Not a Kodak Moment - Shares Crash in Anticipation of Bankruptcy

Another American business icon is circling the bowl. The Eastman Kodak company was founded in 1892 and for more than a century completely dominated the camera and photo film business. When I was a little kid back during the 1970s, I thought Kodak made all the camera film there was available. Other brands simply had zero name recognition. Paul Simon even sang a sweet tribute to the company's products called "Kodachrome," that was popular on the radio back then.

Quite obviously, the rise of the digital age was pretty hard on Kodak even before the financial crash of 2008. And now, it looks like the end is approaching, as reported today by CNN:

Shares of Eastman Kodak dropped almost 60% Friday, with trading halted several times amid rumors that the camera maker has hired a law firm for advice on a major restructuring or bankruptcy filing. The company later denied that is planning bankruptcy moves.

The Wall Street Journal said Friday that Kodak had hired law firm Jones Day to explore a restructuring. Bloomberg said the company hasn't officially hired a firm yet, but that bankruptcy is among the options being considered.

The rumors came just days after Kodak was forced to draw from its credit line, had its credit rating downgraded by two major agencies, and received harsh words from a stockholder.

Kodak shares plunged 54% Friday on the news to a mere 78 cents. The stock is down a whopping 86% year-to-date.

After the close of trade on Friday, Kodak released a statement denying the rumors and saying the company "has no intention of filing for bankruptcy."

Nevertheless:

The year hasn't been kind to Kodak, which has suffered massively from photography's transition from film to digital, and this week was especially tough. Late last week, Kodak disclosed that it needed to tap $160 million from a pre-existing $400 million credit line.

You really have to wonder what financial institution was dumb enough to give a dinosaur company whose whole business model is rapidly disappearing a $400 million credit line. This is the type of crap banks pull when they know if they bet wrong the government will just bail them out.

In the end, Mama didn't take Paul Simon's Kodachrome away, technological advances coupled with economic collapse were the real culprits.

Friday Rant: The Impotence of Positive Thinking

Sometimes you read a news story that is just so dumb that you walk away shaking your head. First term Republican Governor Nikki Haley of South Carolina is a Tea Party darling and, like fellow Indian-American Governor Bobby Jindal of Louisiana, one the party likes to promote to show how diverse it supposedly is becoming. Unfortunately, what Ms. Haley is really proving is that pasty, pudgy old white males don't have a monopoly on low IQ scores occupying high public office these days. As reported by the Charlotte Observer:

Gov. Nikki Haley is ordering state workers to answer phones with a cheery "It's a great day in South Carolina" -- despite a sky-high unemployment rate and the fact that one-in-five residents are on Medicaid.

The Republican issued the order Tuesday during a Cabinet meeting, saying it's part of changing the state and how people feel about their government.

Haley says she wants people to feel positive and says the phrase will put workers in a better mood while reminding them they work for the public.

No word on whether workers not using the greeting will suffer consequences.

That sounds just like the kind of happy-talk bullshit senior managers in corporate America use in lieu of decent pay raises to try and motivate their employees. What's next Governor Haley? Goofy Shirt Fridays at every Palmetto State DMV office? I'm sure THAT would improve the mood of every surly driver who has had to wait in line for three hours to get their license plate renewed.

Listen, Governor Haley...can I call you Nikki? Good. Listen, Nikki, I know you are pretty new at this Governor stuff and all. There must be a lot of pressure on you as a young female of minority persuasion elected to high public office down South where a substantial portion of the electorate still believes a woman's proper place is in the kitchen. So let ol' Billy Boy give you a little advice on this one.

You know what would make "people feel positive" whenever they interact with a state government office? If, when they first call, they actually got a hold of a live person rather than a bewildering automated menu with a couple of dozen options it takes the computerized voice three minutes just to read through.

What's that you say? Hiring additional phone receptionists costs money, which would force you to raise taxes and you're unwilling to do so?

Okay, fair enough. How about when one of your employees DOES finally answer the phone that they do so in a helpful and professional manner and then actually get the caller the information they need? That would engender a heck-of-a-lot more good will than having them drone out some empty-headed greeting as if they were auditioning for a bit part in the next remake of The Stepford Wives.

You see, Nikki, it stands to reason that if an employee is forced to say something they don't really mean, it will be very evident by the sound of their voice. Because a stunt like this isn't going to put your workers "in a better mood." In fact, it is likely to very much piss them off. That's a little bit of Worker Psychology 101, Nikki, which you yourself might have known had you ever held a real job in your life.

Lest people think that my last little barb at Governor Haley is unfair, I invite you to take a peak at her resume right off of her Wikipedia page:

Haley is a graduate of Orangeburg Preparatory Schools, and later graduated from Clemson University with a B.S. in accounting and joined the FCR Corporation (a waste management and recycling company), before joining her mother's business, Exotica International, an upscale clothing firm, in 1994. The family business grew to a multi-million dollar company.

Prep school background before going to college and then essentially falling right into the family business. Former President George Bush the Lesser would be SO proud.

Oh come on, Bill, I hear you saying. You're hardly being fair. Bush was a blueblood inbred who was born on third base and thought he hit a triple. Governor Haley, by contrast, is a dynamic young woman, a shining example of the American Dream...from a family of Indian immigrants who worked hard to BUILD something here in the Land of Opportunity. Shame on you for being so cynical.

So what you're telling me is that NOT being a well connected old white guy gets you free pass when it comes to ignoring reality and trying to prop up the facade of business as usual by making your employees' working conditions a living hell of fake optimism? Sorry, but after Obama I've grown very weary of people giving politicians a pass on their bad acts and lack of leadership simply because of their minority status.

Governor Haley has bought into the American Dream, all right. It's the same delusional Dream most people in this country apparently now have that some day it will be THEM sitting in the catbird seat able to lord it over their former fellow laborers. That's the only explanation I have for how such transparently power-craving individuals like South Carolina Governor Nikki Haley, be they aristocratic old white guys or young daughters of immigrants, keep getting elected to public office in the first place.

An Unfriendly Development Befalls Friendly's Restaurant Chain: Bankruptcy

There used to be a Friendly's location about a half-mile from my house, but the wife and I would rarely ever go there. The food was crappy, and they would hide the poor quality of their signature ice cream by drowning it under a ton of toppings. I wasn't sorry to see it go. Well, today it sounds like the rest of the chain me soon follow our local franchise into oblivion. Here's Market Watch:

Restaurant chain Friendly's is planning to file for Chapter 11 bankruptcy protection and seek a possible buyer, The Wall Street Journal reported late Thursday in its online edition, citing people close to the matter. The chain, which has about 10,000 employees and 500 restaurants, could file as early as next week, according to the Journal.

Slowly but surely, large American retail and restaurant chains are collapsing as the corrosive effect of Peak Oil gradually grinds down the consumer economy.

Cost of Family Health Care Coverage Doubled in the Past Decade

As I have said before on this blog, all that is wrong in America today can be summed up by the health care mess. Greed and avarice by the private corporations that control most aspects of the system has not only prevented the enactment of national health care, but has driven the costs of even basic medical treatments beyond the ability of the average citizen to pay. Just how bad things are is summed up in this brief article by Boise Weekly:

A new study out today by the Kaiser Family Foundation, a nonprofit research group that tracks employer-sponsored health insurance, shows that the average annual premium for family coverage through an employer topped $15,000 in 2011, an increase of 9 percent over last year.

Many businesses continue to cite the high cost of coverage in decisions not to hire new employees, dragging down an already-sputtering economy. According to the study, the cost of family coverage has doubled since 2001, when premiums averaged $7,061.

Keep in mind that the median household income in America is somewhere around $49,000. So that means it costs nearly a third of a family's annual income to provide that family with adequate medical coverage. And the cost just continues to rapidly spike upwards despite the corporate giveaway known as Obamacare.

