by paying a wage that is below the poverty level (a living wage in the U.S. is over $11/hour) and offering few benefits and pricing the benefits they do offer out of the reach of their average employees. Then they force the American taxpayer to subsidize their employees by referring them to state and federal well fare programs. Think that over, you are subsidizing Wal-Marts low prices and their astronomical profits with your taxes, whether or not you shop there. At about 4:30 into the video it gives you numbers on this.
When I first started working at Wal-Mart management at the store I worked at would wait till someone punched out at the end of their shift and then tell them to clean up a department before they left. At least they weren'tlocking us in overnight. There was an audit by the government and that practice stopped only to be followed by a tricky hiring practice. The manager didn't hire any full time employees. That alone saved on lunches since an eight hour employee gets two fifteen minute breaks and a half hour for lunch while a four hour employee gets only one fifteen minute break. It also saved on benefits since only full time employees were eligible for them. These new employees were all hired for the lowest paying job in the store and then trained for the jobs that got paid twenty five cents per hour more. That's a small dick in the ass of each employee but twenty five cents an hour for fifty employees over a an eighteen hour business day seven days a week adds up to over $80,000 in labor cost savings a year.
So Wal-Mart comes to town playing its game of dirty pool, drives local businesses out of business, and forces self sufficient former entrepreneurs to work for poverty wages while taking dollars out of the local economy and sending them to their corporate offices in Arkansas and overseas. That's why when people suggest I shop at Wal-Mart I say, "Sorry, I love America too much."
The Electronics Entertainment Expo ceased to be relevant when it became a venue for gaming companies PR departments to masturbate in front of the media rather than a showcase of the latest in electronics for the consumer base. This parallels the fall of the movie and music industries except the video game industry is still going strong. Movie and music companies have been seeing falling revenues and blame piracy and a shift toward video games. Except in a previous posting we have discussed studies that have shown some piracy actually helps music sales. These companies refuse to acknowledge that the mediocre and pedestrian fare they produce might be the reason they can't attract customers. Also, I personally believe that an artist has the right to own and benefit from his creation. However the corporate model of entertainment production where producers dictate creative content and the label owns the final product create an environment that stifles creativity. It doesn't help that independent music and movie producers are being bought up by large media companies because they are profitable and then shut down to trim costs once they are inside the fold of the media giant. The big studios fail to see that it was the niche markets and inherent freedom to create that was the strength of the independent shops. Instead they blame the Internet and pirates and make overzealous moves to defend the copyright (that they swindled away from the artist in the first place) and they wonder why they are perceived as attacking their customer base.
I love movies and watch them often. I have a friend, we'll call her Pear, who also loves movies. We sometimes watch the movies we get with each other, sometimes not. Neither of us has an extensive DVD or, god forbid, VHS collection. We watch so many, that it would be ridiculous to purchase every movie we want to see. Rent? Oh no, no. Pear, as far as I know, has not rented a movie in what may be years. I will occasionally rent one, but it is usually if options are limited. No, Pear and I watch all of our movies for free, essentially.
The fact that my font name is Bloated Nemesis and this is a blog, you could probably make an assumption that I download movies from the log cabin. Well, you would be partially correct, son. That used to be the way to watch movies in the Bauman Manor living room. Downloading has a couple of significant draw backs. The most relevant to this post is the concept that the downloader now has a copy of it. They can spread this copy around as if it is their own. The downloader can become a distributor. Though, I really have no problem with that, I hear there are some rich, fat, selfish dudes in Hollywood who seem pissed about that possibility.
No, the preferred way to view flicks in the Bauman Manor is streaming. It is easy. It is quick. It isn't always reliable. However, it is beautiful. After I watched Bad Lieutenent last week, I could not distribute it to others. I can point someone towards to the site I watched it with, but that is about it. Essentially, it is being broadcast using the log cabin. Now granted, if we applied FCC laws to the peeps who are broadcasting it, they would be shut down.
Pretend it is 1945, and we all love radio. I'm scrolling through the stations and I stumble upon a station I have never heard before. It turns out some rogue electronics nerds with resources set up a tower and started broadcasting with no FCC authorization. Well, those rogue nerds would get in trouble when they were caught. However, those of us who listened to the station would not have legal problems.
