Texas Worker

Jobs Recovery will require Equities, Tools, and Land Reform

By Greg Moses

OpEdNews

In a Friday morning appearance on Squawk Box at the Capitalism kNows Best Channel (CNBC) Warren Buffett promoted two things: a new cartoon where he plays himself as investor super hero–and equities.

“I would much rather own equities at 9000 on the DOW than have a long investment in govt bonds or a continuously rolling investment in short term money. Now, again I don’t know where it’s going to go next week or next month,” said Buffett in a quote archived at Huffington Post.

“But you still think equities is the place to be?” asked Becky Quick.

“I own them myself,” chuckled Buffett, putting mouth where money is at.

For my part–ignoring for the moment how “media savvy” the Oracle from Omaha can be–I have been paying attention to Buffett because I think what he says can be helpful in trying to understand a way upward in the direction of job growth. Also, with my brief experience in market trading, I think he does have the more sustainable long-term view of market investment. If the market crashes next week, he will still have plenty to work with.

Although I have NO IDEA what people should do with their savings this month, I do think that whenever more people decide to truly invest in equities there will be a greater chance of a recovery based on jobs. The term “jobless recovery” to me has all the charm of fingernails scraping a blackboard. Anyone who speaks seriously about a jobless recovery is only declaring that he belongs to the class which has no Real Jobs to lose.

For the rest of us, the combination of depression and joblessness cannot suggest images of anything resembling recovery. Already the image of Skip Gates in handcuffs warns us how suddenly ugly things can get.

So I am looking for a way to think about the requirements of a recovery “with jobs” and I am following the guidance of San Francisco economist Henry George who argues that workers will create value on the spot so long as they are provided proper tools. From this cue I go looking through Google News for signs of capital expenditures and investments. What’s up with tool development these days?

Notice that I did not begin my search for recovery with “consumer spending,” because I think that the mainstream chatter about this is another way of capitulating to depression. In other words, please tell me why consumers are going to increase spending while they are losing jobs? A labor-centered discussion of recovery would change the language of “jobless recovery” into “capital stagnation” so that we may more forthrightly name the thing that needs to be directly confronted.

The run-up in technology-sector equities these past few months gives us something to work with. This is a prime tooling sector for advancing development along broad dimensions of opportunity. Jim Cramer makes a compelling case that the tech sector is also more free to refresh itself compared to other sectors plundered by pirates of finance. Yet the tech sector is beginning to quiver and quake upon rocking foundations.

The first item I find when looking for “capital investment” is a press release from the National Venture Capital Association announcing that the Biotech sector has attracted a 67 percent increase “in Seed and Early Stage fundings” during Q2. Clean Technology is the next fastest growing venture sector, followed by Software and Medical Devices. Although the raw numbers look hopeful because of very recent increases, the historical levels of capital at play take us back more than a decade, “close to what we saw in 1997 before the Internet bubble.”

Next item on the Capital expenditure front is a pep talk by Andy Rowsell-Jones at Gartner, Inc., who is telling IT directors not to capitulate to cuts in IT budgets.

“While IT expenditure may be a small proportion–ranging from 1.7 percent in the construction and engineering industry to 12.6 percent in the banking and finance sector–budgets have been cut in light of the economic situation. Rowsell-Jones said IT spending has risen every year from 2003, but is being cut for this year, according to a recent Gartner survey.” The banking sector is not even upgrading its own computers? Hold your expletives, and pass the subpoenas..

The third item is from Stockholm, reviewing the quarterly report from Ericsson Telephone: “Several telecom operators have announced plans to reduce investments in order to maintain cash-flow in the economic downturn, a trend that can hurt companies like Ericsson that supply network equipment.”

From this short sample of findings we may draw a preliminary hypothesis that capitalism is in no great position to deliver the tools that will be needed for a speedier economic recovery. And this is why so long as Capitalism Knows Best we are staring at a chasm that is called the jobless recovery.

What is called for is something we might call pinpoint socialism where public resources are put to use injecting support for tool-making in precise contexts. In the case of IT upgrades and telecom network equipment, the needs are “shovel ready.” They have been planned and budgeted. Suppliers are at hand. Only a vicious cycle of “free market cash implosion” has trickled down. If active and sensible agents of public trust were to get busy in these areas, putting our debt bubble to productive use–instead of taking August recesses–jobs could still be “saved or created” in the near term.

As a preliminary parameter for public injections of funds to make new tools, there could be a simple baseline requirement that qualifying companies must state the need in their SEC filings. If the companies are caught lying about their capital investment needs, theoretically there is an agency that could send in the Cambridge Police.

Along a second line of analysis offered by Henry George, successful experiments are taking place in Pennsylvania and Michigan regarding a different approach to land policy. Wikipedia has a good orientation to Land Value Tax (LVT) that gives brief credit to Henry George. The basic idea is to shift the burden of taxation away from capital (capital gains) and labor (income tax) — both of which we need more of — and place the taxation onto land (which is ever in fixed supply).

According to reports archived at earthrights.net the experiment with LVT has been underway in Pennsylvania since the 90s. The process begins with a “split tax” that separates property improvements from land itself, and then gradually shifts the tax burden away from improvements and onto land itself. What the land tax is supposed to do is discourage land accumulation beyond the capacity to put it directly to productive use. Land at the margins will therefore be ready for the next person who can actually make it pay.

In a paper titled, “Can the Land Tax Help Curb Urban Sprawl? Evidence from Growth Patterns in Pennsylvania,” H. Spencer Banzhaf from the Georgia State University Department of Economics and Nathan Lavery argue that, yes, the land tax can effectively counteract the nefarious magnates of sprawl, too.

In Genesee County Michigan, home of the legendary city of Flint, alternative land use practices have also been developed. If you live next to an abandoned property you adopt it from the County Land Bank (LBA) for $25. All you have to do is promise to take care of it. Now here’s what the executive director says to any of you non-Genesee residents:

“Any non-Genesee County residents may acquire LBA property only with an enforceable plan to place the property into immediate productive use (meaning the property is to be occupied immediately or with the immediate commencement of some form of development project that fits our stated mission). This applies to vacant lots as well as properties with structures, residential and commercial properties.”

