Millions of Americans are experiencing that sinking feeling these days.  What happened to the price of milk?  Is corn really that expensive?  How come rice ain’t so cheap anymore?

The economists say it’s all about supply and demand.  That’s true, but it doesn’t tell the whole story, which is that the SUPPLY is being distorted by an unholy alliance of big agribusiness interests and their lobbyists and a bunch of Midwest congressmen trying to buy votes.  It’s time we DEMAND a change in policy, because it has helped to result in a huge transfer of wealth from the poor, who spend more of their money on consumption, to the corporate interests at home and the oil cartels overseas.

Because of federal mandates, they’re throwing tons of corn and wheat into the production of energy, which has sent the costs of these basic foodstuffs soaring.  Supply and demand.  There is less food for human consumption because it is being consumed as energy.  For the first time, the cost of energy and the cost of food is linked directly, so when oil goes up, food goes up.  The basic well-being of our citizenry is at the whim of the commodity traders who make their buck whether the price goes up or down.

How did this happen?  Why are we kidding ourselves that using food for energy is a good thing when it (1) prolongs our dependence on oil at the expense of moving toward alternatives, (2) creates a cash crunch for the poor, who get hit at the grocer AND at the gas station and (3) increases instability overseas by sending those huddled masses into hysteria due to a lack of staples like rice and corn?

We’ve got to wake up and fix this, or we’re ALL going to be eating Ramen Noodles soon.

Breaking News!

The Feds have jumped in, boom-bam, and they kept interest rates at 2%.

You know, in plain talk this means that banks will charge each other only 2 cents on every dollar on overnight loans.  In turn, the money commercial banks loan you or businesses don’t have to have the extra “vic” (beyond the 5% prime lending rate) to cover their owed fees to others, hence, you get money that you can afford to have.  Hey, it ain’t rocket science, just common sense.  Meaning, I go to the bank, they now have borrowed cheddar, which makes them more likely to lend me money that I can afford to pay back.

Wow! What a system.

Wall Street has responded with pure joy: oil prices dropped by the barrels, and stocks rose by the buckets.

Yet, despite all these behind the scenes actions, it’s still a jungle out there to survive!

Here’s why:

INFLATION!  For one, she’s a bad mother…and she will come into play.

Next, consumer spending is falling, credit is tight and folks aren’t getting pay raises to meet the demands.  Food prices are up and (can you believe this?) the price of corn is sky high.  Yes, corn!  And believe me it DOES cost the shirt off your back to pay for gas.  Need I say more?

Now, this was touched upon in an earlier blog entry about economics–regarding the “invisible hand” and here’s an example.  Statistically, consumption increased 0.8 percent in May, and 0.6 percent in June, while wages had 0.1 increase.  But once you factor in the food increase, gas increase, and other increases on our necessities for life WE ARE IN THE HOLE!

This, in sum, means that the Federal stimulus package is having little effect, in my view, because we haven’t put a glove on the “invisible hand”.  Hence, we consumers are feeling the pain of this economic recession. Therefore, my solution is PLACE A GLOVE ON THE “INVISIBLE HAND” IN OUR POCKET…WHAT DO YOU THINK?

Oh yeah! I will be bold and provide you a description of the “invisible hand”.  Here it is: Big Oil companies, hands in our pockets, the war profiteers,- hands in our pockets–corporate barons, who want to drill off shore- playing in our pockets, —— you get the picture.

Let’s unite and expose these “invisible hands”, otherwise we may never recover from this recession.

IT’S THE STUPID Economy !

What do have to say?

What?

There were 51,000 jobs lost in July, making it the seventh-straight monthly fall, and the paper writes that “It’s not as bad as Wall Street feared?” All I can say is: the fix is in.

Employers have now cut 453,000 jobs this year. That’s almost a half million jobs lost and we still have several more months to go in 2008. And Wall Street investors tell us that because they predicted job losses to be 75,000, instead of 51,000, it’s ‘not so bad’. This is what I am talking about when I talk about the fix being in. You know what I mean? It’s when something is what it is, but then you change the perception of the situation by expanding the lens we use to look at it.

Folks, I am here to tell you, 51,000 jobs lost is bad, and we need to get the folks in power, and ourselves, focused on this issue.

I mean, it’s all about the economy now. The jobless rate rose this month by 0.2 points, to 5.7% in July, the highest since 2004.

Payrolls have shrunk by an average of about 66,000 a month this year. Our economy relies heavily on consumers being consumers, so we are in for a huge awakening unless someone starts to talk about the fact that “its the economy stupid.”

I don’t say this to call anyone names, but we’ve got to get our focus on the fact that the average work week fell by .1 hours to 33.6 hours, the lowest since 2004. Damn folks, this means no money, no spending, no economic growth, no jobs…yes, there is a pattern here.

Now as I mentioned in my earlier statement, the Feds are looking to keep interest rates at 2%. Thank goodness for government.

WHAT!? Yep! That’s right. I thank you, Feds.

As we set our sites on another week, let us take a moment to reflect:

ON THE ECONOMY: GOVERNMENT vs. the ECONOMY………This isn’t a matchup of two opposing forces, it’s a marriage of necessity.

Here we go: Gas is high! The current market jitters are centered on tumbles and bumbles in the U.S. credit market.   These worries have forced our Federal Reserve bank to pump billions of dollars to oil (I mean lubricate) the wheels of lending.  So why then are there at least 39% of voters upset at this action?  Are we allowing politics to cloud the reasonable solutions to our economy?  I don’t know, but I would love to hear your thinking.