So, one of our two film buffs uses log cabin streaming. Well, what does our friend Pear do? She goes to the library. You know, the public library, or that big ass building downtown that has all of the books and homeless people. Ring a bell? Pear watches a lot of movies, all for free. (Well, I suppose technically tax dollars factor in it, but we are working on the individual consumer level right now.) That is completely legal. Shit, you are considered a "good citizen" if you use libraries. Well, it is a slight surprise to some people that libraries often have movies. Lots of them. Good ones, too. Often, many of the same ones you can get from the log cabin. When Pear gets movies from the library, she does not get to keep them. There is a limited time period in which that movie is "hers."
So, in recap. Pear and I both watch a lot of movies. We watch them for free. We have a huge selection to choose from. We have a limited time period in which the movie is "ours." Shit, libraries and streaming both have an unreliability to them. (Even if Pear knows the library has a movie, they may not have it available at that time. When I stream, I often run into server problems or bad copies.) Seems like borrowing media from a library and streaming off of the log cabin are pretty comparable to me.
So, I was just wondering, if the log cabin is the future of information dissemination, and libraries are the past, why is there not a similar legal option on the log cabin to libraries?
Oh yeah, I remember. The log cabin is a new frontier, much like America was up until 100 years ago. The corporations are trying to make the log cabin completely profit driven, and they want to squash anything that is more utopian than them.
Although this article is long, it gives a thorough look at the fundamental conflict of interest between the credit rating agencies and the financial markets that exploded and is, to say the least, now exposing the U.S. economy to further downside risks. However, this is only one part of the calculations behind Gross Domestic Product.
Private spending and business activity is also fairly important when considering the health of a particular economy. While oil futures are a good indicator of what will happen in a few months, after oil has been refined, with near record low refinery utilization rates, into various chemical products, individual corporations earnings are perhaps a better indicator. Bank of America, the giant in discount consumer financing announced a 77% drop in profit for the first quarter of this year, mostly because of concerns with defaulting mortgages. For some anecdotal evidence, one need do no more than compare this graph of subprime mortgage concentrations, with this article about California's foreboding rising in foreclosure rates. Global shippers UPS and FedEx are usually a good indicator of economic prospects.
However, with the ongoing catastrophe that is the hunger crisis, inflation, rather than the lack of available credit, would seem to be the biggest threat to global economic stability. This inflation is, of course, a natural response to the growth in oil prices, as industrialized economies depend on the supply of crude oil in just about every sector.
The situation is exponentially compounded when the currency that is the basis of all of these transactions is rapidly depreciating in value, as seen in record lows versus the Euro. One must wonder if Ben Bernanke and the rest of the Federal Reserve Board are questioning their monetary policy, as economies that are keeping interest rates up to draw capital are seeing their currencies rise in relative value.
Another factor in this fiduciary fiasco is the echo chamber of ideas. Last summer, CEOs declared the housing crisis near its end, and more recently that the crisis was in its last throes. The point that we can take from these statements is that their companies are more important than reasoned, open discourse about the overall state of the economy. And that it is a losing proposition to trust those who are dependent upon a stock price. As long as there are CDOs and other arcane financial creations that do not have a monetary value, banks will continue to be plagued with problems, which will be further complicated by consumer spending withering away under the burn of inflation and unemployment. Surveying a crystal ball to find the answers to when the U.S.' GDP might become positive again is less than useful.
G7 finance ministers and Central Bankers are scheduled to meet in Washington, D.C. through this weekend to hammer out solutions to the numerous crises facing the world economy. Here's a handy list of items that might be on their agenda.
General Electric reported losses across almost every sector of operations for the first quarter of the year, and revised revenue for the year downward. The normally stalwart stock is perhaps the strongest indicator yet that the global recession is reaching into every part of the economy.
Bear Sterns has delayed releasing its first quarter results due to the disruptions caused by the merger with JP Morgan. As they are expecting negative results, one can understand their disinterest in transparent financial accounting, but its losses will probably be indicative of the weakest parts of the financial markets.
Head of Germany's Bundesbank, Axel Weber, is concerned about inflation in the Eurozone, and doesn't see any room for interest rate hikes. One can imagine the back and forth between European and American banking officials over the difference in interest rates and other monetary policies.