The LBA principle of land liberation is right out of “Progress and Poverty” by Henry George, which argues at length that labor and capital will keep each other more productive if all unused land is set free. Need we remind ourselves there will never be a cheaper time in our lives to liberate the land monopolists?

Finally, while we’re at it, may I venture to suggest, that wherever today you find people complaining about “Mexican illegals” — tomorrow — with fresh tools and liberated land–everybody will marvel at the rise of cities of gold.

By Greg Moses

OpEdNews / TheRagBlog / DissidentVoice

Another less-bad week is in the making for corporate earnings, housing sales, and unemployment trends–perhaps less bad enough to say that corporate capital is on the mend–less bad enough to keep the markets from driving the price of all things down. But if the weekly rate of less-badness holds steady at “only about” a half-million newly unemployed and half a dozen banks closed down we will be sliding that much closer to Real Hard Times.

This week may give us a chance to put some big questions onto the table about the way things work and the Real Meaning of the stresses we’re about to undergo, together. Let’s talk about the Real Market, shall we? And the Real Deal that we’re all in the process of cutting.

For five months I’ve been cramming market analysis the way I used to cram geometry the week before college boards. And for strictly educational purposes I have taken some advice from John Dewey by making my study “hands on” by putting a few hundred bucks into an online trading account. Thirty nine trades later, my portfolio is outperforming the dollar, so I haven’t lost any Real Money yet, but I’ve learned a few things.

Dewey was correct. What you learn is different depending on whether you are watching or participating. Put just a little money in an active market account and suddenly things go pop and start dancing all around you. Right away you lose your sense of what’s really up or down.

An abstract lesson that the market teaches you is the distinction between judgment and theory. You take or sell a position at so-and-so a price. That’s judgment. You base the decision on what? After your first few killer trades you begin to feel a gut-level desire for some theory that will help you to keep your head from spinning and your palms dry. Yes, a few hundred dollars means that much to me. So you have to go looking for market theory.

One of my early favorites in market theory was Investor’s Business Daily, because it identified a fairly consistent set of criteria for buying and selling, and then was considerate enough to remind me to breathe. IBD offers advice you would expect to hear from Ben Franklin. One rule that stuck with me is to never take more loss than eight percent.

Gradually I have become less interested in individual stocks and more interested in Exchange Traded Funds (ETFs) which allow me to make a little money from China or India while losing money in Real Estate or the Middle East. Websites such as Google Finance, MarketWatch, and stockta.com allow you to track stocks through online portfolios. Another nice free service is investmenttools.com. For a quick glance at overall trends, I also like the market overview page at stockcharts.com or some of the “view all funds” lists available at ETF providers such as iShares or PowerShares. Of course, the Wall Street Journal offers an excellent market data page.

In the hard times that are coming, newspapers will likely continue their downsizing and dispersion. But I don’t think this will affect investors very much. Outfits like Standard and Poors, Thomson-Reuters, Bloomberg, and Murdoch seem like they will be able to continue delivering robust information to premium customers. When you go looking for information that has cash value, you discover that the information sector is booking plenty of first class seats.

Plato’s Republic teaches that justice is a matter of everyone minding their own business, because each occupation has its urgencies. So let’s clear up first things first. Real Investing is a full-time occupation. If the market calls, you’d better be there to answer. Meanwhile, you’d better keep watching out. Once you get a taste for the daily risk of the market life you can see why so many people with Real Money still prefer to take out U.S. Treasury notes. When someone says China is buying U.S. bonds for chiefly political reasons please ask them where they’d find a less risky place for Real Big Money today.

Therefore, anyone who wants to make a national policy of retirement funding via personal market accounts is simply asking everyone to drop what they do best, because you cannot expect everyone to be an excellent investor on the side. Retirement funding is a craft unto itself. Besides, imagine your tax dollars going into someone else’s market bets.

There are three basic families of market theory. The first one is represented by Jim Cramer, the bouncing host of Mad Money. I like the guy, because there is something pleasing about anyone enjoying his work that much. Plus, if you actually have “skin in the game,” his daily presence on television is a kind of exorcism against the dread-mongering that fills so much market chatter. He didn’t succumb to the great “head and shoulders scare” of early July.

As for market scares in general, I started this story on a Friday evening when all was quiet. Now that I’m doing final revisions on Monday morning, I find myself thinking, who knows? A crash could come any day. Or a pop. Or a bomb somewhere. Or a bad number out of Korea. So as of this minute in time it appears that Cramer’s short-term bullishness has been vindicated. Right now, Cramer’s keel is still attached.

Cramer’s theoretical model is “fundamentals.” For the most part, he likes to buy stocks in individual companies. He likes to study the balance sheets, read the SEC docs, listen to the conference calls, and figure out if there is really a productive business priced at a bargain level. Sometimes he gets it wrong, but mostly he wraps his recommendations inside reasons that help you to think about the way the market is working. Like a good teacher, Cramer presents his own choices in ways that help you to think on your own. He offers a market theory.

Along with the other two families of market theory that I will discuss below, the “fundamentals” camp assumes the perspective of the investment class. Cramer can discourage wage raises for Wal-Mart workers because they would raise the price of goods for customers, which will drive down store sales, which will, you guessed it, hurt the stock price that investors need most. We’ll come back to this problem later.

Fundamental analysts such as Cramer, Peter Schiff, H.S. Dent, or Warren Buffett have market theories grounded in the study of earnings, demographics, economic, and yes, investment trends in the Real World.

The second family of theorists can be called “chart technicians.” What they study is the price and volume action as it can be pictured in hundreds of ways. The vintage form of technical analysis–the candlestick chart–is attributed to an 18th Century rice trader in Japan.

