For those keeping track, stocks were up 262 on January 2nd and talk of a rebound was all abuzz, fostered by analysts who have an interest in instantaneous upswings i.e. CNBC and a return to the same old, same old unfetterred capitalism.
Then it fell 245, and after the first four days of trading in 2009, we have netted a growth of just over "3." Today we lost 125 points, and we are in the negative for the new year. This was based on bad profit numbers from major businesses. We have increasing unemployment figures still to hit the fan along with more mortgages in jeopardy since the sub prime "shock dates" mature this year, the final shoe to drop on this fraudulent industry.
Its time we stop putting stock in "impression" and start valuing the age old standards of hard work, savings and earnings. There will be no quick fixes and it is going to be a long year!
David DiBello
Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts
Monday, January 12, 2009
Monday, December 1, 2008
Bailout a Catch 22
Whether or not one feels a “bailout” should be made, has to be made otherwise we will turn into the next great depression. To renege is to cut one's own nose to spite one's own face.
Capitalist purists want the marketplace to rule and self correct, which will mean business failures, bankruptcies and foreclosures and an unemployment rate that will jump up to the high teens.
Usually the purest are at the other end of the totem pole where an economic crisis is an inconvenience, not devastation.
The Citigroup "bailout" is a better crafted one in that the Government will be given preferred stock for its contribution (The U.S. can actually make money). This is our new economy, created by another supply side crash and burn, where our government has a financial share in many big businesses, rather than just a "say." A limited socialism, if you will, as the medicine for casino capitalism.
It was refreshing to hear the President elect’s honesty in stating our economy will get worse before it gets better. He left out we will no longer be able to resort to financial gimmickry - junk bonds, dot com's and real estate bubbles to over inflate our economy and its financial values.
Finally, I love the moderate and experienced course the President elect is taking on his Cabinet choices. Being a Hillary supporter, it’s nice to see the old Clinton gang together again.
David DiBello
Capitalist purists want the marketplace to rule and self correct, which will mean business failures, bankruptcies and foreclosures and an unemployment rate that will jump up to the high teens.
Usually the purest are at the other end of the totem pole where an economic crisis is an inconvenience, not devastation.
The Citigroup "bailout" is a better crafted one in that the Government will be given preferred stock for its contribution (The U.S. can actually make money). This is our new economy, created by another supply side crash and burn, where our government has a financial share in many big businesses, rather than just a "say." A limited socialism, if you will, as the medicine for casino capitalism.
It was refreshing to hear the President elect’s honesty in stating our economy will get worse before it gets better. He left out we will no longer be able to resort to financial gimmickry - junk bonds, dot com's and real estate bubbles to over inflate our economy and its financial values.
Finally, I love the moderate and experienced course the President elect is taking on his Cabinet choices. Being a Hillary supporter, it’s nice to see the old Clinton gang together again.
David DiBello
Sunday, November 23, 2008
Who's to Blame for Big Three Failure?
Forgive me, but I didn't hear of a rash of hi jackings or kidnappings in the 90's or early 2000's forcing Americans to buy Hummers and gas guzzling SUV's. Thanks to auto leases, even our second car was new, which put us more into debt.
Like with our stock, we bougth with reckless abandon while bowing at the alter of gluttony, giving no consideration to frugality. Where does balme for our current economic condition lie?
Of course the Big Three Auto Manufacturers played on the vulnerabilities and lust of their market, and via collusion with Big Oil, kept producing cars that had mileage rates that dated back to our Oil crisis of the Seventies.
As buyers, we didn't learn a thing. So while we are pointing fingers at GM it is important to remember the words of former Mayor Jimmy Walker who refered to his administration's corruption during his resignation speech: "I'm not the only fool here; you voted for me!"
To quote another famous pundit: "The fault lies not in our stars, but in ourselves."
Like with our stock, we bougth with reckless abandon while bowing at the alter of gluttony, giving no consideration to frugality. Where does balme for our current economic condition lie?
Of course the Big Three Auto Manufacturers played on the vulnerabilities and lust of their market, and via collusion with Big Oil, kept producing cars that had mileage rates that dated back to our Oil crisis of the Seventies.
As buyers, we didn't learn a thing. So while we are pointing fingers at GM it is important to remember the words of former Mayor Jimmy Walker who refered to his administration's corruption during his resignation speech: "I'm not the only fool here; you voted for me!"
