Why they're protesting on Wall Street

He doesn't work there, but his work ethic does:

"....We know how to get out of this mess, we have known how for 70 years. We just need the government to generate demand. That means spending money. Ideally it would spend money on useful things like education, health care, and infrastructure, but even if it spent money in wasteful ways it would still create jobs and put people to work. In the 30s we got much of the way back to full employment with the Works Progress Administration and other programs. Much of what was done was useful -- look around, you won't have to go far to find infrastructure built by depression-era programs. However, it took the massive spending associated with World War II to get the economy back to full employment. There is no magic associated with war that makes military spending more effective in creating jobs. The only difference was that the threat to the nation from the Axis powers removed the political obstacles to the necessary spending. The same situation applies today. We just need to spend money. That applies to both the United States and the euro zone countries. The problem is that we have more people in political leadership positions who want to be morality cops and lecture about balancing budgets rather than focus on policies that will restore economic growth. This includes the top officials at the European Central Bank, many of the voting members of the Federal Reserve Board's Open Market Committee and much of the political leadership in the euro zone countries, the United Kingdom and of course here...."

If we repeat this mantra long enough, maybe someone in power who cares will listen.

The American Awakening Starts on Wall Street

What a wasted effort by Obama.

No matter how bold and promising his American Jobs Act sounds, you can be assured that Republicans will "drown it in the bathtub". Am I a pessimist? Maybe. Realist? Definitely. Angry, frustrated, dejected, resigned, exhausted? What hardcore liberal wouldn't be by now?

From Kos:

"Of all the criticisms of Obama, this is the most obviously legit. The president's economic team hailed from Goldman Sachs, and their entire focus has been on bailing out the banking sector from their own excesses. The banks were functioning "properly" in Wall Street's eyes, when they created the credit default swaps and other schemes that destroyed the world economy. "Yet rather than help consumers, oftentimes victims of Wall Street's excesses, they rewarded the villains, time and time again. And then, they tried to hide it. "That Wall Street aristocracy has been coddled by this administration, while regular Americans end up victims to Democratic meekness and Republican obstructionism. It shouldn't be this way. Let Republicans carry water for Wall Street crooks. Democrats should be fighting for everyone else. "The problem with the economy isn't the bankers. Is that no one has money to buy shit. Giving the bankers free money doesn't solve that."

There's more in the post.

WHO OWNS AMERICA

Americans in the top 1% income bracket own nearly 34% of the nation's wealth.

Americans in the top 10% income bracket own 71.5% of the nation's wealth.

Americans in the top 50% income bracket own 97.5% of the nations's wealth.

The median household income is around $45,000. Still wondering who owns America?

See why this graph is a predictor of more bad news for the economy HERE.

Here's Obama's speech from last night, courtesy The Bobblespeak Translations, in a language that all Americans can understand:

State of the Union Address President Barack Obama January 27, 2010 ****************** Madam Speaker… I give you… the POTUS!!! [ yay ] Obama walks in, wearing a Nobel prize and carrying an iPad Pelosi: and heeeeeere’s Baraaaaaaaaaack! Obama: thank you very much Greetings, Madam Speaker, Joe, Senators, House members, all congresspersons - you goddamm worthless motherfuckers! All right anyone who is not a useless piece of shit can stay - everyone else leave the room [ Biden stands up ] Joe you can stay too [ Biden sits down ] [ everyone else gets up to leave ] All right all right you useless shitheads sit your asses back down [ everyone sits down ] And let me give a shout-out to our esteemed Supreme Court justices! Oh did I say esteemed - I meant to say soulless hypocritical corporate whores [ Scalia and Alito stand up, wave to Congress ] Hey Jersey Shore - sit the fuck down yes that's right I'm wearing my motherfucking Nobel prize - check it out assholes! [ waves Nobel prize ] yeah I'm done with teleprompters - I'm all about my iPad now dudes! Obama: Bull Run, Bloody Sunday, the Depression, Pearl Harbor, the day they canceled Star Trek - America has been tested many times before Now you all know I inherited 2 wars and a motherfucking Depression So of course we bailed out the people who created the problem Inexplicably, things are now even suckier than they were before! I’ve have traveled across this nation and read your letters and holy fuck is this country in some deep shit Most moving are the letters written in crayon - so I would like ask Michele Bachmann to please stop Obama: Americans are tired of pettiness Joe Wilson: No! Obama: Sit the fuck down you ignorant cracker Obama: Americans really want one thing - to avoid sliding into poverty and having to move into a black neighborhood But the White House is a black neighborhood now fuckers so that’s why I have never been more hopeful for America! [ yay ] Obama: Now let’s talk about the motherfucking bailout! I hated it - but goddammit let’s not forget Stupid created a crisis I had to deal with and we’ve gotten most of the money back! [ yay! ] Obama: so I propose a fee on the banks - they can fucking afford it, those slimy motherfuckers!!!! [ yaaaaay ] We cut taxes for 8 million people - do you hear me fucking teabaggers!?!?!? We didn’t raise income taxes on anyone... not anybody - can you grasp that you fucking lunatics??? [ yaaay ] And we saved 2 million jobs thanks to my stimulus bill - that’s right shitkickers!!! And so you can see I have single-handedly turned this economy around!! However because I heard there may still be a few unemployed people out there, and with the whole Scott Brown fiasco, I am calling for a brand new jobs bill [ woo-hoo ] Banks on Wall Street are now lending again, but mostly to other criminals - so I propose taking this 30 billion I found in the White House couches and give to tiny little community banks like the Building & Loan [ yaaaay ] You get a tax cut! You get a tax cut! Everybody gets a tax cut!!! [ yaaaay ] And we should have better trains than those damm Japanese! [ muted clapping ] and fewer tax breaks - but still some - for businesses located in the Cayman fucking islands!!! [ yaaaay ] So send me a jobs bill or I will come back here and crack some skulls!! Having said that - we need rules to prevent another lost decade which is why I am proposing a Constitutional Amendment saying no member of the Bush family can ever be President again!!! [ yaaaaay!!] Now the GOP says we have to wait to fix the economy but that would put us behind India and I am not going to stand here and listen to them bad-mouth the United States of Fucking America!!! [ yaaaay ] Which is why we need to skull-fuck the banks that caused the goddamm problem!!! Now I will wave my finger and look tough - do I look tough - no seriously do I?? We need to solve our energy problem which means building new nuclear power plants, drilling offshore, clean coal, biofuels, and harnessing the power of Brett Favre!! [ yaaay!!!] Now I know there are really stupid fuckers who don’t believe in global warming and to them I say grow a goddamm fucking brain and pull your heads out of your asses!!! We need to export more products which is why I have hired a Chinese company to tell me how we can make shit people want!! [ yaaay ] Also we need to expand our empire and seek new markets, in Asia, Africa, and the Spice federation on Tatooine!! [ yaay ] The best anti-poverty program around is to be born into a rich connected family and rig the system in your favor!! But since that is not realistic for people outside this room, I also propose better community colleges! [ yay ] and $10,000 in college grants and no more student debt after 20 years!! students: oh woo oh and we still need health insurance reform [ yaaaaaaaay ] I did not choose to take on health care reform to get a legislative victory or to be more popular.... OBVIOUSLY! Ha anyway let me describe my plan in a simple 7 paragraph - oh hi there’s my pretty wife [ yayayay] where was I - oh right the CBO says my bill would reduce the deficit by 2 trillion dollars!! GOP: deficits don’t matter Obama: so I completely fucked up underestimating how selfish most Americans are - my bad, America! But I will not walk away from insuranceless Americans and neither should you So please Republicans take a breath and vote for my plan Or just send me your plan and I will sign that instead So Congress just pass something so we can all move on all righty [ yay ] Now let me explain something to the extremely dense out there Clinton gave Bush a FUCKING SURPLUS and I inherited a FUCKING DEFICIT I wonder if Fox news will report on that??? Oh did I mention I am trying to prevent a motherfucking DEPRESSION??? So tonight, as usual, Democrats will have to be the grown-ups and freeze spending long enough to get voted out of office, where Republicans will blow the budget all over again!!! [ YAAAAY!!!] So I will freeze spending except for Defense, Medicare, Medicaid, Social Security education and farming - that only leaves $20 billion spent on turning John Boehner orange all winter! [ yay ] Since you fuckers can’t even create a commission I will do it by executive order - yo Judd Gregg!! [ yaaaay ] Now Paul Krugman is probably freaking out - but this freeze won’t start until next year when the recession is over [ boooo ] hey zip it morons Now we could of course just cut taxes and borrow the money and party all the time - but every time Republicans do that it wrecks the economy! So let’s try some common sense fuckers!! Yeah a novel concept motherfuckers!! The rumors are true, America - Washington doesn’t work - it’s bought and paid for by corporations - yeah I’m looking you - you fucking Supreme Court whores!!! I’m not naïve - I’m know you are all untrustworthy snakes - that’s the very essence of our democracy But Jesus Fucking Christ on a cracker you can’t fillibuster every fucking procedure in fucking government!!! I mean criminy people are showing up to my town meetings with fucking guns - so chill the fuck out Republicans And Democrats - stop being such fucking pussies for god’s sake!! And Republicans - if it really takes 60 votes to get anything done well then guess what - then you are responsible for not getting anything done!! And while I am on the subject - GOP just shut the fuck up about national security and if you want a reminder go look at the hole in ground you created in New York City!!! Yeah I’m killing people all over the world - don’t fuck with me people! I am ending the Iraq war cause I am fucking sick of it Now let’s really support our troops and not just say we do! And just like Superman I am going to rid the world of all motherfucking nuclear weapons!!! Watch out Iran - Barack Hussein Fucking Obama is coming for you!!! We’re giving out food, curing disease, and helping Haiti! America is about all people being equal so sometime in 2010 I will work with Congress on repealing Don’t Ask Don’t Tell!!! [ yaaay ] Americans are hopeful, they have just lost faith in government, religion, business, schools, the media… oh wait they AREN’T FUCKING HOPEFUL AT ALL!!! Now I know people aren’t all into Hope and Change anymore but I never claimed to be your Magic Negro so I come here tonight to tell you this -- grow the fuck up America!!! Sure I fucked up this year - but I am not alone - many, many, many, Americans are also totally fucking up and are also in complete denial about it!! So my fellow Americans I don’t quit - I may get fired but I won’t quit!! Goodnight fuckers!!!

