Tax withholding proposed for independent contractors.

The NY Times reports that the IRS' "taxpayers advocate", Nina E. Olson, has proposed tax withholding for American's independent, self-employed workers. Which makes a major change. She also proposes changing or even eliminating the Alternative Minimum Tax, which is supposed to make sure high earners pay at least some tax.


I have to challenge the assumption that by 2010, 33 million Americans will be making more than a million a year. That's quite a bit. How do they know that? Let's focus on what people are earning today, and worry about 2010 in 2010. In any case, the AMT was set up to deal with the many loopholes in the tax code, most of which benefit the rich. If they do repeal it they should first eliminate the loopholes which made it necessary in the first place.

I find it strange that she suggests that the AMT hurts "middle-class" taxpayers, when it only applies to those who make one million dollars or more. It's the rich who will really benefit from this, not the middle-class, who will end up paying more taxes to make up for what the rich don't pay. But ever since the boom there's been a lot of pressure to repeal this, and I guess they're going to get their way. Same as the inheritance tax. All of which increases the growing gap between the rich and the poor.

Anyway, I feel it's "good policy", not "bad policy." If it needs to be adjusted for the growing incomes since 1969, that makes sense. Raise the threshold to two or five or ten million. But let's not pretend repealing it is aimed at "helping" the "middle-class." That's nonsense.

I've long felt that tax withholding ought to be voluntary. The argument is that taxpayers need help in managing their finances. At the very least, the government ought to pay interest on this money, which amounts to an interest-free loan to the government. In any case, it's another extension over the growing federal control of people's lives.



Concerns over slowing US consumer spending.

Casting more doubts over the so-called economic "recovery" is this other article from the FT which expresses "concern" over consumer spending.


Wow, people "may" be spending less because they're not working. I guess you'd need a degree in economics to figure that out. And why do they strip out "volatile food and energy prices" from the inflation figures? Those are the two biggest expenses of your average family. How convenient. That's a blatant lie, the worst kind of spin. They should at least report what the inflation figures are when you include those. And notice that they strip out auto sales, also "volatile", whatever that means, from the retail sales figures.

Of course, including auto sales figures may itself make the figures even more inaccurate. GM, for instance, recently gave away 1,000 cars as part of a sales promotion. But they include those in their sales figures. See this NY Times article on the American auto industry, Big Three Hope Rising Economy Will Lift All Vehicle Sales. It certainly doesn't indicate that the US economy is improving.


"Expecting a slight profit for 2003..." More spin. They said the same thing last year, and the year before. And if they do show a "profit" it will be by manipulating the accounting, especially by conveniently writing the $6.4 billion losses off their taxes (and onto yours.) Read between the lines of the NY Times article to see what bad shape American business is really in. And note that they continue to refer to Chrysler as one of the American "Big Three" automakers, when in fact it is now owned by the Germans. Don't be surprised if you wake up soon and read that GM and Ford have also been taken over by the Japanese and the Europeans.

[I also note that the NY Times includes Financial Times headlines on its business page. Which leads me to think that their (FT's) figures and reporting can't be trusted that much either. Are they part of the same media conglomerate now?]

For another viewpoint, the LA Times reports that Assorted Signs Paint Rosy Economic Picture. I notice that they _do_ include auto sales in their retail sales figures, which is interesting.


That's the great thing about the web. It allows you to compare the various reports. It's amazing what that shows up too.



Dollar edges higher.

The dollar edged slightly higher today, reports the Financial Times.


I think the focus on the decline in unemployment claims is a bit misguided. People only claim unemployment if they've been working during the past year or so. Since there are many people who have now been out of work for a year, or two or three, then they can't claim unemployment. And the Congress last December refused to further extend benefits, as they have been doing the past two years. This doesn't mean more people are working, it means they've given up looking for work, and have exhausted their benefits. Classic spin going on here.

And it's the weaker dollar that is primarily responsible for the slightly slower American trade deficit, as well as the increase in the stock markets. Along with the war profiteering, of course. See this other Financial Times article which notes that IBM reports higher sales due primarily to the weaker dollar.


I didn't realize that financial services is now IBM's biggest business, not computers. That follows the trend in American business. Ford, for instance, is losing money selling cars, but staying alive by profits from its financial services. And notice that what growth IBM has is in Europe and Asia, not the US.

Note that they are reporting that revenues grew from $23.7bn last year to $25.9bn this year. But that's not taking into account the lower value of the dollar. After calculating that, they've actually declined. I think. They manipulate the figures so much, taking "charges" and such so that you really don't know what's going on.

I wonder if PriceWaterhouseCoopers's accounting practices are any more honest than the now-defunct Arthur Anderson's were. Given the collapse of the major Italian conglomerate Parmalat, due primarily to accounting regularities, I have to seriously doubt it. I don't know who did their accounting. But given that Parmalat operated in something like 140 countries, that American firms such as MorganStanley were heavily involved, and that PWC is one of the world's big four accounting firms, it would seem that it's unlikely that IBM/PWC could have been entirely unaware of what was going on. They're all in it together.






Moon and Mars costs don't include ongoing maintenance.

There's been a lot of discussion about Bush's proposal to establish colonies on the moon and Mars. One thing that hasn't been pointed out is that the initial estimates of the costs involved don't include the costs of keeping the bases going once they're established. The initial estimates of the total costs are something like $500 billion, but given the history of overruns in the space program, it will almost certainly end up being in the trillions.

Which itself is an almost inconceivable amount, and even more when you consider that since America is broke, it will have to borrow the money. I shudder to think what the interest charges on a one trillion dollar loan will be.

But this is just the costs of establishing the programs and planting the initial colonies. Once they're there they will have to be maintained, and presumably gradually expanded. That means at least tens or hundreds of billions of dollars a year, if not more. And those costs will never end since the suggestion is for permanent bases. I repeat that: the proposal is for permanent bases that will have to be supported for decades at least. And given Murphy's law ("whatever can go wrong will go wrong") there will almost certainly be enormous unforeseen expenses. If something does go wrong, and it will, we'll have to rescue those folks, no matter what the costs.

These are enormous projects, maybe even the biggest in human history. I'm a big fan of space exploration, and an even bigger fan of colonizing it, but I can see what it will cost. I think eventually it will not only pay for itself, but make a profit. From tourism if nothing else, along with unexpected scientific advances. (I can see the skeptics shaking their heads about that as I write. :)) But in the meantime we're talking potentially many trillions over the next few decades.

If we're going to do this we need to plan very, very carefully, and go very, very slowly. And if at all possible do it on an international basis so that Americans alone don't bear the entire burden. The Chinese are already planning on a permanent base on the moon. I'm sure they don't want to pay all of the costs.



Dollar retreats a bit.

The dollar retreated from its recent lows a bit reports the Financial Times. The main reason seems to be comments by the head of the ECB that it wanted to slow down the rise of the Euro a bit, and the monthly decline in the US trade deficit.


I personally wouldn't consider not falling for two days to exactly constitute a "rebound." But the bankers, especially British and American ones, desperately want to convince themselves, and everyone else, that the dollar's decline is just temporary. And a decline in the dollar is certainly going to favor American trade, so it's not surprising that the deficit should be reduced a bit. But it was $38 billion. That's still a whopping amount of money, close to half a trillion at an annual rate.

