[And healthcare in the "strong economy"?]
3/30 [US] New-home sales decline again, Reuters via Bos Globe, D2.
...in February for a third straight month.... Sales fell 2.0% to a seasonally adjusted annual rate of 881,000 last month following a revised 6.7% drop to 899,000 in January, and a 2.1% fall in December....
[Home sales are often regarded as an indicator of things to come in the economy at large.]
3/30 US account, Bos Globe, D12.
Total public debt March 26 = $5.56 trillion
Interest fiscal 1999. thru Jan = $136 billion
3/28 Raw deals fuel boom - Historically low prices for commodities help keep the economy humming, but they exact pain on producers, by Aaron Zitner, Bos Globe, F1.
...Pork prices...recently hit historic lows. [The same] story could be told by Chilean copper miners, Nigerian oil roustabouts, Texas cattlemen, and West Virginia steelworkers.... From soybeans to steel, from corn to crude oil, many of the raw materials in the economic supply chain have fallen steeply in price.
[This article has more bad examples to bolster its argument than good -
[Two more stories of stagnation in our bogus "boom" - ]
3/27 IMF pushing ahead on aid talks despite Russian anger at NATO raids - Moves reflect importance of Moscow to US strategic interests - 'The saber rattling has increased rather than decreased Russia's chances of getting new aid.' Peter Boone, London School of Economics, by Lynnley Browning, Bos Globe, F1.
[Well, there it is in plain black and white. The IMF is an agency of US strategic interests. They used to be secretive about this, but now, it's quite open. Now if only the US had any coherent long-term "strategic interests," we'd be in better shape, but alas, they are ad hoc, short-term crisis-oriented, chaotic, and therefore not a little self-defeating. One of the major missing "chips" on their "motherboard" is the missing realization that however much they throw into Russia, in five days it'll all be concentrated immobilely in the vaults of the top 5-10%. You guys need a centrifuge mechanism. You need to lose our current self-destructing black-hole capitalism and get sustainable market-reinvestment capitalism. It's a coherent long-term strategy and it's a matter of national security. And this "social software" upgrade to capitalism has as its first step, Timesizing®.]
...The push is evidence that the big fear in Washington - and on Wall Street - is not of a political rift with Moscow, but of an economically weakened Russia again shaking world markets and harming Western pocketbooks....
[The biggest danger to Western pocketbooks is their own naive assumption that they can, via downsizing, indefinitely vacuum spending power from their own and others' consumer markets, and roll it up into little balls in the financial markets without destroying their investments, investments in productivity that is valueless without...markets.]
[And now a nice summary paragraph from an otherwise zero-news article - ]
3/27 Fed expected to stand pat on rates at meeting, Globe Wire Services via Bos Globe, F1.
...The Fed cut its target rate three times last year, to 4.75% from 5.5%, to calm tumbling markets after Russia defaulted and Long-Term Capital Management LP, a hedge fund, collapsed under $4 billion in losses. The central bankers last acted on Nov. 17....
[So if they can't stabilize Russia and they can't stabilize a fancy hedge fund, why would three rate cuts and another $22b (on top of the $32.5 billion already flushin' down the Russian...) stabilize a deflationary spiral?]
[And how's this for another "prime cut" of self-fragging strategy - ]
3/27 Fidelity limits frequent callers, AP via Bos Globe, F1.
...has cut the cord on fidgety investors who jammed the phone lines asking representatives about their fund balances. Some would call every hour on the hour. When the market took a dive, some called even more frequently....
[Now they're gonna get routed into an infinite automated phone system. (That's funny, we thought they already were!) Nasty silly customers! Well there are plenty of other mutual fund companies out there, some of which must still be client-friendly. Hey Ned, you didn't need them basketcases anyway. Customers - who cares about them!]
[As TinkyWinky would say - "Ohoh" - another country tied into the puppet strings of the US State Dept's chaotic foreign "policy" via the dreaded IMF - aaaaaaaaaaagggh - ]
3/26 IMF OK's [$1b] Indonesia loan, Reuters via Bos Globe, E2.
...The money will help recession-hit Indonesia cope with smaller capital flows and ease the impact of a financial crisis which started in Thailand in July 1997 and spread across Asia and the world. Indonesia has already received almost $9 billion from an $11.2 billion IMF loan first approved in late 1997.
