Great Depression

Corporate Primacy Causes People Poverty

Leo Gerard — Tue, 19 Jun 2012 09:17:03 -0400

The Romney v. Obama economic smack down in Ohio last Thursday failed to deliver half the punch of remarks the men made earlier in the week.

President Obama said the nation must focus on the public sector, which continues to lay off thousands of teachers, cops and firefighters, even while the private sector has recovered sufficiently to consistently add jobs. Romney said he would fire more teachers, cops and firemen.

This gets to the dispute between Democrats and Republicans. The GOP has contended for 30 years that the primary function of government is to serve corporations and the 1 percent, and that when they thrive, the 99 percent may receive hand-me-down benefits. Democrats believe the principal function of government is to serve the majority of people and that when they benefit, the economy thrives for everyone.

For all the fancy talk in Ohio on Thursday, it comes down to this: Do Americans want a government of the people by the people for the people, one conceived in liberty and dedicated to the proposition that all men are created equal? Or do Americans want a government of the corporations by the corporations for the corporations, one dedicated to the proposition that the rich are better than everyone else?

For the rich, like Mitt Romney, the proposition that they are better than everyone else is a given. Romney believes that he, the son of a wealthy car company executive and governor, the youth who attended exclusive private schools and wallowed in every privilege, is a self-made man.

That is basic Republican philosophy: Every wealthy person and every successful corporation achieved that all by themselves. They didn’t inherit; they didn’t benefit from taxpayer-funded infrastructure like roads, schools and patent enforcement; there was no luck involved. They achieved it alone by virtue of their own grit, hard work and dedication.

Anyone can do it, the GOP believes, if they would just buckle down, work hard and follow all the rules. As a result, in Republican world, anyone who isn’t rich has only himself to blame.

Therefore, in GOP-logic, the poor and middle class are inferior beings. Government should not serve them. The government, Republicans think, should bow to the successful, who earned service. The government must not, according to the GOP, reward shiftlessness by providing benefits to middle class scallywags who have failed to do what it takes to get rich.

This doctrine of primacy for corporations and the 1 percent has set back the middle class. And the nation’s economy. Middle class income has stagnated. Meanwhile, the wealth of the top 1 percent and corporations has skyrocketed, so that now as much wealth is concentrated at the top as was during the robber-baron age immediately before the Great Depression.

A report issued by the Federal Reserve Board early last week showed that both the income and net worth of the average American family declined so drastically between 2007 and 2010 that nearly two decades of accumulated family wealth was wiped out. Seventy percent of those losses occurred in the years while Republican George W. Bush was still president.

By contrast, on the 1 percent end the scale, corporate executives raked it in last year. Forbes calculated that the CEOs of the nation’s top 500 corporations got an average 16 percent pay increase. The 2011 paycheck for each – a cool $10.5 million.

Also, corporate balance sheets are back in the black, with profits now shooting above pre-recession levels. Rather than investing in America or creating jobs with that money, corporations are hoarding more than $2 trillion in reserves.

And they are stuffing $10 million checks into GOP SuperPAC funds to ensure that Romney keeps his promise to lay off teachers, cops and firefighters while cutting taxes even further for the rich and eliminating any and all regulations that annoy corporations.

No air or water pollution controls on factories. No food safety inspections. Repeal the Dodd-Frank Wall Street Reform and Consumer Protection Law that was enacted to prevent the reckless Wall Street gambling that crashed the economy. Repeal ObamaCare that was enacted to end abusive practices by health insurers.

Romney reiterated last week that he opposes the provision of ObamaCare requiring insurers to cover people with pre-existing conditions. So if a child is born with asthma and his working-poor parents don’t have employer-provided health insurance or the money to buy coverage, too bad for the kid. Let him die gasping for breath. The toddler should have had more grit, hard work and dedication and earned himself some insurance. Or he should have picked better parents. Like Romney did.

Democrats, like Obama, believe in the primacy of the majority, as did the founders of the United States. The revolutionists wrote in the Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal. . .” The 1 percent, CEOs the lucky, the super-smart and the well-born are not more equal. The government was created to serve the needs of everyone.