To quote another famous pundit: "The fault lies not in our stars, but in ourselves."
Thursday, July 17, 2008
WALL STREET AND MAIN STREET: THE TWO AMERICAS
(written 4/20/08)
In case one missed the news of the week, it is as follows: Magazine publishers sent reeling in first quarter; Wachovia posts $393 million loss; Blockbuster to buy Circuit City, and Delta and Northwest merge creating potential job losses; Retail chains caught in a wave of bankruptcies, and finally Citigroup posting a $5 Billion loss, declaring they will cut 9,000 jobs.
Wall Street’s response? They finished the week with a 524 point gain. Why not? Lost jobs improve a company’s P&L and balance sheet which investors love. That’s part of the dichotomy of a capitalist country no longer based on work, but wealth. A mere reminder a similar market increase occurred based on a Bear Stearns bailout which secured wealth.
The admonishment of working hard and saving money to become an investor no longer applies. Wages have stagnated and workers fear losing their job. Consumer confidence is disappearing. Costs haven’t stagnated, eating away at salaries and we are now bearing the burden of paying for baby boomers, our own social security in jeopardy. Firms, struggling to find a better balance sheet have terminated defined pension plans and workers now contribute more out of pocket funds towards their retirement, an add on cost. We have a negative .5% savings rate, which means we officially survive on credit. What happens when that dries up?
The “greatest generation” purchased homes that were half of their final salary before retiring. Today if someone buys a modest home for $250,000 somewhere in Timbuktu and earns a salary of $80,000, they will never retire making the same, let alone double the original purchase price of their home.
Add to the problem the disparity that 90% of wealth is held by 5% of the population, and the fact we no longer produce (10% of workforce is in manufacturing – an all time low) but have become a service economy (easily shopped overseas) and Main Street is getting clobbered.
Something will need to be done or prepare for a lollapalooza of a recession, the kind that is a depression for those who lose their jobs.
Possible solutions? Gear tax cuts towards those who need the money and will place it into service, keeping our economic wheel turning, rather than giving tax cuts to the wealthy to become wealthier. This is not an assault on the wealthy, but rather a way for them to share their patriotism, the way low and middle income families do when they send their children to war.
Like the recent tax rebate to workers to stimulate the economy, money must be put in the hands of the masses who need to spend to survive.
Declare outsourcing of American jobs as unpatriotic as flag burning. Solve the healthcare crisis which accounts for 80% of all bankruptcy filings. Spend tax dollars on education as easily as we do on making war, otherwise our future will be catastrophic.
Global competition with no safe guards has resulted in the “dumbing down” of American standards to that of the third world countries we compete against.
Our current generation will be bailed out by the old money of our parents. What will become of our sons and daughters who are already being told they will not have the standard of living as past generations? How will they survive on shrinking income and rising costs for their basic needs?
We have isolated the two Americas John Kerry spoke about. Perhaps we should take a cue from Martin Sheen to his son Charlie in the movie “Wall Street”: Its time you learned to create things rather than live off the buying and selling of others hard work.
David DiBello
In case one missed the news of the week, it is as follows: Magazine publishers sent reeling in first quarter; Wachovia posts $393 million loss; Blockbuster to buy Circuit City, and Delta and Northwest merge creating potential job losses; Retail chains caught in a wave of bankruptcies, and finally Citigroup posting a $5 Billion loss, declaring they will cut 9,000 jobs.
Wall Street’s response? They finished the week with a 524 point gain. Why not? Lost jobs improve a company’s P&L and balance sheet which investors love. That’s part of the dichotomy of a capitalist country no longer based on work, but wealth. A mere reminder a similar market increase occurred based on a Bear Stearns bailout which secured wealth.
The admonishment of working hard and saving money to become an investor no longer applies. Wages have stagnated and workers fear losing their job. Consumer confidence is disappearing. Costs haven’t stagnated, eating away at salaries and we are now bearing the burden of paying for baby boomers, our own social security in jeopardy. Firms, struggling to find a better balance sheet have terminated defined pension plans and workers now contribute more out of pocket funds towards their retirement, an add on cost. We have a negative .5% savings rate, which means we officially survive on credit. What happens when that dries up?