By my back-of-the-envelope calculation, at the same 9% rate of annual increase in health insurance costs seen during this past year, the total cost of the insurance would more than double again by the year 2020, to just over $32,000. Given that incomes remain stagnant, and are at best likely to continue to be so as the Great Recession drags on, that means the cost of a family's health insurance would then consume nearly two-thirds of their annual income before taxes. Making matters worse, as the article states, many employers are not hiring due to high insurance premiums, a cruel Catch-22 for the uninsured and unemployed.

When a trend appears to be unsustainable, you can bet darn well that it is. At this staggering rate of increased costs, the American medical system is headed for collapse, and not in the distant future either. Unless something dramatically changes, I don't see how the system as currently constituted survives even the current decade.

The Downward Spiral Now Open for Comments

I said there would be some more positive changes to the blog, and I hope many of my readers will enjoy this one. I've decided to open the blog for comments from any source rather than just limiting it to people with blogging accounts. I'm hoping this will increase the amount of discussion about each post. The blog has been averaging about 500 page views per day, but only two or three comments, so I welcome the chance to hear more input.

Because this is a one-man operation, however, all comments will have to be moderated before being posted. As such, it may take me awhile to get them up on the blog as I do have a day job. I'll have to ask for your understanding and patience on that one.

Also, please note that no comments will be allowed that are libelous, hateful, racist, sexist or otherwise abusive. And yes, I will be the arbiter making that call. I don't mind if commenters disagree with me, especially if they are able to back up their position with well reasoned arguments, but please do so in a respectful manner that encourages thoughtful discourse rather than stifles it.

Corporate Welfare for Dummies: The Federal Government Overpays Private Companies for Contract Employees

Government employees have come under a lot of fire recently from the right wing as our nation’s “leaders” wrestle with reducing our insane federal budget deficit. For example, Congressional Republicans have put forth the idea of reducing the number federal workers by 10% or more in order to save money. Sounds like a plan, right?

Well, what you never hear those same Republicans say is that if you really want to start trimming the cost of the federal government workforce, a FAR MORE efficient method would be to get rid of all the contractors. As was demonstrated in a report issued last week by the nonpartisan Project On Government Oversight, the government actually pays well above fair market value for contractors. Here are the details from CBS News:

As Washington's use of private contractors grows, the government is paying those contractors billions more than it would pay their government workers to do the same job, according to a new study released Tuesday.

In an attempt to verify frequently made claims that the government can save money by outsourcing its work, the nonprofit Project On Government Oversight (POGO) compared the total annual compensation for federal (and private sector) employees with federal contractor billing rates.

The group found that in 33 of the 35 occupational categories it reviewed, federal government employees were less expensive than contractors. On average, the federal government pays contractors 1.83 times more than it pays federal employees and two times more than what comparable workers in the private sector are paid.

For instance, the government on average pays contractors $299,374 for accounting services, while it pays federal employees $124,851 for accounting services. By comparison, workers in the private sector (not under contract by the government) make on average $83,132. The government on average pays contractors $198,411 for information technology management, while they pay federal workers $124,663.

That discrepancy is significant, given the federal government spends over $320 billion on service contracts each year, and about one-quarter of all discretionary spending goes to service contractors. According to POGO's report, the contractor workforce rose from an estimated 4.4 million in 1999 to 7.6 million in 2005 -- while the size of the federal employee workforce has remained relatively steady at about 2 million.

Given the above, it should be OBVIOUS to any sentient being that outsourcing costs the government FAR more money than if the work were done in house. So why don’t you hear the Republicans advocating for eliminating contractors? Oh that’s right, because the contract companies whose profits are reflected in that cost difference also write big campaign checks.

In the DC-area, such companies are not-so-affectionately referred to as “Beltway Bandits.” Most of them exist solely because of the contract services they provide to the federal government. Without the hefty profits from this setup, they would be out of business. The notorious Erik Prince of Blackwater fame, for example, became a multimillionaire on the backs of the taxpayers by profiting off of government contracts to provide security personnel in high risk locales. According to Wikipedia, since 1997 Blackwater alone has won more than $1.6 billion in unclassified federal contracts and an unknown amount of secret work.

This is yet another example of how you can tell that the Republicans are NOT in any way, shape or form serious about deficit reduction. They are all about reducing spending that doesn’t help their own political constituencies, but in reality they don’t give a damn about the deficit itself.

Keep this in mind the next time you hear the likes of the odious Mitch McConnell, John Boehner or Eric Cantor on your teevee screen yelling about the need to reduce spending. America does need to get its fiscal house in order, of course, but it should be done fairly, with the greatest burden being placed upon those with those most ability to pay. But you will never hear that said by any of those assholes.

New Look for the Blog

As you can see, I've changed the look of The Downward Spiral blog to make it more readable and user friendly. The other good news is that I've finally figured out how to embed links (please bear with me, even though I'm a Gen-X'er, I'm an OLD Gen-X'er...meaning computer stuff doesn't come naturally to me).

More positive changes are coming, but I'll fill you in on those when I make them.

Cheers!

Chris Christie Courts the Anti-Snooki Vote--and Wall Street Cash in Presidential Bid

In my September 16th Friday Rant, "Yo, New Jersey, Y U B Giving Snooki a Tax Credit?" I called out New Jersey Governor Chris Cristie for saying he couldn't veto a $420,000 state tax credit for the utterly insipid reality teevee show, Jersey Shore, despite the fact that cities in his state have been laying off teachers and police officers in large numbers. Well, according to a report yesterday by Talking Points Memo, since then Christie apparently decided to grow a pair:

New Jersey Gov. Chris Christie (R) has vetoed a $420,000 "Jersey Shore" production credit that was criticized by local lawmakers as a "fake tanning" tax break and "a terrible, terrible and misguided waste."

"I have no interest in policing the content of such projects," Christie said in a press release. "However, as chief executive I am duty-bound to ensure that taxpayers are not footing a $420,000 bill for a project which does nothing more than perpetuate misconceptions about the State and its citizens."

Hmmm...why the change of heart all the sudden? You don't suppose...yep, that's right, someone is looking to throw his hat, as well as his considerable girth, into the President ring. Here is Talking Points Memo again:

There’s a lot of buzz around a Chris Christie run this week, thanks mostly to an all-out effort by big money Republicans to recruit him for a run.

So who are these guys? In July, Christie attended a meeting with a “who’s who A-list of successful fundraisers,” as FOX News put it to discuss a possible presidential bid. The group reportedly included several billionaires, including its host, Home Depot co-founder and venture capitalist Kenneth Langone, who appears to be the most enthusiastic driver of the Christie boomlet.

Langone, 76, has emerged over the last two years as one of the loudest critics of President Obama’s Wall St. vs. Main Street rhetoric. At a CNBC Town Hall last year, Obama himself was asked about Langone’s statement that the White House should stop making “people in business feel like we’re villains or criminal.” The President replied that he was “absolute not” vilifying the private sector, noting that he’s cut taxes on businesses repeatedly. Langone isn’t a total hardliner, however: he endorsed raising taxes on the rich during debt ceiling negotiations so long as the revenue was dedicated entirely to helping pay down the deficit.

New York hedge fund billionaire Paul Singer is also named by Politico as one of the leaders of the latest Draft Christie movement. Singer was a major fundraiser for both George W. Bush’s and Rudy Giuliani’s presidential campaigns. He also bankrolled an unsuccessful 2007 effort in California to try to pass a ballot measure ending the winner-takes-all system for California’s electoral votes, which would provide a massive boost to Republican presidential candidates. Like Langone, he has a moderate streak as well: he helped fund efforts to pass New York’s landmark law allowing same sex marriage this year.

Another key Christie backer: FOX News CEO Roger Ailes. According to New York Magazine, Ailes begged him to run before the presidential race got under way and brokered a meeting between Christie and Rush Limbaugh.

Oooh...it looks like the Republican faction of The Big Money Boys has quickly soured on the odious Rick Perry, who so convincingly proved himself to be Not Ready for Prime Time. So in their desperation to back anyone other than Mitt Romney, who is seriously disliked by social conservatives, they are now turning to the caustic, half-term governor of New Jersey.