Certainly if the European and Asian banks continue to pour money into propping up they can slow down the decline. But that takes a lot of money. The dollar holdings of Chinese and Japanese banks now total more than $2.4 trillion, which is a lot. They can prop it up, but it will take trillions. They can't do that forever.

And certainly its decline will not be a one way street. Like all markets it will go up and down. But the trend is down. And it appears that currency traders are hedging their bets while waiting to see what happens at the G7 meeting in February.

Also, Paul O'Neill's recent revelations about how the folks in the White House view everything in political terms, and in terms of how it benefits them, wouldn't seem to convince anyone that their policies will be aimed at stabilizing the global economy. But rather at how they can profit from them, even at the expense of everyone else.

One issue that I don't understand at all, and which no one seems to ever discuss, is how works in regard to American companies that are owned by the Europeans. Chrysler for instance, which is now owned by the Germans. They keep talking about the "European", "American", "Japanese" and other economies. But the fact is that they're all mixed up now, and it simply isn't cut and dried like that.






OPEC gets closer to pricing in Euros.

Writing in the Globe and Mail, and based on Reuters reports, Patrick Brethour reports that OPEC is moving closer to making the transition to pricing oil in euros, rather than dollars. This has been predicted, and it increasingly looks like it's going to happen.


One thing in the article that may not be quite accurate is that the impetus is coming primarily from Persian Gulf states. Russia, which may now have the world's largest oil reserves, and which does much more trade with Europe than it does with the US, has also suggested it would like to see the change. And Venezuela, where the US is steadfastly trying to overthrow its democratically-elected government in order to regain control over its oil, also doesn't have much interest in sticking with the dollar. Mexico is another country which could well benefit from it. The peso is one of the few world currencies that hasn't risen against the dollar, and the switch to euros could change things a lot there. (I really don't know much about the peso or the Mexican oil industry, but that makes some sense to me.) It would make political sense though for the Venezuelan oil minister to focus on the Persian Gulf states, at least publicly.

I also note that the article is datelined Calgary, center of Canadian's oil industry. The Canadian dollar is rising against the US dollar, but I'm not sure how it's doing against the Euro. Currencies are so complicated, you can go crazy trying to figure out all of the implications of these changes. But George Bush's Texas, and the Bush families extensive oil interests, on the other hand, would probably not benefit.

This is an extremely complex economic development. And would affect countries all over the world in many different ways, ways that would be very difficult to foresee and plan for. (Norway, for instance, makes lots of money on North Sea oil, and the fact that it's priced in dollars is probably the major reason they haven't adopted the euro. Great Britain also counts a great deal on North Sea oil.)

So the folks at OPEC would likely proceed slowly and cautiously. But if it happens it would certainly constitute a somewhat significant event in the global economic history. Especially for America. Oil has now replaced gold as the world's economic standard, and the US has benefited enormously from having it priced in dollars. And everyone in the world is terrified of American dominance, and there are few things that would alter that more than this. It would be a big step in global efforts to draw a noose around the US, the so-called "redlining of America."

Americans really need to wake up to the degree and extent by which American economic policies (both Clinton's and Bush's, this isn't a partisan thing at all) are damaging their long-term economic interests. Believe me, the American stock markets wouldn't like this at all. The ones in other countries I think would though.



US economy is not "humming."

I keep reading these articles that state that the US economy is "humming" now, apparently based entirely on the recent rise in the stock markets. I agree that it's doing a bit better than it has been during the past three years, which is not surprising since it couldn't possible be doing worse. And since the federal government and federal reserve have been pumping hundreds of billions of dollars of cheap money into it, which is bound to have some effect.

But the stock market alone is NOT the "economy." The economy consists of many more things that just the markets, which mostly represent the interests of the wealthiest ten percent of the population. It's also measured by jobs, by the rate of personal bankruptcies, by the strength of the dollar, by whether there is money to keep schools and police stations open, by the trade and budget deficits, by whether people can afford to go to the doctor when they are sick, and many other measures. And all of those are not doing well at all. It's convenient and easy and simplistic to just judge it by the Dow Jones average, but it's not realistic.

My personal economy is certainly not "humming" by any measure. I'm 51, and I have never in my life had such a hard time coming up with steady sources of income. And I have a very good college education, plenty of high-tech skills and such. I shudder to think how the folks with just high school educations are doing.

In my state of Oregon schools, police and other public institutions are on the rocks like they haven't been since the Depression, and far from getting better, they are by all indications things are getting worse. Significantly so.

And it's much worse among the African-American and Hispanic populations. Even during the height (depth?) of the Depression, 90% of black folks could find at least some work. Now the unemployment rate among them is around 30%, and rising. (At least as far as I can tell, they do a great job of hiding these statistics, so you never really know.)

And the single mothers I know are almost all rather desperate. This is almost an entirely "white male" recovery. And as a white male myself, I can assure you it's not even most of them.

And I don't see any of the Democratic candidates offering any thing other than platitudes, and what amounts to a kinder, gentler "business as usual." Dr. Dean sends me email asking me to read Thomas Paine's "Common Sense." I've read it, Doctor. What I want to know if you have any?






Dollar falls, then rises on ECB comments.

The Financial Times reports that the dollar fell to nearly $1.29/euro, then rose after a meeting of the European Central Bank (ECB) expressed concerns about the euro's rapid rise. Which was in contrast to last week's statements that it was not that concerned.


Belief that the Japanese government would also continue to prop up the dollar also slowed its fall. So the governments are trying to keep up its value rather than let market forces work. But private traders continue to see weakness.

Rapid change, either up or down, is bad for economic markets since it creates uncertainty. So in that sense it's probably good that various governments are trying to control things. But simply trying to hide the many serious long-term problems in American finances could only serve to set the stage for a more sudden plummet. Perhaps letting the dollar gradually fall as the markets want would be better.

I also feel that the bankers in Europe and Japan have significant private investments in American securities and investments of all types. And that, to a certain degree, they're trying to protect their own wealth, and reputations, at the expense of the interests of their supposed constituencies.

The fact is that their economies are highly co-dependent on the American one, and co-dependency is no better in economic relationships than in personal ones. Sooner or later you have to confront your problems and deal with them. They just don't go away.

The Bush administration is being very successful at using the dollar's fall to hide problems in the American economy. And they're going to keep trying to do that during the election year. And maybe they'll get away with it. As the old saying goes: "No one's ever gone broke underestimating the stupidity of the American public."

I still think it will at least break the $1.30/euro level this week. We shall see.






New US visa requirements damage tourist industry.

While you would hardly know it from reading the world's financial publications, which still focus almost exclusively on the 19th and 20th century standards of manufacturing and retail sales, the tourist and travel industries are now the largest in the world, especially in the amount of jobs they create. I read somewhere that something like 1 in 10 jobs in the world are in these industries. A lot of these jobs are fairly low-wage service jobs, but they still pay real money and are essential to any modern economy.

Tourism is, in fact, the number one industry in more countries than any other industry. This would include a lot of so-called "third world" (isn't it about time we dropped that archaic term?) countries, but it does represent something quite significant in modern economics. And it is quite new, something that only developed during the 20th century, part of the amazing growth of leisure time and money of recent times.