History teaches us that government’s role in stabilizing the economy is a necessity to our economic system no matter who you vote for.  So America, WAKE UP!  Don’t buy into the FOX Network hype!

A little History Trail Blazing…

The DOT.COM Crash, 2000.

You all remember this.  Shares soared when they (DOT.com. companies) were listed on the Nasdaq stock market despite the fact that only 2 had made a profit.  Sounds like sub-prime lending to me in 2000!
The boom peaked with AOL’s purchase of Time Warner for nearly 200 Billion (wow) in January 2000. Sound familiar, but in a different market, today?  Oh, yeah, by March 2000, the bubble, set by this transaction which caused market inflation, and the Nasdaq index (technologies), fell by 78% by October 2002.  We know that this was all exacerbated by the tragedy of 9/11.  But, just as today, the Federal Reserve bank cut interest rates throughout 2001, gradually lowering rates from 6.25% to 1% to stimulate economic growth.  My point is that there was not a whisper from McCain, or Republicans.  As a matter of fact they led this charge with George Bush. The reality is that it made good economic sense then, as it makes good economic sense now.

How about the collapse of hedge fund Long Term Capital Market (LTCM) in 1997 and 1998?   LTCM, which borrowed a lot of money from her companies, stood to loose billions, so they liquidated their positions by selling Treasury bonds, which took the economy down hill and raised interest rates.  Again, the Federal Reserve took steps, called bankers together and got 3.5 Billion to save the firm from collapse.  Then the Fed itself made an emergency  rate cut in October 1998 and market returned  to stability. Sound familiar?

I will just name a few others to hear from you on:

US Saving and Loan Scandal 1985…Feds saved the day by setting up the Resolution Trust Company.

The Crash of 1929: Fed created FDIC, SEC and the Glass-Steagall Act. Hmmmmm!

Government and the Economy married?  You tell me!

WHAT?

In no way would this benefit the economy in California, particularly since California’s budget depends on consumption. Thats right, sales taxes.  And the last time I checked you need to have money to spend on a product in order to produce sales taxes. It’s clear that state workers are a large body of consumers in the California economy.  More importantly, how does this not make national news?  It clearly represents regressive economic practices.

The Issue: the Governor assumes you don’t have a clue about the economy.

WHAT?

Next, I read oil prices are down!  What?  How can we forget the fact that in 2007 oil companies made billions of dollars in profit.  Our response was that we paid more for our gas.  Why?  Because we have all forgotten the basic principles of supply and demand.   Or, better yet, the corporate leaders continuously remind us the “invisible hand”.  You know, the one that’s always in our pocket…we can’t see it, but we can feel its impact.

Let’s not forget the power of the consumer and the fact that each of us can dictate the direction of the economy by “saving” more.

WHAT?

IT’S A STUPID ECONOMY

For the next few weeks I want to focus on Economic issues.

First topic:  Credit cards.  A “rip-off” or “not”?  You tell me.

I understand that the Feds are entertaining comments from “we” consumers regarding “unfair and deceptive” lending regarding interest rates and “fees” on credit cards.   According to the USA Today, 33,000 complaints have been filed from consumers.

I tell you people, file your complaint.  These lenders pray on us from college all the way through until retirement, offering low rates at sign-up time, then increasing either our credit limit or our interest charges through a notification process that would confuse any legal expert.   These lenders, or should I say these “Banks,” charge for everything possible and they argue that stiff regulation will limit their ability to lend to those with risky credit history.

Well, Banks are estimated to make nearly 19 billion dollars from credit cards fees this year.  With this type of cash flow, clearly, they can take on some risk.  And why not use that money to provide financial education classes in conjunction with our churches, schools and small business in the community?

To me, this all ties into the “exploitation” theory of those with less understanding of finances.  Would it not be beneficial to communities if your local Bank gave training on credit card advantages and disadvantages?  Why not?   Maybe because once that information is shared, lenders would no longer be able to keep people in the dark.

You tell me.

I encourage you go to www.federalreserve.gov and click on the “FOIA” link.  Follow the instructions and give them some comments they won’t ever forget!

Your credit card fees may depend on it.

Without a Name, Former ‘South Central Los Angeles’ Has Become Almost Invisible

This is a sad report on the state of affairs in South Los Angeles. There are too many forgotten people who need to be lifted up. I’m hoping that things can change for the better soon.

Union Dustup Leaves Stern Victorious, and Roselli Licking His Wounds

We’re growing and getting stronger and this story gives the quick rundown of how it went down. One thing is for sure: Long Term care workers in California are on their way to being united.

Click here for a preview.

It’s what we’ve come to expect from the Right–corporate-friendly policies that merely apply a band-aid to a bigger problem, all at the expense of the environment and our economic future.

I say ‘at the expense of our environment’ because that is the consequence if we began drilling offshore again. This ban has been in place since 1981and for good reason–people got sick of seeing oil and other pollutants damaging our coastlines. The Southern California coast is beautiful and doesn’t need any oil derricks destroying the scene. Yet, that’s what would happen if we begin drilling again.

Economically, things are trickier. The easy way out is to begin drilling, to prolong our addiction to oil and slough off the eventual energy reckoning to another generation. I say that NOW is the time to use this moment to emphasize conservation, to change our behavior, to shift to alternative energies and to find innovative technologies to lift our economy. They say necessity is the mother of invention. It’s time we use our ingenuity to solve this problem.

I am confident that we can find a way to achieve energy independence.  But we should look at every possible alternative to, once again, tearing up our coasts.