Thursday, August 21, 2014

More Neoliberal Crap

Edmund Phelps, in his recent column in the Financial Times, once again trots out the bull pucky that "regulation" is the cause of our economic problems.  Post-WWII regulation slowed down innovation, and that loss of innovation has caused the centrifuging of wealth we have seen over the last 30 years.

First, Ed, the years since WWII have been the most phenomenally innovative in history.  I guess you missed the memos on the space programs, computers, and biotech.  All of which, I would add, were significantly assisted by government money.

Second, Ed, don't you find it at all odd that this centrifuging has focused in the last 30 years, a period of massive deregulation?  Of course facts never get in the way of an Austro-Chicago tool like you.

Bottom line, Ed: The rich and powerful paid to have regulations dismantled and then went out to get a big return on their investment by running roughshod over everyone else.  The result of that deregulation has been less protection for the folks who do the actual production work, less protection for the real innovators (as opposed to the corporations who own them), less protection for ordinary investors, less protection for everyone without a lot of spare cash to buy protection.

Oh, and Ed, the big innovations your deregulation has created have been the financial Frankensteins, the multi-level derivatives and synthetics that have created the bubbole-manic, boom-and-bust system we now have.  Congratulations.

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Hearings

Here's a suggestion i think would improve the system greatly, your honors.  If you don't want to hear the argument I'm making, just say so, and don't hold the hearing.  You save time, opposing counsel saves time, and I save time that my client is going to refuse to pay me for anyway after listening to you snark at me for a half-hour.  Even more to the point, don't keep looking at me like I'm the one wasting everyone's time.  I'm nnot the one who set the hearing; you are.

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Wednesday, July 30, 2014

Yes, I Know...

...I didn't include any links in yesterday's post.  Given my opinion of those asshat articles, did you really think I was going to give them click-through traffic?

Tuesday, July 29, 2014

It's the Middle Class, Stupid

Or rather the lack of same.  The financial pundits on both sides of the Atlantic are beginning to admit that most people aren't recovering a thing in this recovery.  Given that there no longer is a recognizable economy that can support a middle class, this comes as a surprise only to those who don't actually have to work for a living.  The rest of us see jobs disappearing, businesses going dark, and concerted attacks on the few remaining things that make survival possible (The DC Circuit's recent ruling on the Affordable Care Act is nothing short of criminal, the only way to save affordable healthcare is single-payer, and we need to start removing judges, starting with the Fascist Five on the SCOTUS.), and every time we turn around, those of us in business are expected to work for free (I'm not talking about paying taxes.  I'm talking about doing free work for "marketing" or for "social responsibility."  When our wonderful Bar Association expects me to do pro bono work to help the "image of lawyers," I have to laugh.  I do pro bono constantly, along with a lot of reduced rate work, as well as holding up my end re professional image.  I'd tell them to go talk to the Big Firm people, but since those are the folks who own and operate the Bar....).  No, there's no recovery going on; quite the contrary.

But what are the pundits worried about?  That Democrats and Labour are making noise other than Austro-Chicago orthodoxy (Horrors!).  Janan Ganesh recently took issue with Ed Milliband in the Financial Times because the Labour leader is behaving, well, like a Labour leader instead of Tory Lite.  Ganesh thinks Millibrand should be proposing new ideas, which would be nice, but Ganesh defines "new ideas" as the same old free market fraud his club has been pounding since Maggie installed her throne at No. 10.  Earth to Janan: Your neoliberal dreack has gotten us into this mess, with a growing pool of hopelessness and no security for anyone other than the 1%.

Speaking of Tory Lite, Tony Blair keeps trying to absolve himself of the current mess in the Middle East.  He continues to claim that removing Saddam Hussein did not create the current crisis.  Facially that statement is true, but not in the way Blair tries to claim.  What caused the crisis was putting Saddam (and all the other tin pot, self-medaled dictators around the world) in power in the first place.  We made modernization look like a tool of Western control.  It's no wonder the fundamentalists attracted an entire generation that was fed up to the gills with our meddling.

What else is worrying the pundits?  How about the end of the USD as the world's reserve currency as a result of a conspiracy led by Russia and China and including France?  Please.  While it would be bad if the Yankee dollah were no longer the world's currency, news of its demise is way premature.  There simply isn't anyone in a position to step up and take over.  Not China, not Russia, not the Eurozone.  This is just another pseudo-crisis intended to distract us from the reality of our inequitable, unproductive global economy.

Any other "crises" to distract the masses while they're being led to slaughter?  Is a pig's backside pork?  According to Martin Wolf, Europe will be without gas and oil unless we all march straight in the Ukraine and push Putin back to Moscow.  Martin has apparently never heard the bit of wisdom about never fighting a land war in Asia, especially against the Russians on Russian soil.  He might want to look into how much success others have had with that.

