The Raw Story

Thursday, 11 December 2014

Central banks have failed - they can't push wages higher

You can print all the money you want, but it will never boost wages to keep up with prices.

Central banks have been pursuing two goals for the past six years: ignite inflation and an expansion of debt that will supposedly generate "growth." Despite squandering trillions of dollars, yen, yuan and euros, central banks have failed to ignite sustainable inflation or growth.

There's nothing mysterious about their failure: you can't get "good" inflation or growth if wages are stagnant or declining. The central banks don't bother to distinguish between "good" and "bad" inflation: any and all inflation is considered not only wonderful but essential to propping up the Ponzi scheme of debt-dependent consumption, a dynamic I described in Central Banks Create Deflation, Not Inflation.

"Good" inflation is wages rising faster than prices. When wages rise faster than consumer prices, households have more money to spend on consumption, and it's progressively easier for them to pay down debt and support additional borrowing.

"Bad" inflation is prices rising while wages stagnate. In "bad" inflation, prices keep rising as central bank money-printing devalues the currency, but wages don't rise along with prices. As a result, wages decline in real terms, i.e. purchasing power.

In Japan, where the central bank and government have struggled for years to generate price inflation as the means to "re-start growth," wages have fallen by 9% in real terms since 1997. (source:Voodoo Abenomics: Japan's Failed Comeback Plan Foreign Affairs)

I explain this in further depth in Inflation Is Not "Growth" (July 23, 2014). These charts reflect the stagnation of American wages and household incomes.

Image source: Rising Wages Where? Real Wages Post First Annual Decline Since 2012

Real household income has declined across the entire income spectrum:

Deduct healthcare expenses and debt service, and what's left of wages for the rest of life's expenses is tanking: Courtesy of longtime correspondent B.C.:

Meanwhile, the purchasing power of wages is in steady decline:

Image source: What Inflation Means to You: Inside the Consumer Price Index (Doug Short)

The point is that lowering interest rates to zero and issuing unlimited free money for financiers to generate asset bubbles has had a negative effect on wages and household income. This is not accidental or bad luck - central bank money-printing and bond-buying have not had any positive effect on wages because they cannot possibly have any positive impact on wages.

In effect, central banks have been trying to pound nails with a handsaw: they don't have the tools to counteract the deflationary influences of labor surplus. Wages are stagnating/declining not because money isn't cheap enough or assets aren't high enough; wages are in structural decline due to three factors:

1. Global wage arbitrage: everybody is competing with everyone else globally for work that is tradable or that can be commoditized;

2. Costly human labor is increasingly replaceable with software and robotics;

3. The rising costs of labor overhead (social welfare taxes, healthcare, etc.) push employers' costs higher even as employees' paychecks stagnate or shrink.

These are factors, affecting employers everywhere from the U.S. to China. No amount of liquidity or free money can reverse these structural trends.

Frantic voices can now be heard suggesting central banks issue free money directly to households. Considering central banks have stolen hundreds of billions of dollars in interest from saver-households in the past six years, there is a painful irony in these calls for free money to households, now that free money for financiers has failed so catastrophically.

A free money giveaway won't fix anything; all it would do is give households the means to pay down a bit of debt or make interest payments on subprime auto loans for another month or two. Free money giveaways are not a substitute for earned income.

Debt jubilees won't work either, as all the debt that proponents want to cancel is an asset to somebody else - and often that "somebody" is a public or private pension fund or another worker's 401K retirement fund.

The game has been lost, but central bankers are still on the field, wandering around in disbelief that their unspeakable powers to issue money and credit have failed. You can print all the money you want, but it will never boost wages to keep up with prices.

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

© NASA/JPL-CALTECH

This is a part of a series of images that reconstructs the geology of the region around Mars' Mount Sharp, where NASA's Curiosity Mars rover landed and is now driving.

The discovery that Mars' Gale Crater was once Gale Lake adds a powerful piece of evidence for an ancient wet and warm climate that lasted much longer than previous predictions. Now, if only the computer models would agree.

To account for a lake that lasted for millions or even tens of millions of years means the Martian atmosphere would have had to be not only far thicker than the puny envelope of gases that surrounds it today, but also loaded with water, said Ashwin Vasavada, deputy project scientist for NASA's Curiosity Mars rover.