And when it does, the economy fairs better. After the Wall Street crash of 1929, the great Democratic President Franklin Roosevelt and his successor Harry Truman instituted changes that supported the majority, including establishing collective bargaining rights. World War II, paid for by high taxes on the 1 percent, created a massive employment program, after which veterans benefits provided higher education for a generation. The result was lower concentration of wealth at the top and the greatest economic boom in the history of the world.

Then came Republican Ronald Reagan who gave the doctrine of corporate primacy a cute name -- trickle down. America must end his spell of voodoo economics or Romney and the Republicans will continue to stick it to the middle class.

Republican Pledge: A Rotten Egg for the Middle Class

Leo Gerard — Fri, 24 Sep 2010 10:05:51 -0400

When Herbert Hoover ran for president in 1928, the Republican party promised his victory would assure the prosperity of “a chicken in every pot.” This week, Republicans proffered a similar pledge to America.

Hoover won, and in 1929, after a decade of GOP rule in Washington, Republicans did deliver something foul to Americans. It wasn’t the much-anticipated cooking hen. It was the Great Depression.

Now in the Great Recession, also delivered during a GOP presidency, Republicans have presented a new promise. They pledged to withdraw all unspent Recovery Act money to prevent it from employing even one more worker; kill health care reform to stop 30 million Americans from getting affordable insurance; slash $100 billion from federal programs protecting the middle class; preserve tax cuts for the rich and cut government regulation -- like oversight of Gulf-oil-gusher-BP and contaminated-egg-producers Jack and Peter DeCoster.

This time, the GOP downsized the “chicken in every pot” promise. Instead they’re pledging a salmonella-poisoned egg.

In 1932, Americans wisely rejected re-electing Republican Hoover, who is regarded as one of the nation’s most inept leaders, and chose instead Democrat Franklin Delano Roosevelt, revered as one of the best. This fall, it’s crucial that Americans choose sagely again, selecting Democrats intent on reforming Washington and protecting the nation’s middle class.

Eight years of Republican rule in Washington climaxed with the worst recession since the Great Depression. Since that downturn officially began in December of 2007, poverty, unemployment and foreclosures have risen while middle class income and health insurance coverage have fallen.

The poverty rate increased to the worst level in 16 years, with 3.7 million people slipping from the middle class to the ranks of the poor in 2009. One in seven Americans now is impoverished. More than 8 million workers have lost their jobs, and 2.3 million families have lost their homes to foreclosure. Nearly one in four mortgage holders is under water, meaning they owe more on their house than it’s worth. Also, last year, the number of uninsured Americans rose by 4.4 million to 50.7 million -- 16.7% of the population. It was the largest annual increase since the government began collecting comparable data in 1987.

By contrast, on Wall Street, where unrestrained and unregulated bankster recklessness caused the recession, happy days are here again. The banks that taxpayers bailed out have resumed paying million-dollar salaries and bonuses. The nation’s top 25 hedge-fund managers each took home an average of $1 billion (BILLION) last year. Those hedgers are among the nation’s richest 1 percent, those whose take home pay grew so fast between 1979 and the start of the recession in 2007 that nearly 39 percent of all income growth went to that tiny number of super-wealthy. Only 36 percent went to the bottom 90 percent of the nation’s population.

Democrats, keenly aware of the diverging experiences of the nation’s sucker-punched workers and its well-heeled elite, have worked to aid the beleaguered middle. They passed the $787 billion American Recovery and Reinvestment Act, which the Congressional Budget Office estimated created between 1.4 million and 3.3 million jobs by July.

Democrats reformed health insurance so that children with pre-existing conditions can’t be denied insurance; senior citizens won’t have to pay for “donut hole” medications; young adults up to age 26 may remain on their parents’ plans, and insurance companies can no longer choose doctors or place lifetime limits on coverage or drop the sick. On top of all that, the Democrats’ reform will lower federal deficits by $138 billion.

Now, Democrats are fighting to preserve income tax cuts for the middle class while eliminating breaks for the rich. The Democrats would continue to lower by $1,132 a year the taxes of median wage earners, those with incomes of about $50,000 a year. Under the Democrats’ plan, the super rich – those taking home more than $1 million a year -- would still get a tax cut of $6,349 – six times that of the middle class. But Democrats would have the super rich pay $97,651 in taxes a year that they now pocket.