[And is there any noticeable solution? No-o-oooo. Then it's "Nine billion bucks, and whaddayou get? Another month older and deep-er in debt. Saint Peter doncha call us 'cause we cain't goooooooooooo -
we owe our soul to the State Dept. stoooooo'."]
3/25 Durable goods post sharpest decline since '91, AP via Bos Globe, D2.
...Orders [for airplanes, electronics and other big-ticket goods] slumped 5% to a seasonally adjusted $192 billion, about double the drop predicted by economists and the worst since December 1991.... The slump that began in Asia nearly two years ago has hurt US manufacturers by cutting their export sales and forcing them to compete at home against low-priced imports. That pushed the US trade deficit to a record $169 billion last year and prompted [the House], over opposition from the Clinton administration, to try to protect one particularly affected industry, steel [by passing (289 votes to 141)] legislation sharply limiting steel imports to pre-1998 levels....
[See story 3/18 on our goodnews pages. Maybe it's already working because steel is in the only category (primary metals) of the Commerce Dept. report that is not dismal.]
Treasury Secretary Robert Rubin...said the benefits of imports are sometimes overlooked.
[Oh yeah? By whom, pray tell, in an age of free-trade faddism?]
"Imports...reduce prices and increase choice for producers, which should lead to greater job creation and higher wages," he said.
[Boy, does this argument have holes in it. "Should" lead to greater job creation sounds pretty weak. Why should it, Robert? And should "lead to".... That sounds like a time lag to us. And if there's any lag in time between when a consumer gets laid off and when they get rehired, their consumption goes down, markets go down, demand goes down, and orders go down.]
Analysts had been [misled] by...gains in durable goods orders [in Dec. and Jan.]. But factory layoffs continued despite the increase in orders. Job losses total 337,000 over the past year....
[More taxcuts for the rich -]
3/25 Senators want to cut fees companies pay SEC, AP via Bos Globe, D2.
Senators of both parties want to help companies by cutting the fees they pay the Securities and Exchange Commission, most of which end up in the government's general coffers. SEC chairman Arthur Levitt endorsed the idea [who's payin' him?] which has backing from Wall Street [what a surprise!] and political traction at a time of a big federal budget "surplus" [couldn't resist adding quotes], now at an estimated $111 billion.
[After the smart move of quashing the impeachment, senators are getting stupid again -
[Most of Warsh's recent columns should be under Politics, not Business, but here's one that's in the right section - ]
3/21 Gone forever?, by David Warsh, Bos Globe, C1.
Fifty years ago, the dream of every...American was to work for a giant corporation [and get] better pay, more perks, automatic advancement, and lifetime security.... For [the last] 15 years, however, we in newspapers have pounded out a constant stream of stories about takeovers, mergers, spin-offs, downsizings, layoffs, and plant closings.... Giant corporations [can no longer] be counted on as stable sources of rising living standards or even employment.
[We would argue that size is irrelevant and NO corporations or businesses can be counted on for employment any longer. That means our planning horizon has shortened considerably and the whole economy has gone from long-term to short-term investment, verging on speculation or day-trading. And the only alternative to individual corporation-based job security and earnings-spending-market predictability is overall job market-based job security and predictability. It may be primitive, it may lack transition details, but the only known design in print of such a system ("Market Reinvestment Capitalism") is in Timesizing, Not Downsizing.]
Now a leading economist has written a...survey of the economic forces that transformed fat and happy institutions into the lean and mean [i.e., thin and stressed] competitors they are today....
[And we would argue that she's missed the most glaringly obvious forces - the extreme concentration of wealth and power, made possible by the huge and growing (and officially denied) labor surplus, made possible by the unprecedented FLSA freezing of the "maximum" workweek, which, subjected to incessant waves of work-saving technology, have turned it into a minimum workweek for low-leverage fulltime employees, just as the kind of flip that led the unions of the '30s to rightly fear the "minimum" wage.]
"New World, New Rules" (Harvard Business School Press, $29.95) [by] Marina v.N. Whitman....