The Curiosity science team announced Monday that the 96-mile-wide crater where the rover landed in August 2012 was once a lake.

"The landscapes of Mount Sharp indicate that rivers, lakes and groundwater were present over millions of years, something that would be impossible on Mars today," Vasavada said.

Today, water on Mars is frozen around the planet's poles. Even if the atmosphere were thicker (generating pressure that would permit water to exist as a liquid, rather than just as solid or gas) water would still preferentially gather in the polar regions, leaving the atmosphere dry. Gale Lake would have evaporated quickly.

"To get a long-lived lake in Gale Crater there must have been so much water in the climate system that the frozen latitudes were essentially filled up, that water was forced to warmer latitudes where it would exist as liquid," Vasavada said.

To humidify the atmosphere, Mars would need a vigorous hydrological cycle fed by either warmer ice at lower latitudes or a large expanse of liquid water, like an ocean.

"A humid atmosphere would slow the evaporation of Gale Lake and also resupply water to precipitation," Vasavada said.

Since the 1070s-era Viking days, scientists have been looking for remnants of a Martian ocean. They've found tantalizing hints, such as a network of valleys and channels cut into the highlands that lead downward toward a large basin. However, concrete evidence, like a shoreline, may have been obliterated by erosion.

"There is no smoking gun for an ocean in the northern hemisphere," Vasavada said.

Even accounting for greenhouse gases, computer models currently fall short in explaining how Mars could have stayed warm enough to sustain a lake like Gale for millions of years.

"Constructing a model of Mars ancient climate that was thick, warm and humid for millions of years has proven pretty challenging," Vasavada said.

One option is that perhaps Mars didn't warm up and stay that way, but heated up periodically from volcanism, changes in its orbit and/or large asteroid strikes.

"Each event may have created warm and wet conditions for hundreds or maybe thousands of years, perhaps enough to fill Gale Crater with one more layer of sediment," Vasavada said.

The question is crucial to understanding how long Mars may have had conditions suitable for life to evolve.

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

On the evening of Tuesday December 9th, people in southern Poland observed a meteor "of comparable brightness to the full Moon" burn up over southern Poland, according to Przemyslaw Zoladek, president of the Polish Fireball Network (PKiM).

Preliminary analysis suggests the bolide entered the atmosphere above Opava in northern Czech Republic. Observers also reported that the fireball was green in color and was visible low on the southern horizon. Observers in Lower Silesia (southwestern Poland) reported the object to be higher in the sky and looking much brighter still.

The fireball sighting was reported by observers to the Polish Fireball Network, whose own observer stations - 'PFN41 Twardogora', 'PFN38 Podgorzyn' and 'PFN40 Otwock' - also recorded the event. The fireball appears to have travelled relatively slowly. All-sky camera footage apparently shows numerous flares as the bolide entered the atmosphere - evidence of fragmentation of the space body.

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

Eric Garner never had a chance

In the space of nine days, two grand juries in two different towns found it unassailable for a cop in one town to shoot and kill an unarmed man 12 times, and for a bunch of cops in another to brutalize an unarmed man as one of the cops put him in a fatal chokehold. In both cases the murdered men were young and black. In both cases their killers were white cops. And of course in both cases the prosecutors who were supposed to get an indictment from the grand jury used the proceedings instead to run interference for the cops they work with every day.

Nate Silver's FiveThirtyEight reports that in 2010, the latest year for which numbers are available, federal grand juries declined to return indictments 11 times - out of 162,000 cases. In other words, grand juries failed to return an indictment 0.007 percent of the time. But two prosecutors walked off with a 100 percent whitewash rate for their cops. They covered for them. They gave them a pass. And killers walked free, because they had a badge, and because their victims were, after all, just black. That tells us where we are in this color-blind society. Blind is right: it's the blindness of the smug.

We have a black president, but that's been the irony in chief of a decade when too many whites take it as proof of their favored delusion: that we're in a post-racial society. This in a country where the wealth gap between whites and blacks is wider than it was in South Africa under apartheid, and has gotten 40 percent worse since Nixon became president, and in a country where young black men without a high school diploma are more likely to be in prison than at a job. (Nicholas Kristoff outlined the facts you'll never hear on Fox's nightly hours of white self-pity in his "Whites Just Don't Get It" series.)