Democrats think the rich have an obligation to pay those taxes. To get where they are, in the top one percent income bracket, they’ve used tax-subsidized public services at significantly higher rates than the other 99 percent of Americans. That includes services such as roads and airports, civil courts, the U.S. patent office, the U.S. Department of Commerce and professional licensing, regulation and inspection departments.

Republicans don’t agree. They believe the middle class should pay so the rich can continue getting breaks. The GOP believes it is fine to give tax cuts to the rich that will cost nearly $1 trillion over 10 years, but not pay for them. Conversely, Republicans have refused to extend unemployment insurance for the middle class jobless unless that’s paid for. The GOP believes it’s appropriate to continue tax breaks for multi-national corporations that ship jobs overseas but it’s not to extend aid to the middle class unemployed to pay for health insurance.

In their Pledge to America, Republicans promise to take care of the rich. They said they’d change Washington by decimating the very regulation that protects middle class workers and their families and by cutting off money that is providing jobs to the unemployed. The GOP pledges to undermine middle class America.

It might be called a turkey, but even that would inflate its value. It’s a rotten egg hurled at middle America.

On Labor Day, Work to Save the Middle Class

Leo Gerard — Fri, 03 Sep 2010 10:09:57 -0400

This Labor Day feels gloomy. It’s a celebration of work when there is not enough of it, a day off when too many desperately seek a day on.

America has commemorated two Labor Days since this brutal recession began near the end of George Bush’s presidency in December of 2007. Now the relentless high unemployment, the ever-rising foreclosures, the unremitting wage and benefit take-backs have replaced American optimism and enthusiasm with fear and anger.

Happy Labor Day.

On this holiday, we can rant with Glenn Beck, kick the dog and hate the neighbor lucky enough to retain his job. Or we can do something different. We can join with our neighbors, employed and unemployed, our foreclosed-on children, our elderly parents fearing cuts in their Social Security lifeline and our fellow workers worrying that the furlough ax will strike them next. Together we can organize and mobilize and create a grassroots groundswell that gives government no choice but to respond to our needs, the needs of working people.

We can do what workers did during the Great Depression to provoke change, to create programs like Social Security and achieve recognition of rights like collective bargaining. These changes were sought by groups to benefit groups. In a civil society, people care for one another. And America is such a society – one where people routinely donate blood to aid anonymous strangers, children set up lemonade stands to contribute to Katrina victims and working families find a few bucks for United Way.

The self-righteous Right is all about individuals pulling themselves up by their bootstraps. That proposition – the do-it-all- by-yourself-winner-takes-all philosophy – clearly failed because so many Americans are jobless, homeless and too penniless to afford boots.

Over the past decade, the winner who took all was Wall Street. The banksters gambled on derivatives and other risky financial tomfoolery and won big time. Until they lost. And crashed the economy. After the American taxpayer bailed them out, those wealthy traders returned to making huge profits and bonuses based on perilous schemes.

Still, they believe they haven’t taken enough from working Americans. They’re lobbying to end aid for those who remain unemployed in a recession caused by Wall Street recklessness. And they’re demanding extension of their Bush-given tax breaks. This is the nation’s upper 1 percent, people who earn a million or more each year, the 1 percent that took home 56 percent of all income growth between 1989 and 2007, the year the recession began.

Since 2007, 8.2 million workers have lost jobs. Millions more are underemployed, laboring part-time when they need full-time jobs, or barely squeaking by on slashed wages and benefits. Since the recession began, the unemployment rate nearly doubled, from 5 percent to 9.6 percent, and that does not include those so discouraged that they’ve given up the search for jobs, a decision that is, frankly, understandable when there are only enough openings to re-employ 20 percent of the jobless. Five unemployed workers compete for each job created in this sluggish economy.

And American workers weren’t prepared for this downturn, having already suffered losses in the years before it began. The median income, adjusted for inflation, of working-age households declined by more than $2,000 in the seven years before the recession started.

