www.nationalview.org and Note From a Madman brought to you by
for your Information Technology needs
owned and operated by Noah "The Madman" Greenberg
This Is What Democracy Looks Like
www.NationalView.org's Note From a Madman
July 21, 2008
The CPI and the Way They Planned It
Every so often I like to check out the Bureau of Labor Statistics and see what the Consumer Price Index (CPI - a.k.a. Inflation) is doing. By now we all know that a growing economy will have price increases. For that reason, the Department of Labor's BLS.gov website tells us the cost of goods as compared to what $100 in 1982 was worth. (By the way, it was worth $100). Today, you would require nearly $220 (218.815) to purchase what your hundred bucks would buy you in 1982.
The June 2008 report has a few numbers, and a couple of statements, which jump right out at you. Just a quick browse of the page (http://www.bls.gov/news.release/cpi.nr0.htm) shows the big one that simply cannot be missed.
-Compound Annual Rate 2-Months ended June 2008: Energy: 53.6 percent
In just three months the US energy index is up by more than half. The twelve-month increase of 24.7 percent is staggering enough, but 53 percent tells a really sad story.
And the story it tells is of a federal government, led by George W. Bush, not caring; it tells of an administration without foresight, or at least without the foresight required to aid the American people - their charges; and it tells a story of a President who would rather "stick by his guns" and "stay the course" on an economy which was designed by, and for, a few very rich people.
Yes, the Bush "base of haves and have mores" have really profited by their hand-picked President. To the victors go the spoils.
I knew I smelled something rotten.
While energy prices rise, our leader in the White House, and his would-be successor John (you all know who I mean) tell us things like the answer lies in off-shore drilling and producing more oil refineries. Just this past week President Bush removed the restraint on off-shore drilling which his idol, President Ronald Reagan, put into effect in the 1980's. Big Oil is still waiting for Congress to release their similar restriction.
But even if Bush and McBush, who was against off-shore drilling before he was for it, were to get their singular, but collective way, it wouldn't make a dent in the cost of fuel for our cars or for our homes anytime soon. In fact, some experts say it won't make a difference at all, unless you happen to own stock in Big Oil companies.
While all this talk of "fixing" our oil crisis rolls around the Sunday Morning talk shows as political fodder, real solutions are placed on the table (or maybe under the table in the round file). Releasing some of the strategic oil reserves, which comes from some of the millions of barrels of oil we purchase every year, also helping to drive the price up, would be a nice start. But that might cause the harm which this, The Administration of Diminished Responsibility, consider to be the most important constituents they have - Big Oil and the very, very rich.
Another way in which the Bushies could help would be by working with Congress and enacting real CAFE standards. Increasing the MPG would go a long way towards solving our "addiction to oil" which President Bush finally discovered just two years ago. But, alas, again that might eat into Big Oil profits and, certainly, the Bushies couldn't allow that one to fly.
And, finally, a more drastic measure would be to force auto manufacturers to build only vehicles which met those CAFE standards. Outlaw those vehicles which simply aren't fuel efficient and make them obsolete soon. It's a solution that an administration with foresight and a will ton help the American people would have seen already.
That is, unless they were blinded by the greed of their "base".
Have You Noticed?
Have you noticed all of the criticism Obama took for suggesting that we negotiate with our enemies? I remember some caustic reprimands from the White House having to do with his alleged naiveté. Are you not intrigued that, last week, the US sat down at the negotiating table with Iran? Isn’t that what Obama suggested? How has McBush responded? I haven’t heard.
Have you noticed that the White House now has adopted a “horizon” for withdrawing troops from Iraq? Isn’t that what Obama suggested? How has McBush responded? I haven’t heard.
It does, however, make me nervous that the White House has now embraced two key components of Obama’s foreign policy, you know, the policy he was incompetent to develop. Given that we know the White House to be eminently competent but totally corrupt, what do you make of this apparent shift to rational behavior? Has the money begun to flow in a different direction? We all know that the White House is all about the money, what has happened to generate two such significant changes in policy? It appears that they have hung McBush out to dry. But, they wouldn’t do that, would they? What’s really happening here, and why do I suspect the White House has at least a second agenda?