You don't, for instance, even find the word "vacation" listed in most 19th century dictionaries. If you had asked most people a a bit over a hundred years ago if they were planning a "vacation" they would be quite puzzled. Wouldn't know what you were talking about. Most likely they would say that, well, sometimes on Saturday we only work eight hours, and have time for a bath. Is that what you mean?

Which is why the many post-9/11 actions to harass, restrict and limit travel here, are having a devastating effect on the American tourist industry. Something that will accelerate due to the new regulations that will require most foreign visitors to get visas before they can come, at least until they are able to get a new biometric passport, which will take a while. An article in the Scotsman, We don't want you without a US visa, discusses how concerned the travel industry is about this, both here and there.


Note the $529 billion figure for the US tourist industry. That's huge. Comparable to what Wal-Mart takes in. Also note that they mention the SARS virus as a problem, even though, so far, the US hasn't had a case of SARS. I guess they're referring to the Canadian problems during 2003. I didn't realize though, that when many people come to America, they also plan on visiting Canada. Or at least they appear to think of North America as a single destination.

I also didn't realize that Florida has become such a major international destination.


I'm also just starting to realize just how restrictive the new regulations are. People in the UK, for instance, will have to travel to London or Belfast first for a face-to-face interview, and pay $100 in order to get a visa. The Scots are particularly worried, since apparently the US closed its visa facility in Scotland a while ago in order to save money. And it would appear that frequent Scottish visitors simply won't bother.


What's particularly sad about this, is that with the declining dollar, travel to the US has never been cheaper. One of the few good things about it. And it will cost the British government millions of pounds to issue the new passports, something that will increase already growing anti-American sentiment.



Canadian economy strong and growing.

While the US economy continues to melt down (the rising stock markets notwithstanding), the Globe and Mail reports that the Canadian economy had a great year in 2003, and continues to grow. Stock markets are up, the loonie (the Canadian dollar is up), employment is growing. Growth, in fact, far exceeded even the most optimistic forecasts. Fifty times more jobs were created in Canada during December than in the US.


What's particularly relevant to Americans about this is that Canada is dealing with so many of the same problems that afflict the US, (rising Euro, Chinese trade, mad cow disease, etc.), and is tied in many ways to many troubled US corporations. Yet despite all of this it manages to grow. Which would suggest that the problems in the US are of its own making, not some imagined problems in the global economy.

It's not all good news. Manufacturing jobs declined, but were more than made up by gains in health care, social services, finance, insurance, and, especially, the booming real estate industry. On the other hand, over 40,000 of the new jobs created in December were full-time permanent ones, whereas it would appear that the measly 1,000 jobs in the US were most likely temporary seasonal ones.

The continually rising loonie leads me to suggest/predict that the Canadian dollar may well achieve parity with the US dollar by the end of 2004. Which would be absolutely amazing. It's very likely though that the Canadian bankers may take measures, raising interest rates, to slow this down, although I don't think even that will make much difference at this point.






O'Neill says Bush won't discuss economics with others.

The Guardian reports that former Treasury Secretary Paul O'Neill has said that President Bush won't even discuss the economy with treasury officials and other economic advisors.


As has been said before, the majority isn't silent, the government is deaf.






LA Times comments on US deficits.

In a new editorial, Rising Deficit, Rising Fears, the LA Times adds to the growing concern raised by the out-of-control American deficits. [Registration req'd.]


Rest assured that savvy, well-to-do baby boomers aren't going to take the hit. They're already moving their funds out of the country, buying up property here and there, and planning on comfortable retirements while the country that gave them everything goes down the tubes.



Dollar has a very bad week.

The Financial Times reports on the dollar's very bad week. I noted the other day that it was going down at a rate of a penny a day. But it seems to be picking up. A penny an hour? Wow.


It's about to crack the $1.30/euro barrier too, which should have a major psychological effect. It also appears that it would be going down even faster if it were not for massive intervention by the Japanese. But that even that seems to be having only a temporary effect, also apparently lasting only minutes. It would seem that the Japanese are reaching the limits of what they can do, and that like the European Central Bank, will just let it go.


I said before that I think it will hit the $2/euro level by the end of the year. Now I think it might just do that by the end of summer, if not before. At the current rate it could cross $1.40 just by the end of January. It just seems unavoidable. The renewed attacks in Iraq, a jobs report that only 1,000 jobs were created in the US during December rather than the 150,000 that economists had predicted, which is really bad news given that it was during the holiday shopping season, the fact that the US government clearly thinks that rising stock markets are a reason to avoid making any major economic changes, accelerating American deficits, an election year which makes it impossible for either party to prescribe any harsh medicine, and many other developments all suggest that there is no reason to expect the trend to reverse. On the contrary, they indicate that it will accelerate.

The Guardian business section has an overview on the reactions of various media around the world to the dollar's change, Markets wonder where the buck will stop. It would seem that only fairly conservative publications in the US and the UK think it's not that serious. Everyone else predicts more of the same. One side is here.


And the other side is here.


Gotta love that "money is just paper" part. That's absolutely priceless. Does everybody else in DC know that? :) I'll have to keep that in mind when it comes time to pay my taxes. Will they accept toilet paper? And that it's all about "trust, outlook and confidence in the government which has issued the money." Actually, to a certainly degree that'sexactly it. It's not just the dollar that's falling, it's global confidence in the US government. But it's not just perception. The American deficits are very, very real, and growing. And sooner or later the bills come due. And to the folks at Newsday, is a penny a day "gentle?"

And where they say it's only against the yen, pound and euro. Only?. Aren't these the three most important ones in the world, the currencies that most other countries use as a yardstick? In any case, that's a blatant lie, or at least a very severe distortion of the facts. It's affecting the Australian and Canadian dollars as well, and it's beginning to hit many others as well. The only major nation that seems to be going the other way is, sadly, Mexico.






IMF projects potential $47 trillion US shortfall.

A new IMF study, reported in the NY Times, suggests that US deficits threaten the stability of the entire world economy. It's a story that's getting told more and more, especially as the deficits get worse and worse, but for the IMF to state it so bluntly is especially worrisome. And rather surprising given the influence Americans have in the organization. They also project a potential shortfall of a whopping $47 trillion over the next few decades.


But even this is not enough to get the attention of Bush and company. Somehow I don't think that they're the ones that are going to lack food and health care.


Especially note this statement about the size of the projected shortfalls. $47 trillion. (Yes, that's trillion, not billion.) Wow. And five times the entire American GDP. That's an almost inconceivable amount of money.


As someone who is 51, I have to assume at this point that all of the money I've deposited in Social Security is pretty much gone, or devalued to the point of irrelevance, and that I'm going to have to do some awfully fancy financial finagling in the next decade if I want to avoid ending up on the streets in my old age. Damn, damn, damn. Oh well, it's only money. It's only life. It's only ... catastrophic.

But from now on it's cash only, and I think it might be wise to avoid American banks as well. For the first time I see the possibility of large numbers of American banks going under, or at least having their funds confiscated by the government one way or another. The devaluing of the dollar to finance the deficit is actually a variation on that. I know that there's FDIC (Federal Deposit Insurance), which is supposed to back the banks in the event of a collapse, but that's only on paper, and that isn't any good if there isn't any actual cash to cough up.






China studies yuan peg changes.