A sobering graph:


[click for larger image]

It is obvious that this recession is the worst, employment-wise, in at least 60 years, and getting worse. And yet, if you just listen to the MSM news, you'd think we were well on the road to recovery.

An excerpt from an interesting rant by Karl Denninger:

...How high does your interest rate have to go on your credit cards - while your bank borrows the money it lends you at zero percent - before you cut 'em all up and send 'em to the bank with a picture of your erect middle finger instead of a payment? How long will you sit while both Democrat and Republican lie to you about how the "bailouts" and "handouts" will help the economy. Has all this grift helped? Did the "stimulus" keep unemployment from going higher as was promised? Did you really get help with your mortgage or were you offered a scam "forbearance" that amounts to the back-end loading of your balance, turning it into a balloon note or worse? Have you enjoyed watching JP Morgan and other big banks that got tens of billions of taxpayer dollars lease tankers and then bid up the price of oil - causing it to double - with your tax money? How about The Fed and Treasury funneling tens of billions in taxpayer money through AIG to a literal "who's who" of big banks so they could in turn pay billions in bonuses? All of this obviously meets with your approval as demonstrated by your actions: You still sit back and pop a beer, you go about your daily routine, you refuse to rise from your chair and demand: STOP THE LOOTING AND START PROSECUTING, finally willing to back that up with your sacred honor - or more. Sometimes I wonder what our nation will stand for - exactly where the breaking point is where we finally force the right things to be done. The right choices. Whether the time will come where we force the barons both inside the beltway and out to face the music for their sins. Is it 10% unemployment? 15? 20? 1/3rd of our nation out of work and hungry? Is it 2 million foreclosures, three, six, ten, thirty? Is it credit card rates at 20%, 30, 50? Will we submit to the jackbooted foot of the scammers and frauds on our collective necks, both in business and in DC, until our children starve and our grandmothers, mothers and fathers are shoveled in the hole, dead and cold?....

Why Obama can't fix our country:

The Audacity of Hopelessness By Phil Rockstroh May 27, 2009 Editor’s Note: Over the past few decades, an arrogant Establishment has led the United States on a dangerous course of deindustrialization, empire-building and free-market extremism that brought fortunes to the well-connected of Wall Street and Washington, and declining standards of living for many other Americans. Now, as the consequences of those policies become bitterly apparent, some Americans are trying to make sense of what happen, as poet Phil Rockstroh does in this guest essay: From time to time, events unfold that are so large in scope, so all-encompassing in their implications that one's initial response is muted by an inability to categorize it all within the realm of experience. Previous reference points prove of little service. One's image of oneself and one's place in the world is under siege, perhaps even in danger of being torn away. One stares into the abyss, until the abyss removes its dark shades and makes direct eye contact. The mind buzzes; one's thoughts scuttle in circles like stunned insects. On a collective basis, we as a nation are living through such a time. At present, we are witnessing the descending spiral of Icarusian Capitalism; our sacred delusion of the perpetual ascendancy of a god-like market place lies broken in the dust. Malls and McMansions stand abandoned, desolate as the edifices of forgotten gods, as the come-ons of the salesmen of deregulated capitalism are churned to spittle amid a cacophony of collapsing market platitudes. And not an uptick in public optimism, nor a surge of euphoria on Wall Street, nor the "invisible hand of the marketplace" sprinkling pixie dust will bring back the Olympian days of 2005, when the wise men of Washington and Wall Street knew the force of gravity was just a myth believed in by those embittered prophets of doom whose only joy in life is fantasizing the fall of their wealthy betters. It does not matter a damn how many dollars our present day believers of neoliberal tall tales, President Obama and Treasury Secretary Geithner, pour into the hole in the ground where the crash occurred, a bean stalk, twining skyward towards a golden, debt-negating goose, will not flower forth. Fortunately, when false convictions fall, it is possible for a leveling of sanity to prevail. But there can be no more hubristic flights borne on waxen wings. No more multibillion dollar confidence scams from Wall Street. No more smash and grab imperial wars. No more tea parties for the dim and deranged. Evil of Banality There is the banality of evil, and then there is the evil of banality. Both, the present era has produced in abundance. From about the late 1970s to the present, the United States all but ceased manufacturing products and went into the business of manufacturing marketplace hype, baseless fears, and illusionary enemies. Due to this economic and cultural derangement, a dark tower of self-imprisoning delusions has circumscribed our nation's fate. Is it any wonder the quintessential dark lord of the darkest tower, Dick Cheney, will not exit the scene? And what will foster real change? Not pleasing sound bites and rousing oratory from President Obama, then a continuance of many of the pernicious policies of his criminal predecessors. Conversely, the iron gates of Hell must crash closed behind us. The absence of light must grow so unbearable to us that we're willing to ask how is it we arrived in this place and become willing to challenge our most cherished concepts about ourselves and our place in the scheme of things. That is the sort of "indefinite detention" the nation could use. What is needed is the audacity of hopelessness. President Obama and the Democratic Congress could have ridden a wave of public discontent towards meaningful reform, but instead they have hugged the shore. And they seem to be surveying the property, scouting locations to build beach house retreats for their elitist benefactors and the militarist fantasists whose tsunami-sized arrogance wrought the present destruction in the first place. Meanwhile, right-wing radio haters, like penned dogs, bark into the empty air of their meaningless day. Daily, we negotiate our way through the encompassing banalities and casual brutalities of soft oligarchy, as beneath it all churns the nebulous rage of the powerless that creates an audience for the likes of Beck, Hannity, and Limbaugh. It is high season for those virtuosos of displaced anger, because not only the nation's treasure, but its élan vital, has been squandered inflating the bubble-borne vanities of the ultra-wealthy up to the point of economic immolation. The elite have perpetrated an act of catastrophic clownishness so massive that it has left the rest of us stunned, and left to pick amid the debris of our exploded hopes. But hopes do not die pretty. Once dead, they do not rise like the redeemer gods of myth; instead, they stagger about, rotting and snarling like B-movie mummies. They leave us with our mouths tasting of ash. Our hearts choked by dry thistle. High-End Looting Yet the buffoons of Wall Street and the killer clowns of our militarized Disneyland strut and swagger past the smoking ruins they left behind after their high-end looting spree. In their plundering, the only thing they didn't steal for themselves was any sense of self-awareness. Or is self-awareness necessary when you're obscenely rewarded for your narcissistic follies? What motivation would a high-chair tyrant have to modify his self-centeredness when he is shielded from the consequences of his bratty machinations? Why become an honest actor in the realm of human events when one can strut through life with a con artist's inexplicable sense of entitlement? And what about the rest of us? The financial elite, by means of their bagmen in the Executive Branch and Congress, continue to plunder our hopes for a meaningful future byway of that legal larceny popularly known as the bailout, i.e., the latest transfer of wealth from the bottom upward. This is why the buffoonish tea-bagger types hoard their resentments. All they've been left with is a heap of fragmented hatreds. Those toxic baubles they store against reality. Tragically, when not addressed, fear and resentment will increase in intensity and can become an exponentially growing feedback loop of paranoid rage. At present, such a process has created that haunted forest of the airwaves known as right-wing talk radio. It is the voice of anger feeding off of itself, and it seems dangerously close to reaching the point of hypertrophic breakdown. It is the audio analog of a belief system in exponential decay. The more the rot increases in the system the more Glenn Beck babbles and weeps. It is physically manifested in the cataclysmic ecosystem of Rush Limbaugh's repulsive bulk, his corpulent carcass is the morbid bloat of unregulated capitalism. Right-wing hatred is a many headed hydra that feeds on fear and desperation. It cannot be fought by attacking its spindling heads, each of its hissing mouths dripping with black poison. Instead, one must make thrusts at the noxious heart of the raging beast. But one cannot know where the heart of an external monster beats without suffering the agonies of one's own. Don’t Look to Obama Accordingly, one must allow one's heart to be broken. And don't look to Barack Obama's bland charm to mend it. Because the honest grief of the heart provides a point of reference, a foundation of knowledge, as to why the monster is inconsolable in its wounded fury; hence, this provides a strategic starting point as to how to fight it. And that is why we must release the photographs of torture. Moreover, we must bring public ignominy upon the respectable psychopaths in high places who mandated these policies, plus bring a leveling of shame upon the high-flying, highchair tyrants of high finance who exploded the global economy. Our ugliness must be public like a frog. The nasty secrets must be revealed; the mortifying pictures gazed upon. Our stomachs should seize up in revulsion. The ordeal must exact such a degree of revulsion within us that we will never again allow these despicable practices to transpire on our watch. There is a stench of putrefaction rising from beneath our feet. We must uncover the corpses laid under by empire. Being placated by Barrack Obama's bland charm -- in the same manner we were cowed by George W. Bush's infantile petulance, amused by Bill Clinton's brilliant, bad boy seductions, and drugged by Ronald Reagan's stupefying 1940's Hollywood bromides -- will only defer the reckoning and render us ignorant stooges in the impersonal sweep of history. As a people, we have a choice: We can be strengthened by embracing uncomfortable truths, or we can grow enervated and enfeebled by pushing them away. But sadly, Obama is attempting the tried and tested political trick -- used effectively by Washington hacks from Watergate ("Our long national nightmare is over") to Iran-Contra ("We cannot have another failed presidency") -- of inducing the uniquely American trait of Instant Amnesia that has, in the past, allowed the empire to stagger on, repeatedly committing variations of the same crimes, then coddling and protecting the same variety of corrupt elitists responsible, and thereby, reducing the Constitution to tatters and rendering the rule of law to rubble. But this time, the rot is too deep, the pathology too systemic. Obama's placebo presidency will not stem the hypertrophic decay. Granted, it was good to evict the previous, psychotic tenants from the property (Although Dick Cheney seems to be stalking the place with his obsessive, media drive-bys.) but that does nothing to repair the collapsing foundation of the structure, its core eaten away by an infestation of anti-democratic termites. Rather than addressing the core issue, the deterioration of the rights and liberties granted by the U.S. Constitution, President Obama is wallpapering over the rot wrought by the national security state's termite hive mind of authoritarian appetites, that has been, silently, and hidden by darkness, gnawing the house of state to sawdust. Again our choice: Either open up the decay within the system to the light of day and start the process of rebuilding and renewal, or allow the republic-ravening pestilence to continue unchallenged, hence unabated, and let the nation go bughouse crazy as the house comes down around us to the strains of the insect-brain stridulations of Beck, Hannity, and Limbaugh. Phil Rockstroh, a self-described, auto-didactic, gasbag monologist, is a poet, lyricist and philosopher bard living in New York City. He may be contacted at: philangie2000@yahoo.com