The classic school of modern-day chart technicians goes under the name of Dow Theory because it was founded by the first editor of the Wall Street Journal, Charles H. Dow, who became the Dow of Dow-Jones. In its classical form, Dow Theory compares the movements if two indexes, the Dow Industrials and the Dow Transportations, which according to Jack Schannep and the editors of thedowtheory.com, yields a buy or sell signal about once a year. To catch more short-term trends, all kinds of charting devices have been invented.

I think the most popular technical tool of the modern trader is the Moving Average Convergence/Divergence indicator or MACD (pronounced Mac-D). At the Wall Street Journal for example the MACD is a default feature of every dynamic chart, reflecting market movements into a graph that helps gauge probable short-term trends in price.

During the head-and-shoulders scare of early July, technical analysis dominated market chatter. Investors have plenty of fundamental reasons to worry about another downturn, so technical signals can really spook the herd. The head-and-shoulders pattern was a pure technical signal that things could get very bad quickly. It spooked me. As it turned out, either there was no head-and-shoulders or the pattern was more of a signal that something big was about to happen up OR down.
The head-and-shoulders pattern, if it was one, actually signaled a breakout or sudden uptrend–which is not the first opportunity I have missed (in the market as in life) because of caution poorly timed.

This week the technical question becomes whether the breakout has established a new floor for a short-term trading range. The fundamental school seems cautiously optimistic that data will continue to come in “less bad.” And many of the technical chart analysts–including the ones who spooked us before–seem to think we’re going to be trading a new level up, at least for the near term. Technical signals don’t take all the chaos out of the market, but they do help you to feel as if you are not gambling on absolute randomness.

The third great family of market theory, The Elliott Wave, could be placed under technical analysis as a subset of Dow Theory, but I’m going to place Elliott Wave Theory in its own camp, because it seems like another order of technical analysis altogether.

Once upon a time a fellow named Ralph Nelson Elliott became so ill that he did nothing but study stock charts. He came up with astonishing results. He found a wave with a complex construction in which advances were related systematically to declines. He theorized that each wave was a wave of waves in which the basic structure was repeated in fractal form. The closer you get to the shorter time frames the tinier the waves become.

The contemporary master of the Elliott Wave Theory is Robert Prechter, who does not offer much advice for free. If you want Prechter’s analysis in detail you will have to pay for it. I think of him as the modern-day Pythagoras. As a market trader, I’m paying for his opinion and glad about it.

Well let me qualify that. To know Prechter’s approach is to know a vision of the next decade that is not gladdening in outline. The long-term wave we seem to be on right now is the yin to that yang we were riding during the good times. If Elliott was correct about the underlying form of market waves, and if Prechter is correct in the application, then prices are really deep disclosures of a psychic life that buoys our collective consciousness. And no, dear reader, you are not reading a Pynchon novel just now.

The Elliott Wave school strikes me as Jungian in flavor, so it will be an acquired taste for most. Something about Jungian archetypes runs counter to mainstream thinking, so we shall soon see who teaches whom the greater lesson. For my part, the older I get the more sense Jung makes. And the Elliott Wave has a serious following among Real Investors.

Related to market theory is an emerging trend in “social investing.” A visit to the KLD website will give you the essential orientation to social consciousness as it has been monetized by the investment classes. Also, a brand new ETF trading under the ticker symbol JVS brings a new style of valuation to the American investor by way of principles mandated by Sharia Law. I have written a little more about these items under a project called abetterorder.com. I own some JVS.

Even with only a few hundred bucks in play these are the things you begin to learn as if your fortune depended upon it. The market is a game–and you want to win. Which brings us back to something that I promised to discuss–the perspective of the investing class. This is a class of folks that for the most part have saved money that they are trying to grow and protect. They appear to be very smart and decent people, even downright likeable. And they have some very practical experience in how the market game works and how to win it. But I used to have a neighbor named Paul who worked all his life for the city parks department.

“Never was a rich man who didn’t get his money off a poor man’s back,” is what Paul would say. Which is another way of claiming that all Real Value comes from labor. If we extend Paul’s intuition to the investment classes as such we might say that all great wealth is already a kind of redistribution.

On the one hand I wonder if Paul could have done better in the wealth department if he had applied his eighth-grade education and not assumed that investment potential belonged to other people. No doubt there are a billion people asking that question right about now. Better choices are always possible. Nobody can say they weren’t warned. So I can see how value belongs not only to those who produce it but also to those who treat it best.

Therefore, I can understand why so many smart investors take a hard line when it comes to the kind of respect we should pay for value. I can see why they have a passion for gold as a standard. A devotion to standards of valuation has allowed many of them to see clearly how our loose regards would steer us into the ditch we’re in. When you start watching your money closely in a trading market, these perspectives accrue practical value.

On the other hand, market trends are thoroughly social if not absolute manifestations of collective (un)consciousness. The problems of market cycles have dimensions that exceed the sum of individuals. As my neighbor Paul implied, strictly speaking there is no such thing as individual wealth. All wealth in some sense is held in trust. Likewise, individuals don’t create market cycles, it takes a market to go boom and bust.

I can understand why some of the great artists of the market are outraged by our social responses to market crisis. They call it socialism. Yet, no matter which family of theory you belong to–whether fundamental, technical, or E-wave–you are dealing directly with a social movement.

At some level each and every individual choice gets subsumed into a dynamic relation to other choices such that “the market” comes to exist with a life of its own. Every investor wants to know, what will the market do today? So there is something that troubles me about investor perspectives that seem to take for granted that “the market” is the only motive force worth respecting, as if the social reality of our lives could be so one-dimensional.

The investment-class perspective shows through when Cramer discourages higher wages at Wal-Mart. This is a perspective that overvalues existing savings to the detriment of new savings that could be made possible if “the market” were enabling more opportunity for all. If existing savings accounts were willing to take a little less return, perhaps new savings accounts could be more easily started downstream.

In the case of my old neighbor Paul, why shouldn’t a worker expect a social order in which every productive life is rewarded with decent wages, benefits, and pensions? But Frederick Douglass long ago advised Americans not to gnash our teeth at spectacles of unfairness. Struggle is the Real Cure.