The “greatest generation” purchased homes that were half of their final salary before retiring. Today if someone buys a modest home for $250,000 somewhere in Timbuktu and earns a salary of $80,000, they will never retire making the same, let alone double the original purchase price of their home.
Add to the problem the disparity that 90% of wealth is held by 5% of the population, and the fact we no longer produce (10% of workforce is in manufacturing – an all time low) but have become a service economy (easily shopped overseas) and Main Street is getting clobbered.
Something will need to be done or prepare for a lollapalooza of a recession, the kind that is a depression for those who lose their jobs.
Possible solutions? Gear tax cuts towards those who need the money and will place it into service, keeping our economic wheel turning, rather than giving tax cuts to the wealthy to become wealthier. This is not an assault on the wealthy, but rather a way for them to share their patriotism, the way low and middle income families do when they send their children to war.
Like the recent tax rebate to workers to stimulate the economy, money must be put in the hands of the masses who need to spend to survive.
Declare outsourcing of American jobs as unpatriotic as flag burning. Solve the healthcare crisis which accounts for 80% of all bankruptcy filings. Spend tax dollars on education as easily as we do on making war, otherwise our future will be catastrophic.
Global competition with no safe guards has resulted in the “dumbing down” of American standards to that of the third world countries we compete against.
Our current generation will be bailed out by the old money of our parents. What will become of our sons and daughters who are already being told they will not have the standard of living as past generations? How will they survive on shrinking income and rising costs for their basic needs?
We have isolated the two Americas John Kerry spoke about. Perhaps we should take a cue from Martin Sheen to his son Charlie in the movie “Wall Street”: Its time you learned to create things rather than live off the buying and selling of others hard work.
David DiBello
KILLING US SOFTLY WITH THEIR OIL
Forget Iran’s nuclear ambitions, Hamas ulterior motive or Al Quada’s next plan of attack. The Mid East is tearing apart the fabric of our economy without lifting a finger; simply raise the price of oil. The worst part of this equation is American oil companies are co conspirators in this covert war, catering to the American addiction with no desire to change our fix or harm their revenue stream. OPEC is using America as their puppet in their economic war.
What about those tax subsidies usually granted businesses for capital improvements? What have oil companies done to explore new avenues of energy and eliminate our reliance on oil, other than lip service from our current President? Wouldn’t those subsidies be best given to Detroit to mass produce flex fuel and hybrid cars, the kinds that give us 50 miles per gallon?
Oil companies despise that remedy the way a drug dealer hates hearing when a “client” checks into rehab. Theirs’ isn’t the only greed at fault for putting our country at such risk. Environmentalists have tied the hands of our ability to drill for oil within our regions, a short term fix that continues dependence on oil, just not foreign.
Liberals are equally to blame. If they are so concerned about “no blood for oil” shouldn’t making America less reliant on foreign oil be a priority, even if it means yielding in principle, for the time being, regarding off shore drilling? Wouldn’t baby steps save lives?
Let’s not forget the American consumer now enjoying Santayana’s caveat about forgetting past mistakes. We endured the oil crisis and gas rationing of the late seventies, and what did we learn? Get right back up on that high horse with SUV’s and Hummers, and live like there’s no tomorrow.
Welcome to tomorrow. We are playing right into the hands of our enemies who are killing us from within by virtue of our own greed and fiscal mismanagement. If we think the Mid East is at war with us, wait until China no longer wishes to finance out debt because the value of our dollar has made us an extreme credit risk.
Now we are told Oil companies will use extortion if America wishes to reintroduce the windfall profits tax, a sort of rebate to America for their price gauging. Let them threaten to pass on taxes, because if done, they will feel the wrath of the American public, as will any politician who foolishly tries to justify such blackmail.
After six years of war against terrorism, we still haven’t learned that the biggest bomb we could drop on our enemies is to dry up their source of funds. Instead, and because of American greed, they are doing it to us. We continue to drive whistling off to work, living on credit, and diverting funds meant for living expenses by paying oil companies who pay the Mid East. Are we really winning the war? Better yet, do we know we are in one, and are losing from within?
David DiBello
What about those tax subsidies usually granted businesses for capital improvements? What have oil companies done to explore new avenues of energy and eliminate our reliance on oil, other than lip service from our current President? Wouldn’t those subsidies be best given to Detroit to mass produce flex fuel and hybrid cars, the kinds that give us 50 miles per gallon?