Look no further for an example of just how broken our political system is than the repeated meteoric rises and crashes this presidential election cycle of candidate after candidate on the Republican side. At one time or another Sarah Palin, Donald Trump, Michelle Bachmann and Rick Perry were all touted as the "savior" of the party by conservatives, briefly led in the polls among likely Republican primary voters, and then crashed and burned once the media actually began to pay attention to the endless stream of stupid things coming out of their mouths.

Christie might fare a little bit better than the rest of them because he seems to be somewhat more politically adroit, as his conveniently-timed veto of the "Snooki Subsidy" shows. But by being so openly courted and touted by Wall Street players and by Fox News, it is obvious that no one who is not a millionaire of a billionaire should ever be duped into thinking he is on their side.

Globalization for Dummies: The Case of the Globetrotting Apples

Free market conservatives are fond of running around bashing the inefficiencies and wastefulness of government spending. And to be fair, governments at all levels provide plenty of ammunition through their sometimes questionable decision making.

What governments are not designed to do is provide any service at the lowest possible cost—which isn’t always a bad thing. I would argue that the maniacal drive by the big time capitalists to put a price tag on everything is every bit as destructive, if not more so, than even the more egregious examples of government waste and mismanagement.

This is particularly true when it comes to the Holy Grail of modern capitalism—globalization. International trade of some form has been going on for thousands of years, but it has only been in the last half century that the cheap oil era and the rise of “just in time” delivery systems have allowed international conglomerates to dominate markets in every corner of the globe.

Thanks to the ruthless exploitation of the world’s petroleum reserves, it became cheaper to grow/build things on one side of the planet and ship them everywhere else than it did to produce the same items locally. This phenomenon has wreaked destruction on local economies everywhere, and in America in particular fueled the rise of homogeneous suburban sprawl that has eradicated the unique and special features of so many of our towns and cities.

One small example of the globalized system in action was documented in a recent story by the British newspaper the Globe and Mail:

Apples imported from China are being sold at a supermarket less than amile from the orchards of Kent.

The move by Morrisons at a store in the Garden of England has angered shoppers and disappointed growers, who say it flies in the face of demand for local food.

Britain relies on apple imports from southern hemisphere countries such as Australia and New Zealand, and, to a small extent, China, during our summer.

But it is unusual to find the Chinese Fuji apples – which are stored and shipped 5,000 miles to British supermarkets – at this time of the year, when local apples are available.

A member of staff said the decision to stock the Chinese imports ‘was not made locally’.
One shopper said: ‘I just hope no one buys them because it is an insult to Kent apple producers.’

Sometimes, the British are just so cute that you want to pat them on the head. They are obsessed with American culture, import our television shows and movies, emulate our wretched bottom line economic policies and eagerly join our imperial war efforts around the globe. And then every once in awhile they have the temerity to get all butthurt about the consequences.

I’ll give them credit for one thing. Had this happened in America, no one would have said boo about it except maybe for a curmudgeonly blogger like me. At least there are some British consumers who are not so obsessed at saving a few pence that they don’t recognize the collateral damage that results.

The real problem, of course, is that the only way it makes economic sense to ship those apples 5,000 miles from China to Great Britain when there is an orchard right down the road is if they can be transported cheaply. And they can only be transported cheaply if the oil that is used to ship them all that way remains inexpensive enough to keep the price of the apples below what it costs to grow and harvest them locally.

The free market globalists would claim that it is more “efficient” for the supermarket chain to sell those Chinese apples. This will spur the local growers to figure out a way to cut costs at an advantage to the consumer. Everybody wins.

But oil is a finite resource. Unlike apples, once it’s gone you cannot just grow and harvest another batch. So is it really more efficient to operate an economy in this manner? Or is it instead a recipe for impending disaster?

Obama's Small Campaign Donors are Finally Giving Up on Him

Way back on May 27th, I posted a Friday Rant entitled "Thinking of Making a Presidential Campaign Contribution? If So, You’re an Idiot," in which I asserted that anyone who is not a millionaire or billionaire should just save their money rather than contributing to one of the presidential campaigns. In particular, I was thinking about President Hopey-Changey, about whom I asserted:

That’s not to say that the Mighty O won’t try to coat his reelection campaign in a shiny populist sheen by taking those laughably small one hundred and two hundred dollar checks from plenty of plebes who have yet to wake up from drinking the hope-spiked Kool-Aid back in 2008. There are millions of the fools out there—good mainstream liberals who are still basking in the glow of righteousness from having voted for the very first minority president—as if a man’s skin color is capable of rendering morally just any hideously evil act he might perpetrate while in office. They will persist in loving him no matter how many times the Great Democratic Savior grabs them by the skull and rubs their noses in the steamy manure pile of his undying support for big business, war and empire. Should they ever start to waver, he can always trot out the sight of his adoring family--looking like some central casting-approved remake of the old Cosby Show—to once again soften their hearts and get them back with the program.

Well, it appears the realization IS finally starting to dawn upon some of those small donors that Obama was simply playing them for suckers. Here is the scoop from the New York Times yesterday:

They were once among President Obama’s most loyal supporters and a potent symbol of his political brand: voters of moderate means who dug deep for the candidate and his message of hope and change, sending him $10 or $25 or $50 every few weeks or months.

But in recent months, the frustration and disillusionment that have dragged down Mr. Obama’s approval ratings have crept into the ranks of his vaunted small-donor army, underscoring the challenges he faces as he seeks to rekindle grass-roots enthusiasm for his re-election bid.

In interviews with dozens of low-dollar contributors in the past two weeks, some said they were unhappy with what they viewed as Mr. Obama’s overly conciliatory approach to Congressional Republicans. Others cited what they saw as a lack of passion in the president, or said the sour economy had drained both their enthusiasm and their pocketbooks.

For still others, high hopes that Mr. Obama would deliver a new kind of politics in his first term have been dashed by the emergence of something that, to them, more resembles politics as usual.

“When I was pro-Obama in 2008, I was thinking of him as a leader who could face the challenges that we were tackling,” said Adnan Alasadi, who works in behavioral health in Mesa, Ariz. Mr. Alasadi contributed repeatedly to Mr. Obama during his first campaign but says he will not give the president — or anyone else — any more money.

“Now I am seeing him as just an opportunistic politician,” Mr. Alasadi said.

Better late than never there, Mr. Alasadi. Your new stance is exactly the right one to take. Neither Obama nor any of his Republican challengers intend to lift a finger to help you or anyone else who does not have a seven-figure bottom line. Class warfare is raging in America these days and the rich are winning hands down. It's time for the rest of us to take the first step by not giving any more of our hard-earned money to their political hand puppets.

Someone Actually Still Believes in the Common Good

In this day and age when the audiences at the Republican presidential debates have been vocally cheering Rick Perry’s execution record in Texas, or the idea of letting a young man in a coma without health insurance die, it is easy to become completely cynical and not see that there are actually plenty of good-hearted people still around. One such group of people was recently highlighted in a newspaper article entitled “Teachers Give Up Money for Books” by the Omaha World-Herald:

Mead Superintendent Dale Rawson has never seen anything like it.

When the health care provider for Mead Public Schools and other districts offered teachers a one-month vacation from paying their insurance premium, it was with the stipulation that teachers and school boards agree how the money was to be spent.

"The state teachers' association recommended all local teacher groups work toward seeing that windfall translated into direct compensation for teachers," Rawson said.

But Mead teachers had a different idea. They wanted the nearly $28,000 — which would have translated to about $1,000 apiece — used to buy textbooks.

"We had settled earlier in the spring, and we actually got what we asked for," said Marcia Lamberson, who represented Mead teachers in negotiations. "We talked about what to do with these funds and decided this would be the best use for the money."

Lamberson said many of the social studies books, especially at the high school level, are outdated and teachers often have to find supplemental materials.