The Asia Times, in an article on the recent currency changes, Dollar slide to push Euro to new heights, reports that on Monday Chinese officials indicated that they may move sooner than later to change the way the yuan is valued on global markets, moving from tying it to the US dollar to tying it to a basket of international currencies. Which, in the long run, would be the best thing for a stable global economy.


I find the Asia Times to be an excellent source of objective reporting on world affairs. Perspectives you simply don't find in the American and European press.



Dollar continues its penny a day decline.

The Financial Times reports that the dollar continued its now a penny a day decline today, reaching $1.28/euro, albeit briefly.


Given the strength not only in the US stock markets, but markets worldwide, I'm not sure what this means, but there you are. It can't possibly continue to decline at this rate. At a penny a day that would mean $3-4/euro by the end of the year, if not more.

For a more general analysis of this all, including some historical perspective, see this article in the Guardian, The Best Recovery Money Can Buy, by William Keegan, the Observer's senior economics commentator.


It's about time someone acknowledged that the growth in US stocks is due almost entirely to warmongering and war profiteering, along with an easy money policy based on borrowing from future generations. But those are just short-term gains. That is, the rising Dow does not signify increased long-term investment in endeavors that have any long-term payoff, which is what capital markets are supposed to be about. On the contrary, it just represents the sacrifice of America's future fiscal and social health to Bush's reelection prospects. "After us, the deluge."

And yet another Guardian article on the subject, No end in sight to dollar's descent, in which they lay most of the blame on the American Federal Reserve's policy of rock-bottom interest rate.

I won't quote much of it, but I did note this part.


This is noteworthy, because just today it broke through that $1.28 level. And I don't think the risk of a "crisis" is low at all. I think it's already reached crisis levels. But I'm not an economist, so what do I know?

I have to link mostly to British and other foreign reports on this subject, since the American press seems to be studiously avoiding the issue.






China is the joker in the global currency wars.

While most discussion of the changing values of the dollar and euro focus on those two currencies, and those of related countries such as the UK, the real joker is China. At the moment the Chinese yuan is directly tied to the dollar. But if the dollar continues to change so rapidly, they will have some rapid decisions to make.

For one thing, the Chinese economy is just beginning to achieve some real stability, for the first time in a long time, and the last thing they need is a shaky and constantly changing currency. So they might have to cut the ties sooner than they expected or wanted. Possibly even this year. They might also have to decide which market is of more interest in the short term: the European one of 500 million, or the American one of only 300 million.

On the other hand, they might decide that the long-term value of being tied to the American economy is worth the effort. Both nations have a lot of interests in common, and there are lots of reasons to work together. Unfortunately, the Bush administration doesn't seem to care about long-term issues, but only focuses on the immediate short-term. So they might end up cutting America's throat.

It really all is incredibly complicated. And seems to be getting more so. And then there's India. And Russia. And all of those eastern European countries getting ready to join the eurozone. Going to be a bumpy ride.



The dollar and the Euro in 2004.

In its year-end special section business outlook for 2004, the NY Times finally addresses the rapidly changing value of the dollar, and discusses the various possibilities. Analysts Hope the Weakening Dollar Will Avoid a Sudden Plunge. They acknowledge that a sudden plunge may hurt the economy, but they still seem to be the victims of wishful thinking.


The global head of currency strategy at Citigroup would seem to be a position where one would look at the real picture. But the idea that the dollar may go up at all seems incredibly unrealistic. As I say, it should reach at least $2/euro this year, if not $3-4/euro, but anything remaining less than that would be doing very well. As far as the other prediction of $1.45/euro, at the current rate of decline it could hit that level within a month or two.

But I think it well to get these predictions on record. I could be wrong about my own predictions, but I really think that these people are simply claiming that the dollar will remain stable because: (1) They have their own investments in dollars, and are dependent on doing business with others who do as well, and know that any public expressions of weakness will hurt their own pocketbook; and (2) Because they simply assume that just because America was strong during the 20th century it will remain strong during the 21st. And they also assume that because Europe, Russia, China, India and other great nations have been week that they will continue to do so.

Basically, they won't ever admit any serious problems because the very expression of difficulties itself could cause damage. And because they can't admit that their American-centric view of the global economy is a 20th century anachronism, and don't have the education or knowledge of the world necessary to develop a more modern approach. They're living in the past.

Consider if you will the possibility that it's not the dollar that is declining at all, but rather the Euro that is rising. You have to break free of American-centrism to see this though. The British as well as the Americans are having a hard time breaking free of obsolete imperial pretensions and attitudes.

I could certainly be wrong about my predictions. But one thing I am definitely correct on is that all of these people were way off the mark during 2003. All of them stated a year ago, fairly conclusively, that the worst the dollar could do was $1.15/euro, or so. But they never learn.

Found a couple of interesting blog entries on the subject of the dollar and euro. This one by Steven Kyle at Economists for Dean, who discusses the possibility of the dollar being replaced as the world's reserve currnency. Interesting discussion in the comments there. And this one by XXX over at Atrios/Eschaton.

One note on the subject of the dollar's being replaced as the world's reserve currency. I think the very idea that any one currency will be the global standard is obsolete. The world is becoming more multilateral and intertwined (as we all know), and the global economy is simply far too complex for any one currency to dominate. And far too fragile for all of the eggs to be in any one basket. What's happening here is the emergence of a basket of major currencies serving where one used to do. But the idea of any single nation's currency becoming a standard is as archaic as the notion that any single nation could establish an old-fashioned "empire." It simply can't happen anymore.

But if there is just one as the standard, it will almost certainly be the Euro, probably tied in some way to the Chinese yuan. But it won't be the dollar; the American government, especially the Treasury Department and the pertinent congressional committees are far too corrupt and incompetent for the world to trust them anymore. Heck, I'm an American and I don't trust them. There are problems with the Euro, but with 20 or more countries keeping watch it's much more likely to remain competently and honestly managed.






Stocks up, but corporate sleaze remains.

The Guardian reviews developments in corporate America during 2003, Scent of sleaze persists amid US boom, and observes that while the Dow may be up quite a bit, most of the problems which came to light during the post-boom crash still remain. "Sleazy" and "squalid" are the terms they use to describe corporate governance in America.

And get this, my fellow Americans, corporate profits during the third quarter of 2003 rose a very whopping 30%, the largest increase in 19 years. Did your income increase 30%? No, nothing's changed since Clinton. No limits to corporate greed and no end in sight. In fact, since they let them keep all of the money they stole the last time, there's no reason to suggest that they won't try to steal any more this time. Why not? With enemies like Eliot ("Just promise not to do it again, return one percent, and you can keep the rest") Spitzer being held up as "heroes", who needs friends? What a joke.


It's funny how eager and desperate everyone seems to claim that the "boom" is back, just because of a small rise in the stock market. A period of just normal business isn't good enough anymore; it has to be a "boom", or it just doesn't matter.

Their views are quite simplistic, and permeated by the sins of omission. "Fueled by tax cuts and government spending." It's so much bigger than that. No mention of the fact that most of the gain was due to war profiteering and the war industries, altho I guess that could count as government spending. But it's still blood money. And what about the lowest interest rates since World War II, thus flooding the markets with dirt-cheap capital, but at the cost of destroying any incentive for prudent Americans to save.

