Category Archives: Economy

Correctly framing the current import crisis

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I was sitting up at work last night and a story from the Daily Mail UK caught my eye. The story discussed how Isaac Larian, the CEO of MGA Entertainment, complained during an interview with Fox News how President Biden’s efforts to address the supply shortage that’s affecting US imports were “too little and too late”. Give me a second while I make the wanking motion as I wouldn’t expect anyone to go on Fox News singing the praises of how effective Biden is handling the cards he’s been dealt.

Now, this is a billionaire who says he has been in the toy industry for decades. He even said “I’ve been doing this for 42 years. I have never, ever seen something like this before.” Larian also added. “And frankly, the administration knew about this and what they are doing is too little, too late to save this holiday.” While reading the article, I did not see a single admission by Larian or the writer telling the role that company CEOs played in causing this supply crunch. Instead, what I saw was the appearance of the right wing media trying to pin the entire issue on the Biden administration.

For proof, here’s a few stories I came across including the referenced Daily Mail story.

Anyone who has been in a business where just in time shipping is involved with productivity already knows that the current administration is not responsible for the current situation. This situation has been in the making for decades. When I worked retail in the 1990s, just in time shipping was replacing warehousing because the decision makers decided that cutting warehousing costs to increase profits was a wise business decision. This is a part of the destructive aspect of capitalism where the extraction of profits takes precedent over everything else including common sense basic business decisions.

To explain the differences in warehousing supplies vs just in time shipping, here’s a simple example that anyone should understand. Warehousing would be like a family coming up with ideas of what they want to have for dinner for an entire week. Then, the family goes grocery shopping to buy all the necessary supplies to prepare the meals for the entire week. Those groceries are brought home and stored in the refrigerator, freezer, or pantry as required. Just in time shipping would be planning the meals for the entire week. Instead of one grocery store trip to buy everything, the family would make a trip every day to the grocery store to buy just the items needed for that day’s meal.

If you’re able to rub two brain cells together, you can see where the embedded flaw lies between the two approaches. In the former approach, the family can return to the store during the week to purchase any items that were not in stock during the initial visit before they’re needed for that day’s meal. With the latter approach, if the items are not in stock that day, then the meal cannot be prepared.

Here’s a twitter thread that goes into the details of the problem at our shipping ports.

It’s well worth the time spent reading it to understand the effect just in time shipping has on our entire economy. Beyond just in time shipping, the crisis is also fueled by offshoring. When it became cheaper to make goods abroad and ship them here to sell, that also plays a part in our supply chain. We would not be discussing how to unload hundreds of container ships that are anchored offshore around the countries if the goods were still made here. Domestic goods are easily transported over rail and by truck without the extra time required to offload them from massive cargo ships. Domestic production removes links in the supply chain that can cause the system to lock up as it currently has.

This tweet here summarizes it all in a few characters.

The lack of long term thinking and planning is why we have a supply crisis, and not Joe Biden. The pandemic plays a role, but with an effective planning strategy, the effects of unexpected disasters like that can be mitigated.

Don’t let these folks con you into thinking this is a problem because of the current administration. This crisis has been in the works for a long time. Biden just happens to be the person sitting in the captain’s chair as the ship has run aground. We’ve been on a course with disaster for decades. The problems faced by capitalism today are due to capitalism’s greed overriding common sense. The CEOs bought the legislation they wanted to maximize profits, so now they need to own the repercussions of their greed. Businesses caused the crisis, so they should be properly attributed as such and not the sitting president.

The bashing of the middle class continues

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Eons ago, Americans went to work for a company, spent their entire work career with said company, and then was rewarded for that loyalty with a pension to live off when retired.  Those days are gone, long gone.  Now, we have workers who think 10 years with one employer is too long.  Likewise, that lack of loyalty to a single employer disappeared along with the old-school pension for the most part.

Pensions are still around, but not like they used to be.  Pensions usually come with jobs where collective bargaining agreements still exist and unions help negotiate benefits for the workers.

