Marx, Labor’s Dwindling Share Of The Economy And The Crisis Of Advanced Capitalism
by Zero Hedge - August 31st, 2011 3:50 pm
This is an excellent post by Charles Hugh Smith, cross-posted at ZeroHedge. – Ilene
Submitted by Charles Hugh Smith from Of Two Minds
Marx, Labor’s Dwindling Share of the Economy and the Crisis of Advanced Capitalism
All attempts to reform the Status Quo of advanced finance-based Capitalism will fail, as its historically inevitable crisis is finally at hand.
It is self-evident that conventional economics has failed, completely, utterly and totally. The two competing cargo cults of tax cuts/trickle-down and borrow-and-spend stimulus coupled with monetary manipulation have failed to restore advanced Capitalism’s vigor, not just in America, but everywhere.
Conventional econometrics is clueless about the root causes of advanced finance-based Capitalism’s ills. To really understand what’s going on beneath the surface, we must return to "discredited" non-quant models of economics: for example, Marx’s critique of monopoly/cartel, finance-dominated advanced Capitalism. ("Capitalism" is capitalized here to distinguish it from "primitive capitalism.")
All those fancy equation-based econometrics that supposedly model human behavior have failed because they are fundamentally and purposefully superficial: they are incapable of understanding deeper dynamics that don’t fit the ruling political-economy conventions.
Marx predicted a crisis of advanced Capitalism based on the rising imbalance of capital and labor in finance-dominated Capitalism. The basic Marxist context is history, not morality, and so the Marxist critique is light on blaming the rich for Capitalism’s core ills and heavy on the inevitability of larger historic forces.
In other words, what’s wrong with advanced Capitalism cannot be fixed by taxing the super-wealthy at the same rate we self-employed pay (40% basic Federal rate), though that would certainly be a fair and just step in the right direction. Advanced Capitalism’s ills run much deeper than superficial "class warfare" models in which the "solution" is to redistribute wealth from the top down the pyramid.
This redistributive "socialist" flavor of advanced Capitalism has bought time--the crisis of the 1930s was staved off for 70 years--but now redistribution as a saving strategy has reached its limits.
The other political-economic strategy that has been used to stave off the crisis is consumer credit: as labor’s share of the economy shrank, the middle class workforce was given massive quantities of credit, based on their earnings and on the equity of the family home.
The credit model of boosting consumption has also run its course, though the Keynesian cargo cult is still busily painting radio dials on rocks and…
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DiggZings Of The Day, August 31, 2011
by Insider Scoop - August 31st, 2011 3:39 pm
Courtesy of Benzinga.
Russian bailiffs today raided BP’s (NYSE: BP) Moscow offices with regards to a lawsuit over the company’s joint venture in Russia, through minority shareholders of TNK-BP. In Soviet Russia, nothing goes right. You’re screwed.
Carl Icahn yesterday saying his board nominees would try to sell Clorox (NYSE: CLX) if all of them are elected. Carl, you better get the bleach out for all the B.S. you’re pedaling.
25% of the top-paid U.S. CEOs made more in salaries than the companies they run paid in federal income tax. This should go over well.
Options Feeding Frenzy Ensues On AT&T As DOJ Threatens T-Mobile Deal
by Option Review - August 31st, 2011 3:24 pm
Today’s tickers: T, LYB, XLY & NRG
T - AT&T, Inc. – The cost of buying AT&T put options that expire at the end of the week exploded after the U.S. Justice Department filed suit to block the telecommunications company’s proposed $39 billion acquisition of Deutsche Telekom’s T-Mobile USA, Inc., on grounds the deal would hamper competition in the wireless market. Shares in Dallas, Texas-based AT&T fell as much as 5.5% on the news to $28.00, while options implied volatility jumped 30.0% to 27.97%. Frenzied options trading ensued on AT&T during a news conference held to explain the lawsuit. Nearly 200,000 option contracts have changed hands on the stock as of 1:25 pm in New York. Put options are more active, with around 1.5 puts trading on AT&T for each single call option in play this afternoon.