Rawson, who has been in Mead for two years, said he "was just stunned" by the teachers' decision and commended them for their generosity. "In 30 years as a superintendent, I've never had a staff that would do that."

Before I continue, let me just give my heartiest thumbs up to the teachers from the Mead Public Schools. Yours is the type of generous spirit and belief in the common good that has become all too rare in America these days. My hat is off to all of you.

I use this story as a counter to all of the recent public employee union bashing that has become a regular feature of our media these days. “Austerity” minded State governors from Scott Walker in Wisconsin to Chris Christie in New Jersey, in particular, have gotten plenty of political mileage out of bashing the teachers' unions.

That’s not to say that the public employee unions do themselves any favors when they refuse to acknowledge the very real financial crisis that many states and municipalities are facing and will continue to face. It would be far better if everyone in this era of permanent economic contraction would recognize that there is very much a need for shared sacrifices. Unfortunately, those who have been yelling the loudest about the benefits given to others—be it health care coverage, pensions or even public employee compensation—have repeatedly demonstrated that they have little interest in helping to provide for the common good, let alone any desire to willingly participate in such shared sacrifices.

I See Dead People...They are Still Cashing Government Checks

In this new age of federal budget "austerity," one of the things Obama keeps yammering on about is the need to cut down on waste and fraud. USA Today has the details of one such example:

The federal government has doled out more than $600 million in benefit payments to dead people over the past five years, a watchdog report says.

Such payments are meant for retired or disabled federal workers, but sometimes the checks keep going out even after the former employees pass away and the deaths are not reported, according to the report this week from the Office of Personnel Management's inspector general, Patrick McFarland.

In one case, the son of a beneficiary continued receiving payments for 37 years after his father's death in 1971. The payments — totaling more than $515,000 — were only discovered when the son died in 2008.

Damn straight. Crack down on these (ahem) deadbeats. Put 'em in jail if they are committing fraud. It all sounds great, and I do applaud such efforts. Problem is, that at approximately $120 million per year, even if this type of fraud were completely eliminated, it would only reduce the deficit by 0.0001%, or not even enough to qualify as statistical noise.

The Snake Eats its Own Tail

The report of the Congressional “supercommittee” on reducing the federal deficit is not due out for another two months yet, but already various trial balloons are already being floated to test the prevailing political winds. One such proposal was reported yesterday by Bloomberg:

Congress’s deficit-cutting supercommittee may cap or end a tax exemption that helps set state and local debt prices, raising borrowing costs and disrupting the $2.9 trillion municipal-bond market.

Bankers, bondholders and issuers are preparing for an attack on the tax break investors get for interest earned on some municipal securities, already targeted by President Barack Obama in his jobs and deficit-reduction proposals. The exemption, which has never been cut, lowers the cost of loans for schools, highways, hospitals and other public works.

“They’re looking at everything, and the tax exemption is on the table,” said Steven Boyd, principal with Halyard Asset Management LLC in White Plains, New York, which oversees $400 million. “It’s a factor weighing on investors’ minds.”

Should the 12-member supercommittee whittle down or erase the advantage for high-income investors to own municipal bonds, demand may shrink, pushing up costs for states and local governments. The exemption is projected to save owners of the tax-exempt securities $230 billion from 2012 to 2016, according to the White House’s Office of Management and Budget.

Because federal aid also may be cut to reduce the deficit, some municipal borrowers already avoid the debt market, said Lisa Quateman, the managing partner of Polsinelli Shugart PC’s Los Angeles office. That’s especially true when the financing may depend at least partly on dollars from Washington, the bond lawyer said.

Wow…that’s so stupid it makes my head hurt. Critical thinking is in such short supply in America these days that we are seriously proposing to reduce the federal deficit just by effectively pushing the costs on to state and municipal governments. Presto! Problem solved!

Unlike the federal government, states and municipalities are prevented by law from running budget deficits. That means they have to close short term funding gaps and pay for big ticket infrastructure projects by selling municipal bonds. The tax exemptions at issue make those bonds more attractive to investors. Eliminate the tax exemption and you remove a big buyer’s incentive, and the states and municipalities will likely have to pay a much higher interest rate to attract investors. Locales teetering on the edge of bankruptcy like Harrisburg, Pennsylvania, and Jefferson County, Alabama, would no doubt find borrowing to be well nigh impossible.

And yet, there was President Hopey Changey yesterday giving a big speech at a bridge in Kentucky, touting infrastructure improvements as part of his new jobs proposal. As reported by the Cincinnati Enquirer:

The president mentioned the way traffic backs up even in normal conditions at the outdated Brent Spence Bridge, during his speech urging Republicans to back his jobs bill to get such infrastructure projects moving. He also called out by name both House Speaker John Boehner of Ohio and Senate GOP leader Mitch McConnell of Kentucky, saying they are powerful Republicans who can either "kill this bill or pass this bill" and help their home states.

That brought chants of "Pass that bill!" from the crowd standing under the Clay Wade Bailey Bridge over the Ohio, with the Brent Spence in the background just to the west.

With this insanely schizophrenic set of policy proposals, Obama literally wants to rob Peter to pay Paul. Even if his jobs proposal passes Congress, which is highly unlikely, the proposed deficit commission cuts to the Municipal Bond tax credit will likely kill off at least as many infrastructure projects as Obama’s proposal would create.

This just shows how desperate our so-called “leaders” are becoming in their efforts to continue concealing the uncomfortable reality that the so-called American Way of Life not only IS in fact negotiable, but unsustainable and rapidly unraveling. If Obama were to get his way, he would no doubt start crowing about how he reduced the deficit, while the country’s roads, bridges and schools continue to slowly deteriorate from lack of upkeep and repair. The snake is now literally eating its own tail in order to keep up the appearance of business as usual.

Nightmare on Elm Street: Rapid Increase in Suburban Poverty Illustrates the Death of the American Dream

Four bedroom McMansion built on a half-acre lot around a cul-de-sac. Lawyer foyer, granite countertops and a home entertainment system. A minivan and an SUV in the garage to take junior to soccer practice and little miss junior to her ballet lessons. Maybe you gotta drive an hour each way to work, but it is well worth it, for this is the American Dream you’re living. Pass me the remote, hon. Life is GOOD.

Well, maybe not anymore. Here’s CNN with the details:

Guess where most people in poverty live? Hint: It's not in the inner cities or rural America.

It's in the idyllic suburbs.

A record 15.4 million suburban residents lived below the poverty line last year, up 11.5% from the year before, according to a Brookings Institution analysis of Census data released Thursday. That's one-third of the nation's poor.

And their ranks are swelling fast, as jobs disappear and incomes decline amid the continued weak economy.

Since 2000, the number of suburban poor has skyrocketed by 53%, battered by the two recessions that wiped out many manufacturing jobs early on, and low-wage construction and retail positions more recently.

Ironically, Americans in vast numbers initially fled the cities in part to escape blighted, poverty-ridden urban neighborhoods. They were enticed by the ideal of the American Dream as I outlined it above. Our government short-sightedly encouraged them by choosing to build highways rather than public transportation and by not setting gasoline taxes high enough to prevent the spread of suburban sprawl. And now, after more than six decades of this folly, the poverty Americans sought to escape is catching up with them, turning the American Dream into real life version of Nightmare on Elm Street.

Fear and Loathing in the Auto Industry: The Flacks Can’t See What’s Right in Front of Their Eyes

One of the most shortsighted policies enacted by our so-called “leaders” in response to the financial crisis was the bailout of the automobile industry. The end of the cheap oil era and the onset of the world wide peak in oil production means that the long term trend in gasoline prices is heading in one direction: up. Additionally, the economic devastation the crisis has wrought among so many working and middle class Americans means that many will likely never again purchase a new car during their lifetimes. For those of us who are Peak Oil aware, these are accepted facts that are beyond dispute.