As corporate capital rebuilds its structure from the current bust to the next boom, why shouldn’t some higher expectations of performance be costed in right now? I think I understand how these labor costs will make additional demands upon the structure of recovery, but if decent health benefits and pensions are made a universal condition of corporate earnings perhaps the regeneration of corporate health this time will help to raise up a new generation of investors who understand that money not budgeted toward labor’s livelihood is at risk of being gambled away.

Finally, I have an intuition that the bias of the investor class leads to a skewed desire for a gold standard, but I’m not altogether sure about this. It may be that my impression is colored by a context in which most of the talk about gold is by people who are thinking chiefly of wealth in individual terms. In five months of investing I too have gone from “gold, what’s it good for” to “give me thirty shares of silver trust please.” I’m up eleven dollars thanks to that call on SLV.

In thinking about gold, I have drawn the distinction made by San Francisco economist Henry George who talked about the difference between wealth for personal use and capital that is put back into new tools. The good people at Lew Rockwell point out that if I hold my personal wealth in a Real Bank it will be leveraged into Real Capital, therefore there is no Real Difference between wealth and capital. Yet even if this were also true for holdings in Real Gold, I think we can still distinguish between wealth and capital. But I’m willing to grant that Real Gold held by a Real Bank may be somewhat more productive than fear itself.

As for the assumption that Real Banks will take Real Savings and turn them into Real Capital, I think this is the problem. From what I understand, banks are not producing capital investments at any kind of usual rate. And they are not doing it because of the damage done by the great evil that Henry George warned against—land speculation. Therefore, the dramatic increase in American savings is not now being leveraged into new tools for American workers. The pressures of the current economy will keep labor compensation low on one side while disrupting on the other side the assumption that increased savings by labor should be leveraged into capital investment. Instead, Real Banks are gouging labor further on the debt front. Prechter has more to say about what has happened to Real Banks in his July newsletter.

Which brings us to the last word in successful investing, Warren Buffett. No doubt his influence has sometimes weighed down upon wages from time to time as he seeks to maximize earnings from Dairy Queen or Geico. Last week he admitted that he had to cut the jobs of 500 people. Yet Buffett says that it may be time to think about a second stimulus which would be a Real Stimulus this time. What interests me about Buffett’s position–all puns intended–is that he speaks as an exceptionally engaged investor who follows carefully how his wealth, and therefore his capital, has effects on precise productive labors.

If Buffett can stomach the idea of a stimulus then we should raise the question of costing into the new generation of investment a better life for labor in long-term salaries, benefits, and pensions. We are the workers upon whose labor the power of U.S. Treasury notes depends–and we have been valued in this crisis as worthy enough to carry the world’s savings accounts on our backs. Therefore cost us in at the full value of a whole life.

Maybe there is nothing that can be done about a future that is already written by the finger of God. Just save yourself if you can. But when it comes to the problems faced by the investor classes and their personal wealth preservation in this sick economy, at least Buffett still talks as if the investor classes are in the same boat with the rest of us and how we need to pull together and share some of the risks. While we’re at it, we should not be afraid to discuss the opportunities that this crisis holds out for labor. Discussing it today will be cheaper than discussing it tomorrow.

Based on what I’ve learned after five months as an active trader, I don’t think it’s a question of whether hard times are coming. The question is how can we best work on this social trauma individually AND together to address risks and opportunities system-wide? The thing that strikes me about Buffett’s position on the second stimulus is this. If the ship’s going down, Captain Buffett talks as if he’s prepared to go down with it. Any Real Captain would surely toss Real Gold overboard now in order to bring more Real Lives safely to port later.

By Greg Moses

CounterPunch / DissidentVoice / TheRagBlog

They tell us we’re experiencing a crisis of demand, but they have a backward idea of it.

To turn the picture right side up, we begin with the biggest lesson from the financial sucker punch hitting workers of the world this year–human value comes from having real work to do.

Today’s value crisis hits hardest where profits–and this is why they are called earnings–are failing to produce new tools. This is the demand crisis. Our demand that leaders take better care of the people’s tools has not been heard.

Of course, as the great London philosopher sez in Capital Volume One, tools are contradictory things. The better tools get, the fewer workers needed per unit. Hence the labor-management contradiction. Hence the iron law of social revolution. Dearborn, then and now. Once you start making better tools you can’t help but create–what shall we call it? Change?

And the big problem with change is that people try to go around or over or under or WITHOUT the progressive re-production of tools. No new tools, no real change.

Capitalism is of course the holy system which speaks the language of the Gospel and promises to keep tool making dynamic and efficient so that value flies up from work. And it does have a metaphysical charm owing to our impression that profit and tools derive from some conjoined living form.

The great San Francisco economist Henry George said interest payments are legitimate social demands because the wealth we put back into tools needs to grow like anything else. Of course any living thing can demand disgusting amounts of fodder and grow to obscene proportions on that basis, but it should not use the words of Henry George as an excuse for that.

Now, if we are consistent in our terminology here, we could say that anyone who kills the living conjunction between earnings and tools can be considered anti-capital. But if we were consistent in just this way, we would demand triple damages from Wall Street for a trillion or more anti-capital crimes.

Instead of consistent terminology, however, what we are getting fed these days is nonsense soup. For example, in my home there is an electric soap box where people sit for hours yammering about how outraged they are at outsized cash payments going to workers at institutions who once made a contest of stashing wages and profits into silos that nobody can find.

Well, who was it let go of that money in the first place? Who should demand it back? Predatory lending is piracy. Predatory lending that inflates a mortgage bubble is piracy. To find pirates, you don’t have to go all the way to Tortuga or Mogadishu.

Today there is some question about how to value “toxic assets” that derive from predatory debt. But there’s a simple way to value the cost of such piracy. How much would it cost to give every penny back?
We can solve this demand crisis in at least two ways. First, we could demand that all the pirate trunks of “toxic assets” be loaded onto flatbed trucks and driven back to California where they belong. Overnight, California would need no more I.O.U.’s.