[We would argue that what we're living in is not a "new world." It's a replay of Roaring '20s and previous less-documented pre-depression periods going back to Matilda and Stephen in England ("all the demons in hell are loose in the land") and the Hyksos Period in ancient Egypt ("father betrays son and son father..."). Whitman, like so many economists, takes a short view.]
Whitman says that virtually every [clause] of the "implicit contract" that once existed between corporations and their various constituencies has been [cancelled] by a whirlwind of economic change [i.e., by CEOs].
The good news, she says, is that the forces of globalization, deregulation, and technological advance have enhanced the dynamism of the US economy.
[Oh yeah? What about the world economy, Marina? Does Russia today have "enhanced dynamism"? And what about Japan and Brazil and Indonesia and Thailand and the Phillippines and China and.... Did you write this book entirely before 1998? - and even then! You don't mean "dynamism" - you mean "volatility" and "unpredictability"! Are America's prisons dynamic? Is America's double-digit unemployment in the 50+ age bracket in high tech and other industries dynamic? There is no good news here except for economic bubble surfers and balloonists. And even now we are doing everything we can to further weaken what's left of our economic fundamentals. We couldn't be doing it better if we were doing it on purpose! We have commoditized and sold what used to quaintly be called the "good will" in our economy, and since we are still a social species, the most social species with the possible exception of bonobos, we have sabotaged our own nature and will suffer the usual brutal reversal mechanisms of this sabotage - depression and war. And it doesn't take a rocket scientist or a Will Rogers to make such predictions.]
It was a mixture of slowdown, volatility, and sharpened global competition that forced change upon large US corporations, starting in the early 1970s [ - ]
Accelerating the change was the rise of investor capitalism.
...A host of financial innovations in the 1980s - notably...junk bonds - created a "market for corporate control." And that meant that boards were no longer free to pursue diverse goals in defiance of narrow economic logic [i.e., the short-term bottom line leading to the stock price]....
[Whitman, in Warsh's presentation at least, misses the stock-based CEO incentive programs that spread widely in the 1980s and completely backfired in terms of enhancing the long-range viability of the corporation, Chainsaw Dunlap being the most infamous of the "dumb parasites."]
No more "us" and "them"; instead, a struggle of each against all.... Moreover, as Wall Street was [homogenizing] corporations, government was assigning new roles to them....
[Whitman sure has a funny way of looking at things. This was not "government assigning new roles to corporations." It was government sloughing off roles it had taken on in the '30s, that even then were not "new" but were practiced by only the most advanced CEOs such as W.K. Kellogg of Kellogg's Cereals, the early Henry Ford, Lord Leverhulme of Lever Bros. at the turn of the century, Robert Owen of New Lanark at the turn of the previous century....]
...making them watchdogs of consumer and workplace safety and equal opportunity.
[Huh? You don't need government to make the fox guard the henhouse. What planet is Whitman on?]
Companies skinned back from other responsibilities they previously had shouldered, in managing pension and health care benefits.
[This again misses the point, which is, that companies cut benefits right and left these days. Even employee-friendly UPA tried to part-time-ify all its employees a few years back just to strip them of benefits. Why? Because once the comprehensive World War II labor shortage finally wore off around 1970, employees started seriously losing leverage. No leverage means stagnant wages and cutback benefits.]
Corporate philanthropy has undergone a historic change, becoming narrower and less dependable.
[This is one change we like. "Any economic design that relies on charity for vital functions is to that extent flawed." The vital functions, such as massive ongoing frontline reinvestment in consumer markets via OJT and hiring and wages, have got to be designed-in as an automatic reflex of the private sector. Then we can dismantle almost all government regulations, subsidies, bureaucracy and taxes that have swollen up since 1933.]
In the end, the downsizing of corporations' role in modern society has impoverished nearly everyone, Whitman writes.
[Amen to that!]
One result of the increased pressure has been...a search for substitute sources of security - including perhaps an expanded welfare state.
[God forbid! It was the expanded welfare state of 1933-40 that got us into this mess in the first place, and it did not work until the War (1941-45) gave it the appearance of working by removing surplus labor hours bigtime from the job market (by killing and maiming people) and centrifuging wealth by the natural forces of supply and demand operating on what was then perceived as a labor shortage (but was probably more accurately described as a "labor balance").]
