Day: May 27, 2009

Consumer Confidence Soars!

Yesterday, 26 May, the markets got what they had been wanting…a bit of good news….and the investors had a feeding frenzy.

The national Consumer Confidence Index was up 14 points this month, to 54.9, according to the Conference Board, the New-York based group that conducts the monthly survey. Driving this was the ”Expectations Index,” which is the part of the survey that measures beliefs about the future. That part was up 22 points, to 72.3.

After hearing the news and watching the markets soar….I had to ask?  Huh?

Did I miss something?  Over 6 million unemployed…..foreclosures raising at an alarming rate…..prices screaming upward…..businesses closing….bills unpaid….personal bankruptcies going up…on and on…..but somewhere the economic gurus have found a way to make all that sound like a bright future for us all.

When I heard the news my first thought was, “who did they ask?  Some guy with a job making $75,000 a year?”  Apparently that is just who they asked.  Why do I say this?

In simple terms, increased consumer confidence indicates economic growth in which consumers are spending money, indicating higher consumption. Decreasing consumer confidence implies slowing economic growth, and so consumers are likely to decrease their spending. The idea is that the more confident people feel about the economy and their jobs and incomes, the more likely they are to make purchases. Declining consumer confidence is a sign of slowing economic growth and may indicate that the economy is headed into trouble.

Each month The Conference Board surveys 5,000 U.S. households. The survey consists of five questions that ask the respondents’ opinions about the following:

  1. Current business conditions
  2. Business conditions for the next six months
  3. Current employment conditions
  4. Employment conditions for the next six months
  5. Total family income for the next six months

Survey participants are asked to answer each question as “positive”, “negative” or “neutral”. The preliminary results from the Consumer Confidence Survey are released on the last Tuesday of each month at 10am EST.

Now that you have been informed on how the CCI is calculated, you can also see that I was right in my assumption.  They poll 5000 households that are stable and thriving and then they write a report stated that all is well in the land of consumption.  And the markets respond to the “good” news.  Investors benefit from the “fake” news.

Let us take another tack…..pick a business say….Staples…..Staples Inc.’s  fiscal first-quarter earnings fell by a third as consumers and businesses put off purchases of bigger-ticket items such as office furniture.

Aside from the downsizing and closings of businesses that have come with the recession, big office-supply chains like Staples are facing a wave of price competition from lower-cost vendors ranging from online discounters to giants such as Wal-Mart Stores Inc.

That does not sound like even businesses are that confident, now does it?  So the whole CCI is a made up piece of economic fairy tale that illustrates NOTHING, while giving the markets a reason for a rally.

As with all these types of reports, the info is skewed to benefit Wall Street not to show a realistic picture of what the economy is really doing and how it is effecting “real” people.

What About The Middle Class?

Bank bailouts…auto industry assistance…CEO bonuses….Credit card rules….nice work if you can get it….all the help has been for the corporations…..the middle class has received only some minor lip service…….will that change?

God knows it should, be so far I have not seen any of the efforts that will create a more stable middle class….without that we have nothing but a 2 class system….the wealthy and the poor…Obama has mentioned the middle class numerous times…but so far nothing has been done to protect it from the erosion it is experiencing.

In an article written by Robert Stark in the LA Examiner he noted:

Obama is no friend of the middle class. He is a tool of international finance, multi-national corporations, the military industrial complex, and has strong socialist leanings. Many think socialism and financial capital are at opposite ends of the economic spectrum. That could be further from the truth. Socialist want more customers for the welfare state to sustain their political power. That is why the democratic establishment supports massive immigration because they want to increase their power base. They bribe voters with social programs. Many of these perceived leftist causes are financed by Wall Street financiers. The financial and corporate elites want open borders because they profit of the cheap labor and want a feudalist economic system.