According to the IMF, inflation is also expected to tap down growth in emerging nations in Asia. With consumer confidence in the United States slumping, to put it mildly, in the facing of rising import costs, growth in Asia will come to be the growth engine for the world economy.
The food crisis throughout the developing world, while the most important of the various crises to be discussed, is unlikely going to be at the top of the agenda as finance ministers through the developed world are beginning to see the limitations of their capital.
As mentioned before, the position of Ben Bernanke is likely to come under heavy scrutiny among his colleagues, as the Fed Chairman continues to stand by the notion that banks and other perhaps insolvent financial institutions should be allowed to continue operating, and although the 'originate-to-distribute' system of loans failed at almost every level and started the current credit crisis, the system could be fixed and return to being useful in the future.
Oil prices, while retreating from their record high of $112 a barrel set earlier this week, are continue to weigh on the economy. However, the larger economic impact is felt by record high gas prices in the United States, edging closer and closer to $4 as the Summer driving season approaches.
What is an annual or bi-annual exercise in frustration in good times, has become a nightmare for many states across the union, as legislators tangle over spending priorities. An equally alarming trend is that some states were only able to reach their decisions behind closed doors, away from the probing eyes of the concerned public. And how concerned should the public be about the problems behind budget shortfalls? Well, the public is already cutting back on their expenditures, so there's little reason to further bemoan the plight of Main Street. To provide some background context, here are the BEA's GDP Figures by State. Government spending is a major factor in GDP calculations, and with states being forced to spend less, there will be further downward pressures on GDP for 2008.
In Kentucky, the budget process is getting bogged down as State Legislators use money in special funding pools to spend millions of dollars on efficient and not expenditures, such as infrastructure little league equipment. However, to add more funds to the state's General Fund, lawmakers are planning to seek at least $25 million through the sale of bonds. Even with the modest amount requested, one would hope that the State Government would seek to diversify their income sources to allow for more flexibility. The deadline for final action on the budget is April 15th, the last day of the 2008 General Assembly.
In New York's new budget, the final version of the budget allots education funding in a similar pattern to previous state budgets, with appeals to certain constituencies, such as Westchester. Nine days late, the budget was decided in last minute closed door talks between legislative leaders and Gov. Patterson, who has reportedly been marginalized throughout budget negotiations. However, depending on $1.5 billion windfall funding begs the question of whether or not the state has overspent.
In another case of infrastructure projects falling under the axe of deficits caused by falling receipts and increased costs, South Carolina's budget is facing a $90 million shortfall that appears to be stifling long-term economic growth and short-term development opportunities. Water and sewage aside, the proposed fiber optic system, Light Rail, designed to connect the state's three research universities to national and international colleagues probably would have created numerous extraneous benefits beyond the possibility of drawing private investment.
Nevada's situation seems much more drastic, or in the words of Senate Minority Leader Dina Titus, Democrat from Las Vegas, "We're down to the bone." As all of their traditional revenue streams have dried up, the state is facing at least $350 million in budget shortfalls, aside from unfunded liabilities in the State Pension system which will cause problems in future years.
In California, the Governator is on a tour of Republican strongholds to drum up support for an amendment to the state constitution required by his sytemic fix of the state budget process. In an effort to tie the hands of legislators, Arnold is trying to limit increases in legislative spending to 5.4%, the average increase in revenue in the state, an effort to average out the boom and bust years.
In Florida, the downturn in tax revenues has gotten so bad, that the Florida House has proposed suspending Hospice funding for the next two years. Lawmakers argue that the programs can be supplemented by localities and hospitals. It stands as just another lesson of the problems that stand to be created as states reduce the services they can offer as they aren't able to make Benjamin Franklin stretch in quite the way he used to.
Arkansas, too, is facing shortfalls, with the state legislature predicting that only 54% of the second-tier Class B spending will be funded in the coming year.
Unfortunately, due to the arcane nature of economic measurements and a desire on the part of the elite to remain elite, there is an entire market around attempting to provide answers to clients and predict near- and long-term economic phenomena. So, in an effort to help you from wanting to go spend money on overpriced financial services, here are some questions you may be asking, and some answers.
