What a friggin mess!
Should we worry about jobs, should we worry about Europe, should we worry about Isreal nuking Iran before Iran can nuke Israel, is there too much copper is there too little gold, is the entire Atlantic Ocean going to become uninhabitable? I can go on and on but I hear it will all be solved if we vote Republican in November so that seems like a no-brainer (and some people will get that and some people won't). Yes, that's right – Republicans are the answer! But why wait for the voters to decide when so many right-thinking (another one) Congresspeople are able to exorcise (not a typo) majority rule by filibustering a jobs bill – a move that will take 1.2M people off extended unemployment benefits on Friday?
"It looks like we're going to come up short," said a senior Democratic aide on Wednesday evening. "It looks like Republicans are prepared to kill aid to states, an extension of unemployment benefits, and ironically, the Republicans are prepared to kill efforts to close loopholes that allow companies to export jobs overseas." The legislation, known as the "tax extenders" bill, would have reauthorized extended unemployment benefits for people out of work for six months or longer, would have protected doctors from a 21 percent pay cut for seeing Medicare patients, and would have provided billions in aid to state Medicaid programs. Thanks to the wisdom of a minority of Congress, none of that will happen and the markets are crashing, as well they should with 1% of our nation's struggling families losing the last shred of money they had coming in.
It's not just the 1.2M people that lose benefits on Friday though, it's the 250,000 additional people PER WEEK that will lose their benefits as well. As today's numbers are likely to show and as I ranted about yesterday – we are doing NOTHING to create new jobs while we funnel Trillions of dollars of Corporate Welfare (which is charged back to the taxpayers) to Banks, Insurance Companies, Auto Makers, Oil Companies and thousands of other companies who lobbied their pet Congresspeople to stop this bill from making it less profitable to ship their job openings overseas. Is the American voting public too stupid to live? Film at 11…
Fifty million Medicare claims from June are currently in process at the reduced rate, which the AARP says has already caused some of its members to have trouble finding a doctor. And the Center on Budget and Policy Priorities estimates that dropping the $24 billion in aid to states will cause 900,000 public and private-sector layoffs in 2011. Both chambers of Congress had already passed the measure, deficit spending and all, but when it came time to combine the bills in May, conservative Democrats and moderate Republicans lost their previous will to help the economy and forced party leaders to begin the nickel-and-dime process of trimming the bill. SEIU's Lori Lodes said:.
"Let Senator McConnell, let Senator Senator Collins, let Senator Brown and every other Republican explain why one of their own constituents doesn't deserve to keep their job, shouldn't be able to send their kid to college, can't put food on their table without maxing out their credit cards. Rooting against America, Republicans are taking pride in keeping families out of work as their only strategy for winning elections."
You can contact your favorite Senator here, the only Democrat against it is Nebraska's Ben Nelson who has said repeatedly he would not vote for the measure unless its cost was completely offset, which is nice in principal unless you are one of the millions who are being cut off during the worst employment climate since the Great Depression or unless you are a retired person on Medicare who needs medical assistance or one of the million State employees who will be losing your job or one of the millions of others who's job is being shipped to Bangladesh, where they pay $73 A MONTH to factory workers - then Ben Nelson is just another jackass Congressman who needs to get his hands out of the pockets of his corporate sponsors and do something to ACTUALLY HELP THE PEOPLE WHO VOTE FOR HIM! – JMHO.
While Congress plays "chicken" with the economy, all this other doom and gloom can be very distracting but we've got trouble my friends, trouble right here! That's trouble with a "T" which is right before "U" and that stands for UNEMPLOYMENT. We've discussed the mess the states are in and the Washington Post's Ezra Klien points out that it's UNEMPLOYMENT, not budget practices, that is to blame for current state deficits. With the real unemployment number hovering around 16%, we are all in Greece and Spain''s situation (20% unemployment there), where governments that are no longer able to tax the rich (3% unemployment in the top 10%) are having their revenues gutted while the great majority of their tax base suffers.