Or second–because to be honest about it we secretly admire pirates and sometimes find ourselves dreaming that we could join them–we can demand that all these big-bonus banking houses show us how they are putting their talents to work funding the next generation of tools that we have been needing as a nation since about this time last year.

We demand that they assist California, too.

Meanwhile, we know what the yammering soap boxers want us to believe about the demand crisis. They want us to believe anything really that will keep us from connecting the dots. In that direction there’s a demand crisis, too.

Jubilee Vouchers, Works Progress, and Employer Tax Cuts

By Greg Moses

CounterPunch / DissidentVoice / TheRagBlog

In a world where one class manufactures credit and the other class clings to hope, how bad can a debt economy be? Of course, we could have that long-awaited revolution where the hopeful class clobbers the lending class and puts an end to the disparities that make borrowing necessary. But what would happen the week after that?

On the other hand we could recover the wisdom of the legendary Jubilee by placing the lending class on notice that every seven years we’re going to have a write-down party, beginning with the summer of 2009.

I offer this as a “mustard seed” (with kudos to Larry Kudlow for the Gospel term that he applies to the salvation of capitalism). Jubilee Vouchers could be sown into “green shoots” and harvested as part of the next stimulus plan. If such debt-relief were offered directly to all the people, all at once, you would surely short the future of any politician who tried to get in the way.

The only moral problem with this idea is how to respect and reward all the good people who didn’t get caught up in debt mania. We should acknowledge their moral superiority and sacrifice.

***

Therefore, the Federal Reserve Bank shall distribute to each taxpayer a book of Jubilee Vouchers totaling $10,000 which shall be accepted by any creditor in return for debt relief. Any unused Jubilee Vouchers held by people of moral superiority and good sense may be presented to the IRS for tax credits that will be good for as many years as the balance may last.

We’ll let the big brains at the Federal Reserve Bank work out the technicalities of what happens next. Maybe they can open up a $2.25 trillion jubilee line of credit to be paid down with interest from the lenders they support. They could call it The People’s Bank.

Or the Fed could refuse to redeem Jubilee Vouchers from lenders who have proven to be predatory, forcing them into immediate bankruptcy. Where the Fed is concerned the world has full faith that when it comes to credit, if there’s a will, there’s a way. (Cap and trade on the national debt anyone?)

***

Perhaps there is a moral concept of modern economics that will be transgressed by the revival of Jubilee wisdom, but since we’re borrowing our financial language from the Gospel, why not invite those without financial sin to cast the first stones?

For example, there are people who get paid by huge broadcasting conglomerates who sometimes puff themselves up as saints–as if the whole credit scheme never leaks into the advertising budgets that fund their creditable livelihoods. We could invite them to stone us, but they’d stone us anyway.

The point is that credit mania became a thoroughgoing social mood that ate and fed all of us with the same collective spoon. Nobody stopped it why? Because we were all hooked into the accelerated experience of the leveraged life.

Since we haven’t got the appetite to prosecute debt pushers or their officious collaborators, and since it is probably true what Greenspan says–that we will never outlaw greed–at least we might offer some meaningful ritual comforts to all the addicts who get left with nothing but the spasm of withdrawal.

***

In addition to Jubilee Vouchers, two other fronts need funding–which we can visualize via that odd couple at CNBC, Cramer and Kudlow.

Jim Cramer says we need a real New Deal jobs program. Kudlow says we need business tax cuts. Publisher Mortimer Zuckerman has joined issue with Cramer in calling for a real job-stimulus program. And any number of old supply-siders are lining up along the Kudlow-Laffer axis to fight for Capital first.

But enough of the bickering already. Do we need labor or capital? Cramer or Kudlow? Why not both?

At any rate let’s not do as a nation what the readers of the Wall Street Journal did in their online responses to Zuckerman’s sober proposal. Zuckerman stayed focused on the needs of the people and how the government might do its duty. The readers of the Wall Street Journal diverted precious pixels into a childish blame game of whose fault?

Fact is, there are very few of us behaving like part of the solution these days, and Congress could probably get all this done in early August if we make it a condition of their summer break. Get Zuckerman to print the bill, roll it down the aisle in a wheelbarrow, and nothing of the usual diligence or transparency of American democracy would be sacrificed

But if we don’t get a serious world-historical plan in place before the real Bear Market hits we’ll soon be thinking of “mere unemployment” as the good old days.

By Greg Moses

CounterPunch / DissidentVoice / TheRagBlog

From a distance the Chinese mainland appears to be snorting through the global depression like a fire-breathing dragon. But a closer look at internet discourse reveals a giant in the throes of aftershock. When we hear tones of irritation from Chinese officials regarding “dollar problems” we could on the one hand consider their pain.

On the other hand, whether you are listening to pro-dollar or anti-dollar partisans today, there is an eerie agreement between Marxist and Friedmanite alike that return on capital is the main thing. What we need to hear more often from both sides of the global mouth is how capital will only grow through labor.

With the help of Google translate, the average monolingual yankee can cross the ocean and listen to the official pronouncements of ministers for the Communist Party of China (CPC) who have a thousand throats exhorting the masses to keep on the scientific path.

What the scientific path sounds like in China today is a lot like what you hear weekdays over the chatterbox at the Capitalism-Knows-Best Channel (CNBC). For instance, the Chinese “socialist market economy” is being redefined scientifically into a “modern market economy under rule of law,” which is exactly the way they like it at CNBC.

From both sides of the Pacific you get pretty much the same news: double-digit downturns in profits across the board, dozens of gigantic projects suddenly scrapped and unplugged, trade routes collapsing, pages snatched from memories of capitalism past, the better to remind us how to survive.

Even on the question of climate change there is a convergence of policy conviction that “the construction of ecological civilization” will help our damaged economies to “cope with the international financial crisis” through the material re-production of green technologies.

Tuning into the thoroughly capitalized culture at CNBC—coming at you “live from the financial capital of the world”–bust is generally accepted as the price of boom. Mad Money man Jim Cramer said recently that if the stock market were to take another 150 point dive on the S&P 500 Index, investors from the boo-yah land of Cramerica could consider it a gift–”A GIFT!!”