It's gonna take a revolution to fix things.

Here's another indicator showing why the recession is still getting worse:


[click for larger image]
Increased delinquencies leads to increased defaults leading to increased bankruptcies, leading to increased unemployment and business failures, leading to increased delinquencies, leading to increased defaults.... etc. It's a vicious, spiraling cycle. If you're just lookng at the stock market for signs of a recession recovery, well, you're just going to get fooled again.

Never In Doubt

It's unfortunate that Veterans, especially Disabled Veterans, will be stigmatized but really, this was never in doubt.

The Department of Homeland Security (DHS) has released a report titled: Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment. The report was prepared by the Extremism and Radicalization Branch, Homeland Environment Threat Analysis Division and coordinated with the FBI There have been a number of reports similar to this in the past. But, this report really focuses on the current economic crisis and how it, along with political strife, can aid the recruitment efforts of extremist organizations. I'll let you read it and decide how much rings true. However, the most disturbing part of the report is the mention of veterans and how they are portrayed. Read below: (U) Disgruntled Military Veterans (U//FOUO) DHS/I&A assesses that rightwing extremists will attempt to recruit and radicalize returning veterans in order to exploit their skills and knowledge derived from military training and combat. These skills and knowledge have the potential to boost the capabilities of extremists—including lone wolves or small terrorist cells—to carry out violence. The willingness of a small percentage of military personnel to join extremist groups during the 1990s because they were disgruntled, disillusioned, or suffering from the psychological effects of war is being replicated today. — (U) After Operation Desert Shield/Storm in 1990-1991, some returning military veterans—including Timothy McVeigh—joined or associated with rightwing extremist groups. — (U) A prominent civil rights organization reported in 2006 that “large numbers of potentially violent neo-Nazis, skinheads, and other white supremacists are now learning the art of warfare in the [U.S.] armed forces.” — (U//LES) The FBI noted in a 2008 report on the white supremacist movement that some returning military veterans from the wars in Iraq and Afghanistan have joined extremist groups. Of particular note is the mention of veterans as "disgruntled, disillusioned, or suffering from the psychological effects of war." This thinly-veiled reference to PTSD does nothing to paint veterans in a good light... in the minds of many. It just reinforces the "wacko warrior" image veterans have fought so long to dispel. -- Larry Scott at VA Watchdog dot Org

Update: Huffington Post claims that Michelle Malkin and redstate are coming unglued over this Homeland Security report. I hope this gets pushed out in the open. Perhaps we can have a national discussion on it. Possibly stop the vitriol from the likes of FAUX News, Glenn Beck and Ru$h Limbaugh, however, I doubt it will stop people from hating and the sick ones from killing.

Think Progress has more.

From Crooks and Liars:

Malkin's headline wails:

"The Obama DHS Hit Job on Conservatives Is Real"

So, I have a question for Malkin: Are you saying that mainstream conservatives are now right-wing extremists?

Because, you know, the report -- which in fact is perfectly accurate in every jot and tittle -- couldn't be more clear. It carefully delineates that the subject of its report is "rightwing extremists," "domestic rightwing terrorist and extremist groups," "terrorist groups or lone wolf extremists capable of carrying out violent attacks," "white supremacists," and similar very real threats described in similar language.