Trading traffic in the weeklies suggests investors are scrambling for near-term downside protection and asking questions later. Puts granting the right to sell shares in the wireless provider at $29.00 were purchased roughly 1,000 times for just $0.08 apiece around one hour into the trading session, but news of the lawsuit saw premium required to buy those puts sky-rocket to $1.02 in under 60 minutes. All told, more than 7,100 of the September ’02 $29 strike puts changed hands against open interest of 1,432 contracts thus far today. It looks like the majority of the contracts were purchased for an average premium of $0.25 apiece. Investors piled into puts at the Sept. ’02 $28 strike, as well, driving volume up past 9,600 contracts by lunchtime. On the flip-side, traders expecting the stock to rebound somewhat before the week is out, picked up nearly 3,000 calls at the Sept. ’02 $29 strike at an average premium of $0.16 each, and another 1,000 calls…
Openwave Systems Soaring 23% On Patent Litigation
by Insider Scoop - August 31st, 2011 3:22 pm
Courtesy of Benzinga.
Openwave Systems Inc. (NASDAQ: OPWV) shares are soaring today, as news hit earlier that the $150 million company is suing Apple (NASDAQ: AAPL) and Research in Motion (NASDAQ: RIMM) over patents.
According to AppleInsider, Openwave Systems has accused both companies of using some of Openwave’s patents in their popular electronic devices. Openwave says the iPhone, iPad and iPod touch have violated Openwave’s patents, while the Blackberry is accused of infringing on patents.
“Openwave invented technologies that became foundational to the mobile Internet,” Ken Denman, Chief Executive Officer of Openwave, said in a statement. “We believe that these large companies should pay us for the use of our technologies, particularly in light of the substantial revenue these companies have earned from devices that use our intellectual property.”
“Before filing these complaints, we approached both of these companies numerous times in an attempt to negotiate a license of our technology with them and did not receive a substantive response.”
At last check, shares of Openwave were up 31 cents to $1.78, a gain of 21.12%? on over 6 million shares.
Greece Itself Now Openly Ridicules Europe’s Lies Of Greek “Stability”
by Zero Hedge - August 31st, 2011 3:21 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Compare these two statements: first from Reuters- “Greece’s debt has run out of control and government policies are failing to restore finances, an independent parliamentary committee of experts wrote in a report released on Wednesday.” And second, from Bloomberg: “Greece’s debt is on a “durable declining path” and new projections will show that the second rescue program reduces net liabilities, European Union Economic and Monetary Commissioner Olli Rehn said.” Sorry Europe: your credibility, whatever was left of it, just ran out. When the indirect object of your bail out effort (the direct one being naturally your central bank and your various local banking oligarchy of course) says in your face that you are full of excrement, it is time to put a fork in it.
More on the truth:
“The steep debt rise, high primary deficit … have exacerbated to the maximum the dynamics of debt, which is out of control,” the committee of experts appointed by the Finance Ministry said in a monthly economic bulletin.
“It is clear that the country’s problem is not just the size of the public debt but the inability to consolidate the current fiscal management. Despite gigantic effort for fiscal adjustment, no primary surplus has been achieved, on the contrary the primary deficit widens,” it said
And lies:
Internal EU assessments indicate that “given the private sector involvement, the government debt ratio net of collateral will fall compared to the previous projection,” Rehn said in response to a European Parliament inquiry.
“Including the loan to accumulate collateral in the context of the private sector involvement, the gross debt ratio actually increases compared to the previous assessment,” Rehn said. “However, the debt ratio is expected, in any case, to decline from 2013 on.”
The new projections will be included in the next quarterly report on Greece, Rehn said according to a text posted on the parliament’s website.
Thus the official beginning of the end of the Euro and Eurozone starts. Perhaps Europe can now refocus its efforts on something more practical: like restoring Esperanto as the global language of bureaucratic efficiency, peace, unity and prosperity and what not.
Chevron Awarded $96 Million in Arbitration Claim Against the Government of Ecuador
by Insider Scoop - August 31st, 2011 2:43 pm
Courtesy of Benzinga.
An international arbitration tribunal has awarded Chevron Corporation and Texaco Petroleum Company $96 million in a claim against Ecuador related to past oil operations by Texaco Petroleum, which is now a Chevron subsidiary. The tribunal, administered by the Permanent Court of Arbitration in The Hague, found that Ecuador’s courts violated international law through their significant delays in ruling on certain commercial disputes between Texaco Petroleum and the Ecuadorian government. The final award also takes into account taxes, compound interest, and costs associated with the preliminary award announced in March 2010.