Of course it's blacks' fault. They're the jobless. They're the moochers. They're the criminals. There's some truth to that when looking at the raw numbers, but only if you choose to cherry-pick and limit your historical perspective to yesterday's brown-shirted version of talk radio. There's more damning truth in the fact that blacks get sentenced to far longer terms than whites do for the same crimes, that a presumption of guilt shadows a black man far more than it does whites. What white person has experienced the assumption of threat that every black man has to live with in most whites' eyes when they see him on the sidewalk, entering the elevator, waiting his turn at the ATM? None of that has changed in half a century of civil rights gains and Martin Luther King holiday sales, gains that effectively went into reverse, along with so much else in what George Packer calls America's "unwinding," since the Reagan years. Whether they're a Harvard professor or a fat man selling cigarettes on a street corner, Blacks are still three-fifth suspects first and human beings last.

That's what led to the killing of Eric Garner on Staten Island in July, Michael Brown in Ferguson a few weeks later, and of course Trayvon Martin in Sanford in 2012 and Jordan Davis in Jacksonville the same year. At least a man was convicted for the killing of Jordan. And to appease the cynics, let's concede that there was some ambiguity in the homicides of Martin and Brown, in the sense that only their killers really knew what happened. But there was no such ambiguity in the killing of Garner, which was caught on a clear and indisputable video.

Garner is obviously unarmed. He's not doing anything but standing at a street corner. He'd been arrested before for selling untaxed cigarettes and smoking pot, and he was probably selling cigarettes that day. Big deal. You don't kill a man for that. You don't even waste policing time on that. But it was Staten Island, which likes to think of itself as a place that has preserved a little touch of the old golden-age American where some people knew their place. Garner had, like most young black men, had his share of police harassment. He was in for it that day. "I'm minding my business, officer. I'm minding my business. Please, just leave me alone." That's what he told them. Then one of them tries to put handcuffs on him. He jumps on Garner, who at that point is no more than an animal to be harnessed. He puts a chokehold on Garner while three other cop goons rush in, then four, smash him to the ground and cuff him. One of them has his whole weight pressing on Garner's head against the concrete. Garner is panting: "I can't breathe. I can't breathe, I can't breathe."

Watch the video. Watch the cops not give a damn. Watch them turn cigarette-selling into a crime against their version of humanity. And what humanity it is. Watch a man die because cops were indignant that a big fat black man in a t-shirt and shorts was daring to tell them to leave him alone. You don't speak that way to cops. Not just on Staten Island, but anywhere in America, where reasoning with a cop is synonymous with resisting arrest, and resisting arrest is every hotshot cop's self-fulfilling proof that the bastard was worth arresting in the first place. I can hear it now: Don't resist. Comply. None of this would happen otherwise. Not that Garner was given a choice. The moment his killers jumped him, he was immediately fighting for his life, and his body reacted accordingly. To the cops, he was resisting. Therefore force was justifiable. Even deadly force.

So goes the circular snag of a cop's cuff in a country so enamored of force that police agencies, including our own, use SWAT teams to serve warrants for marijuana possession - a substance less lethal than cigarettes - and no one bats an eye. People rather applaud even as the din makes the Fourth Amendment sound like a yappy poodle to be kicked to the curb. We love the brawn and the high-powered rifles. And if you brought in a tank to the festivities they'd probably salute and ask for the driver's autograph. You can't entirely blame those goons on Staten Island for making a beast of Eric Garner. It's how the us-versus-them mentality that started emerging in the 1980s has enabled cops to see their "mission" as a war, with citizens as their enemies, and blacks of course, or anything off-white and worse, as worse than enemies: as animals. If you think this is hyperbole, have a look at the Eric Garner video. Nothing exaggerated there, especially not the outcome. Then imagine the daily and nightly horrors caught on video and inflicted on a few million Eric Garners around the country in the confines of unaccountable judge-and-jury policing.

The chokehold incidentally was outlawed at the New York Police Department 20 years ago. But who cares. Cops have their own rules, and if push comes to choke, they have their own prosecutors watching their back. As with Eric Garner, they probably guessed that they'd get away with it. And they have. That's justice in America, in post-racial black and white. Stop resisting.