How much will this crisis cost the economy in the long term? According to JP Morgan Chase, the overall costs could be as much as $1.2 trillion.
How is the crisis being felt in other markets? Europe's economy is resilient against the contagion, thanks to the rising Euro and sound monetary policy of keeping interest rates stable, which, in turn, draws available capital into the Eurozone. Head of the European Central Bank President, Jean-Claude Trichet remains skeptical if the worst has yet to come. Canada's CIBC still is working through at least $25 billion in exposure to monoline insurers.
Is there more unwinding yet to happen in bad loans? The simplest way to answer this would be to say, "Yes." However, as details are still emerging about the prevalence of home equity loans, or other liens placed on homes in addition to the traditional first lien, mortgages, there is still a lot of red ink to be spilled.
Is the stock market going to be a viable investment anytime soon? Perhaps, but not for the next few years. In the cyclical nature of business, the stock market traditionally sours for a decade after a decade of strong trading. So if this trend continues, the market will probably not begin to make lasting gains until approximately 2012.
With increasingly visible protests against financial corporations receiving bailouts from the Federal Government, are there any other potential targets of popular discontent? As all politics are local, one need look no farther than the financing of your local Wal-Mart. Does your local community allow 'tax increment financing?'
The employment outlook is souring, but was there any good news in the latest batch of GDP data? Not really, almost every number on the page is down in comparison to the quarter before, with a very precipitous drop in government spending. Also of note, exports are declining at the same time as imports are decreasing, which is a reflection of real consumer spending. Also of note, the value of real residential fixed investments, that of houses and such, fell by 25.2%.
With all of the concerns about moral hazard, is there really a bad way to intervene in the marketplace? Yes, there is. For instance, pushing Fannie and Freddie into buying bad loans and then holding more capital in reserve against this new volume of bad loans. Businesses and executives that made bad decisions need to face the consequences of their decisions. The government has enough work to do to get its own house in order. I'm not alone in thinking that with this bailout will come a spiraling dollar.
There are two issues going before the Supreme Court in the news today. The hearing challenging the Washington D.C. gun ban and a challenge to broadcast indecency regulation by Fox. Both of these cases have to do with the relationship of individual to one's government. And, in both of these cases freedom is being defended by right wing maniacs. The same maniacs who have been decidedly anti-freedom under the Bush administration.
It's difficult to defend freedom of speech when its offensive, and it's difficult to defend the right to have and use a lethal weapon without resorting to a slippery slope argument that evokes an opressive totalatarian 1984 regime.
Many of the Founding Fathers were philosophically libertarian. This philosophy describes the American way the individual relates to one's government. Power is vested in the government by the citizens and the purpose of the government is to preserve the rights of its citizens. This is the only way sovereignty can be legitimate. Under this philosophy, the rights delineated by the Constitution and the Bill of Rights are not granted by the document but ensured by it. Every human has these rights, it is the purpose of government to ensure the freedom to use these rights.
Freedom can be a scary thing. Its hard to trust strangers not to abuse their freedoms and infringe upon ours, but that is the freedom that each of us gives up to live within civilization. As long as no one infringes on your rights, you do not have the right to be offended.
The national debate over guns is often depicted as having one side that declares, possessing guns is an individual human right, and another side that declares that guns kill people. I do not see these as counterpoints to one another. Saying that a gun kills is like saying water is wet. A gun is a tool for killing and a pistol is a tool for killing other humans. The point is so obvious that it overlooks a fundamental difference in ideology that stems from the Western fear of death. We believe that death is bad and killing is wrong as if they are intrinsic universal truths. In an urban life, separated from the terrifying freedom of nature, and surrounded by a comforting layer of concrete and glass it is easy to believe, "my life does not cause death," but that is not true. It seems to me that this is the same kind of foolishness that leads to veganism. Though, as much as I believe it to be foolish, it is each person's right to choose when it is acceptable to kill. And in a society where our killing is done for us by others, it is difficult to stop. I can only accept that by being alive that my life necessarily causes death, one day I will die, and something will eat my body.