Oil companies despise that remedy the way a drug dealer hates hearing when a “client” checks into rehab. Theirs’ isn’t the only greed at fault for putting our country at such risk. Environmentalists have tied the hands of our ability to drill for oil within our regions, a short term fix that continues dependence on oil, just not foreign.
Liberals are equally to blame. If they are so concerned about “no blood for oil” shouldn’t making America less reliant on foreign oil be a priority, even if it means yielding in principle, for the time being, regarding off shore drilling? Wouldn’t baby steps save lives?
Let’s not forget the American consumer now enjoying Santayana’s caveat about forgetting past mistakes. We endured the oil crisis and gas rationing of the late seventies, and what did we learn? Get right back up on that high horse with SUV’s and Hummers, and live like there’s no tomorrow.
Welcome to tomorrow. We are playing right into the hands of our enemies who are killing us from within by virtue of our own greed and fiscal mismanagement. If we think the Mid East is at war with us, wait until China no longer wishes to finance out debt because the value of our dollar has made us an extreme credit risk.
Now we are told Oil companies will use extortion if America wishes to reintroduce the windfall profits tax, a sort of rebate to America for their price gauging. Let them threaten to pass on taxes, because if done, they will feel the wrath of the American public, as will any politician who foolishly tries to justify such blackmail.
After six years of war against terrorism, we still haven’t learned that the biggest bomb we could drop on our enemies is to dry up their source of funds. Instead, and because of American greed, they are doing it to us. We continue to drive whistling off to work, living on credit, and diverting funds meant for living expenses by paying oil companies who pay the Mid East. Are we really winning the war? Better yet, do we know we are in one, and are losing from within?
David DiBello
INCOME REDISTRIBUTION? FIRST END INCOME MONOPOLY
The right wing wealthy in this country are raising the specter of unfairness in claiming that Democrats are seeking to tax them and give their hard earned money to the lower class of the population. They are waging a Robin Hood defense, skimming over the fact that their class, as in the ‘80’s decade of greed, have benefited overwhelmingly while only representing a small fraction of the country. In actuality the working class is questioning how they got those earnings in the first place.
Bill O’Reilly nightly bemoans taking “his money” but little is mentioned by any of this ilk about hard working people losing health coverage or the victimization of minimum wage workers who haven’t gotten an increase in 16 years and work hard for below poverty wages. No mention is made about unchecked CEO pay, agreed upon via the collusion of non employee board members who themselves are of the same ilk as the candidate CEO – wealthy white males mostly – to the ignorance of the stockholders.
The wealthy have manipulated corporations into not only paying golden parachutes, but golden coffins for those executives who die in office. Not only do CEO’s enjoy higher proceeds from life insurance policies, their estate receives salaries if they die where the working class would be left flailing in the wind, with lower death benefits to boost.
Everything is done to protect the wealth of this class. Not only do they benefit by paying significantly less these past eight years, they have no representation in the military. It’s a win-win; don’t fight and enjoy your money while others do the fighting for you. A kind of income protection at socialized government level wages, with veterans treated as yesterday’s news when fighting ends. Their sacrifice, if any, is limited to the pin of a flag lapel piercing their Armani suit and a hand held over their heart as they recite diatribe they will never live up to.
Thanks to capitalism, the “haves” always have the upper hand. Capitalism, while being the best form of economics, also needs to be tweaked. We created rules to eliminate monopolies, a direct violation of the competition addendum, to the behest of business, which seems to like unfairness when it is to their advantage. They have beaten down the working class by eliminating their defined pension plans and reducing more employee health premiums via payroll deduction.
The nature of capitalism dictates that money makes money, so those with more money watch their nest egg grow multiple times faster than those scrimping to save in a "rich get richer" ponzi scheme. This is why our economy is now based on wealth not work, and old money is dictating the rules over the working class struggling to survive, many times at the expense of their very own children. We have not only rich versus poor, but generations now pitted against one another.
Suppose the working class got wise and boycotted outlandishly priced items like Yankees tickets, or clothing and electronics, or automobiles. If we cancelled our cable and Fox News' revenue decreased, Mr. O'Reilly would eventually find out whose money he does have, after his assistants get laid off first. The haves will threaten layoffs not of their own, management or high priced prima donnas making more money in one year than twenty men in a lifetime, but of the vendors and ticket takers first – high class blackmail termed “negotiation” when done from behind a white collar. Of course with the addiction of wanting one’s son to see a ballgame, the “haves” can revel like drug dealers at the trough. Protection is needed to defend against the inequities and injustices perpetrated by the wealthy.