"Confidence returned to both the markets and the economy..." they say. But that's just it. It hasn't returned to the economy, not really. Just the markets. Overall things remain rather depressed. Where I live, in Oregon, they're still planning on more school closures this year. And no one I know expects the higher Dow to result in any significant decrease in the near 10% unemployment rate, at least not in the near future.






Dollar continues decline.

The Financial Times reports that the dollar continued its rapid decline on the last day of the year, falling to $1.26/euro. It's going down at about a penny a day, which is quite a bit. The most rapid decline in history anyway.


I think it will continue to go down during 2004, reaching at least $2 to the euro sometime during the year. Which would mean its decline will slow down a bit. The current rate of decline of one penny a day would mean a value of $4.91 against the Euro in a year. That seems almost inconceivable. But in fact the rate of decline accelerated during December, especially since Saddam was captured, so who knows what the new year will bring. At a penny a day, it will cross the $2/euro threshold before April.

There doesn't seem to be much that the American government can do about it either. In fact they seem to think it's actually good for the US, which it may be in the short run. It's probably the major reason for the Dow's recent rise despite the lack of any significant economic growth in the US.

The major tool for managing currencies is the interest rate. But the Fed can't raise it very much without endangering the so-called recovery in stock prices, and that's extremely unlikely during an election year. The current easy money policies help corporate America in the short term, but at the long term expense of the economy as a whole. And the world markets are starting to realize that. The G7 meets in February so it will probably be the hot topic there. But again, what can they do?

There's another article in the FT which reviews the changes during this year, and points out that a prediction of the current levels would have seemed "outlandish" a year ago. I'm sure my prediction of $2/euro by 2005 also seems "outlandish."






Despite everything, the Euro continues to rise.

The Financial Times reports that the Euro has had an excellent week, going up a full two cents, which is a lot in the currency markets.

It continues to rise despite last weekend's quadruple whammy of (1) Saddam's capture, which presumably should have raised America's reputation, at least a little bit; (2) The Dow going over 10,000; (3) The collapse of talks on the EU constitution, which should raise questions about the Euro's future; and (4) simple year-end profit taking, where those selling the dollar (and America) short cash in.

But none of these seem to matter. The perception is that the American economy is still being very badly mismanaged, and that no real efforts to deal with the problems are being made. The appointment of a former Goldman, Sachs executive as new head of the NY Stock Exchange, for instance, says that business will continue as usual.


All of which would seem to indicate that it's not the Euro that's rising, but rather that the dollar is falling. The fact that they're talking about the pound reaching the $2 level next year is quite noteworthy. That's a major change. And, at the current rate of change, it's quite possible that the Euro will also reach the $2 level by the end of 2004.

It would also indicate that the rise in the Dow is not due to increased economic activity in the US, but simply, or at least mostly, a reevaluation of its worth in the international markets. That is, $10,000 worth of American stocks today will only get you, internationally, what $7,000 worth would have brought just two years ago.

But some would say then, well if a European can buy an American house that cost a €1,000,000 just two years ago for only €700,000 today, then that's a reason to invest here. Maybe so, and there should be some of that. But they may also say that, well I'll wait another year, and it will only cost €400,000. And the year after only €100,000. Impossible? We'll see. But that's what the current trends are indicating.

It also would seem to suggest that the world feels that election year pressures and politics within the US will make it impossible to address any of the very serious, and long-term, fundamental problems with American business. Certainly none of the presidential candidates, Democratic or Republican, are talking about Enron, WorldCom, et al, or suggesting doing anything about the problems their collapses exposed. Lip service, but that's it. But lip service and military power won't work anymore. And the markets know it.






Russian economy growing rapidly.

Reuters reports in the Moscow Times that Russia's economy is expected grow at a rate exceeding 6% in the first nine months of 2003. Which is even more impressive than it sounds, since that's over the 2002 rate, which itself was quite good.








US leader in world arms sales.

The NY Times reports that the US remains the number one arms dealer in the world, especially in the sales of arms to what they call developing nations.


Hopefully none of these will ever be used against Americans, but I wouldn't hold my breath. There is some good news however. It would seem that overall arms sales worldwide are declining, not increasing.





Court blocks anti-telemarketing bill.

Reuters reports that, at the last minute, a federal court has blocked enforcement of the anti-telemarketing bill, which would have allowed people to stop unsolicited calls to them.


I wonder if the (corporate-controlled) courts will also block recent legislation banning spam under some dubious free-speech provision. I think they might have to since the same principles applying to spam would also seem to apply to traditional junk mail, and in fact, all advertising in public spaces.






Virtual corporate slavery spreading.

Via Common Dreams, is an article The Price of Dignity by Anita Roddick detailing the accelerating spread of virtual slavery around the world. I'm a little skeptical of blaming it entirely on China, but that does seem to be the fastest growing area at the moment.


While "evil" corporations certainly share a lot of the responsibility, I can't help but feel that American workers and labor unions could be doing a hell of a lot more to organize and fight this. But instead they just want to portray workers in other countries as the enemy, and focus on their own immediate short-term interests. Not just cutting their own throat but that of everybody else's as well. Sad. Ms. Roddick doesn't even mention American unions, but toes the "blame-the-corporate-for-everything" line that so many progressives and liberals use today to avoid accepting responsibility for their mistakes.

One interesting thing the article shows is that jobs are moving from countries such as Mexico to even poorer countries. That should put paid to the notion that NAFTA is to blame for the loss of jobs, since there is no NAFTA with these other countries. But it's a convenient political buzzword in the US, so I guess they'll continue to use it. But repealing won't bring a single job back to the US. Not one. It'll just drive them even further away.






IMF says dollar could collapse at any moment.

Guardian article. The IMF's chief economist says that the "colossal" American trade deficit could cause the dollar to collapse at any moment.


They also report that old-fashioned attitudes within the Eurozone would continue to stifle growth there.


I find the phrase "once-mighty dollar" rather succinct.






Scotland's top earners.

The Scotsman is running a series on the top 100 earners in Scotland. It illuminates several important economic trends. Artists and athletes are doing very well, but those doing best are those who provide basic everyday needs. And those doing the worst are the techies and computer types. Yes, the very worst.


The list is being released in parts, and the top earners are not yet identified. But I'll bet the number one is J.K. Rowling. Certainly writers and musicians are doing very well. Especially considering their industries are not considered "real" businesses and receive virtually no serious investment, or any of the long-term financial management and planning that other industries receive.


And while sports are doing well, they foresee some problems in this area.








Fabulous Farm Aid concert.

Via Common Dreams, Harvey Wasserman reviews the recent Farm Aid concert.


More information about Farm Aid is available at www.farmaid.org. It's a good cause to support.






Argentina defaults on IMF loan, but growth continues.

The Economist reports that Argentina has defaulted on a large payment due to the IMF, despite what they describe as "the economy bouncing back quite strongly."


I think this notion that credit is essential to a government, or a business for that matter, is a bit obsolete. In the old economy, an economy of scarcity, capital and credit were essential. But in the new economy, an economy of affluence, cash is cheap and abundant. People have been financing enterprises on a pay-as-you-go basis for millennia. The economics of it are quite sound, and the savings from interest are enormous.