Nothing about conservatives. The word never appears in the report.

"On the Edge"

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts. It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated. Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again. It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world. Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners. Meanwhile, our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall. It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.” Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap. We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken. As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on. And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time? Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive. So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next. It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge. - Paul Krugman.

California: Fell off a cliff and still falling

California Unemployment - Worse Than Reported I have gone into painful detail regarding the California housing situation and need to reiterate that housing will not bottom in 2009. The reason I continue to beat this drum is so people don’t drink the Kool-Aid (again) and go out buying a home simply because it is half-off and you saw a kid spinning a neon colored sign. I’ve heard a few pundits going off this line of argument again and they are simply wrong. After posting an article with the dire 8.4% number from November, we got a release telling us unemployment had shot up to 9.3% in December. That number is stunning. Keep in mind that since 1976 (data from the Census) the highest unemployment rate for California was 11%. I expect us to break through that. In fact, we are already there if we calculated the number accurately. You need to remember that part-time workers looking for full-time jobs or those not working who have given up are not counted in the unemployment numbers. I know personally many people that are working one or two part-time jobs but want full-time employment. I’m sure you personally know of cases like this as well. Basically 1 out 10 people in the state is without work. What is more startling in the report is the massive amount of involuntary layoffs: California unemployment data December 2007 unemployed: 1,079,000 December 2008 unemployed: 1,732,000 November 2007 unemployed: 1,566,000 What that means is in one month, California saw 166,000 people added to the unemployment lines and in one year, the number has jumped a stunning 653,000! That is simply jaw dropping. And as I expect with our current budget deficit still in shambles with a $40+ billion budget deficit for the next couple of years, and the fact that we have yet to see the massive recasts with option ARMs, the state is in for a tougher 2009. So we will break that 11% mark.But if we dig deeper into the data, we realize even more deterioration: Of the unemployed: 782,200 were laid off 125,300 left voluntary Others: new entrants or reentrants into the labor market or temps The number leaving the workforce by choice is tiny. This is an across the board cut down in the employment sector. That is why the California 2009 forecast I put out will hold true since we’ve relied so heavily on the finance and real estate industries. What is disturbing is the growing number of those on unemployment insurance: “In related data, the EDD reported that there were 655,445 people receiving regular unemployment insurance benefits during the December survey week. This compares with 593,670 last month and 451,098 last year. At the same time, new claims for unemployment insurance were 87,979 in December 2008, compared with 80,920 in November and 56,984 in December of last year.” Those filing for unemployment insurance is skyrocketing. Some of you may be aware of this insurance but I think it is important to know what it is: “The amount for benefits available is based on the claimant’s earnings in the base period. To qualify for benefits in California, a claimant must have (1) earned at least $1,300 in the highest quarter of the base period, or (2) have earned at least $900 in the highest quarter and earned total base period earnings of at least 1.25 times the high quarter earnings. For example, if the claimant has $900 earnings in the highest quarter, he/she is also required to have earned a total of $1,125 in the base period ($900 x 1.25 = $1,125). The maximum amount of a regular UI claim is either 26 times the claimant’s weekly benefit amount or one-half of the claimant’s base period wages, whichever is less.” Just before leaving office, former President Bush did sign a law extending unemployment insurance by 13 weeks from the current 26 weeks. So 39 weeks or three-fourths of the year will be covered. The max anyone can receive is $450 per week in California. So let us run the numbers to see how much is going out per week: Number currently receiving unemployment insurance: 655,445 (max) Average $450 per week: $294,950,250 Average $300 per week: $196,633,500(lower end) Average $250 per week: $163,861,250 Keep in mind that unemployment insurance is financed by employer taxes who pay up to a maximum of $7,000 per year. Do you think with the bottom line being hit with many companies that some can actually afford this? Keep in mind when the extension was signed in November, many people had already started exhausting their funds. The government had to dig deeper in to its pockets, money which it doesn’t have. So think about it, I know many people criticize “make work” programs but already in a state like California, anywhere from $163 million to $294 million is going out a week to people who aren’t working. Shouldn’t we at least put some of these people to work if they can’t find a job? I think this would be a better use of money because at least folks will be working and generating an income and have a stake in helping the economy even if it means repairing roads or fixing up a school. This is how things are going to be for some time. Japan has many lessons for us with its lost decade. It is probably more likely we will head down toward a Japan route instead of a Great Depression world if we do have a major economic calamity here. The fact that we have already sunk trillions into the economy and zombie banks and now we are on path for a major fiscal stimulus program, we can expect a sluggish next 10 years. Much of our future money is being spent right now. Maybe a lost decade is better than a major Great Depression? That seems to be our choice. Any pundit that tells you we are going to have a second half recovery needs to be banned from ever appearing on the air again. Really, do you think things will be shiny again by again by July?