There’s a solution. Restore Clinton era tax schedules, the ones where the budget was balanced while the economy was humming along, with the exclusion of the first $20,000 of income for all taxpayers in calculating tax obligation. On paper there can be no declaration of unfairness, yet the wealthy will argue that the first $20,000 means nothing to them. They still want the inequity that currently exists on the tail end, the level of income few Americans get to reach thanks to the fact that the purse strings of American firms are held by the “haves,” and they don’t want to see anyone touch their nest egg, no matter how unfair. They rather pit working class against each other, giving them the illusion that they can one day be at their level with hard work, a scam due to current cost of living increases along with our induction into a global economy with no protection for the American worker who currently competes with third world wages.
Let’s forget all that. Here’s an alternative theory perhaps the wealthy could understand – it’s the working class’ turn.
David DiBello
Bill O’Reilly nightly bemoans taking “his money” but little is mentioned by any of this ilk about hard working people losing health coverage or the victimization of minimum wage workers who haven’t gotten an increase in 16 years and work hard for below poverty wages. No mention is made about unchecked CEO pay, agreed upon via the collusion of non employee board members who themselves are of the same ilk as the candidate CEO – wealthy white males mostly – to the ignorance of the stockholders.
The wealthy have manipulated corporations into not only paying golden parachutes, but golden coffins for those executives who die in office. Not only do CEO’s enjoy higher proceeds from life insurance policies, their estate receives salaries if they die where the working class would be left flailing in the wind, with lower death benefits to boost.
Everything is done to protect the wealth of this class. Not only do they benefit by paying significantly less these past eight years, they have no representation in the military. It’s a win-win; don’t fight and enjoy your money while others do the fighting for you. A kind of income protection at socialized government level wages, with veterans treated as yesterday’s news when fighting ends. Their sacrifice, if any, is limited to the pin of a flag lapel piercing their Armani suit and a hand held over their heart as they recite diatribe they will never live up to.
Thanks to capitalism, the “haves” always have the upper hand. Capitalism, while being the best form of economics, also needs to be tweaked. We created rules to eliminate monopolies, a direct violation of the competition addendum, to the behest of business, which seems to like unfairness when it is to their advantage. They have beaten down the working class by eliminating their defined pension plans and reducing more employee health premiums via payroll deduction.
The nature of capitalism dictates that money makes money, so those with more money watch their nest egg grow multiple times faster than those scrimping to save in a "rich get richer" ponzi scheme. This is why our economy is now based on wealth not work, and old money is dictating the rules over the working class struggling to survive, many times at the expense of their very own children. We have not only rich versus poor, but generations now pitted against one another.
Suppose the working class got wise and boycotted outlandishly priced items like Yankees tickets, or clothing and electronics, or automobiles. If we cancelled our cable and Fox News' revenue decreased, Mr. O'Reilly would eventually find out whose money he does have, after his assistants get laid off first. The haves will threaten layoffs not of their own, management or high priced prima donnas making more money in one year than twenty men in a lifetime, but of the vendors and ticket takers first – high class blackmail termed “negotiation” when done from behind a white collar. Of course with the addiction of wanting one’s son to see a ballgame, the “haves” can revel like drug dealers at the trough. Protection is needed to defend against the inequities and injustices perpetrated by the wealthy.
There’s a solution. Restore Clinton era tax schedules, the ones where the budget was balanced while the economy was humming along, with the exclusion of the first $20,000 of income for all taxpayers in calculating tax obligation. On paper there can be no declaration of unfairness, yet the wealthy will argue that the first $20,000 means nothing to them. They still want the inequity that currently exists on the tail end, the level of income few Americans get to reach thanks to the fact that the purse strings of American firms are held by the “haves,” and they don’t want to see anyone touch their nest egg, no matter how unfair. They rather pit working class against each other, giving them the illusion that they can one day be at their level with hard work, a scam due to current cost of living increases along with our induction into a global economy with no protection for the American worker who currently competes with third world wages.
Let’s forget all that. Here’s an alternative theory perhaps the wealthy could understand – it’s the working class’ turn.
David DiBello
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