Blaming the victim: Congressman says Eric Garner's death is his own fault for being fat

Video shows cop sarcastically waving to cameraman after choking Eric Garner

#ICantBreathe - Comedian Jon Stewart on Eric Garner grand jury decision: 'The idea that we live in a society, much less a post-racial society, is a joke'

Poll: Most New Yorkers want to see criminal charges in the death of Eric Garner

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

Police say a deer burst through the front doors of a New Jersey home, darted through the residence and ransacked the master bathroom.

Galloway police received a 911 call at around 3:30 p.m. Saturday from a woman reporting that a deer ran through her house while she was putting sweet potatoes in the oven. The woman said she followed the deer into the back of the house and locked it in a bathroom.

Responding officers found the glass on the front storm door shattered. They also found the frame on the main door damaged, indicating that the deer muscled its way through two doors to enter the home.

After a brief standoff, police escorted the deer from the home and released it into the wild.

The bathroom was significantly damaged.

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

© Agence France-Presse

The oil tanker was carrying an estimated 357,000 litres (77,000 gallons) of oil when it sank in the Sundarbans’s Shela river, home to rare Irrawaddy and Ganges dolphins.

Dhaka: An oil spill from a crashed tanker in Bangladesh is threatening endangered dolphins and other wildlife in the vast Sundarbans delta, officials warned on Thursday, branding the leak an ecological "catastrophe".

The tanker was carrying an estimated 357,000 litres (77,000 gallons) of oil when it sank in the Sundarbans' Shela river, home to rare Irrawaddy and Ganges dolphins, after colliding with another vessel on Tuesday.

Rescue vessels have now salvaged the tanker, but officials said the damage had already been done as the slick had spread to a second river and a network of canals in the Sundarbans, the world's largest mangrove forest, which straddles India and Bangladesh.

"It's a catastrophe for the delicate ecology of the Sundarbans," the area's chief forest official Amir Hossain said. "The oil spill has already blackened the shoreline, threatening trees, plankton, vast populations of small fishes and dolphins."

Hossain said the oil had already spread over a 60-km-long area of the Sundarbans. Spread over 10,000 square kilometres, the Sundarbans is a Unesco-listed World Heritage Site and home to hundreds of Bengal tigers. The delta comprises a network of rivers and canals.

The accident occurred inside one of three sanctuaries set up for the dolphins, said Rubayat Mansur, Bangladesh head of the New York-based Wildlife Conservation Society.

The three areas were declared dolphin sanctuaries in 2011 after studies found they are home to some 6,000 of the animals. Fishing is banned there, but tankers and other boats are allowed to pass through. Speaking to AFP from the accident site, Mansur labelled the spill a "national disaster" and accused authorities of not doing enough to contain the damage.

"There are no coordinated efforts to tackle the disaster. The air has become toxic and we got news from fishermen they've seen dead fish. Crabs, which make up the largest single group in the forest are facing the biggest threat," he said.

"And if crabs are hit, the dolphins and tigers will be affected. Dolphins will find it very difficult to breathe this foul air," he added.

Authorities have launched a small-scale clean-up, but warned they lack the hardware and experience for a major effort.

"The tanker has been dragged to the shore. Two tanks housing 120,000 litres of oil remained intact, but the other four tanks with two-thirds of the ship's 357,000 litres of oil have already been spilled," shipping ministry spokesman Rafiqul Islam told AFP.

Islam said a government ship carrying 10,000 litres of oil dispersants would reach the spot within hours to begin a more substantial clean-up.

"The oil dispersants would break the spilled oils into droplets," he said, adding authorities have banned ships from using the Shela river channel until further notice.

Bangladesh's state-run petroleum corporation was also using buoys to restrict the slick, while local fishermen have been ordered to use nets to try to stop the oil entering small canals.

Want something else to read? How about 'Grievous Censorship' By The Guardian: Israel, Gaza And The Termination Of Nafeez Ahmed's Blog

The Raw Story

Focused on providing independent journalism.

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Thursday, 11 December 2014

Central banks have failed - they can't push wages higher

Discovery that Mars' Gale Crater was once lake evidence of wet and warm climate

SOTT Exclusive: Bright green fireball breaks up over southern Poland, 9 December 2014

SOTT Exclusive: Bright green fireball over breaks up over southern Poland, 9 December 2014

America in black and white: Cops kill because they know they can get away with it

More animal lunacy: Whitetail deer breaks through 2 doors at New Jersey home

'Catastrophic' Bangladesh oil spill threatens rare dolphins

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