Senator Bernie Sanders (I-VT)
Bernie Sanders (I-VT) has been reading letters from middle class families on the Senate floor. Here's some samples:
A mother and father in rural Vermont: "Due to increasing fuel prices we have at times had to choose between baby food/diapers and heating fuel. We've run out of heating fuel three times.. The baby has ended up in the hospital with pneumonia two of the times."
A man in north central Vermont: "As bad as our situation is, I know many in worse shape. We try to donate food when we do our weekly shopping but now we are not able to even afford to help our neighbors eat. What has this country come to?"
A mother: "By February we ran out of wood [for the wood stove we use for heat] and I burned my mother's dining furniture. I have no oil for hot water.. We are certainly a country in distress."
A 55 year old man: "I have worked since age 16. I don't live paycheck to paycheck, I live day to day.. I can see myself working until the day I die.. I work 12 to 14 hours daily and it just doesn't help.. I am just tired, the harder that I work, the harder it gets."
A man in a small town: "I have what I used to consider a decent job, I work hard, pinch my pennies, but the pennies have all but dried up.. I began selling off my woodworking tools, snow-blower (pennies on the dollar), and furniture that had been handed down in my family from the early 1800s, just to keep the heat on. Today I am sad, broken, and very discouraged."
A woman from Northeast Kingdom: "I have always been a big pusher of 'if you can do something to change your situation, do it'.. [But] it seems like every time [my husband and I] do the right thing and try to move ahead for our family, something out of our control happens in order to slap us back down.. We now find ourselves unsure if we will be able to pay for both the mortgage and our oil next winter."
A working mother of two: "I spend around $150 per week at the grocery store and trust me when I say I don't buy prime rib.. Some nights we eat cereal and toast for dinner because that's all I have. My family has had to cancel our annual trip to the zoo, and we make less trips to see our families in another town due to the increase of gas."
A 71 year old man: "I have been retired since 2000. With the price of fuel oil I have been forced to go back to work just to heat my home and pay my property taxes."
A teacher: "The middle class is no longer the middle class.. I've slipped into the lower class after a winter of double heating costs and now these new economic hits."
Wife and mother of two: "People that I know that have never struggled with money are now frequenting our local food shelf so they can feed their families staple foods! Please listen to our pleas and put ethics first!"
Bernie Sanders notes the following:
"When you talk about the collapse of the corporate media in terms of responsibility," he says, "it's not just the War in Iraq. The other huge story that they have missed is the collapse of the middle class - the fact that we have tens of millions of people working longer hours for lower wages; that we have the highest rate of childhood poverty in the industrialized world. For the first seven years of the Bush administration, [the media was] simply the stenographers for what the President was saying:
'The economy is robust. We have strong economic growth. Unemployment is reasonably low.'
The metaphor is - it's like the operation was a success but the patient died. The economy is doing great, except for 90% of the people in the economy. The reality is that we have the hollowing out of the American economy. Median family income declined by $2500 in the last seven years. 8 million people lost their health insurance. 3 million people lost their pensions. This is a strong economy? You've gotta be insane to believe that. And yet that is what the Bush Administration was talking about and that's what the corporate media kept on talking about."
So, the McCain campaign thinks these economic sorrows are just in people's minds and that people are whining? I wonder why the taxpayers pay the salary of clown's such as McCain? We have to end the costly Iraq occupation, fix the broken financial system, stem the tide of home foreclosures and create good paying jobs. McCain is not up to the task. Obama for President in 2008!
PORTRAIT OF A PANIC
by Victoria A. Brownworth
copyright c 2008 Journal Register Newspapers, Inc.
Nearly every day some pundit on the business news tells us that the U.S. is “nearing” recession with “possible” inflation.
Not where I live. Where I live–lower income lower Germantown in Philadelphia, which is the poorest city among the top ten largest cities in America–recession hit hard about two years ago and inflation has been slamming us ever since.
I also wonder where the people predicting the “possibility” of inflation shop and buy their gas.
Or where they live, because according to a report released June 23rd, the housing slump is the worst in 50 years. The worst since the post-World War II housing boom went bust.
Foreclosure rates are up 75 percent since 2007. They are the highest since the Great Depression.