At the same time, practices like off-shoring jobs and signing regressive international trade deals contributed to the loss of middle class, blue collar jobs. A new report, “The Polarization of Job Opportunities in the U.S. Labor Market,” by the Center for American Progress and The Hamilton Project, says:

“The decline in middle-skill jobs has been detrimental to the earnings and labor force participation rates of workers without a four-year college education, and differentially so for males, who are increasingly concentrated in low-paying service occupations.”

The recession compounded that, the report says:

“Employment losses during the recession have been far more severe in middle-skilled white- and blue-collar jobs than in either high-skill, white-collar jobs or low-skill service occupations.”

What that means is high roller banksters are living large; lawn care workers and waitresses subsist on minimum wage, and working class machinists and steelworkers are disappearing altogether.

The researchers found the U.S. economy is increasingly polarized into high-skill, high-wage jobs and low-skill, low wage jobs. America is losing the middle jobs and with them its great middle class.

No wonder the rising anger in middle America.

But fury doesn’t solve the problem. This Labor Day, we must organize to save ourselves and our neighbors. We must stop America from descending into plutocracy. We must demand support for American manufacturing and middle class jobs. That means terminating tax breaks for corporate outsourcers, ending trade practices that violate agreements and international law and punishing predator countries for currency manipulation that subverts fair trade by artificially lowering the price of products shipped into the U.S. while artificially raising the price of American exports.

We must demand support for American industry, particularly manufacturers of renewable energy sources like solar cells and wind turbines that create good working class jobs, increase America’s energy independence and reduce climate change.

We must insist on policies that support the middle class, including preserving Social Security and Medicare, extending unemployment insurance while joblessness remains high, and enforcing the health care reform law so that every American worker and family can afford and is covered by insurance.

On this Labor Day, we should all have a picnic, invite neighbors, friends and family, and over hot dogs and potato salad, organize to save the American middle class.

Mobilize to end the gloom and restore American optimism.

***

For help: the Union of the Unemployed, the AFL-CIO, USW, Working America. Join the One Nation March for jobs Oct. 2 in Washington, D.C.

Republicans Kiss the Rich; Diss the Jobless

Leo Gerard — Mon, 19 Jul 2010 12:06:20 -0400

A brutal competition pits worker against worker continually now in this country. Five unemployed people vie with each other for each available job. It’s like a cruel game of musical chairs, with five desperate competitors for one seat.

Workers who’ve lost cars to repossession and homes to foreclosure run around frantically trying to get that one job. When the music stops, four disheartened, still-unemployed people move to other viscous cycles of five struggling to win one available job.

Republicans watching this blame the 14.6 million unemployed Americans for the inadequate number of chairs. They’ve called the unemployed lazy and refused to extend unemployment compensation. Meanwhile, the GOP is demanding an extension of Bush’s tax cuts for the rich.

To the GOP, the rich are deserving. Republicans see the unemployed as leeches -- not as victims of filthy-rich, banksters who destroyed the economy, not as the stalwart citizens whose tax money Bush used to bail out Wall Street. To Republicans, the unemployed – along with the un-rich – deserve only disrespect.

And they’ve been heaping it on.

Republican Sen. John Kyl of Arizona said during a debate on the Senate floor, for example. “In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

Republican Sen. Orrin Hatch of Utah demanded drug tests for those receiving unemployment benefits, "We should not be giving cash to people who basically are just going to blow it on drugs."

Republican Senatorial candidate Sharron Angle of Nevada said extending benefits to the unemployed, who she characterized as “spoiled,” would be “terrible.” She told a radio station: “You can make more money on unemployment than you can going down and getting one of those jobs that is an honest job, but it doesn’t pay as much. And so that’s what’s happened to us is that we have put in so much entitlement into our government that we really have spoiled our citizenry and said you don’t want the jobs that are available.”

Republican Lt. Gov. Andre Bauer of South Carolina said the unemployed, like stupid stray animals, should not be fed: “My grandmother was not a highly educated woman but she told me as a small child to quit feeding stray animals. You know why? Because they breed. You’re facilitating the problem if you give an animal or person ample food supply. They will reproduce, especially ones that don't think too much further than that. And so what you’ve got to do is you’ve got to curtail that type of behavior. They don't know any better.”