But over on the Chinese mainland, ministers seem to be talking to masses who haven’t quite learned how to appreciate the opportunities of economic collapse. This is the time, say the ministers, to vigorously seek innovations in technology, reconfigure business models, bury dead capacities, and evolve the community through decisive calculations of “M&A.”

In the chatter of Chinese ministers sounds a worry that the “socialist market economy” could come out of the economic crisis fatter than it needs to be and therefore vulnerable to all the lean dogs that global capital is breeding as we speak.

Of course every Wal-Mart shopper knows how much is owed to the enormous Chinese factories that punched out a dozen or so shopping seasons. But Chinese ministers know better how the tiny “Made in China” labels were not attached to Chinese-branded logos. And whereas the great logos of the global economy will likely recover on top of factories somewhere or anywhere (thank you Naomi Klein) there is no guarantee that the factories of China will be serving the logo powers next year.

There is enough worry to go around. In the USA we don’t know if the unemployment numbers will stop in time to provide the baby boom a respectful retirement. In China, the ministers don’t know if plants and projects will stop shutting down in time to prevent a more colossal sacrifice in capital spending.

Matching the positive image of the Chinese minister atop his nearly $2 trillion mountain of dollar reserves is the precise negative image of the average American consumer down in his valley of debt. And where the images should be joined at the middle term is across the rubbed glass surface of the Wal-Mart check-out counter, courtesy of MasterCard and Visa.

Of course, there was a time not too many months ago when the era of dollar-fed arrogance seemed to be stalking the world with unchecked power as “dollar hegemony” rolled around the globe with tsunami force. These days however the dollar gets pulled up off its knees by other currencies at the most curious times, exactly in moments when the whole flow of things seems to shudder with collapsing pipes.

What the dollar needs most right now is a national emergency declared in behalf of jobs. Enough diddling with yield curves and balance sheets already. Whatever it takes, we need folks back at work. Until we are busy creating value through labor, every dollar will stay busy shrinking.

Which brings us to the final correspondence between CNBC and the ministers of China. By and large all these voices fail to inflect the urgency of the single outcome that will count most toward economic health–getting everybody back to work. If you are holding a pile of dollars the immediate question should be how to transform that cash into tools of productivity for workers of the world. Wealth today is paralyzed from not knowing how to become productive. This is the real problem.

So whether you grew up on one side of the Pacific listening to warnings about the Midas touch or you grew up on another side of the Pacific sneaking lessons from Mencius you should know. When you mistake the real value of human economy for dollars, gold, or profit, you shall kill the order of things.

Something about the discourse of crisis is chilling to the ear. Neither side of the ocean is talking early or often enough about how to forge wealth into tools that can be put to work. There is still time perhaps to put jobs first.

I was happy to read your article in CounterPunch where you explain and recommend the Georgist tax shift to land values. I just wanted to introduce myself, as former president of Council of Georgist Organizations and as UN Representative for the International Union for LVT. With funding from the UN Global Land Tool Network, the IU and the Schalkenbach Foundation I completed production of an online course on Land Rights and Land Value Capture that now has registrants from 43 countries. It is here: www.course.earthrights.net.

–Alanna Hartzok, author of The Earth Belongs to Everyone, and co-director of Earth Rights Institute, which also works for ecological village development worldwide.

By Greg Moses

DissidentVoice / CounterPunch / TheRagBlog

It’s a wistful headline, I admit. But it covers a considerable hope.

The Austin-Round Rock metropolitan area was nearly alone among USA cities for its ability to report year-over-year job growth in April, 2009 (up by 3,400 jobs). And it was the only major metro area (out of 38) to report an increase in the employment rate (+0.4 percent). To believe that this slim green shoot is the first sign of economic Springtime in America requires a bit of the Oat Willie determination to go “Onward thru the Fog.” Which, actually, is what I intend to do.

But first a note: more notice should have been given to Odessa-Midland which, unlike Austin-Round Rock, gets split into two separate metro areas. Odessa employment was up by 1,800 over the year, while Midland was up by 1,500. Why these sister cities don’t get hyphenated into a single metro is curious….

Still, these Texas numbers look like boutique novelties in a warehouse of national economic crisis. The volumes are crushingly large. Los Angeles has lost 240,000 jobs, the New York metro area is down by 234,000. Chicago down 190,400, Detroit down 143,400, Phoenix and Atlanta down by 129,700 and 123,600.

How all these jobs will get re-started is not easy to see. Where are the new paradigms of labor to come from?

Stock watchers are reading reports about large dollar supplies stored up by investment managers and standing ready to flow back into a wary market of stocks and bonds as soon as things get more steady. But the dynamic reminds me of Truman’s exhortations on fear. Don’t things continue to fall harder the longer the investment managers wait?

In some circles one hears a constant drumbeat for buying gold, which may be a way to own something that won’t crash in value this year. But what use is gold, really?

In the great classic of American political economy, Progress and Poverty, Henry George defines capital as that part of wealth which is put back into productive use. He encourages a view of capital as something which enables labor to be more productive and he therefore discourages taxation on capital.

Taking a Georgist view, I would think that gold is wealth that serves very little productive purpose. To the extent that gold is a way of holding some savings for retirement or rainy days, I don’t see how it should be valued much differently than any other form of savings.

But to the extent that gold is hoarded up as a pile of fear, doesn’t it become its own effect, pulling wealth out of productive equity investments, drying up more jobs, etc.?

From my armchair view of internet chatter, it seems to me a wise thing for policy makers to devalue the dollar in the near-term as a means of coaxing cash into markets. But if devalued dollars simply get transmuted into gold shares, then the alchemy gets dark.

A Georgist approach to systemic reform begins with tax policy. Capital and labor should be taxed last. Then property values should be clearly divided between improvements and the land they rest upon. Let the improvements also move to the back of the tax line. This leaves land value at the head of the line for taxation.