So, are we bearish? Hell no! This is ALL old news. Republicans have been tools of corporations since they got rid of Honest Abe and Johnson and put up their first "movie star" President, Ulysses S. Grant who was against rebuilding the South (giving them back their guns) which drove the liberals nuts and made him a hero of radical Republicans and he won by a landslide but he was so far to the right that, during his tenure, state after state was lost to the Democrats as the people sought to balance the scales (sound familiar?) and it was Grant's policies that turned the South solidly Democratic for 100 years to follow. From Wikipedia:
The Panic of 1873 was a world-wide depression that started when the stock market in Vienna crashed in June 1873. Unsettled markets soon spread to Berlin, and throughout Europe. Three months later the Panic spread to the United States when three major banks stopped making payments, the New York Warehouse & Security Company on September 8, Kenyon, Cox, & Co. on the 13th, and the largest bank Jay Cooke & Company on September 18. On September 20, the New York Stock Exchange shut down for ten days. All of these events created a depression that lasted 5 years in the United States, ruined thousands of businesses, depressed daily wages by 25% from 1873 to 1876, and brought the unemployment rate up to 14%. Some 89 out of 364 American railroads went bankrupt.
The causes of the panic in the United States included over-expansion in the railroad industry after the Civil War, losses in the Chicago and Boston fires of 1871 and 1872, respectively, and insatiable speculation by Wall Street financiers. All of this growth was done on borrowed money by many banks in the United States having over-speculated in the Railroad industry by as much as $20,000,000 in loans. Grant, who knew little about finance, relied on bankers for advice on how to curb the panic. Secretary of Treasury William A. Richardson responded by liquidating a series of outstanding bonds. The banks, in turn, issued short-term clearing house certificates to be used as cash. By October 1, $50,000,000 had been released into an economy desperate for paper currency. This was done without undermining the value of the dollar. By January 10, 1874 Richardson continued to liquidate bonds that released a total of $26,000,000 of greenback reserves into the economy. Although this curbed the Panic on Wall Street it did nothing to stop the ensuing five year depression. Grant did nothing to prevent the panic and responded slowly after the banks crashed in September. The limited action of Secretary Richardson did nothing to increase confidence in the general economy.After the Panic of 1873, Congress debated an inflationary policy to stimulate the economy and passed the Inflation Bill on April 14, 1874. The bill would release an additional $100,000,000 into the nation's tight money supply. Many farmers and working men in the southwest anticipated that Grant would sign the bill. Those with outstanding loans needed greenbacks in order to continue business. Eastern bankers favored a veto because of their reliance on bonds and foreign investors. On April 22, 1874 Grant unexpectedly vetoed the bill on the fiscal grounds that it would destroy the credit of the nation. Initially Grant had favored the bill, but decided to veto after evaluating his own reasons for wanting to pass the bill.
So why should we worry, this is just the typical economic playbook that we've seen being run on our country for most of it's history. The rich seize power through a puppet President, write ridiculous regulations that allow them to get away with murder, commit murder and then ask for bail-outs while lobbying NOT to give bailouts to the actual citizens because it might be a slice of their pie and THEY WANT THE WHOLE PIE! Grant presided over the very first "Black Friday" in 1869, when speculators cornered the gold markets and ruined the economy as they fed the press with rumors that the Government would be unable to continue issuing "greenbacks" and would have to begin circulating a currency that would be backed by gold. Wow, people were stupid back then - can you believe the fell for something so ridiculous? Thank goodness today's sophisticated investors could never be tricked into trading the product of their labor for shiny bits of metal, right?
Anyway, so everything old is new again and this is not going to stop us from bargain-hunting in the markets. When something really scary happens, we'll start worrying but right now we're just testing the bottom of our range again (as expected on our Tuesday charts) and, as convicted stock felon Martha Stewart says, "That's a good thing":
We've blown a lot of our levels and if we don't get back over and hold them through tomorrow we may have a very different kind of trouble – the kind that starts with a "T" for "technical" as we bend those blue lines into a downtrend that reinforces the downtrending red lines rather than negating them. Don't forget we have a G20 meeting coming up and although Merkel has already rejected pressure to SPENDSPENDSPEND from the comedy duo of Timmy G and Larry S, now it's time for the big show in Toronto.
Hopefully we'll have reason to be more bullish into the weekend but, for now, we're still running this race under a yellow caution flag.