I know that in California, a lot of the budget crisis stems from overcheap money, and how easy it's become for a government to borrow money. It just results in politicians not confronting difficult choices, but passing them on to later generations. And it results in incredible amounts of money being paid, perennially, for interest. Money that could much better be spent on the state's needs.

But the IMF and the other bankers make their living lending money. That's all they do. So they constantly claim that there simply isn't any other way to operate. That this is a basic economic law, and can't ever be changed. But they're wrong.

Another point they may be missing is that Argentina doesn't necessarily need to be doing a great deal of business with the US and Europe. There's a growing economy in global south that offers plenty of business. I'll bet that they are more concerned with trade with Brazil than with the US. Maybe not yet, but the trend is in that direction.

To their credit, the Economist article does point out that the IMF stands to lose as much as the Argentines here.


In a way it reminds me of the situation with Iraq. For all of its global power and wealth, when it comes down to it, the IMF can no more force the Argentines to play by its rule than the US can force the Iraqis.

And, by the way, if Argentina's $14 billion dollar debt is so staggering and dangerous, then what about America's multi-trillion dollar one? The article points out that Argentina is in the same class as Zimbabwe, Liberia and Sudan. If you just look at the figures so is the US; with Japan not far behind. America is the world's biggest debtor.






A farewell to Japan.

Jonathan Watts has been living in Japan for 13 years and covering it for the Guardian for the past few years. In an article, Japan Slips Into Cozy Retirement he reflects on his years there and the changes he's seen in the Japanese economy. It's a sad story, but well worth a read.


A good read. He's now moving to become their correspondent in China, where the action in Asia is now. For more on Japan, see the Guardian's special report on Japan.






Buying peace and tolerance.

Two articles in the Guardian struck my fancy. Entirely different problems and parts of the world, but the same approach: giving money.

This one, by Cesar Garcia, reports on the Columbian governments new plan to buy peace by paying soldiers on both sides to stop fighting.


An expensive approach though, and one that doesn't address the roots causes of the wars. Although in Columbia it would appear that the fighting has taken on a life of its own, and that it's no longer about anything but survival and profit.

The other article reports, by Gary Younge, on a pastor in Louisiana that is attempting to address the segregation in southern religion by simply paying white people to come to its services.


And I guess I could also mention the American government's decision to pay $30 million reward money to those who helped capture Hussein's sons. Money is an awfully strong incentive sometimes, that's for sure. For most people anyway. But not true believers. True believers are willing to even pay to die for their cause.

"For fifteen hundred dollars, you can have anybody killed." -- Bob Dylan, I forget the song.



Amazed at the effort behind a web site.

After transferring everything over, and redesigning the sites and such, I'm again amazed at just how much work and time-consuming details are involved in getting a good-sized site up. Goodness. It just eats up the time.

I guess it's worse for me since I'm an eternal perfectionist and can futz forever, but even so it's a real challenge. Trying to deal with PERL, PHP, mySQL, MovableType, the browsers, Mac and Windows, mail settings, domain name stuff, nameservers, and on and on and on.

I don't think I'm going to be redoing this one for quite a while. Will add on to it, but I think I'm going to let well enough alone.

I must say that the software is starting to get very good and even well documented. Movable Type is very well done, and with good documentation and online support as well. So is the forum software, Invision Power Board. My new domain hosts, ipowerweb.com are also pretty good, with extensive user control over the settings and good help. I'd recommend any of them. I also use easyDNS.com for domain name management. They're really good as well.






American deficit dependency and the world economy

Writing in the Guardian, Larry Elliott is skeptical about the prospects of future economic recovery, at least to the extent it's dependent on the American economy.


While I agree with much of this analysis, particularly that the US deficit is NOT good for the economy, I think he overstates the degree to which it affects the rest of the world. The assumption that a plunging dollar is bad economic news is just that: an assumption. There are lots of good things that could come from that as well.

The phrase "global economy" gets used a lot these days, but it may be a bit exaggerated. While there is much "global" activity, fundamentally we have a number of national and regional economies that exist on their own. At least to the extent that they can do well or badly somewhat independently of the rest of the world.

So, while the American economy may be slumping, and the rest of the world to the extent it depends on it, many others are actually doing rather well. China, Russia, India and many of the smaller EU nations are growing fairly rapidly, Russia especially.

I think it's entirely possible for the world economy to be growing while the American one isn't. They are not as closely connected as they once were, and the perception that they are is a bit outdated. And so I think that his conclusion may be a bit pessimistic.


As a matter of fact, I think that the slowdown of American business may actually serve as a boon to other countries, forcing them to develop new markets and relationships and such. But then he's an economist, and I'm not, so what do I know?

One thing for sure though. The degree and extent to which many economies are tied to the US, and vice versa, amounts to a "co-dependent" relationship. And that is no healthier in economic relationships that it is in personal ones.






Abominable story of AOL-Time-Warner merger.

The NY Times reviews Alec Klein's new book on the merger. I find it shocking even given all of the stories we've heard of greed and corruption during the dot-com days. Virtually nothing to do with business or capitalism; this is just naked theft and fraud, with no apparent limits of any sort.


The part about how their fraud and aggressiveness played a major role in causing the collapse of many smaller dot-coms is a revelation. If you owned stock in any of those companies, any that advertised on AOL during 1998 and 1999, you have a legal case against them.

But they go after Martha Stewart for a couple of hundred thousand dollars, and let Case, Levin et al walk away with uncounted tens, if not hundreds, of billions. Case should be in prison for the rest of his life. His actions have had a devastating on people not just in the US, but all over the world. And they continue to hurt and damage us all.






The Clear Channel-Bush connections.

Take Back The Media! offers up an analysis of the various connections between Bush and Clear Channel, now the largest media company in the country, probably the world. The connections betweent the two, and an assorted group of cronies, goes back to his days as Governor of Texas. Via Abuddha Memes.


Here's a nice graphic that lays out some of the more important links.


Especially note how George Bush, Sr. always seems to show up when there's trouble. He's always there in the background. Always. His connections in Texas go back to the late 50s when he started Zapata Oil, and then, around the time of the Kennedy assassination, by coincidence of course, as a US Representative from Houston.






Is the stock market boom back, or not?

Apparently different folks at the NY Times have different ideas. Gretchen Morgensen is positively bullish. Small Investors, Once Burned, Lead New Bull, she says.


But Paul Krugman says we're Still Blowing Bubbles.


I can't say myself, although I can say I have no faith in the ability of either the federal government or corporate America to manage the economy, nor do I believe that they've made any real effort to cure any abuses. On the contrary, by allowing all of the companies who broke the law to retain possession of the money stolen, they've sent a signal that it's business as usual. The worst that will happen is a slap on the wrist, if that. WorldCom changes its name to MCI and all is forgiven.

And I don't know of any significant economic developments within the US that would cause a 20% increase so quickly. Certainly the economy isn't turning around like that. (I wonder if this has to do with the laundering of drug money from Afghanistan? Naturally, I'll deny ever having said that. Nobody wants to mention the importance of laundering international drug money to the stock market.)

Oh well, nothing new. But I'd be wary. Remember that the brokerage firms and investment houses make money whenever you buy or sell, that is, no matter which way the market goes. And that they desperately need business right now. I also think the dollar has not finished falling, and that there will be a substantial reaction to recent American aggression that is not going to help the American economy. Note what Mr. Krugman says about corporate insiders selling now, not buying. As well as his closing warning.