What other lunacy is flying about?  One need look no farther than the ever-reliable Robin Harding, who has never met a Randian delusion he didn't try to have a long-term, intimate relationship with.  His latest shovel-full is that house prices are artificially high because of, wait for it, zoning laws.  I realize that conservatives believe that, in the words of their Blessed St. Ronnie, "Facts are stupid things, " but let us nevertheless put facts before a candid world.  First, housing prices are not artificially high; they're pretty depressed here in the US, albeit over-encumbered by toxic mortgages that the likes of Harding once touted as the next great bit of free market brilliance, and while prices have risen recently in the UK, that was a product of loose money that will soon be going away, so expect a correction on that front soon.  Second, housing zoning these days is focused on affordability: multi-family, townhouses, in-fill.  This shift became necessary if for no other reason than that the old model created an infrastructure that was unsupportable.  Suburban sprawl created too much street, too many miles of utility lines, too much area for fire and police to cover, etc.  That Harding believes zoning still promotes acres of lawns and miles of picket fence has more to do with where he and his friends live than with reality.  Finally, Harding, true to his creed, ignores the 409-kilo gorilla in the room: People can't buy houses regardless of the price because 1%ers he is so stridently defending have created a system in which very few of the 99% have sufficient economic security to enter into a mortgage.

It's the middle class, stupid.  People who work for a living can no longer even hope for stable enough incomes for a house, a new car, and college educations for the kids.  They may be making it this month, but it could all be gone next.  This is what the 1% has pushed us into.  This isn't a recipe for independent, economic actors; it's a recipe for serfdom.

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Friday, June 06, 2014

Meet the New Scam

Same as the old scam.  I've been catching up on reading about the current markets, and as usual I'm left shaking my head.  First I see that collateralized loan obligations (CLOs) are taking off.  CLOs are basically securities backed by bundles of loans to low-rated companies that the companies have given collateral for.  Effectively securities backed by "secured" junk bonds.  But this time it's different!  Unlike the pre-crash CLOs, these new CLOs have more financial support from the issuing banks and stricter collateral requirements.  Says who?  Says the folks selling them, that's who.  Which is exactly whose word we took before.  Think I'm being cynical?  Think again.  The new commercial mortgage-backed securities, which also supposedly have these new safeguards built in, are showing increasing defaults.  The only improvement over last time is that the ratings agencies don't seem to be going along.  Nevertheless, the usual suspects (such as Citigroup and Goldman Sachs) are cranking these messes out, often utilizing methods that leave you wondering just when you fell down that rabbit hole.  We're going to crash it all again folks.  It will be soon, and it will be worse.

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Wednesday, March 12, 2014

Financing Small Business

Went to a presentation recently where funding sources made presentations to small business owners on how to seek capital.  A couple of things struck me.  First, few if any of the owners had any knowledge of cross collateralization (where your collateral on one loan also becomes collateral on another loan with the same lender) and cash collateralization (where your bank accounts and receivables are collateral for a loan).  In the first instance, you can pay off the first loan and find your assets are still encumbered because they have been cross collateralized on another loan.  In the second case, your lender for all practical purposes owns your revenue stream.  One of the main sources of quick cash a small business has is factoring its accounts receivable, i.e. selling or borrowing against its outstanding accounts.  Both cross and cash collateralization, which are quite common in small business equipment loans and lines of credit, block a business's ability to factor its accounts.

Second, I noticed that most of the owners had been approached about SBA loans, but none had heard about what a nasty collection outfit the SBA is.  You know all those protections you think you have.  You don't have them against the SBA.  I have a client right now whose monthly Social Security check is garnished because she cosigned an SBA loan with her husband.  She didn't understand a bit of it at the time and understands no more of it now.  I could get her out of it with a bankruptcy, but she's been told that's immoral (Yeah, right, as opposed to having a 75-year-old stroke victim cosign a loan.  Some set of values we have these days.  But I digress.).

The moral of the story is, yes, there is money available for your business, but it will cost you, and if you don't read the fine print (or have somebody like me read it for you), it will cost you far more than you can handle.

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Thursday, January 16, 2014

Our Current Boom

So everything is going great guns with the economy, but there aren't any jobs, and no one is making more money.  So how does this shark keep swimming?  Simple.  Debt.  Those pursestrings the lenders tightened up in 2007 got relaxed in 2011 and have just kept loosening, with inevitable results.  Just check this article citing the latest CardHub Debt Studies.  Credit card debt went down $1 billion in 2009, up a modest $2.2 billion in 2010, and then up an average of $41.2 billion each of the last three years.  In other words, the current consumer boom is being fueled by a tsunami of debt, and the average schmuck is already up to his earlobes.  So much for the bankruptcy downturn.  We're just never going to learn.

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Wednesday, November 06, 2013

Blockbuster on the Rocks

Well, I suppose it was inevitable: Dish Networks has pulled the plug on Blockbuster.  Changing markets and business models left the movie rental stores in the dust.  This means a lot more dark space in a lot of strip malls.  Another chunk of the service sector gone, along with its jobs, such as they were.  I think I'll keep my Blockbuster card as a memento of a bygone era.  Still have my Hollywood Video card squirreled away somewhere.

Add to that the fact that oldest daughter just informed me the store she works in is closing.  Not only can we not manufacture anything anymore, we apparently can't even sell or rent anything.  I keep seeing reports that the economy is recovering, but that only seems to apply to the Over-a-Quarter-Mill-Per-Year crowd.

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