Given the limits to perpetual growth, when do we hit the wall?
The Story Thus Far: The Fed raised the discount rate from .50% to .75%. This is the rate the Fed charges to lend reserves to banks overnight. This is either meaningless or the end of the world or a bit of psychological warfare or possibly a repeat of a giant mistake. Or maybe it is just another illustration of how little reality actually means to the world of rumors, fears, greed and illusion that is modern finance.
Doing the Hustle: Done your taxes yet? Did you have to include any of the $140 billion that Wall Street paid the happy few last year? Where in hell did these profits come from? What do these folks do that's worth ten percent of that amount? Did Goldman go from bailout - $13 billion plus whatever they hid – to billions in bonuses because they are clever, or because we're not?
Pounding: Britain apparently forgot its New Year's resolution and went on a spending binge in January, borrowing 4.3 billion pounds when the plan was to save about that much. By the end of the year the UK will be ahead of Greece in the budget deficit/GDP race.
Map & Compass: Feeding Wall Street and its international siblings has cost the world's governments so much that by the end of this year total government debt will exceed a full year's GDP. And we – or they – are not done borrowing yet. Future obligations, hurriedly and mostly secretly made, loom on the horizon, blotting out any chance the government, any government, will have of making good on its promises to its citizens. Many of whom vote.
Misbehaving: Deflationary expectations stubbed their toe on January's PPI, which was up 1.4% as food and petroleum rose (it was an uncomfortable 0,3% excluding them). To go along with this bummer, unemployment claims were up 31,000, not down as expected. The 4-week average was essentially unchanged at 467,500.
Just So: I liked the headline so much I didn't read the article: “The Biggest Threat To Banks Is The Pitchfork-Wielding Public.” So, we're starting to get through to them.
Truth as Propaganda: HHS Secretary Sebelius assures us that the 39% hike by Blue Cross in California is not a fluke. In at least six states increases in the 50% range have already been imposed, and more are likely to follow. The Administration hopes that this will encourage a letter or two to Congress.
Flashback: All men may have been created equal, but lately some differences have come to light. Mainly it's the rich – they are not like you and me. While most of us keep on trying to get by, the top 400 American families upped their income by 31%, to an average $344 million. Each. A year. Granted this was back in 2007. And their effective tax rate was 16.6% - lower than most of the middle class. You don't think there are overlords? These folks took in (I refuse to say earned) more in the first three hours of the first day of the year than most Americans did in the whole year. And now nearly 31% of the bottom 10% of Americans are unemployed and earning nothing. Shame.
Soggy Boggy Ground: Permafrost – permanently frozen ground – has moved over 130kilometers (80 miles) north in the last 50 years. If this trend continues great swaths of permafrost will melt in the foreseeable future, raising questions about the future rate of methane release. Probably means a longer mosquito season, too.
Profit Motive: There's something wrong when investors hope more people will go to jail.
Alphonse and Gaston: After years of each party blaming the other for increasing deficits, the prophesied day of reckoning is at hand. So now politeness steps in and each wants the other to step into the quagmire first. The Dem's are not going to win. The GOP'ers are not going to win. And most certainly, the public is not going to win.