Chevron and Texaco Petroleum filed the international arbitration case in December 2006 under the Rules of the United Nations Commission on International Trade Law (UNCITRAL). The Permanent Court of Arbitration is an intergovernmental organization with over one hundred member countries established by international convention in 1899 to facilitate arbitration and other forms of dispute resolution. The United States acceded to the Court’s founding convention in 1900 and Ecuador acceded in 1907.
The decision by the arbitration tribunal resolves seven commercial claims that Texaco Petroleum filed in Ecuador between 1991 and 1993. Ecuadorian courts continually delayed and refused to rule on the seven cases, which the tribunal determined was a violation of Ecuador’s obligation under its Bilateral Investment Treaty with the United States to provide effective means for U.S. investors in Ecuador to assert claims and enforce their rights.
The “Shining” Example Of Obama’s $787 Billion Fiscal Stimulus Act, Solar Energy Company Solyndra, Files For Bankruptcy
by Zero Hedge - August 31st, 2011 2:40 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Yesterday Zero Hedge contributor Bruce Krasting had some very insightful and very prophetic words when he asked rhetorically if a “Government investment disaster in the works??” The company in question is (now former) massively subsidized solar energy company Solyndra. Solyndra filed for bankruptcy less than 24 hours after Bruce proposed that the company is nothing but a stimulus black hole. We congratulate him on his investigative efforts. Alas, being private, there was no way to short it and capitalize on this investigative coup de grace. And while there are no winners, there are plenty of losers? Who – why US taxpayers of course. Why? Because as some may recall, Solyndra is one of the “shining examples” of Obama’s $787 billion American Recovery and Reinvestment Act. After all none other than president Obama said that Solyndra is “leading the way toward a brighter and more prosperous future.” He also cited it as a success story from the government’s $787 billion economic stimulus package.” Alas Solyndra has now become a less than shining example of the complete catastrophe this latest exercise in pointless Keynesianism has been, all on the backs of US taxpayers. But don’t worry, Obama is about to bring us a fresh new such fiscal stimulus catastrohpe any minute. This time it will be different.
From ABC:
President Obama visited Solyndra in May 2010, heralding the company as “leading the way toward a brighter and more prosperous future.” He also cited it as a success story from the government’s $787 billion economic stimulus package.
“Less than a year ago, we were standing on what was an empty lot. But through the Recovery Act, this company received a loan to expand its operations,” Obama said at the time. “This new factory is the result of those loans.”
In 2009, the Obama administration fast-tracked Solyndra’s loan application, later awarding it $535 million in guarantees from the stimulus funds.
The deal later came under scrutiny from independent government watch dogs and members of Congress, which said the administration had bypassed key taxpayer protections in a rush to approve the funds — claims the administration has denied.
All this delightful irony on tape:
A Big Bundle Of Joy…Global
by Insider Scoop - August 31st, 2011 2:25 pm
Courtesy of Benzinga.
Joy Global (NASDAQ: JOYG) reported earnings this morning that were far higher than what Wall Street was expecting, and raised fiscal year guidance, as it expects the mining boom to continue.
The Milwaukee-based company reported earnings of $1.62 per share on $1.14 billion in revenues. The report was mixed, as the $1.62 per share in earnings beat Wall Streets’ estimates of $1.51 per share, but the company missed the Street’s $1.15 billion revenue estimate. What is powering shares to the upside this afternoon is the company’s guidance for the rest of the year, thanks in parts to its acquisition of LeTourneau. The company said that it expects to earn $5.70 to $6 per share this year, up from the $5.30 to $5.60 per share it saw previously. It also raised its revenue forecast, going from $4.1-$4.3 billion to $4.3-$4.5 billion.
“This has been a particularly good quarter for us,” said Mike Sutherlin, President and Chief Executive Officer. “Our results continued the trend of strong operating performance, and we made two major strategic moves that will add long-term value. Very good operating leverage on strong sales growth enabled us to deliver another record for operating margin, before the impact of LeTourneau.
“We closed on the LeTourneau acquisition in late June, and today announce the sale of the drilling products business to Cameron International. Cameron’s leading presence in the oil and gas industry will allow Cameron to grow and develop LeTourneau’s drilling applications with greater speed and efficiency. In a short time, I have gained a strong appreciation for the people that make up the LeTourneau drilling products business, and it is good to know that they will have a great home and a bright future at Cameron,” said Sutherlin.
