Now we know why they got along so well

Are the Koch brothers the Left's new Emmanuel Goldstein?

I've known about the Koch brothers, Charles and David, for decades. The billionaire owners of Koch Industries have for years publicly supported free-market think tanks and liberty-oriented causes. Until recently, such civic engagement was considered patriotic.

But as George Orwell so brilliantly illustrated in 1984, hatred against some other is an invaluable tool for an authoritarian regime to control the masses. 1984's bogeyman was Emmanuel Goldstein, a traitor possibly invented by the regime, a face toward which the enslaved populace could direct their anger.

Ask any leftist you know these days about the "Koch brothers," and you're likely to provoke a look of disgust. Leftist political organizations and their acolytes in the media have turned "Koch brothers" into a dirty word, along with "Citizens United" and "corporation."

Watch MSNBC personality Rachel Maddow completely make up an entire news segment claiming the Koch brothers were behind a push to drug-test welfare recipients, an issue the Kochs had absolutely nothing to do with.

The year of the 1%ers

What bitter irony that in the year following the re-election of the most left-wing President in history, America's wealth and income inequality continues surging to new highs.

Real estate is re-bubbling, the stock market is skyrocketing, but job creation is slow and the new jobs tend to be low-paying and/or part-time.  Real median household income is still well below where it was a decade ago.

There are many reasons for the growing inequality.  At the top end, Fed easy money is at the top of the list for increasing stock and real estate wealth and incomes in banking, real estate development, and related industries.  The crony capitalist / corporatist regime in Washington D.C. is not far behind, with the Washington suburbs becoming one of the wealthiest areas in America based on buying and selling policies that rule the rest of us.

At the other end of the spectrum, automation and outsourcing certainly play a large role in the decline of the middle class.  But throughout history, jobs lost to technology have been replaced by new jobs in new industries.  Is this time structurally different?  The new Obamacare mandate certainly doesn't help.  Why would businesses hire more full-time employees with expensive Obamacare mandates when they can much more cheaply hire part-time, or even outsource or automate?  High consumer indebtedness, too, surely discourages business expansion, as there's no point making more products if the customers are maxed out.

What's the outlook for 2014?  Wall Street strategists see an acceleration in economic growth based on the housing rebound and the domestic energy boom.  That's certainly plausible, and even looks like the default scenario barring an unforeseen shock.  Rising health care costs due to Obamacare could certainly be one such shock, but would likely take more than a year to derail the recovery.  So a best guess for 2014 would be more of the same: Wall Street and Washington lobbyists getting richer, the middle class struggling under heavy debt loads and stagnant income.

Given that outlook, Charles Hugh Smith's timeless advice seems especially timely:

Debt is serfdom, capital in all its forms is freedom. The only leverage available to all is extreme frugality in service of accumulating productive capital.

Get out there and accumulate some capital. The outlook ain't getting any better for labor.

News you can use

McDonald's internal employee web site gave employees advice on how much to tip their maids and pool boys.

'Twas Christmas Eve, Babe

Richard Riordan and Tim Rutten have absolutely no idea what they're talking about

It's bad enough when one person writes something obviously wrong (like Chriss Street did last week).

But how do two supposedly intelligent people collaborate on a short editorial and both not realize that what they are writing is ridiculous?

Richard Riordan and Tim Rutten in the Sacramento Bee, on whether to default on municipal bondholders instead of cutting pensions:

Some will argue that it’s better to hurt “fat cat” investors than retirees on fixed incomes. That’s nonsense, however. The majority of municipal bonds are purchased by funds whose shares are held by private pensions and individual 401(k) accounts precisely because they’ve been seen as low-risk investments. That means that trying to resolve a municipal bankruptcy entirely on the backs of bondholders just spares one group of working people by hurting another.

That's nonsense, however. Municipal bonds are tax-free (other than the short-lived Build America Bonds), so it would be financial malpractice to put them in a tax-sheltered account such as a pension fund or 401(k). The tax-free status is of most benefit to high-net-worth investors, and that's who owns the vast majority of municipal bonds (whether through a fund or held directly).

There are plenty of reasons not to advocate default before pension cuts. But pension funds and 401(k)s holding muni bonds is not one of them.

What to get for the WCV reader who has everything

Zombucks, the currency of the apocalypse. My favorite is the Walker (above), which is sold out but you can still find it on eBay.