All this wheel of life shit is too philosophical for the debate at hand. The point is that sometimes, killing is necessary. Sometimes it is necessary to kill another human being. For instance, in self defense when that human is trying to rape you, kill you, or severely injure you it is acceptable to use lethal force to protect yourself. Libertarian philosophy supports this conclusion and our laws regulate its effect by apportioning guilt. If you accept these two points, that there are acceptable times to kill and one of those times is to protect your person, the only remaining debate is one of tool choice and the question of banning guns becomes one of reasonable regulation. Should weapon choice be limited, and in what way?
Meaningful hard data is difficult to come by since through studies have been done by either side of the issue and anecdotal evidence can be pointed to by either side. In my recent posts on this blog I have referenced some stories from the past year that tend to support the conclusion that gun regulation either does not work or is counterproductive. One story noted a significant decline in violent crime in Detroit, every year for the last ten years since the passing of Michigan's concealed carry law. In the tragic massacre at Virginia Tech, the killer had been declared to be a danger to himself or others. Existing gun control laws prohibited him from purchasing a gun but he was able to anyhow, either because of bureaucratic bungling by law enforcement or through the negligence of the shop owner. Even more recently a gun toting maniac shot up a convent and was stopped from killing more people by an armed member of the congregation that had the lawful right to carry and had been a police officer.
One last point about the Second Amendment. The founding fathers were radical revolutionaries who had just overthrown their government through a violent war. They knew this was only possible by having armed citizens who could be loosely organized into militia when there was a need for extra military force. As Thomas Jefferson said, "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
Such an audacious quote brings me to the topic of freedom of speech. You are not really using your freedom of speech unless someone is trying to take it away from you. The gurantee of this freedom exists not to protect mundane and polite speech, but offensive, shocking, profane, and challenging speech. This is why freedom of speech means you do not have the right to be offended.
Speech is impossible to regulate. Profane language is derived from emotion and is meant to convey that emotional content. The power is only marginally in the words but it really stems from the emotional content they are meant to convey and the power we invest in them. You might as well attempt to regulate anger and criminalize rage.
Even if one could make a list of say, seven words, that must never be spoken and if that regulation can actually have an effect on stamping out those words. Other words will be granted offensive power by being filled with the same emotional content and social stigma making the old words meaningless and silly. Language is fluid and meaning changes in relatively quick time even in regular words. "Humbug" used to be a profoundly profane word and is hardly used today.
Further, such regulation is inherently self-defeating. Labeling certain words as taboo only encourages their use for the purpose of shocking others. Thusly, restricting a words use as profane, only enshrines its profanity, and further empowers it to do harm.
I am certain that this was the goal of the performers who used these offensive words and caused Fox to be fined by the FCC. It seems ironic to me that Fox, the network that curtailed political speech and freedom of the press through social pressure and jingoism in the frantic run-up to the Iraq war where the MSM failed its duty to the entire world, is the one who is fighting for a small victory for free speech. Then again, if anyone is going to go to court over profanity, its going to be the network that brought you "Who wants to marry a millionaire?"
With Ben Bernanke's newfound affinity for nimble and flexible policy, the comparison to a cat almost seems natural. However, in an effort to help you better channel your inner cat here is some reading and food for thought.
First, usaspending.gov is a really awesome website for policy addicts out there with some dynamic ways of looking at the way that the U.S. Government spends its money, with much potential for fun and blogging. For instance, in 2007, the Federal government spent less on traditional state spending than in previous years. This continues, despite record federal deficits. As one would expect the crumbling value of the dollar is being reflected in exponentially increasing federal spending. Unfortunately, for us, the War in Iraq and the Global War on Terror are contributing, if not causing, this problem.
Here is a handy slide show from the GAO about how the government is spending its money. The numbers are pretty terrifying, especially considering that these numbers don't reflect the quicksilver economic reality that we are currently faced with, aka the increased transportation costs of gas prices going up by 25% on average. Remember when it was serious when gas reached $2 a gallon? Not to mention the fuel inefficient vehicles the military relies on aren't going to see less use in the near future. Unlike the GAO, we here at the Fringe Element feel that more constructive advice is necessary, if for nothing more than general principle. My recommendation would be to move towards an asset-based financial system, perhaps similar to Islamic banking practices, in an effort to provide some stability to the dollar to try to halt its historical slide to worthless.