Republican gubernatorial candidate Tom Corbett of Pennsylvania denied U.S. Labor Department statistics, insisting there are plenty of jobs, but the unemployed are shiftless and prefer their paltry government benefits over jobs: "The jobs are there. But if we keep extending unemployment, people are just going to sit there.”

By contrast, Democrats, who view the highest unemployment rates in 28 years as an emergency, have repeatedly tried to get a compensation extension passed and will mount another attempt Tuesday.

Disdainful of the unemployed, Republicans have refused to vote to extend the lifeline unless Congress ends its historical practice of classifying unemployment compensation as emergency funding, which is added to the deficit. The GOP is demanding that the $35 billion cost of extending compensation be offset by cutting federal programs or by reducing the stimulus – the very program designed to create jobs for the unemployed. In the six weeks since extended unemployment compensation expired and Republicans have blocked renewal, weekly checks averaging $300 ended for 2 million Americans.

Republicans try to sound fiscally responsible as they explain their votes disregarding the plight of the unemployed. But Senate Minority Whip Jon Kyl’s words wreck the GOP’s deliberate disinformation campaign. While insisting that unemployment compensation extension be offset, Kyl says that’s entirely unnecessary for extension of Bush’s tax cuts for the wealthy. When Republicans give rich people tax breaks, the GOP thinks it’s fine for the $678 billion cost to be added to the deficit.

Minority whip Kyl’s stance is held by the majority in his party. Most Republicans agree Congress need not pay for tax cuts benefitting the wealthy. “That’s been the majority Republican view for some time,” Senate Minority Leader Mitch McConnell said, “So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”

Today, American workers face the worst job market since the Great Depression, with unemployment stuck at 9.5 percent and the average spell of joblessness lasting 35 weeks. In May, there were 11.8 million more unemployed workers than there were job openings.

Democrats see the pain of losing a job, financial security and hope for the future. Republicans see something entirely different – lazy, drug-addicted moochers living off the rich who the GOP believes should continue to be taxed at rates lower than those paid by their secretaries.

U.S.A. 2008: the Great Depression

Michael Kwiatkowski — Thu, 03 Apr 2008 14:26:12 -0400

Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.

News of the Depression is slowly beginning to spread.

Michael Kwiatkowski — Wed, 02 Apr 2008 13:59:08 -0400

If you're at all familiar with Michael Fox (the columnist, not the actor), and you're trying to decide if the current economic crisis is a recession or a full blown depression, he certainly makes it hard to be optimistic. Back in November, Mr. Fox reported that the New Depression had already begun. In February, he reported that it had entered Phase Two, and that it had gone global.

Deniers may or may not have paid Mr. Fox much attention, if any at all. But now news of just how bad our current economic crisis really is is starting to bleed into the rest of the Blogosphere. Salon.com's Andrew Leonard writes:

Most economists are no longer debating whether there will be a recession in 2008. Now, they're arguing over when the recession started -- was it last November, or December? -- and how bad it's likely to get. While they bicker, however, a far more terrifying economic specter from the distant past has sent a chill through the infosphere.

"We have not seen a nationwide decline in housing like this since the Great Depression," said the CEO of Wells Fargo late last year. "It is now clear that the U.S. and global financial markets are experiencing their worst financial crisis since the Great Depression," wrote economist Nouriel Roubini last week.

What's kept things from completely collapsing is the hardcore denial by those in power that anything is even wrong. The children running the Federal Reserve "reason" that if they can hold off all public acknowledgment that there is a crisis, and that allowing the "free" market to run wild was the cause, then the problem doesn't exist. And if the problem doesn't exist because no one admits there is one, then the "reasoning" goes that when the next administration comes in and has to tell the public the truth, blame can then be shifted to that bunch. Because, after all, the Depression "didn't exist" until the new folk in charge began talking about it.

Except it does exist, and it shan't be long before even the lazy and all-too-often complicit corporate media are forced to admit it. The independent media has already belatedly come to terms with the fact of the economic crisis. Matthew Rothschild of The Progressive wrote yesterday about the growing problem of looting other people's homes for metals such as copper and steel. People are getting so desperate, they're ignoring things such as televisions and stereos. Guard your plumbing jealously, ladies and gentlemen. That's what robbers are really after in today's Great Depression.

