by: Matt Phillips Shapiro
Pimco bond meister Bill Gross is out with his monthly investment outlook calling QE2 a Ponzi scheme and saying it’s arrival will mark the end of the rally for U.S. Treasurys. He writes:
It seems that the Fed has taken Charles Ponzi one step further. Instead of simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies, surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. It is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin. It is a Sammy scheme – you and I, and the politicians that we elect every two years – deserve all the blame.
Still, as I’ve indicated, a Sammy scheme is temporarily, but not ultimately, a bondholder’s friend. It raises bond prices to create the illusion of high annual returns, but ultimately it reaches a dead-end where those prices can no longer go up. Having arrived at its destination, the market then offers near 0% returns and a picking of the creditor’s pocket via inflation and negative real interest rates. A similar fate, by the way, awaits stockholders, although their ability to adjust somewhat to rising inflation prevents such a startling conclusion.
by: Dina Rasor
One out of every 100 people in the United States is imprisoned. Even though we are 5 percent of the world's population, we have 25 percent of the prisoners in the world. We are number one in the world in the number of people we imprison - we even beat China. A normal reaction to this situation would be to try to reform our laws, our judicial system - including sentencing - our prison system and our society so that we would not have the disconcerting distinction of being the number-one jailer in the world.
Instead, in the past decade, there has been a movement to privatize more and more of our state and federal prisons to save money (which has not materialized) and ease overcrowding under the pressure of the courts. This has led to a wide world of influence peddling, self-dealing and lobbying while preying on a captured group of people to fill prison beds. Just as I have feared that privatizing the logistics of war will encourage private war-service industries to lobby for a hot war or long occupation to keep their industries viable, there has emerged a group of prison industries, state and federal legislators, and other players who will continue to benefit from our disgraceful ranking as the world's largest warden..
There are two very large and influential prison companies in the United States who are manipulating the system to make sure they have plenty of business: The GEO Group (formerly Wackenhut) and Corrections Corporation of America (CCA). In the first part of this two-part series, I will explore The GEO Group's influence peddling; next week, I will look at CCA.
by: Katharine Gammon
Robots are stealing American jobs. In a 76,000-square-foot zone of the 832,000-square-foot Zappos warehouse in Shepherdsville, Kentucky, 72 robotic "drive units" organize and deliver shelves of goods—from argyle socks to handbags. People remain in charge (for now), because it takes human dexterity to pack items into a box for shipping. But the bots still have plenty to do, picking up the slack on boring tasks like shifting inventory.
The droids roll at 3 miles an hour, navigating via barcodes stuck to the floor and commands from a central server. And they're buff, able to lift half a ton.
Expect to see more swarms soon; Kiva Systems, the company that created them, is working with Staples and Gap, too. "Watching the warehouse from the ground is like seeing a choreographed dance, a concert of motion," says Mick Mountz, Kiva's CEO. "But conceptually, it's like computer-chip architecture." Funny—that's just what they said about Skynet.
by: Mac Slavo
It’s bad out there. Really bad.
As world leaders finally begin to admit that we are smack dab in the middle of another Great Depression and the economy stands at the cusp of another earth-shaking collapse of the financial system, the US census reports that nearly 100 million Americans are now classified as living in poverty or are considered “near poor.”
That’s nearly 1/3 of our populace who are living in the worst economic conditions in nearly fifty years.
by: Sam Pizzigati
A brick factory makes 10,000 bricks a day. But then the factory happens on a new brick-making technique, reorganizes production, and starts making 15,000 bricks a day, with the same workers working the same hours.
Or should all of the above — owner, workers, and consumers — benefit?
America's answer in the decades right after World War II: all of the above.
Corporations did just fine in the immediate postwar decades as the nation’s productivity rose steadily. But so did average Americans, as both workers and consumers. Over the course of the postwar years, Americans shared the wealth that higher productivity created. The nation would experience the greatest epoch of middle class prosperity the world had ever seen.
What happened next? That’s the story that Lawrence Mishel, the president of the Washington, D.C.-based Economic Policy Institute, tells in his just-released preview on productivity from the upcoming new edition of EPI’s biannual economic factbook series, The State of Working America .