So it was with great interest yesterday that I read an article from Fortune magazine entitled, “The Incredible Shrinking Auto Boom.” I actually got excited for a second, thinking that maybe this was an example of a mainstream media publication actually beginning to report our true predicament. How silly I was. Nevertheless, things started off promisingly:

Fears of a global recession, brought on by slowing China growth and financial panic in Europe, are dampening hopes for a strong U.S. recovery in auto sales.

That could have consequences that ripple far beyond Detroit, Wolfsburg, and Toyota City.

Ummm…yup. Anyone with two brain cells to rub together should have been able to foresee that, please continue:

Until very recently, autos have been holding up as one of the few bright spots in U.S. manufacturing. New assembly plants are opening and automakers are adding to their payrolls. Autoworkers have entertained visions of fat profit-sharing checks as they concluded contract negotiations with GM and continue them at Chrysler.

What’s amazing about the quote above is how quickly Americans seemed to forget about the oil price spike of 2008, and started buying new cars again as soon as gas prices plummeted in the wake of demand destruction caused by the effects of the Great Recession. The chart above shows that auto sales WERE starting to recover. Apparently, though, none of the optimists were taking note of the fact that gasoline prices began to relentlessly march upwards again late last year, or perhaps they might have dampened their enthusiasm. It is on exactly this point that the author of this article, who has the unfortunately aristocratic sounding name of Alex Taylor III, really demonstrates his stupidity:

As recently as April 25th, I wrote approvingly about anew forecast from IHS Global Insight that had car sales under one scenario climbing steeply to 17 million by 2015. It foresaw a healthy economy expanding at roughly 3% per year and creating two million new jobs annually. Its reasoning was that years of below-average sales would create pent-up demand that must be satisfied as long as automobiles remain a primary mode of transportation.

Wow…talk about an example of why you should never; EVER take financial advice from a mainstream media publication. According to my buddies at GasBuddy.com, the average price of a gallon of gasoline on April 25th, the very day Sir Alex Taylor III wrote his unfortunate bit of optimistic prognostication, was around $3.85, a mere quarter from its all time high in the summer of 2008. Was Alex Taylor III completely asleep during that whole time and does he really not recall how the financial system imploded less than two months after they hit their peak that year?

I guess, being a Senior Editor at Large for Fortune magazine (a title which kind of makes him sound like a bank robber on the lam), Mr. Taylor III doesn’t get out much. Or at least, he doesn’t get out much to neighborhoods where people actually work for a living. If he did, he might recognize that working and middle class Americans are struggling with layoffs, bankruptcy, foreclosures and related maladies, and hardly have the excess spending money to be able to afford to run annual auto sales back up into the 17 million range.

As the article continues, Mr. Taylor III actually interviews another, more “pessimistic” analyst:

Independent analyst Warren Browne of Automotive Compass has been figuring on 2011 sales coming in around 12.5 million since February. Based on some new work he has done that ties auto sales to GDP growth, he sees 2012 sales stalling at 13.2 million. He's assuming annual GDP growth of only 2.5% for the rest of the decade and autos not peaking in the current economic cycle until 2019.

"The current automotive cycle is operating below trend," Browne writes. "There is not enough economic support to alter this path for at least a few years.

You see the problem? Even when these people are supposedly being realistic, they still don’t have a clue what the fuck they are talking about. Annual GDP growth of 2.5% for the rest of the decade? Auto sales peaking in 2019, when worldwide oil production will likely already be in steep decline from today’s levels? Sorry, Mr. Browne, we’ll be lucky if there still IS an American auto industry by 2019.

Reading this article served as a good reminder just how pervasive business-as-usual thinking is despite all of the mounting evidence that we have reached a key turning point in our history in which economic growth is finished. The likes of Alex Taylor III and Warren Browne will no doubt continue to spew their nonsense until the day finally comes that they lose their own jobs and reality finally pierces the media bubble of their own creation.

"Too Big to Fail" No More

Yesterday, it was reported that three of America’s largest banks, Bank of America, Wells Fargo and Citigroup, were downgraded by Moody’s Investors Services. Here is CNN with the pertinent details:

Moody's has declared the era of too big to fail over.

In yet another blow to the financial sector, Moody's Investors Services announced the downgrade of Citigroup, Wells Fargo, and Bank of America -- three of the United States' top banks.

Among the primary reasons: the U.S. government is less likely to step in to save a troubled financial institution.

"It is more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute," Moody's wrote in its downgrade note of Wells Fargo's stock.

What's funny about this action is that the major credit rating agencies stood around with their thumbs up their asses during the run up to the 2008 financial crash, attaching their AAA ratings to anything that didn’t move fast enough. Many have rightfully questioned why anybody should trust them now. The answer, of course, is that you SHOULDN’T start trusting them now. But, given that there is motivation for positive bias in every aspect of reporting on the financial system, you should assume that they are still UNDERSTATING the risks, not being overly negative.

So what does all of this mean for us little people? I mean, beyond the obvious, which is that none of us should be investing any money we can’t afford to lose in the common stock of these institutions? Well, the first thing it means is that if you have any money deposited in one of these banks, you really ought to look at getting it moved elsewhere.

But, but, but…I hear you sputtering…what about FDIC Insurance? If my bank goes under, I’ll get my money back, won’t I?

Sigh. I really thought I had taught you better than that. Yes, theoretically the FDIC insures every bank account at member institutions up to $250,000. Nearly 400 banks have failed since the beginning of the financial crisis in 2008, and thus far every depositor has gotten their money back. Sounds like the system is working, doesn’t it?

There’s only one little problem. Like many other institutions in America these days, the FDIC is effectively broke. In fact, the FDIC itself just proudly announced on August 24th that the Deposit Insurance Fund (DIF) is now barely back into the green after being underwater for the previous seven quarters:

The FDIC Deposit Insurance Fund balance was +$3.92 billion at the quarter ending 6-30-11. This is the first positive balance since the QE 6-30-09 (+$10.37 billion) and after 7 consecutive negative quarters. The peak balance was +$52.84 billion at QE 3-31-08. This was before the 2008 USA financial system crisis and Great Recession. The low balance was -$20.86 billion at the QE 12-31-09.

Whoo-hoo! Break out the champagne, ‘cause happy days are here again, right?

Wrong again, and here’s why. In 2010, Bank of America alone had more than…wait for it…$800 billion in total deposits. Combined, Bank of America, Wells Fargo and Citibank had a staggering $1.8 TRILLION in deposits.

When the DIF went into the red during the depths of the financial crisis, it was given a $500 billion line of credit by the Department Treasury, which if utilized would not only instantly increase the federal deficit by half a trillion dollars, but STILL wouldn’t cover the losses if just Bank of America alone failed.

The implications of this should be pretty clear. If you have your money on deposit at one of these three institutions, you are at risk of at the very minimum not being able to access it for months while the FDIC tries to figure out how to reimburse hundreds of billions of dollars in deposits. At worst, if say all three of these big banks went down in rapid succession, the FDIC might be unable to borrow enough from the Treasury to cover the losses, and then you would be, as they say, shit out of luck.

So what should you do? I'll admit that's a tricky question. As the market was crashing back in 2008, I pulled most of my savings out of the bank and held it in cash until things settled down. But I'd be lying if I said it didn't make me nervous to physically have it around. More than being robbed, I was worried about what would happen if the house caught on fire.

Some people have no problem stuffing their cash into a mattress or burying it in their backyard, though I would think a sturdy home safe would be a better option. But if you aren't comfortable with any of those measures I would suggest moving your money to a smaller, local bank. Preferably one with a good rating. You can do the research to find such an institution on the website bankrate.com. That is not a foolproof solution by any means, and it won't save you if the whole banking system goes kablooie all at once, but at least when a smaller bank fails, the FDIC will likely still have the money to cover depositor losses.