Finance capital has bought of most of our politicians and media. Much like Socialist, monopoly capitalist want complete control of the economy and government. Think tanks such as the Council on Foreign Relations that many politicians including much of Obama’s cabinet seek to dissolve American sovereignty and consolidate the power on the financial elites. A strong middle class  is necessary for a free Republic. Both socialist and financial elites make common cause in weakening the middle class to consolidate their powers and have control over both major political parties. The middle class unlike left wing, ethnic advocacy groups, foreign, and corporate financial interest does not have a lobby to advocate on it s behalf. Politicians need the middle class to get elected but most presidents have abandoned it in favor of the elites and special interest once they are in power.

After watching the admin for the last 4 months or so, I am beginning to agree with Stark’s observation.  Why?  The banks have received billions upon billions and the only thing that is suppose to accomplish is to loosen up credit….in a time when consumer confidence is low…foreclosures are rising faster then the temperature….and unemployment is racing out of control…..Just where in there is the help for the middle class?

The middle class needs employment and stability, not a continuation of the policies and programs that put them in the dire straights they find themselves now.  The middle class is slowly disappearing and soon there will be two class in the US–the rich and the poor.  Nothing that is being attempted at this time is stablizing the middle class, it loses ground daily and Washington fiddles.

A New Path?

As Yogi Berra once said, “when you come to a fork in the road, take it” and that best describes the “new” direction that the GOP will be pursuing.

From an article written by Perry Bacon, Jr for the WaPo:

RNC chairman Steele has outdone himself this time.   Steele, speaking to the 168 members of the Republican National Committee, continued his fiery rhetoric in the last few weeks against the president, who he said “could not be more partisan.” He accused Obama of “yielding his legislative agenda almost entirely to radicals like Nancy Pelosi” and called Obama’s first 100 days a “reign of error.”

“We’ve seen strategists writing memos and doing briefings urging that Republicans avoid confronting the president,” he said in a speech at a convention center in Oxon Hill. “Steer clear of frontal assaults on his administration. They suggest we should go after Nancy Pelosi, whom nobody likes, or Harry Reid, who nobody knows”

“The era of apologizing for Republican mistakes of the past is now officially over,” Steele says. “It is done, we have turned the page, we have turned the corner. No more looking in the review mirror.”

So the plan is to start attacking the prez on all fronts.  Is that a wise choice?  The prez has a 70% approval rating and the people may not be receptive to such attacks.  I know the party is struggling to find its footing, but is this a wise choice?  Why not formulate some new ideas on the economy and such to present to the people and let them, see that the GOP is truly a viable party?

And all out frontal assault is about as wise as just saying NO to everything.  Not sure that this decision was thought out completely before it was offered to the members of the RNC.  Or if the political fallout was taken into serious consideration.

Credit Card Companies Still Win

Big News–the US Congress has finally come to the aid of credit card holders–we may all take a moment to rejoin and say a small prayer.

As of 21 May 2009 the credit card bill has been approved and passed by the House and the Senate and now awaits the official signing ceremony.  But what does the law require the companies to do?

Good question!

Basic provisions of the new credit card law.

  1. • Companies are prohibited from raising interest rates on existing balances unless a cardholder is 60 days past due.
  2. • Card companies can’t raise interest rates for the first year after an account is opened.
  3. • At least 45 days’ notice is required for a rate hike.
  4. • No over-the-limit fees except for cardholders who sign up for programs allowing transactions that would put them over their credit limit.
  5. • Consumers under age 21 would only be able to get a credit card with a cosigner or proof they can pay their bills.
  6. • Card bills must explain how long it would take to pay off the balance and how much interest would be paid by cardholders who make only the minimum monthly payment.

All looks pretty good, huh?  Take a closer look, people.  After about 45 days the companies are allowed to return to screwing you into poverty.  It will protect underaged people from the predatory pracxtices of the past, which will mean less monetary kick backs to the colleges.

This whole exercise is in futility–the companies will not lose that much revenue from this laand the people will still have to keep a jar of Vasoline handy.