“In 2013 there were 14.5 million members in the U.S., compared with 17.7 million in 1983. In 2013, the percentage of workers belonging to a union was 11.3%, compared to 20.1% in 1983. The rate for the private sector was 6.7%, and for the public sector 35.3%.”–Wikipedia “Labor unions in the United States”

In the current $1 Trillion spending bill that’s floating through Congress, there’s a neat little nugget encapsulated in that legislation that hasn’t been much discussed by the MSM.  If that spending bill passes, one of the riders attached will allow cuts to benefits already promised to workers.  It’s being described as a way to help the funding issues with pensions, which are reportedly vastly underfunded.

The measure ostensibly aims to stave off insolvency for multi-employer plans facing financial problems, largely by allowing them to cut retiree benefits to save money, well in advance of insolvency. Helping these plans survive is a laudable goal — as many as 200 of the 1,400 such plans in existence may face financial problems over the next 20 years.

But as Ken Paff, national organizer of Teamsters for a Democratic Union, asserts: “The process stinks.” The deal was worked out in secret and invested with a bogus urgency: There’s absolutely no reason it needs to be passed this week, much less attached to an omnibus budget bill that has to be enacted before Congress leaves for vacation this week. “To attach this to a budget bill is a dirty trick,” Paff says.

The actual language of the 161-page pension measure wasn’t made public until Tuesday night; at midday Wednesday, pension advocates were still working their way through it. But it’s already clear that some descriptions of the provisions provided to reporters Tuesday by its drafters, Reps. John Kline (R-Minn.) and California’s George Miller (D-Martinez), were flagrantly misleading.–LA Times

The LA Times piece goes on to mention that the “protections” that were supposedly included for retired workers really isn’t much protection at all considering that you have to be 80 years old in order to be fully protected from the cuts.  Those who are at least 75 can still have up to 80% of the maximum allowable amount cut from their pension.

This likely won’t cause much alarm for many people because not many people have their retirements set up in pensions.  Most people have a 401k plan now.

Even those with a 401k plan should pay attention to the cuts being made here as well.  Recently, Radio Shack announced they were ending matching contributions to their employee 401k plans, and I don’t think this will be an isolated case.  Employers are cutting costs to maximize profits, and unfortunately for today’s worker, we’re nothing but a cost on the company’s P&L statement.

I see nothing more but more chipping away at the columns that support the middle class.  Some people like to play the blame game and suggest one party is responsible, but as this legislation shows, they both contribute to the demise of the middle class.

Another day, another bank scandal and fines

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(Reuters) – Regulators fined six major banks a total of $4.3 billion for failing to stop traders from trying to manipulate the foreign exchange market, following a yearlong global investigation.

HSBC Holdings Plc, Royal Bank of Scotland Group Plc, JPMorgan Chase & Co, Citigroup Inc, UBS AG and Bank of America Corp all faced penalties resulting from the inquiry, which has put the largely unregulated $5-trillion-a-day market on a tighter leash, accelerated the push to automate trading and ensnared the Bank of England.

Authorities accused dealers of sharing confidential information about client orders and coordinating trades to boost their own profits. The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings.

Source: Reuters

The sun rose in the east this morning, and what do we know…  another bank scandal.  It’s getting to be the norm that a scandal is announced, some pittance of a fine is imposed, and the behavior continues on as though nothing happened.

What kind of punishment is a $4.3 Billion fine to a group that can generate that sum within a week?  When are these motherf**kers going to start doing perp walks and doing hard time?

If I go and rob a bank for $20,000 or less, I will get prison time.  If I go and rob Grandma Mary down the street, I’m going to get hard time.  No judge is going to make me pay a $50 fine and walk away.  So, why is it that these people from the banks can do that over and over again?

The striking thing about this currency manipulation scheme is that it started AFTER regulators began investigating the LIBOR scandal.  I guess you can live and work like the nastyass honey badger when you know there is no punishment for your behavior other than making you keep the millions of dollars you earn in your scheme.

