midtowng's blog

The Red Neck War

On a Dreary Morning in May of 1920 Seven Men Carrying Winchesters and pistols boarded the Norfolk and Western's No. 29 at Bluefield, West Virginia, bound for the little mining town of Matewan on the Kentucky border.
- Robert Shogan

It was the only time in American history that government airplanes intentionally bombed its own citizens. It was the largest armed insurrection fought on American soil since the Civil War.
And it has been almost totally forgotten outside of the lore of the United Mine Workers of America.

TARP in danger of becoming subsidy for organized crime

There was certainly no shortage of skepticism and criticism of the Troubled Asset Relief Program (TARP) when it was first introduced. But the news dump from just today is downright scandalous.
Let's start with the headline numbers.

Ethisphere, a research think tank that examines whether companies can benefit from using ethical practices, created a TARP Index in December to track losses taxpayers are taking under the TARP program. Since TARP's inception on Oct. 7, 2008, the government has lost $104.2 billion (as of Apr. 10).

According to Elizabeth Warren, who heads the Congressional Oversight Panel responsible for keeping tabs on TARP, for every $100 put into the program, the taxpayer is getting $66 back.

The Banking Crisis Is Over! Long Live The Banking Crisis!

Time magazine has announced an end to the banking crisis! Huzzah!

the great banking crisis of 2008 is over.
All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.

It's all True! Wells Fargo Bank announced an immense $3 Billion profit last quarter.
Shortly afterward Goldman Sachs announced a $1.8 Billion profit.

Suddenly everything is coming up roses on Wall Street.
At least if you are willing to believe total bullsh*t.

The General Strike

Workers Rise; Seize Control In Cities
- NY Times headline, March 16, 1920

There has been nothing more inspiring to the working class than a popular movement of the people, taking over the streets, flexing their muscles by sheer numbers, and sweeping away all that oppose them. And nothing is more terrifying to the entrenched power than this scenario.
Class struggle has been with western society since the dawn of civilization, and it will continue as long as there is inequality in the world.

The numbers just don't add up

The saying goes "a picture tells a thousand words". If that's true then these charts I'm about to show you tell a huge, scary novel.

Let's start with this one.

Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.
Mr. Wen voiced concern on March 13 about China’s dependence on the United States: “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

Another wave of foreclosures is approaching

Well Fargo announced today $3 Billion in profits. It was fantastic news and it sent the stock market soaring.

However, one thing that didn't get talked about was why they made so much money.

Wells Fargo CFO Howard Atkins discusses the banks $3 billion reported first quarter 2009 earnings. Atkins hypes the impact of mortgages to the bottom line, due to low interest rates and foreclosure selling no doubt, but shockingly admits at the 7:45 mark that with the writedowns that would have been required by Mark to Market the bank actually lost money on the quarter.

To put it another way, Wells Fargo made money because the government allowed them to play "let's pretend your assets are worth something".

The Final Stage in the Deindustrialization of America

I'm old enough to clearly remember their lies. Their promise to us was that we would "think" while others would "sweat".
It sounded too good to be true, and like anything that sounds too good to be true, it was a lie.

The pro-globalization, pro-free trade crowd was very clear. If we lowered our trade barriers to cheap foreign imports, while we retrained our workforce, other nations would do the hard, manual work of producing goods while we would do the do the mental stuff of high-tech goods and services.
It was an appeal to our egos. They tried to manipulate us with false pride, and it worked to some extent.

What was sowed was hubris. We are now reaping that false promise.

The Great Strike Wave of 1946

[The 1946 coal strike] is the most momentous event in the country's peacetime history."
- Evansville Courier, 1946

When most people think of labor unrest in America they think of the 1930's, or the various major strikes of the 19th Century. The fact is that no year, before or since, saw so many strikes, and such a large percentage of people on strike, or so many industries effected by strikes, as 1946.
Never before had labor unions flexed so much muscle.

But that success also sowed the seeds of labor's long-term downfall.

Picketers (and dog) in jail during Rochester General Strike

The Battle in the Citadel of Capitalism

"They lay there, clinging to one another and trying to shield the more vulnerable parts of their bodies from the blows of the nightsticks, while the police hauled them apart and dragged them bodily into waiting patrol wagons."
- NY Times, March 31, 1948

Every once in a while an underdog defeats a Titan.
This isn't one of those times.

It isn't the victory of an underdog that inspires us so much as it is the incredible courage it takes to even challenge the overwhelming champion.

Sixty-one years ago the labor movement took the fight literally to capitalism's door-step in one of the most lopsided battles in history. The name of the underdog that championed the cause was Merritt David Keefe.

Let's Twist Again

As most econo-geeks know by now, the Federal Reserve is monetizing treasuries in an effort to lower interest rates, which in theory should encourage people to borrow and spend.

“The Fed’s monetization of government borrowing is in economic terms a hugely powerful liquidity tool,” said Lena Komileva, head of Group of Seven market economics in London at Tullett Prebon Plc, the world’s second-largest interdealer broker. “It also helps to address investor fears, by depressing government yields and private sector borrowing costs and signaling a firm commitment by the Fed to keep monetary liquidity flowing for a long time.”

The problem is that Treasury yields actually increased last week, despite massive purchases by the Fed.