It’s Not Easy Being "Green"

The recent Solyndra scandal in which the solar panel company received over a half-billion dollars in loan guarantees from the Obama administration, only to go bankrupt and be raided by the FBI two years later, brought negative attention to the solar power industry just at a time when many are looking to it to “save” us from our fossil fuel and global warming predicaments. Time will tell if Solyndra failed due to mere incompetence or instead because of outright fraud, but one of the excuses made by the company for failing so spectacularly is that it was being undercut by state-sponsored solar power manufacturers in China.

Fair enough, let’s then divert our attention to the other side of the globe for a moment and see how things are going over there. Oops, not too well as it turns out, at least in one case. Here’s the New York Times with the story:

The authorities have suspended production at a solar panel factory in eastern China following protests by residents who blame the plant for fouling the local air and water, a government Web site said on Monday.

Hmmm…that doesn’t sound too good. Please elaborate:

Villagers have complained about toxic smokestack omissions and factory wastewater they say killed a large number of fish. Government inspectors have confirmed that fluoride contamination was 10 times higher than acceptable levels after heavy rainfall swept improperly stored wastewater into a canal, according to the state-run media.

Local residents have also blamed the five-year-old plant for what they claim is an unusual number of cancer deaths, although local officials say such fears are exaggerated.

According to the Haining city Web site, JinkoSolar has been fined about $74,000. Company employees reached by phone on Monday declined to comment.

So let’s see here. Toxic smokestack emissions and wastewater, plus a higher number of cancer deaths. Sounds like the kind of side effects that might result from residing near a more conventional power plant, doesn’t it?

What this article clearly demonstrates is one of the little inconvenient truths about so-called “green” energy: that it is still very much reliant upon dirty, old fashioned manufacturing techniques in order to make it viable. You want a wind turbine, or a solar panel, or a battery for an electric car? They got to be built somewhere, and it takes much more than just wind or solar generated electricity to manufacture them. The process may be many things, but one thing it is NOT is environmentally friendly.

The real problem with wind power or solar energy is not that they don’t have their benefits. It is obvious that they can be quite useful on a small, localized scale. No, the trouble comes when they are touted as being the next generation of energy sources that will replace fossil fuels without us having to make any meaningful changes in our lifestyles or to our economy.

It is just this sort of delusional thinking that caused the Obama administration to give those huge loan guarantees to Solyndra. Defenders of the administration are now claiming that even though Solyndra failed, the idea to promote solar energy was sound and can be done right next time around. What they refuse to understand is that squandering the government’s rapidly constricting financial resources on a pipe dream of maintaining business as usual in a glorious, green energy-fueled future is actually worse than doing nothing at all.

Incidents of Child Abuse Climb as the Great Recession Deepens

In yesterday’s post, I wrote about the increase in abuse and invective directed towards disabled people as the Great Recession grinds on. So what could possibly be as revolting as that? Why, an increase in the physical abuse of children, of course. Here is Reuters with the gruesome details:

As the U.S. economy began to tank, the number of abused kids landing in the hospital with severe brain injuries spiked, a new study shows.

Anecdotes linking child abuse to the recession have surfaced before, but there had been no hard data to back the connection until now.

"It's definitely disturbing," said Elizabeth Gershoff, a psychologist who studies parenting, but was not involved in the study.

Yuck. So just how bad is it? The article continues:

From 2004 to 2009, there were 422 children diagnosed with what doctors call "abusive head trauma." The majority ended up in the intensive care unit, and 16 percent died of their injuries.

The children's average age was nine months.

In the three years leading up to the crash in December 2007, the rate of abusive head injuries was 8.9 per year per 100,000 kids. After the crash, the number jumped to 14.7 per 100,000.

"If what we are seeing is even close to generalizable, that is a lot of excess children," said Dr. Rachel P. Berger, a child abuse expert at Children's Hospital of Pittsburgh who co-authored the study.

She said she noticed a sharp uptick in the number of children who came to her hospital with banged-up heads in 2008. From 17 cases per year, it suddenly jumped to 37 in 2008, and 11 of those kids died -- more than had been killed after accidental head traumas.

"At any given time there was virtually always a baby in our ICU," Berger told Reuters Health.

Let’s have a time out for just a moment as I call attention to Rachel Berger’s unfortunate use of the term “excess children” in that article. Given what’s going on in the economy, you should be a bit more careful with your choice of terminology, there Rachel.

Anyway, this article plus the one I posted yesterday dramatically illustrate that our society is slowly coming apart at the seams. If this were just the normal cyclical recession, you might be tempted to shrug off this story and say things will get better once the economy improves. But as I’ve demonstrated over and over again on this blog, the economy for most people is NOT going to improve. In fact, it is likely as good as it’s ever going to get right now as I write these words.

Millions of people are growing increasingly desperate as the light at the end of the tunnel increasingly appears to be that of an onrushing freight train. So far, they have suffered in quiet desperation, without taking to the streets in any form of mass protest—which is exactly how they have been conditioned to react by our mainstream media.

Unemployed, but no one will hire you? Defaulting on your mortgage and losing your house? Sick but can’t afford to go to the doctor? Straddled with unpayable student loan debt? Credit card balances driving you into bankruptcy? Sorry, loser, but it’s your own damn fault. Suck it up and stop whining. Just because we conditioned you to engage in the reckless financial behavior that led you to this point does not absolve you of your “personal responsibility.”

Imagine hearing that message over and over again, pounded into your skull while the bill collector won’t stop calling, the roof is leaking but you can’t afford to have it fixed and the baby lies in the next room, screaming in her crib. For far too many folks and their unfortunate children, the American Dream has turning into a waking nightmare.

Why Social Welfare Benefit Demagoguery is Actually Dangerous

A lot of people were taken aback last week at the audience reaction to a question posed by Wolf Blitzer, the moderator of the Tea Party Republican Presidential debate, to Representative Ron Paul about whether a 30-year-old man in a coma who had refused to buy health insurance should be allowed to die. The audience appallingly cheered its approval at the idea, and the Good Doctor answered by blathering on about how everyone needs to take “personal responsibility” and not look to the government as their savior.

I actually thought the question was unfair and was designed by Blitzer to elicit just such an audience response. Very few people who make a six-figure salary would ever be so daft as to refuse to pay for health insurance. A far more accurate question to ask Dr. Paul would have been if he favored letting a 30-year-old man die who COULDN’T AFFORD health insurance because he was working at a minimum wage job. It would have been interesting and far more enlightening to hear the lunkhead audience members’ reaction to that much more realistic scenario.

All of this reflects a very ugly undercurrent that is now flowing within not just American politics, but around the Western world as the post-World War Two welfare states come under increasing strain from the economic effects of Peak Oil and resource depletion. Most people may not understand WHY their goodies are slowly being taken away from them, but they are NOT happy about it nevertheless. This could explain the following scary story out of Great Britain that appeared on Thursday in The Guardian newspaper:

There is little doubt that disability hate crime is on the rise. A recent Equality and Human Rights Commission report concluded that "people with disabilities in the UK face harassment, insult and attack almost as a matter of routine, while a collective denial' among police, government and other public bodies means little is done to challenge the situation".

This is strong language. It seems so shocking that we might decide that it cannot possibly be true. Turn then to the Mencap study that found police were consistently failing the victims of disability hate crime, or to the Scope report that concluded that "widespread casual and institutional disablism in Britain creates the conditions where disability hate crime can flourish without being recognised or challenged".

According to a ComRes, some 47% of disabled people surveyed said that attitudes towards them have worsened over the past year while 66% claimed that they had experienced "aggression, hostility or name-calling". Taken to its extreme, this bullying leads to the tragic deaths of people such as Fiona Pilkington and Francecca Hardwick, Gemma Hayter and Keith Philpott.

But while the causes of hate crime are hard to fathom, we should look first to the attitudes of those who govern and inform us. A recent select committee report criticised both the press and the department of work and pensions over the way in which the media covers statistics on sickness benefits. Articles referring to "the shirking classes", "scroungers" and "skivers" led the chair of the committee, Dame Anne Begg, to write to the DWP urging staff to be careful how they present statistics.