Boy, doesn't this say it all:

In an effort to wring every last cent from anxious investors who've already lost a significant chunk of their retirement portfolios' worth, financial advisers are now saying that the impending $700B bailout is going to stabilize the housing and stock markets, and that investors should buy, buy, buy! Gee, where have we heard that before? How about after each government intervention during the past year? Lowered prime interest rates. Rescue Bear-Stearns, rescue Fannie/Freddie, rescue AIG, and now $700B of free money for losers. And don't forget, immediately after each rescue all the experts said that, if it wasn't for the government rescue of Company XYZ, the global markets would have crashed and the planet would have dived into a financial meltdown.

Yeah, right.

Not only is the latest bailout proposal the largest in history, it's also the worst financial decision in history. We are going to give money away to companies that are in dire financial straits. It's that simple. We're "investing" our tax dollars in the very companies that were the most mismanaged and thus suffered the worst losses. Is that the way you would invest your personal savings?

And to add insult to injury, reasonably smart taxpayers like myself who stayed out of the housing market the past six years are going to suffer because the idiots in Washington feel it's necessary to give my (and my children's) money to companies and individuals who made bad financial decisions. I mean, WTF?! Be smart, get punished. Be a greedy asswipe and get rewarded. Apparently that's the new American Way.

There's probably nothing any of us can do to stop the Bush Administration and, by The Order of the Subservient Sheep, the Democratic Congress from giving away our money and, in the process, spitting in the face of our youngest and soon-to-be taxpayers who will have to carry the burden of this financial ruin for the next several decades.

Right now the Congressional Democrats are pretending to stand up to Bush by insisting on a better method of giving away that $700B, but in the end it's all the same old same old. Bush will in essence get his way as the Dems roll over and lay back down in their still-warm spots, waiting to receive and follow Bush's next demand.

Only in the U.S. government will you find success in enacting the worst possible laws while its taxpayers, after 7+ years of being ramrodded over a wrong war, worstening healthcare, increasing unemployment, a national infrastructure as tenuous as a stack of Legos, decreasing real wages, worsening climate and loss of constitutionally-backed personal rights, still take it all and go back to watching American Idol.

We are SO deserving of what we get.

{cross-posted at Daily Kos]

The Prescient One

Nobody can say Obama didn't see the problems with the mortgage crisis and Wall St. coming. The man was ahead of his time.

Obama Urges Bernanke, Paulson to Fight Foreclosures, Hold Homeownership Summit Thursday, March 22, 2007 FOR IMMEDIATE RELEASE Contact: Ben LaBolt WASHINGTON, DC -- U.S. Senator Barack Obama today sent a letter to Federal Reserve Chairman Bernanke and Treasury Secretary Paulson urging them to immediately convene a homeownership preservation summit with key stakeholders to fight foreclosures driven by growth in the subprime mortgage market. The text of the letter is below: Dear Chairman Bernanke and Secretary Paulson, There is grave concern in low-income communities about a potential coming wave of foreclosures. Because regulators are partly responsible for creating the environment that is leading to rising rates of home foreclosure in the subprime mortgage market, I urge you immediately to convene a homeownership preservation summit with leading mortgage lenders, investors, loan servicing organizations, consumer advocates, federal regulators and housing-related agencies to assess options for private sector responses to the challenge. We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes. And while neither the government nor the private sector acting alone is capable of quickly balancing the important interests in widespread access to credit and responsible lending, both must act and act quickly. Working together, the relevant private sector entities and regulators may be best positioned for quick and targeted responses to mitigate the danger. Rampant foreclosures are in nobody’s interest, and I believe this is a case where all responsible industry players can share the objective of eliminating deceptive or abusive practices, preserving homeownership, and stabilizing housing markets. The summit should consider best practice loan marketing, underwriting, and origination practices consistent with the recent (and overdue) regulators’ Proposed Statement on Subprime Mortgage Lending. The summit participants should also evaluate options for independent loan counseling, voluntary loan restructuring, limited forbearance, and other possible workout strategies. I would also urge you to facilitate a serious conversation about the following: What standards investors should require of lenders, particularly with regard to verification of income and assets and the underwriting of borrowers based on fully indexed and fully amortized rates. How to facilitate and encourage appropriate intervention by loan servicing companies at the earliest signs of borrower difficulty. How to support independent community-based-organizations to provide counseling and work-out services to prevent foreclosure and preserve homeownership where practical. How to provide more effective information disclosure and financial education to ensure that borrowers are treated fairly and that deception is never a source of competitive advantage. How to adopt principles of fair competition that promote affordability, transparency, non-discrimination, genuine consumer value, and competitive returns. How to ensure adequate liquidity across all mortgage markets without exacerbating consumer and housing market vulnerability. Of course, the adoption of voluntary industry reforms will not preempt government action to crack down on predatory lending practices, or to style new restrictions on subprime lending or short-term post-purchase interventions in certain cases. My colleagues on the Senate Committee on Banking, Housing and Urban Affairs have held important hearings on mortgage market turmoil and I expect the Committee will develop legislation. Nevertheless, a consortium of industry-related service providers and public interest advocates may be able to bring quick and efficient relief to millions of at-risk homeowners and neighborhoods, even before Congress has had an opportunity to act. There is an opportunity here to bring different interests together in the best interests of American homeowners and the American economy. Please don’t let this opportunity pass us by. Sincerely, U.S. Senator Barack Obama

Once in awhile if one is to fully grasp reality, one needs to step back from the trees and look at the forest. The trees in this case are all the individual events that have happened, that are happening, and that are likely to happen.