...We in newspapers have begun to...hint...that an age of wealth-creating oligopolies might come again.
[Warsh already has his oligopolies at the present time with the usual pre-depression upsurge in mergers and acquisitions. The question is, how do they become wealth-creating in any way but the self-undermining way of concentrating wealth. The usual post-1933 answer has been war. The traditional pre-1933 answer, the intelligent answer, is labor glut reduction by workday and workweek reduction. This can be done gradually and non-arbitrarily (by linkage to underemployment) along the lines of Reuther's "fluctuating adjustment of the workweek." It can have a built-in inflation blocker if the adjustable ceiling on the workweek is an unleashing, job reinvestment trigger instead of a stifling "everybody stop work here!" See chapters 7,8,9 in Timesizing, Not Downsizing.]
...The 1950s look pretty good from here.
[Agreed, and we can bring them back without the nightmarish McCarthyism and H-bomb drills (and minus the world war apéritif) by once again using worktime as a control variable instead of continuing to completely externalize it in standard economic theory.]
3/20 Gain, pain in Texas - Price slump highlighting shift in state from oil-based to more diversified economy, by Patricia Hart, Bos Globe, C1.
[Ah, shouldn't this be "causing shift" and not "highlighting shift" (whatever that means).]
...The Texas oil industry [is suffering] from its worst slump in a decade. Like most of the nation, Texas is reveling in a flush economy. [That we'd like to see.] But in nearly every corner of the state, there are pockets of pain in the small towns that exist solely to service the oil industry.
[The concentration of wealth tightens further - ]
3/20 AT&T pays CEO $6.3 million [last year], Bloomberg via Bos Globe, C2.
...largest US phone company [rewarded] chariman and chief executive C. Michael Armstrong...for a $58 billion rise in the company's market value under his watch.
[What an unstable criterion of "merit."]
The company paid Armstrong a salary of $1.4 million, plus a $1.9 million cash bonus, as well as about $507,300 in other compensation.
[Lots of others have done much greater deeds and been compensated much less.]
He was also granted 300,000 options [and] received other benefits valued at $2.49 million.
[Funny how many of these figures seem manipulated to minimize public furor - e.g., not $2.5m but $2.49m.]
3/19 [Surface-]strong US economy sends trade deficit soaring 21% - Historic $17b imbalance may spur calls for curbs, AP via Bos Globe, C2.
...congressional efforts to erect trade barriers that protect American industry. The...widening in the January deficit - up by $2.9b from December - reflected a booming [or bubble-ing] US economy's strong demand for foreign [or cheap, because fewer people have money] products and global recessions that have seriously undercut exports by American farmers and manufacturers. Yesterday's worse-than-expected Commerce Dept. report came one day after the House passed a [flaccid, token] bill...to impose stiff limits on imports of foreign steel. The Senate [is expected to throw it out]....
"The United States remains an oasis of prosperity in the global economy," said Michael Fenollosa, economist at John Hancock in Boston....
[And so does Europe, though unlike U.S., they're smart enough to keep their mouths shut about it. And their prosperity is less bubble and more solid ball - with more of technology' promise taken in terms of leisure (shorter workweeks and annual 5-6 week vacations) instead of hidden unemployment, disability, welfare, homelessness and record-breaking prisons.]
The Clinton administration is worried that rising protectionist sentiment in this country could trigger new financial turmoil in developing countries by signaling the U.S. is no longer willing to serve as an importer of last resort for troubled countries.
[Ah, don't they mean "first resort"? Boy, we do need a 3d party in this dumbing-down land, don't we? The GOP is suicidally negative and Clinton has such screwy priorities. You can't save the rest of the world while gutting America. Here's their "evidence" that our economy is "strong," "booming," "turning in a stellar performance"?]
Inflation, helped by the flood of cheap imports and falling world oil prices [in other words, by global deflation, plus a domestic workforce too scared of downsizing to ask for raises], rose by only 0.1% in Feb., while the number of Americans filing for unemployment benefits remained below the 300,000 level for the 7th straight week [partly because of the spread of low-wage part time, not covered by unemployment insurance] there are fewer and fewer jobs that are covered by unemployment insurance], something that last occurred 25 years ago [in the heights of the stagflation of 1974? = the beginning of our vanishing middle class].