This is not just a problem in the UK, or even a recent problem caused by any one political party, but one faced by disabled people in France, Italy, Australia and elsewhere, as governments attempt to reduce the number of people claiming benefits by taking a "tough line". Is it any surprise that our neighbours feel less supportive if they are asked on a monthly basis to believe that most disabled people are simply "lazy", "fraudulent", "feckless" and "workshy"?

No, I must say that it is indeed no surprise at all that in this time of economic hardship there is an increase of abuse directed towards those who may be viewed as “parasites” upon society.

I’ve written before about Joe, my best friend from high school who was laid off from his retail manager’s job at the beginning of this year and was unemployed for eight months. Joe’s wife was still employed and retained her health insurance, which is lucky because their son has been a quadriplegic since being the victim of a horrible automobile accident when he was a baby. The kid’s an adult now, though still young enough to be on his mother’s health insurance. This is fortunate because he needs to be hospitalized for several days two to three times a year to have his lungs drained of fluid and undergo other unpleasant procedures just to stay alive.

In a couple of years, Joe’s son will be too old to remain on his mother’s health insurance policy and will have to switch over to the Social Security Disability Insurance program. At that time, his continued eligibility to receive social welfare benefits will literally be a matter of life and death. There is no way he’d ever be able to obtain his own private health insurance policy when he needs probably hundreds of thousands of dollars of medical treatment every year.

So this is the challenge I would issue to Dr. Paul as well as to any asshole who would selfishly cheer on denial of care to an uninsured deathly ill or disabled person. Have you really stopped to think through exactly what it is you are advocating? Are you prepared to look Joe’s son, who worked very hard to become an Eagle Scout despite his disability, in the eye and tell him he has to die in order to keep your taxes from going up? Because if not, or if you don’t have the guts to face up to it, then you really should just shut the fuck up.

The real problem with the health care system is not the uninsured, but the profit motives of the drug companies, insurance companies and hospitals that are driving up costs for even basic care far beyond the ability of the average person to pay. In my own personal case, my self-only health insurance policy has risen in combined cost for me and my employer from just $1300 annually fifteen years ago to over $6300 this year. That’s an astonishing 485% increase; far above the rate of inflation. And even with my health insurance now costing over $500 a month, I still have out-of-pocket expenses and essentially NO dental coverage.

Peak oil is, of course, eventually going to wreak mass havoc on our society, and many people are going to suffer and die as a result. The disabled are going to be particularly vulnerable. That’s reality. There is a big difference, however, between that eventuality and allowing a still young and viable human being to die out of nothing more than sheer greed. The former is unavoidable, but the latter is inexcusable.

Update: My Friend Joe Got a Job

In my July 5th post, "Twenty-Six Weeks and Counting, A Friend’s Unemployment Ordeal," I wrote about Joe, my best friend from high school who lost his retail manager's position at the beginning of this year after having never experienced any period of unemployment during his career. Joe's employment search was particularly frustrating because despite sending out hundreds of applications, he only got a handful of job interviews.

The good news is that I received an e-mail from Joe this past week saying that his ordeal is finally over as he was hired to become the manager of a Dollar Tree. He'll have to commute 30 miles to work each way, but at least it's a job. Given that, as I reported earlier this week, business is currently booming at dollar stores around the country in this poor economy, I gather he will at least have job security for awhile.

I'm very happy that my friend was able to avoid the catastrophe of long term unemployment before his benefits ran out. Many millions of others haven't been so fortunate.

The Dumbest Liberal Defense of Obama Yet: “He’s a Bigger Tax Cutter than Reagan!”

Fair warning, dear reader. I’m about to go on one of my periodic rants against liberals and progressives. And yes, I do so not because I’m a wingnut Neanderthal, but because as a former member of the leftist political tribe, I know that their minds ought to be open enough to free themselves from conventional political dogma—yet most of them still stubbornly refuse to take the red pill.

Take the Daily Kos, for example. The blogosphere’s most notorious left wing rabble rousing site is one of the few outside of the Peak Oil community that has published serious and thoughtful articles on the subject. Still, even though it should have been obvious long ago that there will be no solutions imposed through the political system and that nearly all American elected officials remain in deep denial about the most important issue facing the country today, the Kos insists upon playing the political game as if it still matters.

Most Kos-ies are no doubt feeling very much stung after having fallen so hard for President Hopey-Changey only to have him kick their stated values square in the nuts at every opportunity. Even so, that doesn’t stop them from acting like an abused wife and reflexively sticking up for the guy whenever they can. It was bad enough that the Kos did some rah-rahing for Obama’s great and glorious “victory” in Libya and for his wanton assassination rather than capture and trial of Osama Bin Laden (though in fairness, the readership’s opinion was clearly divided on those issues), but a post from last Thursday contained their most laughably inept defense of the man yet:

The Center for American Progress crunched the numbers and discovered:

With the huge Recovery Act tax cuts and the enormous December 2010 tax cuts combined, President Obama has already signed into law tax cuts amounting to more than $900 billion from 2009 through 2012. Even after accounting for legislation that the president signed that increased revenue during that period, President Obama has cut taxes by more than $850 billion in his first term, or approximately 1.5 percent of GDP.

That is compared to the $474 billion in tax cuts enacted by George W. Bush in his first term. If the latest tax cuts included in President Obama's American Jobs Act are passed, he will be the biggest tax cutter of the modern era. Bigger than Reagan. Bigger than Bush. That's saying something!

Yet, despite this fact, we've seen poll after poll indicate that people still believe President Obama has raised their taxes.

Two things:

1). The idea that tax cuts bring economic growth should be thoroughly debunked by now. But it isn't.

2). It has to be political injustice of the worst order to be the biggest tax cutter ever and not get any credit.

Whoo-boy. Where to begin? How about starting with the fact that the Mighty O’s payroll tax cut has already caused Social Security’s revenues to plunge deep into the red and has hastened the eventual demise of the Democratic Party’s signature social welfare program? Maybe we could add the fact that Obama’s reckless tax cuts have greatly contributed to the insane levels of federal deficit spending the past three years and caused “austerity” to become the political buzzword of the day.

That would make a heck of a lot more sense than giving the Teleprompter-in-Chief “credit” for being such a big tax cutter. Maybe, just maybe, the Kos should instead be excoriating him for engaging in such reckless fiscal policies in the first place. Since the public is dimwitted enough to believe that he raised their taxes anyway, he should have gone ahead and actually done so, especially on those with the most ability to pay. Then perhaps the government wouldn’t be in nearly as dire financial straits as it is now.

Sadly, it’s this type of malarkey that keeps disgruntled lefties hanging out within the tent of a Democratic party that actually threw them out into the cold around the time the dust settled from the George McGovern electoral debacle in 1972. Obama is shoring up his liberal/progressive base for the upcoming election solely by pointing to the likes of Perry and Bachmann and shouting, “OOGA-BOOGA!” And still, like that beleaguered wife with the black eye and the split lip, the liberals and progressives refuse to press their very legitimate charges and rightfully abandon him to his electoral fate.

Both sides of the political spectrum need to wake the fuck up and come to recognize that they have much more in common with each other than either does with the likes of Obama and Pelosi, or McConnell and Boehner. For one brief, shining moment in September 2008, for example, representatives from the far left and far right came together on behalf of the taxpayers and defeated the hideous bankster giveaway known as the TARP law. And when it passed on a second try after a bunch of corrupt wheeling and dealing, the public should have then stood up for itself by voting out of office every Congressman and Senator up for reelection that November who voted “Yea," regardless of party affiliation. As long as us non-millionaire and billionaires remain politically divided against each other, we’re doomed to increasingly suffer from financial exploitation at the hands of the elites, until the day finally arrives when the whole corrupt system comes crashing down around us all.

Time Out for an Update on World Oil Production

Link: http://gregor.us/policy/limits-to-keynesianism/

Every once in awhile, I need to remind myself that The Downward Spiral is intended, first and foremost, to be a Peak Oil blog. Sometimes, I get so wrapped up in crabbing about politics, government, the media and related stupidity that the Peak Oil issue tends to fade into the background.

