midtowng's blog

Historic anniversaries in labor history

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As a people we like to mark the anniversaries of important events in our lives. This is true for nations, individuals, corporations, and political groups.
The labor movement has been mostly left out of this tradition. This is my effort to change that. For instance, this Wednesday is the 160th Birthday of Samuel Gompers, founder of the AFL.

For this essay I would like to concentrate of events, such as this Tuesday is the anniversary of the very first worker's compensation agreement.

The states budget crisis about to get much worse

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Insolvency is no longer just for California. The dreaded word "bankruptcy" is now being whispered in Chicago.

While it appears unlikely or even impossible for a state to hide out from creditors in Bankruptcy Court, Illinois appears to meet classic definitions of insolvency: Its liabilities far exceed its assets, and it's not generating enough cash to pay its bills. Private companies in similar circumstances often shut down or file for bankruptcy protection.

Get ready for another Wall Street bailout

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When you know you are about to do something unpopular you try to hide it. For instance, the public would never know that over 140 banks (not counting credit unions) have gone under this year because their announced failures only happen on Friday evenings.
Another extremely unpopular event would be another round of bailouts for Wall Street banks. That's why the provisions are hidden deep within the financial reform bill.

For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system.
Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Believe it or not, this is not the most outrageous thing Washington has done in the last week.

You have been warned

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The underlying assumption that the current world monetary system is built upon is that America will always over-consume and the world will always accept our debt at face value. It's a warped and unhealthy relationship, but its worked (sort of) for several decades. That's why it was notable when a Chinese central banker spoke up last week.

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

Impossible? That's absurd. For decades foreigners have been more than willing to exchange their excess dollars from trade surpluses for our debt in order to keep their currencies at artificially low levels.

"Five Minutes to Midnight" in Athens

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Events are rapidly coming to a head in Greece, and the consequences could ripple through all of Europe.

Leading Greek economists and bankers yesterday warned George Papandreou, prime minister, that he had to announce bold initiatives to rescue the country's collapsing bond market and avert the possibility of defaulting on a rising public debt.
...

Bonddad versus Bonddad

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Last week Bonddad posted a diatribe against the entire economic blogosphere.

Reading blogs that in any way write about economics has generally become an exercise in utter futility. According to most good news is either propagated by corporate whores who are blind to the realities around them or presented without considering "all" the facts. All government statistics and all economists are wrong -- unless they support or present a bearish viewpoint.

Normally I wouldn't notice, but someone pointed it out to me and it got me thinking. How did we arrive at this point, where the bullish and bearish are drawn up against one another in much the same way that Democrats and Republicans in Congress are?
It occurred to me that perspective has everything to do with it.

Presto! Unemployed people vanish before your very eyes

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The big economic news today is the unemployment rate dropped slightly.

The rate unexpectedly fell to 10 percent, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The government also said 159,000 fewer jobs were lost in September and October than first reported.

Could Dubai be just the first?

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By now most people are aware of how Dubai got itself in over its head. What exactly is the perfect metaphor for Dubai's excesses? The palm-tree shaped islands? The underwater hotel? The indoor ski resort? It all had the feel of Disneyland meeting the dot-com mania.
In the end it was all about borrowed money. Lots of it. In that context Dubai is not alone.

Dubai's default has the world's investors asking the question: Who's next?

Golden Myths

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I don't believe there is any investment, outside of a mania, that elicits more emotion, both positive and negative, than gold. People love it or hate it, there isn't much in between. It's because of these strong emotions that there is so many misconceptions about the yellow metal. Emotions tend to cloud normally reasonable minds to the point that they miss either opportunities or dangers.

Which brings us the current bull market in gold. What does gold hitting all-time record highs mean? To answer that you must brush away the myths and misunderstandings of what gold is and why someone would purchase it.
I am going to attempt to do that.

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