Update on corporate wars against unions.

Jeanne d'Arc of Body and Soul has an interesting post on the use of military means against unions by American corporations in different parts of the world. And the increasing number of international legal actions against them. She says the LA Times coverage of this issue is much better than that of the NY Times, which focuces mostly on the impact on their stock prices.






Bob Geldorf calls for global summit for Africa.

Observer article. The founder of BandAid has some practical and far-reaching suggestions to make, and calls for a Marshall Plan type strategy. Worth a read. He's been doing this for 20 years now, knows his stuff, understands exactly what the problems are and how they developed, doesn't mince words and makes an awful lot of sense.


He has harsh things to say about the EU bureacracy, to say the least. "At least the Evian G8 guaranteed food security for the impoverished and starving, but let's pray it is not discharged through the blundering office of our dear EU." But he's been saying very good things about George Bush lately, who he claims has been meeting his commitments, unlike the Eurocrats.






California's job market continues to deteriorate.

The LA Times reports that unemployment in California continues to increase. However, southern California is doing better while northern California, particularly Silicon Valley, remains deep in post-boom slump.


The thing I find interesting about this article is that it doesn't even mention the movie or music industries, both of which are enormous in LA. There's this deep bias towards the arts, and this assumption that there is no real money made in them, or large numbers of jobs produced. So much so that they don't even bother looking at the figures. I can see that in other places maybe, but it amazes me that the LA Times still doesn't consider the movie industry to be "real work" or a "real business."

The unemployment figures don't reflect self-employed people, particularly artists, of whom there are a lot more than people seem to realize. Actors, writers, musicians, painters and so many others are put down as unemployed, no matter how much they're making, because they don't have weekly paychecks. I live in southern California and it seems to me that film makers and musicians and such are doing pretty well. A heck of a lot better than the computer types.

They also report that the incredible increase in workers' compensation payments recently, up to 100%, are very definitely driving businesses out of the state.


As someone who's been living in California for 50 years now, I can't decide if that's good or bad. The population here has skyrocketed during the last few years, far beyond the ability of the infrastructure to support it, so maybe it's good if there's a bit of a reduction.

And the Bush administration's contempt for California certainly isn't helping. It's no coincidence that the states on the west coast have the highest unemployment figures. Washington is 3,000 miles away and they don't care. Those who think the Republicans have the upper hand in the 2004 election should know that the nation's largest state is very solidly Democratic and getting more so every day. Whoever the Democratic candidate turns out to be, they've already won here.






American auto giants in trouble.

The Economist asks if American car makers are an endangered species?. They've been in trouble and been bailed out before, but this time the signs are a bit more ominous. At the very least it would appear they're going to have to bail out on their pension obligations, part of a growing and very dangerous trend. "GM already has a pension-fund shortfall of $19 billion, as big as its market capitalisation."


Yet the article also indicates the bias in most reporting on the economy. They refer to Chrysler as an "American" company, yet it's owned by German DaimlerBenz. They really don't see the overall picture at all. Nor do they discuss the problems the declining dollar is causing. Very little, if any, global perspective. They just see "America's car industry." I personally would consider Japanese and European operations here as "American." They create American jobs, and are manufacturing products for American consumers.

They also share the corporate bias towards unions. The article gives the distinct impression that it's the unions that are making it impossible to deal with the problems. I'd agree with part of that, maybe, the greed of the well-established unions are certainly helping to make the US less competitive internationally. But the major problem is management, as they sort of note. And given the economic problems in Japan it doesn't make much sense to claim that eliminating unions will help much.

I think corporate America is due for a great shakeup in general, but I also think that American industry is basically very strong and not going anywhere. Ford is celebrating its hundredth anniversary this year, and I'll bet it's around a hundred years from now. If I had to choose which was going to be around in a hundred years, Ford or the Economist, I'd go with Ford.






More reports on massive fraud at WorldCom, now MCI.

The NY Times reports more on the fraud at WorldCom, particularly that of its former chairman and CEO, Bernard Ebbers.


So the chairman of one of the world's telecommunications companies didn't use email. I find that very interesting. And they can't "prove" that he listened to his voicemail. Chairman of the phone company, and a very big time corporate executive, and there's doubt that he checked his messages? What a nice, convenient legal nicety.

Now compare the fact the they still haven't charged him with anything, despite evidence of massive fraud at his own company, going on for a period of years, and involving many oher people, with the charges made against Martha Stewart, over a single incident, and not even that of her own company.






World Com was being run by the seat of the pants.

An article in the NY Times about a newly released report on the scandals at World Com says that the executives were just making decisions on the spur of the moment. And big decisions too.


This amazes me. They're always talking about sound business practices, the value of MBAs and so on, and then we find out they spend six billion dollars basically on a quick whim. Unbelievable. But then it's from the NY Times, so who knows what the true story is.






ECB cuts interest rates.

NY Times article. Guardian article. Economist article. These quotes are from the Times.


Big mistake in my opinion. For one the idea that cutting interest rates will promote the economy is slightly obsolete, and based on old economy notions that capital is scarce. Both Japan and the US now have very low interest rates and it hasn't helped them much. It may in fact be making matters worse.

It also represents putting the interests of the larger states, such as Germany, over those of the smaller countrieis, which have been benefiting from the Euro's increase. And giving in to pressure from the US and the UK to take measures which help their economies, not necessarily those of the EU. Notice that the Economist, which primarily represents the interests of London bankers likes it, but still wants more.

But for small EU investors it means a smaller return on their savings and investments, just as Alan Greenspan's policy of propping up the US stock market with cheap money has given US savers the lowest interest rates of the postwar era. Economists are always talking about the importance of savings, but with interest rates at 1-2% there's not much point to it.


The degree of pressure from the US and the UK on this issue I think indicates just how frightened they are that the Euro will be a great success and supplant the dollar and pound as the world's primary currency. But they're fighting history here and won't win.

Note that all of the discussion focuses on Germany's problems. None of the three articles so much as mentions any of the other eleven Euro countries. Not even once. I find that very curious. They repeatedly mention the American and British economies, but not the European ones, even though the issue is (supposedly) the EU economy and European rates.

Basically they have the idea that the way to promote the global economy is to promote the few biggest countries. But the age of superpowers is over, as is the notion that you promote economic growth by increasing the wealth of the elite. The global economy depends on a hundred or more smaller economies all experiencing slow but steady growth. But the greedy, selfish bankers in New York, London and Berlin are ready to sacrifice the rest of us in order to prop up their archaic, elitist 20th century institutions.

I also noticed that the Guardian has another article stating that German unemployment actually fell last month, which would bely the notion that there are serious, long-lasting problems there. Neither the Times or the Economist mentions this, but rather give the impression that unemployment there is growing.

This is another thing I want to write more about. Particularly on how the idea that capital is scarce and that making money cheap will help the economy. Capital is _not_ scarce now, and making it too cheap may just prop up failing enterprises and encourage wasteful investment and spending.

As for it slowing the Euro's growth, I don't think so. Maybe temporarily, but maybe not even that. The American economy is severely out of whack with reality, IMHO, and the dollar is going to continue to reflect that. The Euro looks really good to me. Sure there are a lot of problems with adapting to all of the changes, and the changes will continue until after the new ten members have fully established it, 2010 at the earliest. And the bloody British being unable to make up their minds will continue to cause damaging uncertainty. But the shortcomings are mostly short-term while the advantages are mostly long-term.