In fact, it is the housing and credit crises which concomitantly sent the economy into free fall. The years of the Clinton Administration were the best economic times since the end of WWII. Then came the dot com crash with the Bush Administration, followed by 9/11, starting two wars, Hurricane Katrina, a runaway giveaway by the Bush Administration in corporate welfare and tax cuts for the wealthy and voila: we have an economic crisis.
To be fair, not all of this was the fault of the Bush Administration. Economists note that 9/11 and Katrina wrought havoc on the economy and these were both, in essence, acts of God. Katrina was a hurricane and 9/11 an act of religious terrorism.
But the rest was policy, pure and simple.
On July 11th a scene straight out of 1929 could be witnessed in California. Investors and depositors lined the streets outside IndyMac Bank, each hoping to withdraw as much money from their accounts as FDIC insurance would allow, while wondering where the rest of their money would go.
The FDIC (Federal Deposit Insurance Corporation) took over IndyMac after alarmed depositors, hearing that the bank was in crisis, made a run on the bank July 7th. IndyMac had assets of more than $32 billion, but depositors withdrew $10 billion within three days, effectively crashing the bank. A spokesperson for the FDIC said it could take several years before the FDIC could address all the customer claims from the bank collapse.
Under the FDIC, investors are covered for up to $100,000 in savings or other bank accounts. IRA accounts are covered up to $250,000. Financial advisors note that no one should, given the current economic climate, have more than $100,000 in any one bank. While IndyMac isn’t well known on the East Coast, it was a formidable institution on the West Coast. IndyMac is the largest regulated thrift bank to fail and the second-largest financial institution to close in U.S. history. (Thrift banks are banks formed as a depository primarily for consumer savings. Savings and loan associations and savings banks are all thrift institutions.)
Like many other victims of the greed that followed the mortgage loan boom and bust, IndyMac foundered after the subprime mortgage debacle reached critical mass in January 2008. Much of its revenue had become dependant on subprime mortgages.
Now the bank is being controlled not by its investors and depositors, but by the federal government. Depositors can file claims for part of the share of sales of any assets from the bank, but few will see recompense of their entire savings in the bank. Over 300,000 deposit accounts were on file with IndyMac. Of those, more than 10,000 were in excess of the FDIC insured limit.
The FDIC says 50 other banks are in the same critical condition as IndyMac was.
Freddie Mac and Fannie Mae, the government-backed mortgage lending corporations that essentially bolster the housing market in America, are also in trouble.
On July 18th the Feds scrambled to try and pull both companies back from the brink to prevent further collapse of the stock market and the falling dollar.
Most Americans who are not bankers, stock brokers or financial advisors know only this: A dollar seems worth a lot less than it was a year or two ago.
That’s a correct assessment. The economic rules by which the Bush Administration has been playing and by which it continues to play are gutting the dollar. Yet the President continues to allege that the economy is good.
Economic standards for inflation exclude gas and food prices. That theoretical view does not jibe with the reality facing majority America, however.
Listen to the news and it says gas prices are *on average* $4 a gallon. Gas hasn’t been $4 a gallon in Philadelphia or New Jersey since Christmas. Maybe in Texas or Oklahoma or other oil-rich states, but not anywhere on the East Coast and on the West Coast gas has been closer to $5 a gallon for the entire year.
Last week General Motors announced it was scaling back yet again, after reaching a 50 year low in car sales. No one can afford the big trucks and SUVs that have come to dominate American highways over the past decade when oil was cheap and before we were fighting two wars to hold onto oil caches in the Middle East that we still do not control and which were never ours in the first place.
Oil and fuel prices have impacted food costs. Americans are paying between 20 and 30 percent more for basic food stuffs than they were a year ago. Produce costs are even higher and are expected to climb right through the end of this year.
Where did the economic mess begin?
Some might say it began with Ronald Reagan and his convoluted theory of economics which stipulated that less government regulation benefits the economy and that deficit spending is immaterial to economic growth.
John McCain still invokes Reagan as does, inexplicably, Barack Obama. Both are dead wrong for thinking Reagan’s is a platform to follow. It was, to a large extent, Reagan’s theories that got us where we are today.