What's that? You're still not convinced? Let's read more from Mr. Leonard.

In 1933, 24 percent of the workforce was unemployed. In February 2008, according to the Bureau of Labor Statistics, the U.S. unemployment rate was 4.8 percent (though there are reasons to believe that number significantly underestimates the true picture). Between 1929 and 1933, U.S. GDP growth declined by around 30 percent, the stock market lost almost 90 percent of its value, and a whopping 40 percent of the nation's banks failed. In the fourth quarter of 2007, GDP growth registered an 0.6 gain. While stocks are down over the last year and a half, there's still no consensus about whether we're living through a "correction" or a full-scale bear market. And even though scores of mortgage lenders have declared bankruptcy in the last year, both the real banking system and the so-called shadow banking system of generally unregulated investment banks and hedge funds are still afloat, thanks in large part to Federal Reserve chairman Ben Bernanke's dogged determination to ensure that if economic disaster does strike, it won't be because the Fed failed to pump enough liquidity into the system (an error that conservative economists are convinced helped cause the first Great Depression).

Now let's read some portions of Mike Fox's report from last November:

The Chinese had begun a sell-off of their US securities. They have dollars held by their government and, separately by their treasury (like the Fed).

Today, that entity has made clear that they will be unloading some $400 billion, which they already began in August (according to the China Daily, they sold off $9 billion - without buying any new debt in that month alone) in an attempt to divest of American Government securities. (They still hold over a trillion dollars of, well, other dollars â€“ stock, corporate paper, etc)

The Japanese, not to be outdone, sold off some $24 billion in US treasuries in August.

Today, GM posted a loss of $40 billion in the 3rd quarter, because they had so much anticipated income from anticipated tax credits that they had opted to show as possible income FOR THREE YEARS in order to minimize the appearances of real losses, that they now had to suck it up and stick it all on the balance sheet for this one quarter, even though, at selling cars, they made a profit in that quarter! Can you wrap your mind around LOSING 40 BILLION DOLLARS IN 3 MONTHS? There are many nations that don't have that number for a GDP, annually. This is America's great manufacturing giant. And, as they used to say, what's good for GM is Good for America.

So, America, let's just all write-down our losses in the third quarter and move on, shall we?

Today, Washington Mutual (the one hitherto considered clean), got nabbed on CRIMINAL charges by Andrew Cuomo, Attorney General of NY for their mortgages (specifically for defrauding Freddie Mac and Fannie Mae with bundled mortgages).

Today, the Europeans (as I pointed out in my January 07 letter, not published on SC - everyone else thought they were safe) are suffering too. BMW and LVMH both took large hits on their stock values, as they realize that all that entry-level luxe crap - that foolish Americans were mortgaging the floorboards to buy - will no longer sell (3-series BMWs are where the money is, but that market just slammed shut, similarly Louis Vuitton, which has opened dozens of mall stores to sell items that used to be exclusive, may as well close those doors, because the market will revert to the rarified air it used to breathe, and all those middle class gals who've been buying $1200 purses will do so no more, because you can't mortgage a house after it's been foreclosed.

Remember, this was back in November, before the bailout of Bear Stearns. Now let's take a look at Mr. Fox's reports from February:

Egg, a British online bank, said it would cancel the credit cards of 161,000 customers it deemed too risky. The cards will stop working in March. The news provoked angry reactions from some credit-card holders who claimed their credit records were spotless. Egg was acquired by Citigroup last year, before the deterioration in money markets. [From The Economist, Feb. 7, 2008]

Citigroup recently found itself short of cash-on-hand, so they sold another 5% of the company to the UAE. That wasn’t enough, evidently, so now they’re tightening up on lending. First was the mortgage sector, now the consumer credit. Dropping 161,000 credit cards in Britain would work out to dropping over 800,000 were they to do likewise in the United States. Only, this is one small subsidiary bank in Great Britain, and this is only the beginning.