So today, I'm rectifying the situation by posting the above chart from the excellent Gregor.us blog showing the world's oil production for this past decade (mbpd stands for Millions of Barrels Produced Per Day). As you can see, oil production peaked in 2005 and has essentially been flat ever since. If you want to know why the governments of the OECD countries have been so desperately trying to pump up their economies with massive amounts of borrowing in recent years, look no further than the above. It also demonstrates exactly why they will fail, as debts cannot be serviced if the economy does not grow, and the economy will not grow unless the supply of available energy grows. It really is just that simple.

At this point it remains uncertain as to how long the world will continue to bump along this oil production plateau before finally entering terminal decline. A number of of the most knowledgeable analysts, including Tom Whipple, have estimated that it will occur beginning in 2014. If so, we will likely experience the continuation of "extend and pretend" by OECD governments for a few more years before the shit really starts to hit the fan.

Prepare accordingly.

Yes, Virginia, Our Attorney General is an Idiot

It's one thing for global warming denying conservative politicians to demagogue on the issue. That's to be expected from a bunch of self-interested greedheads who are bought-and-paid shills for the oil, gas and coal industries. But it's another thing entirely when their grandstanding starts to cause real world harm.

Like many other states, the Commonwealth of Virginia where I reside is financially strapped and has had to make deep cutbacks in vital services in recent years. Given this fact, you would think the the so-called "leaders" of the Old Dominion would be mindful of incurring any unnecessary or frivolous expenditures. Sadly, you would be wrong in that assumption.

In 2009, Virginia was a political bellwether state in the age of Obama when we replaced our Democratic governor with a hard right conservative Republican. Riding the new governor's coattails was a even farther right conservative named Kenneth T. Cuccinelli II (I guess "Junior" ain't good enough for this hayseed), who was unfortunately voted in as our new Attorney General. I say "unfortunately" not because I particularly care about his outmoded ideology, but because he is exactly the kind of political attention whore who can't resist throwing his weight around in inappropriate ways.

Like many on the far right, Cuccinelli is a obstinate global warming denier. Of course, environmental issues are not normally the purview of a state Attorney General, but for the fact that one of America's leading global warming researchers happens to be employed by the University of Virginia. I think you can see where I'm going with this. Here's the Washington Post with the gory details:

A judge has delayed making a decision on Attorney General Ken Cuccinelli II’s most recent request to Virginia’s flagship university for documents related to global warming.

Albemarle County Circuit Judge Cheryl Higgins granted a stay Friday until after the Virginia Supreme Court rules on a related case.

Last year, Cuccinelli (R), a vocal skeptic of global warming, issued a civil investigative demand, essentially a subpoena, for documents from the University of Virginia. He is seeking five grant applications prepared by former professor Michael Mann and all e-mails between Mann and his research assistants, secretaries and 39 other scientists from across the country.

But a judge dismissed the subpoena. Cuccinelli re-filed a new, more specific demand pertaining to just one $214,700 state grant, but also appealed the ruling to the Supreme Court. The Supreme Court has not set a hearing date.

In an unusual step, U-Va. hired its own attorney and is fighting back, arguing that the demand exceeds Cuccinelli's authority under state law and intrudes on the rights of professors to pursue academic inquiry free from political pressure.

So to recap, because of one asshole with a partisan agenda that extends well beyond the normal duties of his office, the taxpayers of the State of Virginia are now forced to fatten the bank accounts of lawyers on both sides of a completely frivolous court case. The article does not mention this, but no doubt the cost to the state in legal bills has likely already far exceeded the relatively puny (by government expenditure standards) cost of the particular grant in question.

Make no mistake. Attorney General Cuccinelli II didn't file this suit because he believes Professor Mann committed grant fraud. He did it instead to spruce up his conservative credentials as the man who led the "crusade" against the evil climate scientists and their anti-American Exceptionalism agenda. Even if the dumb bastard manages to get the documents he subpoenaed, it's not like an anti-science cretin such has him is even going to understand what it is that he's reading.

For all that you do, Attorney General Kenneth T. Cuccinelli II, to burden the taxpayers of Virginia with onerous and unnecessary legal fees at a time of severe budgetary distress just to further your own narrow partisan political agenda, I hereby declare you to be a Real Attention Whore of Genius.

Friday Rant: Yo, New Jersey, Y U B Giving Snooki a Tax Break?

The state of New Jersey has been hit hard by the financial crisis. Like many other troubled states, it has struggled to reduce spending in state programs as tax revenues decline. Last spring, Governor Chris Christie battled publically with the state’s teacher’s unions over pay raises and layoffs. In January, the unfortunate city of Camden laid off HALF of its police force, with predictable results as reported by the Huffington Post:

New Jersey's most crime-ridden city has been even worse since nearly half the police force was laid off in January.

A Camden County Prosecutor's Office report obtained by The Courier-Post of Cherry Hill and the Philadelphia Inquirer shows there have been 79 aggravated assaults with a firearm this year in Camden, up from 22 during the same period in 2010. Shootings nearly doubled, increasing from 16 to 30.

Given the above, you would think that the “leaders” of the Garden State would be extra careful about not only about spending, but also who gets awarded any business tax credits. Well, as has happened so often before on this blog, your common sense assumption sadly hits well wide of the mark. Here is Talking Points Memo with the rather gruesome details:

A number of New Jersey lawmakers are outraged that the state has awarded a $420,000 production tax credit to the hit MTV reality show "Jersey Shore" because, as one GOPer put it, "I can't believe we are paying for fake tanning for 'Snooki' and 'The Situation', and I am not even sure $420,000 covers that."

On Wednesday, NJ.com reported that taxpayers would be paying the credit for the show's first season in 2009, as approved by the New Jersey Economic Development Authority.

But wait…before you run into your kitchen to retrieve a salad fork with which to stab out your own eyeballs, there’s more:

But, Christie's office said, "the Governor cannot veto EDA action that is in compliance with non-discretionary, existing law....The bottom line is that the governor has not been in favor of this tax credit, and this and other applications were in the pipeline from the prior administration.

Okay, now you can head for the kitchen. It’s all right; I’ll wait.

Because that is the only sane reaction one can possibly have upon reading this story. I just love how all the politicians in New Jersey are standing around with their thumbs up their asses pointing fingers at one another while claiming there is nothing they can do to stop this particular fiscal abortion. Gubbner Christie was a acting like a big ol' tough guy last spring, throwing his not inconsiderable weight around and calling the leaders of the teacher’s unions thugs and whatnot. But apparently all Snooki has to do is flex her bicep and bat a fake eyelash and suddenly he turns into a tub of goo.

Memo to Chris Christie: the last time I checked, that little “R” that appears after your name stands for Republican. And exactly when did the party whose most recent President once infamously referred to the Constitution as a “damn piece of paper” start giving a flying fuck about the rule of law? We can hold prisoners indefinitely at Guantanamo without trial, but you say you can’t veto a business tax credit for an utterly dim-witted reality television show? Give me a fucking break already. Even President Hopey-Changey had the balls to tell Congress to go fuck themselves when they started moaning on about the War Powers Act during the Libyan bombing campaign.

Could this be any more of a glaring example of just how far out of whack the priorities are in this country today? It was bad enough when Rutgers University used student tuition funds to pay a speaker’s fee for Snookie to come and give a talk on campus, but now we find out that apparently the entire New Jersey state government is made up of Rutgers alumni. Where is Tony Soprano and his crew when you need them? THAT guy was one Jersey dude who wouldn’t have been intimidated by the likes of Snooki.

(Editor’s Note: the title of this post is a tribute to the late author and blogger Joe Bageant, whose last ever blog entry before he succumbed to cancer early this year was so memorably titled, “America, Y Ur Peeps Be So Dum” We miss you, Joe.)