But...the good overall economic performance...is little comfort to workers laid off by import competition. "An unemployed steel or textile worker will tell you the trade deficit does matter," said Rep. Sherrod Brown, an Ohio Democrat.
[And so will the diminished owners of those vanishing steel and textile industries, and so will the rest of the economy as it becomes clear that the iceberg is melting and more and more businessmen are competing for higher and higher stakes from a smaller and smaller population of customers who still have money.]
3/18 Familiar economy theme: growth without inflation - Federal Reserve regional survey upbeat on future, by Vincent Del Giudice, Bloomberg News via Boston Globe, p. C2.
[We bet you could find lots of these headlines in the 1920s. The shaky term here is "growth" which now stems primarily from the GDP index. The GDP, like its parent the GNP, gives points for some very negative stuff - see Chapter 3 on "Misplaced Concreteness: Measuring Economic Success" in Daly and Cobb's "For the Common Good" (Beacon: Boston, 1989).]
...Still, there were some clouds in the report. The Fed said companies reported difficulty finding qualified workers and wages were rising at a faster rate than in previous months.
[Two problems with this. At a time when the pace is increasing and we need more continuous on-the-job training, there is little patience with this among today's CEOs who want to pluck the ever more perfectly qualified employee right out of the labor market, and complain loudly if they can't. Secondly, wages don't have to do much to rise "at a faster rate than in previous months," and they are still far, far from closing the bogusly lamented "income gap."]
The latest survey showed...weakness in agriculture and a few manufacturing industries....
[We guess so! After spinning&weaving, agriculture was the first industry to mechanize and the second was general manufacturing. The conversion of these industries from lots of small "owner-occupied" operations to big huge absentee-owner operations ("agribusiness" and megamanufacturing) - plus overseas competition - has ruined them. (And now that process is creeping into the service sector and high tech.) The only really healthy manufacturing firms left are "owner occupied" like Aaron Feuerstein's Malden Mills, maker of PolarTec, and employees-first firms like timesizing Nucor Steel and Lincoln Electric, and outright employee-owned operations.
[The critical difference can be summed up in one phrase - "long view." As firms "go public" they become increasingly controlled by people with a shorter and shorter time horizon. Finally they are controlled by mere speculators who make so many decisions that are short-term good, long-term bad, that they can justifiably be called gradual suicides or in biological terms, "dumb parasites." This process leads to such drops in extended self-interest and long-term goals among leadership that war or plague ensues, and kills off the much-denied automation-borne labor surplus. The shortage of labor centrifuges wealth and power again, by market forces operating on pure supply&demand, and self-interest again widens and goals lengthen in time horizon. This gives a temporary period of prosperous peace before the deteriorating part of the cycle starts again.]
The Fed's regional outlook is based on reports from the Fed's 12 district banks. It is published 8 times each year....
[A case in point of "drops in extended self-interest and long-term goals among leadership" - ]
3/18 Senate OK's antimissile defense plan - Foreign testing spurs action, by Anne Kornblut, Boston Globe, front page.
[In other words, "Star Wars" is back. Oh nooo, not agaaaaaain.]
3/16 Analysts: Big doesn't necessarily guarantee independence, by Kimberly Blanton, Bos Globe, C1.
Fleet...and BankBoston Corp. tout their proposed merger as a way to ensure that Boston will always have a hometown bank.... The truth is that there will be no guarantees.... Today's financial world is being transformed so rapidly and so dramatically that big never seems to be big enough.... In 1998, globalization [now retreating] and cross-industry mergers in the financial industry wiped out all boundaries to doing business....
[...boundaries that were learned the hard way in 1929-1941. Now we unlearn them and have to relearn them the hard way.]
3/16/99 [Fleet-BankBoston] Merger raises concerns in Latin America - Bank philosophies differed on overseas commitment, by Richard Chacón, Boston Globe, p. C4.
...would [Fleet] maintain BankBoston's decades-long commitment to the region[?]....
[Probably not - Fleet does not look that far ahead.]
For earlier collapse stories, click on the desired date -