George’s reasons for land tax could be summed up in a Kudlow motto: “tax it and you get less of it.” But with land, there is no danger of taxation reducing the supply, there is only the promise of land monopolists unloading every acre that they are not already putting to productive purpose.

Thus, under the Georgist model, the land tax — as the only tax — could never result in an absolute decrease in land supply. The land tax would only tend to decrease the amount of land that is held, like piles of gold, for unproductive use. As for gold and other means of piling up unproductive wealth, I can’t see right away why a tax on such things wouldn’t hasten the development of a more productive economy for all.

George says that supply and demand are misleading terms to use when trying to understand the causes of the unemployment cycle. Workers are not quitting their jobs because they have earned all they need. They are not refusing to produce or to consume. We never have all we want, and the example of Austin in April proves that we are ever willing to earn the next leg up. So why do so many workers find themselves at massive rates closed out of productive opportunity?

The problem lies at the door of unproductive wealth, because there is still plenty of it. Yet for some reason unproductive wealth is encouraged and allowed to pile up, even sometimes as an excuse for “real value.” If we taxed land, unproductive wealth, and gold supplies, I wonder, wouldn’t we quickly motivate and incentivize tons of wealth into capital that would eagerly call for full employment now?

By Greg Moses

Charts that accompany the Dallas Federal Reserve’s May 26 Texas Manufacturing Outlook Survey tend to trace v-shaped signs of a struggling recovery, but the uptrend lines are still “underwater,” which means all talk of recovery is only a way of saying less worse.

About 80 percent of Texas manufacturers reported that they were not cutting or planning to cut compensation, but about one third said they were cutting jobs and weekly hours in May, which is less worse than April.

Meanwhile, says the DalFed, “Investment plans were still largely on hold,” with only seven percent reporting some increases of (or plans to increase) capital expenditures.

The MoneyTree Report of private equity activity shows 24 deals made in Texas during the first quarter of 2009 totaling $156 million. To find a lower dollar figure you have to go back to the first quarter of 1998. To find a lower number of deals you have to go back to 1995.

Texas ranks fifth of 18 regions for capital equity interest, with the Silicon Valley of California dominating the field. In Q1 2009 there were 173 deals cut there with a combined dollar value of $1.1 billion dollars. California also contributes the fourth largest region for private equity in L.A. / Orange County where 39 deals were closed for a total of $208 million.

The other two top five regions are New England and the New York Metro area which did a combined 121 deals for $700 million.

You may recall recent studies arguing that Texas is winning the business war in the U.S. because of low taxes and lax regulation. But investors prefer Cali to Texas by a ratio of $8 to one.

Once we get past the huge tech bubble of the Y2K years, we find that the overall national trend in private equity investing rose to a high of $8 billion in Q4 2007, down to $3 billion in Q1 2009.

Although I don’t have the figures for global deals, it is possible to infer from the hot stock markets in Brazil, Russia, India, and China, that capital spending is building a home of BRIC. And beyond those emerging markets are places that global capital calls “frontier” such as the MENA countries of the Middle East and North Africa, which not by chance reminds us that the MENA frontier is not far from Iraq or Afghanistan.

So the manufacturer survey in Texas has brought us around to some big questions about the kind of recovery that is possible as the frontier of “primitive accumulation” capital moves through world history. As commentators such as Jim Cramer have remarked, this recovery will likely go better in the short term if the dollar weakens. Now that Dollar Bill has proved his global power by causing a simultaneous global meltdown, it is only proper that the grand old fella should mingle a little more modestly with peer currencies of exchange.

On this point, I don’t see where the Chinese Communist Party can be all that sincere in scolding American central bankers for printing their way out of the Dollar Bill mess. I mean, Marxists should be able to do the math. Where did they think this whole game was heading as they crammed American houses full of manufactured crap.

Already I want to apologize for that last sentence. My Made-in-China winter coat that I ordered from Cabela’s is a virtual body thermos, and who can inventory which Chinese gems keep me happy at my Dell keyboard. But you’ve seen what happens — haven’t you? — when Miss Niecy shows up for a project on Clean House. All I’m saying is that there must be some kind of Chinese term for codependency.

So Dollar Bill crashes the world and then watches as emerging markets and frontiers get up quicker than he. He should know the difference between right and wrong by now. He should have read more Plato instead of going around thinking that expediency could outlast justice in the American republic.

In the end, Dollar Bill will be worth what those who use him make him worth. And there is really no way around the fact that the only thing which makes a dollar worth anything is somebody’s hard work. If July is going to be better than June — instead of less worse — it will be because so many more people have figured out how the labor power of Texas — ready, willing, and able — can do something rather than nothing to contribute to a more valuable world.

And perhaps a more modest Dollar Bill will figure out that a more valuable world will be more peaceful, too.

Texas — the second largest state — is mentioned three times by the Bureau of Labor Statistics in an April 23 press release on mass layoffs (of 50 workers or more):

• Texas is the state with the third highest number of unemployment claims resulting from layoffs in March (14,284), after California (38,130) and Illinois (18,096), but ahead of Ohio (13,067).
• Texas is the third highest of 42 states reporting growth of layoff claimants year over year (+9,179), behind California (+16,318) and Illinois (+11,402).
• Texas is among 26 states reporting the worst month ever for March layoffs since the statistic has been tracked.

In a supporting table, the BLS shows that Texas reported 112 mass layoff events in March 2009 compared to 36 in March 2008.

But in keeping with some other “derivative” trends in the US economy, which may indicate that the rate of decline is slowing, the number of layoff events was one fewer than the 113 reported in February and 24 fewer than the 136 reported in January.

While the number of March jobless claims filed by Texas workers on the basis of mass layoffs was also fewer than January 2009 (16,893), it was nevertheless a large increase over February (9,769).

In the first quarter of 2009 at least 50,000 Texas jobs have been lost to mass layoffs.

The civilian labor force in Texas has grown by 243,000 over the past year (March to March) but the number of jobs has shrunk by 40,000 (TWC).