If you read economists like the New York Times’ Paul Krugman or The Street’s Jim Cramer, you understand Reaganomics means economic cataclysm.
De-regulation of banks and other institutions is what has taken us to the brink of economic collapse. There are no runs on banks with strict regulation. The fact is, were it not for the investment banks like IndyMac or UBS deciding to become involved–deeply and irrevocably–in the subprime predatory lending schemes which could only have happened through massive de-regulation, there would be no subprime mess or concomitant housing and credit crash.
The U.S. is in a recession, no matter what the President says or some pundits who are not actually economists say. New job growth is at its lowest point in 50 years. The housing market is at its lowest point in at least 30--some say 50--years as well. The dollar is worth less than any other serious currency including the Canadian dollar and the Japanese yen, despite the fact that Japan has been in the throes of recession for a decade.
The U.S. stock market was cresting toward 15,000 points exactly a year ago. Today it hovers either slightly below or slightly above 11,000. That’s a huge loss in a year’s time. How can Bush say the economy is thriving?
In Pontiac, Michigan last week Michelle Obama said that the $600 stimulus checks Americans have been receiving were “only enough to buy a pair of earrings.”
Are any of our so-called leaders paying attention? Mrs. Obama can be excused–barely–because she’s merely the candidate’s wife, not the candidate. But a comment like that reflects serious ignorance of the plight of most Americans who aren’t buying earrings with their stimulus checks, but buying food. And such a comment doesn’t help the Democratic candidate lose the image of being elitist, either.
What the candidates and all Americans need to remember is that the American economy determines much of the global economy. China and India might be rising economic powers, but it is still U.S. currency that propels the global marketplace. If the U.S. economy is in free fall and deep and growing recession, what does that mean for the world’s poorest people?
The current presumptive nominees have been talking a lot about everything but the economy in the past week. Yet there is no more pressing issue for Americans–or the world–than the U.S. economy. The perils of inflation are manifold and the economic platforms of both Obama and McCain reflect a lack of comprehension of what needs to be done to control inflation while also holding back the full impact of recession.
Both economic platforms are flawed, taking in far less money than they give out.
One way to stop a huge financial hemorrhage is to end the war on Iraq. That war has cost more than $700 billion to date.
Both candidates waiver on the need to balance the budget. McCain says it will be done by the end of his first term. Obama says it’s not the most important economic issue. Both are leaning on that old-time Reaganomic construct.
If you have a bank account and you don’t balance your check book, what’s the net result? Bounced checks and mounting debt. That’s where America’s collective checkbook is at present. The budget needs balancing.
There is no quick fix to the economic crisis the U.S. is currently mired in. It’s easier to get into debt than it is to get out. But one thing is certain and should be obvious–get out we must. Perhaps the husband of a wife who would spend $600 on earrings or the husband of a wife who is an heiress don’t quite get what the problem is. But for those of us who have known for a long time that we were dealing with recession and inflation, even if we didn’t know what the terms actually meant, leadership to bail us out of this economic morass is what we need.
The question is, who will provide it? And when? Bush–and McCain and Obama–need to look less to Reagan and more to FDR for the kind of fix we need to put America and the economy back on track.
In response to the McCain campaign's sense that our poor economic standing is all in our minds, Robert Scardapane sends this from Time Magazine:
"Americans are not simply dissatisfied with the economy. They are deeply unhappy: 85 percent of respondents in a recent poll believe that the country is on the wrong track."
Does McCain still think it's all in our minds? We need a President that can recognize a real problem. We need to elect Barack Obama.
In response to George Bush's, "I'm not an economist, but I do believe we're growing," Pat Thompson writes:
That is the basic problem with our brand of capitalism -- there must be growth. However, right now, there is continuing serious shrinking, which we all know about, but apparently Bush does not. Sure, his friends in the oil industry are doing fine, and Halliburton and KBR are doing great, thanks to no bid government contracts. The pharmaceutical industry and prison industry are fine. But that leaves out a lot of people. Forget growing -- how about just maintaining? And even if you have a few "dollars", they are becoming more and more worthless -- that's why it takes more of them to fill your tank or your grocery cart.
Send your comments to: NationalView@aol.com