Third night of protests in Geneva.

The Guardian reports on battles between protesters and police in Geneva. Anti-globalization protesters have gathered there since it is the closest they can get to the G8 summit in Evian, France.


I've seen virtually no mention in the American coverage of the summit of the fact that over 250,000 protesters were there, or of the extent of the police presence. In a search of the international section of the NY Times, there is an article on the summit focusing on the demands made to Iraq and North Korea to stop developing nuclear weapons.

There's also an article telling us that Queen Elizabeth wore a yellow hat and sensible black shoes at her coronation's 50th anniversary celebrations. But no mention of violence so great that the Swiss police have been forced to call in German reinforcements, which I myself would consider a much more important story.






Tensions at the G8 summit.

The Guardian reports on the strains at the G8 summit in Evian, France.


Beyond the disagreements over Iraq, there is a deep and growing divide over economic issues.


The Guardian has a special section on the G8 summit. The G8 is important because these eight nations are attempting to act as a de facto world government, but one without democracy, judicial oversight or any other safeguards. They are clearly living in the past, but still don't seem to realize it. (Or maybe they do and are just trying to maintain power by force.)

One of the stories is on the extraordinary security in place around Evian, which they describe as an "idyllic lakeside town encircled by wall of steel."








Global property a "house of cards"?

The Economist offers up a comprehensive overview of global investment in private property. "In many countries the stockmarket bubble has been replaced by a property-price bubble. Sooner or later it will burst," says Pam Woodall, the economics editor. The article links to several more specific ones.


The conclusion they come to is a bit daunting.


But cheer up. For people like me, who _don't_ own real estate, this is very good news. That's the problem with a global economy: whatever hurts someone, helps someone else. And if governments try to prop prices up they may encounter some unexpected opposition.



Bill Moyers warns of rising national deficits.

Also via Common Dreams. Bill Moyers says current budget plans and tax cuts are getting us Deep in a Black Hole of Red Ink. He also tells us that the tax credit for eleven million children that was trumpeted as part of the tax cut was quietly eliminated before it was signed.








Japanese banks report huge losses.

Following the continuing problems in the Japanese economy, the Guardian reports that the largest bank in Japan, and the largest in the world in terms of assets, has reported an astounding $20 billion dollar loss.


And, despite no real evidence of any significant changes, they continue to insist that this is the end, and that "next year" will bring enormous profits. We shall see. What's needed, IMHO, is for the government to stop bailing these giants out, take the hit, and allow the Japanese people to rebuild on a solid base. But what do I know?






Warren Buffet on Bush's tax cuts.

In the Washington Post, Warren Buffet writes on Dividend Voodoo. Short story, he thinks it's quite ridiculous.


He closes by saying something we all know, but never seem to hear.








British trade minister admits he's been wrong about the IMF and the World Bank.

In a fascinating Guardian article, Stephen Byers, a former British trade and industry secretary and a cabinet member from 1998 to 2002, admits: "I was wrong. Free market trade policies hurt the poor. The IMF and World Bank orthodoxy is increasing global poverty."


He goes on to cite numerous instances and examples, and in particular shows how in fact developing countries that protected their domestic industries ended up doing better.


Interesting to see a prominent politician so openly admit he was wrong. And especially interesting to think that it was the demonstrations in Seattle that caused him to begin reconsidering his views.






Migrant workers sent home $80 billion last year.

Guardian article. Money sent home by migrant workers now greatly exceeds foreign aid programs.








New York Times finally admits it has no idea where the dollar's heading.

An article on the rapidly declining dollar acknowledges that all of the previous predictions have been quite inadequate, with the Euro already exceeding levels it was not supposed to reach until the end of 2004.


This is rather surprising. The corporate economists NEVER admit that they simply don't know what's going to happen. At least I can't recall them doing so.

But I think they're still way too optimistic. Nowhere in this article do they acknowledge any resentment towards American arrogance and warring, or the fact that the major reason people are now reluctant to invest in America is because of the complete failure of the attempts to clean up the still very corrupt financial industry. Basically they're still saying that everything is A-OK, the war is over, there will be some minor adjustments but nothing major, and soon America will be a superpower again.

I think there's a possibility that the Euro will be worth double the dollar by the end of the year, and maybe even three times it by the end of 2004. Probably not, but the conditions for this to happen certainly do exist. I've lost my faith in America, at least in corporate economics, and it seems to me that most of the people in the world also have.

I'll be writing more on this I hope. I'm really interested in the Euro, the EU, and the other changes taking place in our world.






States investigating national brokerages.

The New York Times reports on how individual states are proceeding in their investigations of various firms. I knew they were doing this, but didn't realize how they'd divided it all up.


But the SEC and other federal groups are pushing everyone to agree to one simple settlement, so as to end it and let them get back to business-as-usual. You have to be suspicious of any plan the firms themselves support. Such a settlement would pretty much hide each firms' individual crimes behind this general "everybody does it" generalization, and, most especially, stop most attempts to find specific individuals guilty of criminal offenses.


Ah, the feds are advising the firms on the easiest way to get out of this. Our tax dollars at work. Basically the feds want to keep it entirely a civil matter. This wasn't really theft, and they aren't really criminals. Just honest businessmen who may have made some bad business decisions. That also allows them to keep most of the money. Oh, some fines. But nothing like what they stole. And no one goes to jail.






Questionable projections of computer sales.

Some interesting predictions about the industry overall in an article from CBS Marketwatch on Apple's expectations in coming quarters.


Seems to be quite a gap between current and future estimates, based, as far as I can see, on the assumption that there's to be substantial economic recovery shortly. Basically wishful thinking. Certainly the June forecasts were way, way off the mark, less than a quarter of what was predicted only about 100 days ago. I think they'll be lucky to just hold even, much less increase.

Computer sales are not just going to come back: it will require confronting the serious problems facing the industry, most especially Microsoft's and Apple's monopolies. These are very definitely making it impossible for new technology to develop. I, for instance, would be developing an absolutely killer ebook program for Windows, except that Microsoft's giving theirs away for free. How do you compete with that? Is anyone going to invest in that situation.

Say, whatever happened to that Microsoft anti-trust thing? Proceeding along with due speed I suppose. Goodness, this thing is going to outlast both the boom and the recession, and probably Bush as well as Clinton. "Justice delayed is justice denied." Can't people realize that it's this uncertainty and dishonesty that's devastating the tech economy? You can't invest in this atmosphere.

You have to have a set of rules. They can be bad rules, they can be slanted towards the corporations, they can be unfair, but whatever they are they have to enforce them. This is why we pay our taxes, this is what the government is FOR.






Corporate profit reports are just fantasy.

Mathew Ingram in the Globe and Mail comments on the financial realities behind the so-called profits declared this week by companies such as GM and Citigroup.


Basically, not a thing has changed since the dot-com crash. Companies still reporting paper profits as though they were real, and the markets (and apparently even the general public) just buying it as always.

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End of entries. Unless indicated otherwise, all entries are by Michael Presky, and copyrighted the date of their creation. All quotations are copyrighted by the creator.