Great article today on CounterPunch. You are right, it’s time for a democratic surge and a rebuilding of health care, etc. You mentioned Larry Kudlow? His show should be required viewing for all leftists. He is the epitome of the Capitalist televangelist, spreading the gospel of personal accumulation with such zeal that it’s, well, beyond words, I guess. anyway, thanks for a great read.
— Mike Whitney

By Greg Moses

TheRagBlog / CounterPunch / DissidentVoice

It wasn’t the housing bubble exactly. It was more the way the bubble was blown.

In the official language of the International Monetary Fund report for April 2009, “the crisis was largely caused by weak risk management in large institutions at the core of the global financial system combined with failures in financial regulation and supervision.”

After “the crisis” was caused, the weak risk managers along with their failed regulators and supervisors came back to loot the national debt.

In essence, the mortgage of the American Worker has been preyed upon to inflate the wealth and power of financiers. Twice.

From the IMF point of view, more debt looting or “fiscal adjustment” will be necessary to keep the world economy from worse channels of trouble. And so long as the money makes genuine entry into the credit system at lenient rates (if not terms), then it seems like sensible advice. I believe the IMF when it claims that worse trouble is possible.

Says the IMF: “Key transmission routes [of worse trouble] include deep corrections in national housing markets, especially but not exclusively in advanced economies; corporate stress, especially but not exclusively in emerging economies; deflation risks, mainly in advanced economies; and increasing vulnerabilities in public sector balance sheets, especially but not only in emerging economies.”

Sure as sewage runs downhill, downside risks remain.

And yet, behaving like crash victims who climb from wrecks and run around for awhile, whole classes of boosters may be seen doing double flips of joy because they think they feel the world bouncing off its bottom.

There are many gloomy charts in the IMF report on the global economy, but the one that chills me most shows how each economic region of the globe is expected to contribute to the world recovery that (we hope) will begin later this year.

When it comes to the crucial turning point for that recovery, the US is the only portion of the global economy that completely disappears from the bar graph. The US will make zero contribution to global growth in the 4th quarter of 2009, then a bit of a negative contribution in the 1st quarter of 2010, before slacking to zero again in the 2nd quarter of 2010.

As for “other advanced countries,” you will find them colored in dark blue below the line of recovery, indicating that they will be worse than no help. Above the line of positive Purchasing Power Parity, all the heaving lifting at the beginning of the second decade of the 21st Century will be upon the shoulders of China and the “rest of the world.”

This, my friends, is how you win a cold war without knowing the least reason why.

Along with my favorite storm watcher these days, Larry Kudlow, I also have faith that democracy and capital will figure out how to keep each other alive through this deluge, but I disagree with his forecast model.

For the past several decades capital has taken advantage of weakened democracy in the US. It is now time for democracy to return the favor. As US capital returns from subzero on the IMF recovery scale, democracy has to insist on new parameters.

If the Chinese can lead global growth in 2010, what happens to the claim that big governments must be incapable?

Therefore, health care coverage for all people, cap and trade for all creatures, a path to citizenship for every neighbor in the neighborhood, and a genuine national youth program, all of these things will elevate the US to a place we should have been 30 years ago

When we voted for change last November we weren’t talking about pennies on the dollar. Bankers of the world, untie!

By Greg Moses

CounterPunch / The Rag Blog

Ah, the common folk. How we do pile up. Come May Day 2009 there will be about 14 million unemployed, twice the seven million who were unemployed in June of 2007.

Speaking about this on the stock market channel—which I have been watching lately the way I used to watch the weather channel back in the 90s–they call unemployment a lagging indicator. On the stock market channel they have their eyes always on the stock prices, which crash before the people do, and which consequently qualifies unemployment as not only post hoc to stock prices but propter.

So what we need as an immediate federal jobs program is a labor channel called Countrywide Unemployment (CU) where unemployed people can get paid for some honest reporting on what a lagging indicator looks like when you keep your eye on it.

The incentive to the employer community would be that a voice on the unemployment channel would agree to leave the air when presented with a competitive labor contract for a term of 18 months or a length of time equal to the average recession, whichever is longer.

The only advertisements allowed at the CU network would be for employment, education, or the kinds of cultural events that could be considered unemployment friendly, certainly not the Super Bowl. Any other crap you want to sell goes to Google ads at the network website.

But in no event will credit card companies be allowed to advertise unless they agree on pain of nationalization to lend at prime plus nada for the life of the cardholder.

There should be regional bureaus set up in RVs and parked outside important places like the White House, Congress, State Capitols, Regional Federal Reserve Banks, and rotating on a regular basis to various network places and research parks where venture capitalists may be found.

Now in recognition of the fact that youth get systematically screwed when it comes to the unemployment rate, one desk at the unemployment network would be dedicated to coverage of the Unemployed Peoples Youth Resource Service (UPYRS).

The UPYRS program would accept proposals on a weekly basis from youth who have shovel-ready ideas for community improvement. They would pinpoint something that they are tired of seeing neglected and their proposals would be put up for vote at the network’s website and hooked into Twitter and so forth.

A camera crew in each city would be assigned to follow the winning team of the week as members of the team receive full salaries and funding, purchase equipment and supplies, and get the work done in an entertaining and uplifting youthful manner, improving the community, the economy and their own prospects for saving memories of happy and productive lives.

Upon completion of the project each team member would receive a compensation bonus bond in the form of a T-Bill denominated for effective participation in the patriotic agenda known as “quantitative easing.”

This whole operation could be geared up in about an afternoon as soon as the Fox Network is nationalized and placed under an advisory council of cable access producers from across the country.

The founding annual budget should be a modest $5 billion funded directly by the Federal Reserve Board under discretionary powers delegated to the US Central Bank. The fund will be called Talented Access Living Live (TALL). The Philly Fed should have the TALL cash Fed-Exed to Fox Headquarters by noon, although stipulation could be made for a boxcar of gold bullion in case the Philly Fed is temporarily out of paper.

If there is any trouble getting this whole network up and running by midnight, then fourteen million unemployed should go milling around the Wall Street sector of Manhattan until the last of their lagging indications gets reabsorbed into a business plan.