Obamanomics: Wages, employment flat; oil, stocks down

Endgame of feckless Administration, Reid-stymied Congress is a “progressive” dream: the endgame of capitalism and the rise of … the New Feudalism?

Bust of Karl Marx.
Via ZeroHedge: "...according to Sky News economics editor Ed Conway, this was just 'spotted in the Greek Economy Ministry (I kid you not).'"

WASHINGTON, June 4, 2015 – Worried about impending U.S. interest rate hikes? You have a surprising new ally: The International Monetary Fund (IMF).

According to a report this morning via CNBC:

“The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday.

“The fund’s report comes amid signs that some rate setters at the U.S. central bank are also pushing for rate hikes to be delayed until there are clearer signs of a sustained recovery. U.S. data has been mixed and the economy shrank 0.7 percent in the first quarter.

“‘Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016,’ the fund said.”

This follows on our earlier report citing Fed governor Lael Brainard saying essentially the same thing.

Hold that thought and add these additional items.

  • Several news sources recently have been highlighting the absolute and continuing stagnation in wages, at least for those lucky folks in this country who still have a job. Real unemployment (U-6) remains stubbornly around 10 percent, not the much-ballyhooed near 5 percent “lows” we read about in the papers—a number that doesn’t include those who’ve dropped off unemployment rolls and have given up or those laboring in part time jobs because they can’t get 40-hour-per-week jobs.
  • Inflation is nowhere in sight (unless you’re buying meat at the grocery store).
  • And oh, yes, there’s that ongoing Greek soap opera, which by now would be genuinely tiresome. If anything goes wrong over there at this point, the markets will take a cliff-dive that would impress even Wile E. Coyote.

The real problem uniting these elements, the Maven hates to admit, is that we appear to be in the current end game of Capitalism As We Know It. The U.S. was its last bastion.

But, like post-WWII Europe, the U.S. has gradually been taken over by obscenely wealthy financial tycoons who buy Democratic politicians for life and use them to shape legislation that permanently enriches both them and the politicians they own. The hell with anyone who’s not been admitted to the club.

The Democrats, in turn, denounce their patrons for public consumption whilst taking plenty of illegal baksheesh behind closed doors. That way, they continue to get rich and continue to get re-elected by U.S. voters who’ve been so dumbed-down by public education (controlled by Democrats) that they actually believe the Republicans have been doing this to them all along. Everyone conveniently ignores the fact that the hapless Republicans have controlled Washington for relatively little time since FDR ascended the throne in 1933.

As more and more people are squeezed out of what used to be the American Way of Life, the more hopeless the situation becomes. Which gets us to the current administration’s culpability in this.

Like good European limousine socialists, the Obama administration and the Senate’s do-nothing Democrats forced ruinous social spending down America’s throats, particularly Obamacare, which, to this day, a majority of Americans have never supported. (Too bad those opponents don’t have access to George Soros’ moneybags.)

One result of Obamacare is a massive transference of wealth to both the Feds and the insurance, hospital and pharmaceutical companies that got on board the Obamacare gravy train early and often.

Since per-employee costs to business are one of any business’ top expenses, and since no employer has any clue as to how much or how catastrophic the continuing Obamacare bill will be for payrolls, they’ve been highly reluctant to hire any human beings at all since Obamacare passed Congress and was signed by the president.

This situation has persisted without resolution for such a long time that businesses have steadily adopted innovative new computer and robotic technologies to keep costs down and keep those assembly lines running—but without the added and unpredictable expense of new employees. Robots and computers, you see, don’t have to pony up for Obamacare coverage. Which means that the jobs you’re seeing replaced in this cycle will never come back.

Some of these technological advances would have taken place over time, most likely. But that would have given workers and businesses a chance to re-deploy or re-train for something else.

However, these Obamacare-driven employee reductions and wage freezes have materialized over such a short period of time that many workers—particularly those within 10 years of retirement anyway—have been rendered essentially unemployable for the rest of their working lives. Hence, much of that 10 percent U-6 unemployment rate that’s inconvenient to discuss.

There’s no happy ending to this mess. The press won’t discuss it. Now that the Republicans control Congress (barely), the Democrats have no intention of helping them govern in order to rectify this mess. And the Republicans themselves are afraid to make bold moves for fear the administration-controlled un-free press will hammer them into electoral Armageddon in 2016.

Add to all this the administration-encouraged tsunami of wage-suppressing illegal aliens − or “Dreamers” as Democrat propagandists choose to describe them − whose votes the Democrats can easily buy, and it’s game-over for the real American Dream.

All this wonderful “transformation of America” is steering this country gradually but relentlessly toward what we’re seeing in Greece. The politicians in that basket-case country, owned and operated by impossibly rich Greek tycoons, have ruined it with a combination of phony socialism and grossly swollen and overpaid government payrolls.

It’s ironic that the Greek party currently in power worships the Great God Karl Marx, whose bust adorns this article. But what’s even more ironic is that the members of that country’s current Marxist government, just like the Democrats and their Soros- and Hollywood-supported fanatics, are richer than the average Greek even as they claim to be the working man’s champions. We have the same thing here.

What’s begun to replace capitalism in the West is conveniently termed “socialism” or “Euro-socialism.” But what we’re really seeing is a new feudalism, run by impossibly wealthy pretend-Marxists. The situation is incredibly ironic.

Marx thought that Communist revolutions would be spearheaded by violent revolts of the working class. But in this case, today’s fake Western Communism is run and operated by the wealthy, whose goal is to buy lower-class voters, not by redistributing not their own outsized incomes to the poor, but the incomes of the dwindling middle class instead. This perpetuates the bizarre fiction that the wealthy are really the working man’s friends. But they’re redistributing everybody’s income but their own. Dependency increases, and a new, permanent serf class is born.

Wall Street is now trying to come to grips with this situation and the stagnation that makes a return to interest rate and economic normalcy an increasing impossibility. That’s what we’re seeing in current markets.

Something really bad is happening. No one seems willing or able to stop it. As a result, investment dollars are beginning to go on strike with highly dangerous and unpredictable consequences. We badly need to locate Galt’s Gulch on our GPS. If we can find it.


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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17