Those credit cards they’ve been “pre-approving” and issuing to anyone who’d sign up will soon be gone. Without the credit card - mad consumerism of the last ten years, store closures will be drastic, and accompanying unemployment will go without saying. Meanwhile, the government is printing more money to keep the spending spree going, even if the banks can no longer underwrite the party. Still, the Fed keeps lowering the interest rates to encourage borrowing – if only anyone were lending! Yet as the cost of money drops for the banks, credit card interest rates and fees are skyrocketing.

And:

Okay, people, if the foreclosure rate, the banks closing perfectly good credit card accounts, or the loss of thousands of jobs a month hasn’t convinced you, this is Earthshaking. Because, as depressed as the real estate market has been, and as volatile as the stock market has been, bonds have been the conservative investment of choice for large investment fund managers and long-term individual investors. Secretly, who hasn’t aspired to “retire and clip coupons?” (Note to the young’uns: tax-free municipal bonds used to have perforations like a sheet of stamps, and each coupon represented a monthly or quarterly interest payment that was like tax-free cash, thus the expression amongst the wealthy, “clipping coupons”; it has nothing to do with 20¢ off a box of Tide). Now this:

UBS AG won't buy auction-rate securities that fail to attract enough bidders, joining a growing number of dealers stepping back from the $300 billion market, said a person with direct knowledge of the situation. The second-biggest underwriter of the securities, whose rates are reset periodically at auctions, notified its 8,200 U.S. brokers of the decision yesterday, said the person, who declined to be identified because the announcement wasn't publicly disclosed. Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Citigroup Inc. allowed auctions to fail...Bank of America Corp. estimated in a report that 80 percent of all auctions of bonds sold by cities, hospitals and student loan agencies were unsuccessful yesterday.

That may mean as much as $20 billion of bonds failed to find buyers, based on the $15 billion to $25 billion of auction-rate bonds scheduled for bidding daily…Auctions are failing as confidence in the creditworthiness of insurers backing the securities wanes, and as loss-plagued banks…[Feb. 14 (Bloomberg)]

Yesterday, Warren Buffett, the billionaire head of Berkshire Hathaway Fund offered to personally shore-up the four companies that insure all bonds, and are at risk of having their own credit-worthiness downgraded (which would send a huge ripple of skittishness throughout the economy – a ripple, in my opinion, just waiting to happen). Mr. Bufett’s offer has been publicly rebuffed, and, yet, such bravado on the part of MBIA and Ambac isn’t making anyone feel the rock solid security they’re trying to convey. Everyone knows that when the defaults begin in bundled mortgage backed securities, they will not be able to come up with the $800 billion, and then, those holding more traditional bonds, those issued by municipalities and states, will be dependent upon the tax income of those entities, which are dwindling as the home foreclosure rate goes up.

And the Swiss are having none of it. So, yesterday, New York City's Health and Hospitals Corp.’s auction of $64.9 million failed. Likewise, the Port Authority (of New York and New Jersey), saw its auction debt soar to 20 percent on Feb. 12 from 4.3 percent a week ago.

Meanwhile, the CFO of MBIA, Charles Chaplin (no kidding), has taken his show on the road, telling everyone who’ll listen that everything’s okay, nothing to see over here, have faith. Earlier this week he announced that they had enough to cover any degree of failure that may occur, and today, he’ll be testifying before Congress that “A bailout of highly credit-worthy companies, who, at most, are at risk of losing the very highest ratings available, is misplaced.” But no disclosure of details has been made. So far, this roadshow is all talk, and I, for one would prefer to see the balance sheets. As the bonds themselves aren’t selling, the interest rate will have to go up to entice buyers. But that just increases the risk for the insurers. The problem snowballs.

By the way, did anyone notice that platinum hit $2,000./ounce last night? No wonder.

Convinced yet? If not, don't worry. Sooner or later, the corporate media shall have to acknowledge that the New Depression exists. The only question is whether it will happen under a Democratic or Republican regime. If it's the former, look for blame to be laid on the Democrats. If it's the latter, it'll be those pesky regulations that take the blame, and the resulting wave of further deregulation shall inevitably lead to a meltdown that makes the First Great Depression look like a day at the beach by comparison.