Too big to fail my ass…  More like bought and paid for government.  Notice that this kind of stuff happens in countries with “free markets” and not in countries where people get death sentences for doing this kind of stuff.  Maybe its time for the everyday regular people to grab the pitchforks and start marching.

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News can be downright depressing at times

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Two stories that I came across today really made me think about how little control we actually have in America.  No matter who we vote for or what they do, the only people who come out ahead are those who throw down the huge dollars to buy their own Congresspeople.

First one…

Of all the crazy things people have said about former AIG chief Maurice “Hank” Greenberg’s lawsuit against the government, the craziest was that he just might win.

It’s sounding less crazy all the time.

The possibility of a Greenberg victory at trial, which began six weeks ago is no longer unthinkable. According to a Bloomberg report, Greenberg has a real shot of winning his argument that the U.S. government bailed out the insurance firm he founded on “unfair” terms. Greenberg and his star lawyer, David Boies, may walk away with a $25 billion judgment in the case.

As Buzzfeed’s Matthew Zeitlin pointed out, $25 billion is twice the value of all housing aid given through TARP, the highly-criticized relief program that was supposed to help out troubled mortgage holders. It’s also equal to the total value of TARP money set aside for housing that remains unspent. The talking points write themselves.

If Greenberg wins, “the howling will start,” says Susan Webber told Bloomberg, who blogs under the pseudonym Yves Smith at Naked Capitalism.

A legal ruling that AIG shareholders were victims of the government bailout that saved those same shareholders’ stake in the company from being worth zero would be galling. If Greenberg walks away with billions, the public outrage will hit 11. No one argues that his firm could have survived without government intervention.

Source: Huffington Post

If that’s not bad enough, Matt Taibbi dropped a doozy as well.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

Source:  Rolling Stone

The average American doesn’t have a chance.  We think we’re doing something with our houses, cars, and such.  However, many people are living paycheck to paycheck.  That, or we’re only one major sickness away from bankruptcy.  All at the same time, others are fleecing this country dry, and people will defend it as capitalism.  Go figure.

Hopefully tomorrow will bring some happy news.  We’re in need of some because we’re going to see Ferguson light up like a midsummer bonfire before too long.  We may as well try to find some happiness until that time comes.

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“Stimulating” the economy

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What happens when a state forecloses on a business for not paying taxes?  The state usually seizes the property and auctions off the inventory if the business doesn’t pay up.  Well, that policy has put Kansas in a bit of a predicament.

The state seized the inventory of Bang Lingerie and Gifts after the owner didn’t pay up on a delinquent tax bill in the amount of $163,986 that was owed to the state.  Today, the state will auction off the inventory to recoup the amount.

Kansas tax revenues could get a boost with the sale of remote-control vibrating thongs and other sex toys.

Thousands of adult novelty items, from lingerie to handcuffs, are for sale in an online auction as a result of a failure of a chain of erotic stores to pay state sales, income and withholding taxes.

The items — all new and in the original packaging — will be available for inspection Monday at a warehouse in Kansas City’s West Bottoms.

The merchandise was seized in July by the Kansas Department of Revenue from five adult stores in Kansas City, Kan., Topeka, Wichita and Junction City. The owner, United Outlets LLC, doing business as Bang, owes the state $163,986.

Source: The Kansas City Star

I guess you can say this is a way to stimulate the economy in more ways than one.  The state itself will not conduct the auction.  Instead, they have contracted out to a private company to do the auction for them.  Take a look at the auction site and see if you can figure out which auction will consist of Bang’s inventory.

'Equip-bid_com - Kansas Auctions

The auction is being conducted by Equip Bid Auctions, and you have to register even just to look at the inventory that’s up for auction. I have seen no word yet on whether Westboro Baptist Church will be protesting the auction.

How much more comedy can be written into a story involving a state with a governor named Brownback that is auctioning off sex toys that are being housed in a warehouse in West Bottoms?

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