I cannot emphasize enough: this is the sign of a fixed market. It is impossible that this could happen in a free market. Impossible.
This means they are extracting money from the markets, aka: from everyone who isn’t a market mover. Small traders, pension funds, trading accounts of cities, etc… Even if those actors aren’t actually in decline, they are making less money than they should as the banks make sure that their buy orders are filled at the highest price possible, and their sell orders at the lowest level possible. And, in fact, many of them will be in outright decline as a result of these games.
At this point, if you are not a market mover, you can only make money in the market by anticipating the moves of the market movers. This is now about guessing what a few people will do, so you can ride the tiger. Just don’t fall off.
Um, dude, no, Boehner is right, and you’re wrong, when it comes to the real world (h/t Cujo)
That was odd, wasn’t it? The disconnect makes it seem as if GOP talking points are lacking in flexibility, unable to adapt to changing circumstances. When the economy was losing jobs every month, Boehner would say, “Where are the jobs?” Now that the economy has added more than 200,000 jobs in two consecutive months for the first time in four years, Boehner is still saying, “Where are the jobs?” It suggests the would-be Speaker isn’t paying attention to current events very well.
Ok, depending on how you count it, the economy needs to add about 140K to 150K jobs JUST to keep up with increases in the population. About 8.4 million jobs were lost in the last recession. At a rate of, say 250,000 jobs/month, it will take 7 years to both put everyone back to work, and to sop up population increases.
For people in the ordinary economy “where are the jobs?” is a perfectly valid question, and it is a perfectly valid election strategy, because even if the economy starts regularly producing jobs at over 300,000, when November rolls around, the vast majority of people who need a job, still won’t have one.
Here’s my prediction: as a percentage of population, employment will not recover before the next recession. 80%+ of all productivity increases will go to corporate profits, and wages will stagnate.
Boehner is right to ask “where are the jobs?” Both as a matter of fact, because there aren’t enough jobs, and as a matter of electoral strategy.
Uh-huh. Which means, as I said earlier, that the security markets are not free markets. They are moved, at will, by the muscle, money and foreknowledge of a relatively small number of large traders. The small time but professional traders (aka. people who used to make money) are livid, because systems which used to give reliable trading signals have become far less reliable. This is why, on virtually every econo/market blog you will find that the commenters are angry.
This is an oligarchical society. This is true whether you live in Europe, the US or China, it is only a question of who is a member of the oligarchy.
And, with maybe one or two exceptions, no one reading this is.
Some folks seem to misunderstand what I wrote (which indicates I wasn’t clear enough.) I do not know if the huge drop was a message, it certainly may have been. But whether it was deliberate or not, it indicates that the big money CAN crash the market whenever it wants. This is a sharper demonstration of what the 2008 crisis showed—that the hot money can crash the markets and the economy any time it wants.
The lesson of 2008, as understood by political elites, was that this hot money MUST be appeased. The money wants high, risk free returns, and if it doesn’t get them, it will make everyone hurt. This is why, instead of taxing the rich, which is where the money is and which has essentially no economic costs (a 20% tax on purchases of luxury goods or services over 1.5 million would have essentially zero cost to the real economy) what is happening instead is talk of slashing entitlements, or in edge economies like Greece, austerity. (Britain will soon be getting cuts at their national level and States and Cities have already had cuts in the US.)
Instead of appeasement, the 2008 crisis offered an opportunity to break the rich, by forcing them to recognize their losses, by refusing to bail out the financial institutions so that shareholders AND bondholders got smashed. At the same time, to reduce the effect on the real economy, either the FED could have loaned directly to businesses and consumers or the FDIC could have taken over major banks which were dead, like Citigroup, and pushed out Fed money through the newly nationalized banks.
The end result would have been the power and wealth of the rich broken, and the real economy in not much worse shape, but able to recover much better, since the recovery wouldn’t be hobbled by the need to prop up insolvent banks, by crippled lending by effectively insolvent banks and by the need to provide above market returns to banks and the hot money rich.
This is explicitly what I was proposing in 2008, but of course, it didn’t happen. So, instead, we get a decade of suck, if we’re lucky, the EU gets multiple failed economies and austerity plans, and the rich get 80%+ of the profits of the coming economic cycle. If we’re unlucky (or maybe if we’re lucky) it crashes out sometime before then, since it is teetering on the edge.
Here is the basic thing you need to understand:
You can have lots of rich people, or you can have widespread prosperity. You cannot have both.
I’m moving Sunday, and my internet is moving Saturday, so I may or may not be online much for a day or two or three, depending on how the migration goes and if there are any problems. See you all on the other side.
1) killing bankers isn’t what’s needed. The people who need to be scared are their own rich, and their own politicians, who voted for the cram down instead of deciding to end tax evasion, primarily by the rich, and which by itself is enough to close the gap and avoid austerity measures.
2) Voting in right wing governments. You get what you vote for.
When you refuse to tax the rich, the only other option is to soak the middle class and the poor.
Meanwhile the Brits have voted for cuts, cuts, cuts. They too are about to get what they asked for. Austerity.
This contagion is going to spread, because Europe is fundamentally in the same mode as the US: spare the rich, cram down the middle class. The lesson taken by the elites from the crisis was that the rich must be appeased at all costs, because if they aren’t, they will go on strike, and crash the world economy.
What happened yesterday on the stock market proves it–nearly a 1,000 points off the DOW in seconds. The stock markets are no longer free markets, their movements are controlled by a relatively small number of actors with very deep pockets, who can make them go up or down whenever they choose.
There was an opportunity to break the power of these folks—to wipe them out, but it required calling their bluff, not caving to them. That opportunity has now passed. While the world economy remains very fragile and could go into a tailspin any time if anything goes wrong, best guess is we have another really lousy recovery and economic cycle to look forward to, if austerity measures don’t crash it out entirely. Over 80% of any gains will go to corporate profits, virtually nothing to ordinary citizens, and we’ll have another lost decade in which for virtually everyone the economy sucks.
There are solutions, but it’s clear that the elites in most countries aren’t willing to do anything about it, and frankly the population keeps voting for right wing governments (whether called that or not), so they’re getting what they vote for. (Say what you will, Obama was the most right wing of the major Democratic candidates.)
So, get ready for another era during which the deep liquidity, the hot money, is completely catered to—even more than it was in the last era. And get ready for an era in which, to paraphrase George Bush “who cares what you think? is the unofficial motto of government when dealing with ordinary people.
Because there seems to be some confusion, here’s a chart of the top marginal income tax rates. *
Top Marginal income tax rates
You’ll notice that as the rate has dropped, the economy has worked worse and worse for ordinary people. Correlation (though I believe strongly in causation in this case) but also it shows that high marginal progressive tax rates do not hurt the economy, contrary to what some think.
(*35% is still the top rate as of this writing).
