Yes! It worked in La Biblioteca! Onward...

and upward!

Just a few notes...Jeff told me that Italy outlawed extreme skinniness...there are food shortage riots erupting globally...American farmers (or industrial agribusiness) are growing corn for biofuel (ethanol), although I have not seen one fueling station pumping ethanol or any ethanol-powered vehicles...in fact, many farmers are growing corn instead of soybeans which means there is also a cooking oil shortage globally...

Let's get down to brass tacks. It seems like the economy is declining rapidly. In fact, you might say that if the economy were a person, the entire body is in septic shock. I just read that retailers, especially stolid, popular ones (like Linens 'n Things, which I never heard of but read about yesterday also, which had been a major acquisition of some fuckhead private equity person who bought it by accessing debt then piling it onto the retail store which was second in revenue only to Bed Bath & Beyond. Now this fuckhead can't pay the debt costs so it's teetering on the edge of bankruptcy.) Too many parentheses. Whatever.

The problem with problems in retail for instance is that they're like the center of an umbrella with many spokes attached to them for dear life. Vendors, like fabric suppliers and manufacturers of chairs, blenders, aluminum siding (no, wait, that's not right), 600-thread Egyptian cotton sheets and many others are very worried they won't get paid so they stop shipping product. Bankers and other financiers see the piled up debt on top of Linens 'N Things straining like a flimsy rooftop covered with snow and they pull out their support. The decline escalates until the store careens into bankruptcy.

In the meantime, inflation pressures are piling up. Consumers are pulling back on their spending because unemployment is growing. That is just common sense. I don't need to see the jimmied figures because I see the headlines: Bear Stearns goes under, blah blah files for bankruptcy. Of course the bodies lie on the sidewalk. Everyone at Bear is sitting around waiting for the axe to fall. They might as well pack up and leave. The first thing that usually occurs when there are declining revenues is that people are laid off. Labor is the highest cost of a business (for the most part) so to fire people is the fastest way to stem the bleeding.

Of course what has captured the headlines for the past few months is the deflation in the housing sector, or (to be as euphemism-free as possible), falling housing prices. Economic news is more dire daily and what passed for optimism is also declining (like saying, it's sure that we'll be peering at a bottom any time now).

So now you can try to stack up the problems according to which is more appalling or cataclysmic (I love using thesaurus.reference.com): Declining wealth due to falling housing prices; negative equity (loans worth more than the collateral they're built on); no savings (part of our economy, a big part, was generated by rampant consumer spending); lots of debt everywhere, individual and corporate; rising unemployment; hideously high food prices globally leading to unrest and the toppling of a government (Haiti); the gated communities of hedge funds and auction-rate securities (gated in the sense that no investor can get their money out); horrifying price increases in prescription drugs, $5-a-gallon gasoline, $10-a-gallon milk; $4 a dozen eggs...how is it that everything collapsed at the same time?

It's The Economy, Pendejo!

Overseas stock market indices fell precipitously on Monday. Hong Kong went down 7.2% India went down. Germany went down. It was as though gravity was pulling the strings. The United States stock market was off on its dutiful Martin Luther King murder day. American stock traders et al watched in horror. Ben Bernarke convened a teleconference with the other 17 Fed governors and they decided collectively to cut the fed funds rate 75 basis points, the largest cut ever. Did this panicked move (after all, there was a scheduled Fed meeting next week) calm the markets? God knows. The market fell on Tuesday, then swung wildly on Wednesday descending 300 points only to close up 300 points (approximately).

Some in the global economic discourse decry Bernarke's actions. Perhaps lower interest rates are not the answer. After all, didn't they cause the housing bubble by throwing money at everyone with a pulse? Also, doesn't this kind of move make it look like Bernarke is responding only to equity investors, in a sense, rewarding risk-taking? Moral hazard, anyone?

In Davos, Switzerland where the great minds are meeting (wedged in between Alpish skiing) Bill Gates works on his speech about how capitalism doesn't seem to solve the problems of the very, very many more poor people there are in the world other than billionaires. He of course is the very pillar of the modern lethal capitalist. Now that he has all the money, he wants the moral high water mark as well. He even quotes from the crazy Adam Smith's book written prior to "The Wealth of Nations" (something like the Moral Sentiment of the Sentient?) where not only naked self-interest drives altruism(?) but where it's self-enriching to help others! What about that invisible hand? Is that only for pornographic web sites or counting the spoils as one exits as ex-CEO from a demolished financial institution, now a wholly owned subsidiary of Bahrain?

Gack the brain dead walk among us like the stunned wounded middle class, darkly drinking in the ineptitude of our so-called elected representatives. Representatives? What the fuck does that mean? Who do they represent, anyway? The NY Times briefly sketches the horrendous band aid stimulus package cooked up by Congress with Bush's eager pen floating above it--give a few hundred dollars to the great unwashed (Republicans--none to those who pay no taxes because they don't make enough to pay taxes); extend the length of unemployment compensation (Republicans--let's have unemployment drop to Depression-era levels before we do that) and other pittances, bones to throw at the barely rabid rabble.

People are gloomy. They see their children inheriting a world where they will do worse than the generation before them. They feel America's stock has fallen in the world. A landlord has to work an hourly job at Home Depot to help pay the mortgage on his building. At least he gets some health insurance. My insurance premium jumped from $55.50 to $98.50. Jesus Christ that's $43.00, a leap of almost 80%. What the fuck! At least the economic powers-that-be don't talk about core inflation so much anymore. Inflation is everywhere I look for "regular" folks. Gas prices will not recede. My Con Ed bill is sky high. Oil may have declined on the market, retreating from a brief flirtation with $100-a-barrel to about $86 but we will not feel it in our wallets. I shop out of my way to get less expensive eggs. Milk is high. In Davos they deride the U.S. as an "emerging market" economy:

[A]n American economist, Nouriel Roubini, said bluntly, "The United States looks like an emerging market," with large deficits and a weak currency. Brazil, an actual emerging market, had done a better job overhauling its economy, he said.

In the gloomy article the Times ran today about how the average person sees their prospects, one man says when he travels he doesn't tell anyone he's an American. "I tell them I'm a Canadian. I get a much better response that way."