The fact that the U.S. government just took over Fannie Mae & Freddie Mac should be sending thunderous shock waves throughout the nation. What is everyone saying instead?

Everything's okay. The stock market just went up as a result (of the FM & FM rescue). Things will start getting better now. The worst is over. The GDP was up 3% last quarter, and that indicates things are returning to normal. Inflation is low (although up a bit). The stock market is getting ready for a bull run, so BUY NOW!. Housing prices are bottoming out and will start rising soon, so hang in there and BUY NOW! The price of gas is dropping and, since people are driving less and buying more fuel-efficient cars, will continue to drop. Unemployment at 6.1%? That's really not very high, considering. Mortgage rates are rising? Well, that's to be expected after the very low rates the past several years, so things will soon balance out on that front. No more home equity loans? That's okay, I'll just put it on my Mastercard!

When you leave out the cheerleading by the media experts that is supported by nothing but wishful thinking, you actually have:

• A slowly crashing stock market (just look at overseas stock markets to see what will soon be happening here)
• A housing market decline that isn't even halfway to the bottom, plus a commercial real estate market crash that is just getting started
• A looming credit card debt crisis on the same order of magnitute as the mortgage crisis
• The fereral government altering the measurement of inflation so that the biggest causes (e.g. price of petroleum) are left out in order to give the perception of a much lower rate (and give lower Social Security payouts). If you use the same standards of inflation measurement that were used in the 1980's our inflation is over 10%!
• Foreign nations holding trillions of dollars of American debt getting ready to dump it at a loss which will make the dollar much more worthless.
• The U.S. Treasury is ramping up the printing of currency. This will also decrease the value of the dollar and stimulate inflation much more.
• Increasing worldwide political instability and oil consumption that will soon drive the price back up towards $200/barrel. On top of that, Peak Oil is now here.
• Major industries that are on the verge of bankruptcy (e.g. auto, airlines and travel, construction, banking, homebuilding) that will result in massive layoffs and greatly increased unemployment
• Cities and even states getting close to backruptcy
• Continuously increasing food prices

Most of this stuff has been happening only for a short while (1-2 years). If you have noticed, nothing has gotten any better, has it? Sure the price of gas stopped rising, but you're still paying about twice the price compared to only a few years ago. Real incomes continue to fall (i.e. we're all getting poorer even though we get raises).

We've been able to ride this out more or less over the last couple of years because most of us either have used savings or else have cut back on the painless-to-remove extravagances in our lives. Soon we will increasingly have to reduce our standards of living, slowly but surely, until one day in about two or three years we'll look back and realize just how bad things have gotten. It's just hard to perceive slow change when you're immersed in it.

I'm not making any of this shit up. It's ever-so-slowly happening right in front of your eyes. If you block out the opinions and suggestions of all the experts in all the financial industries, all the real estate agents telling you that there's never been a better time to buy a house, all the auto dealers practically giving away their low-mpg vehicles, and all the news reports that tell you, "Hey, look, [fill in the blank] was better last month, things are turning around!", then you will get a crystal clear view of what's really happening.

It turns out that so many of the crackpot doomsdayers who told us, several years ago, that the housing market was poised to burst, that FM & FM were going to become insolvent, that oil would become prohibitively expensive, and that you soon wouldn't be able to give away an SUV, were actually the ones who did step out of the forest and look at everything. You can't blame them for trying to tell us.

The Mortgage Lender Implode-o-Meter lists these financial institutions as being on the verge of meltdown (i.e. closing, bankruptcy, takeover, etc.). If you have any of your hard-earned money in any of them, now's the time to get smart.

Ailing/Watch List Lenders™:
18. Kemper Mortgage, Inc.
17. Freddie Mac
16. Fannie Mae
15. American Sterling Bank - Wholesale
14. Downey Savings and Loan
13. Franklin Bank, SSB
12. Bayview Lending Group, LLC
11. Thornburg Mortgage
10. American Equity Mortgage, Inc.
9. CTX Mortgage Company (Retail)
8. First Horizon Home Loans
7. BankUnited (Wholesale)
6. Chevy Chase Bank - Wholesale
5. MortgageIT
4. Sallie Mae
3. Meridias Capital
2. Doral Financial Corp.
1. Residential Capital, LLC*