“For Joy Global, the divestiture enables us to focus on our core mission of mining equipment and the proceeds will expand our funding options to complete the acquisition of International Mining Machinery Holdings Ltd (“IMM”). We indicated that LeTourneau would be immediately accretive to earnings, and its mining results for a six-week period added $0.04 to our third quarter earnings per diluted share.”
With the company’s announcement that it would be selling LeTourneau’s drilling business to Cameron (NYSE: …
The Avian Flu is Back? Maybe We Can Do Something About It!
by Insider Scoop - August 31st, 2011 2:23 pm
Courtesy of Benzinga.
Holy cow, not the bird flu! Or is it holy bird, not the cow flu? There have been so many variants of the influenza virus originating from animals that it has become hard to keep track.
The avian flu, which is caused by the H1N1 virus, is actually one of the more prevalent threats to American society. In 2009, when the avian flu was on everyone’s mind, the Center for Disease Control released a report stating that the estimated number of victims was between 1.8 million and 5.7 million – and at that time, H1N1 was easier to deal with.
Currently, a mutated version has shown up and may cause another fervent reaction from the public. However, one small-cap company may have found the answer to our problems. Novavax (NASDAQ: NVAX) is a pharmaceutical company that focuses on manufacturing virus-like particles, which attempt to mimic viruses without containing their harmful DNA.
Recently, Novavax released a study that displayed the efficacy of its drug on a sample set of patients. The problem with this study is that it targeted the old version of H1N1 that was prevalent in 2009. While the drug may be able to alleviate the current H1N1 pathogenicity, investors need to keep in mind that results may not be as high as they think.
Benzinga tried to reach out to analysts covering the stock, including one from McNicoll, Lewis & Vlak, whose price target is $9.50. Unfortunately, analysts and other officials were either unavailable or unwilling to comment.
In any event, investors should consider the company’s fundamentals before considering it for their portfolio. Novavax’s cash pile decreased significantly from 2009 to 2010, from $39 million to $8 million. However, short-term investments increased from $8 million to $24 million, so the company may have transferred funds in order to hedge itself from adverse events. The company’s property, plant, and equipment have been increasing over the last few years, which may signal increased growth.
Novavax’s short-term debt decreased to almost $0, but it accrued payables and other liabilities. Long-term debt also decreased to about $0, but other long-term liabilities increased to about $5 million. The firm’s shareholders’ equity decreased from 2009 to 2010. While paid-in capital increased, retained…
A Blood Test to Predict Death? It Could Be Possible
by ilene - August 31st, 2011 2:21 pm
Wow. So would you want to get this blood test – now, knowing nothing more than what’s presented in this article?
Courtesy of TIME, by Alice Park
Could a simple blood test predict a person’s risk of dying from heart disease or cancer?
Reporting in an early online publication of the Journal of the American Medical Association and at the European Society of Cardiology Congress, Johan Arnlov and his colleagues say that a certain enzyme that is measured in the blood may be linked to both heart disease and cancer, and therefore could serve as an early predictor of who is mostly likely to die from these diseases.
In the study, which involved nearly 2,000 people enrolled in two separate long-term trials, Arnlov’s team measured the levels of cathepsin S, an enzyme involved in breaking up proteins. They then tracked these volunteers for up to 12.5 years, and found that those with the highest levels of cathepsin S were more likely to die than those with lower, or about half those levels.
What is unique about the study is that it’s the first to identify a marker associated with both heart disease and cancer, two of the leading killers of American adults. The effect remained strong even after the scientists adjusted for other factors that can contribute to heart- and cancer-related death, such as age, blood pressure, history of heart disease, diabetes and cholesterol levels.
Arnlov decided to focus on cathepsin S because previous studies have linked the enzyme to atheroslcerosis, or the buildup and hardening of the arteries that increase the risk of heart disease. In animal studies, mice without the gene for cathepsin S developed less heart disease, and, interestingly, less cancer, compared with those animals that had the gene. Early studies in people have also showed that obese individuals tend to have higher levels of cathepsin S, and that if they lose weight, their levels go down.
"Cathepsin S is involved in several processes in the body," says Arnlov. "It is involved in the immune system, in regulating how [foreign material] is presented to the immune system, and it is highly expressed in [fat] tissue. It is involved in several crucial steps in the atherosclerotic process as well as in tumorgenesis."
But, he says, it’s not clear exactly how cathepsin S might contribute to either heart disease or cancer. Nor is it obvious yet which tissues are…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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