Softpanorama

Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
May the source be with you, but remember the KISS principle ;-)
Skepticism and critical thinking is not panacea, but can help to understand the world better

Coronavirus recession of 2020

Coronavirus is not the main cause; but it is a powerful catalyst  as pre-existing conditions, especially the derivatives bubble,  point to the downturn

News  COVID-19 Epidemic Recommended Links Financial skeptic Media as a weapon of mass deception US and British media are servants of security apparatus The importance of controlling the narrative
The Real War on Reality Casino Capitalism Financial Sector Induced Systemic Instability of Economy Stability is destabilizing: The idea of Minsky moment Groupthink Fragility of neoliberal globalization and US-China trade war US-China trade war
Patterns of Propaganda Is national security state in the USA gone rogue ? Manifactured consent US Presidential Elections of 2020 Trump's impulsivity and incompetence Trumpcare scam and staggering incompetence of Trump administration Nation under attack meme
Soft propaganda False flag operations as an important part of demonization of the enemy strategy Nineteen Eighty-Four Media-Military-Industrial Complex Propaganda Quotes Humor Etc

COVID-19 can be the catalyst for the economic recession

Neoliberalism created long and often convoluted supply chains to countries with cheap labor. They were temporary disrupted by the epidemic as China slowed down.  in January and February. But as of March China restored over 80% of its production capabilities disrupted by the virus). So now the question is how disruptive will the epidemics for the USA itself. Certain sectors a such are airlines, oil industry, hospitality and restaurants are already feeling the impact. 

As far as I understand that disease (highly infectious virus phenomena) can serve as a catalyst for the economic recession and as such is a very serious economic challenge (betting odds on a US recession recently jumped from 25% to 32% ), much less a public health challenge (despite MSM hyping the threat, the mortality is probably between one and two percent), lower for younger folk and people without serious chronic diseases (especially cardiovascular and lungs related; smokers can be added to the latter category), higher for people over 60 and with chronic diseases.  Data confirm that children and teenagers appear are both  less susceptible to this infection (approx. ten times less that people in their 30th) and if infected (typically in the family) have much better prognosis (almost no critical cases). Like any flu epidemic this infection kills mainly old and already sick folk, especially with heart diseases, lung diseases (including heavy smokers), and suppressed immune system.  

In view of USA media hysteria about Coronavirus COVEL-19, we need to concentrate on facts, not fears. And below I will try to provide some of them (as little as know about this issue, as I am a programmer, not a virologist ;-)  Looks like healthy people younger then 60 have little to fear but fear itself. But fear is addictive snfd it looks like panic, including panic buying had spread. Such events tend to increase the level of government control over population.  That's why they create fearful events or exaggerate naturally occurring events over and over again

As far as I understand that situation this disease (highly infectious virus phenomena) is a serious economic challenge (creating a possibility of "Coronavirus recession"), much less a health challenge (mortality is probably between one and two percent), lower for younger folk and people without serious chronic diseases (especially cardiovascular and lungs related; smokers can be added to the latter category).

Neoliberal MSM, which are practically always are stock market cheerleaders, trying to detail Trump behaved horribly in this respect spreading rumors and fear, often completely unsubstantiated, accelerating economic downturn.  In this sense Trump has a point when is called MSMS coverage of Coronavirus epidemics a hoax (Trump campaign blasts media for 'massively dishonest' claim POTUS called coronavirus a 'hoax' Fox News).  And Trump hit the nail in his famous "Caronovirus" (innocent misspelling) twit: "

Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Caronavirus look as bad as possible

The main danger is a fact that Coronovirus hit  the globalized supply chains and severely affected several industries such a tourism and air travel.  China slow down affects global production chains and might create a snowball effect. But the slowdown was just two month long. As of March 1, 2020 China  is back to over 80% of production. Still some unpleasant surprises are still possible:

HHH 02/29/2020 at 4:24 pm

If this virus shows up and hits hard in say Saudi Arabia and other oil producing nations the narrative will totally change. It will go from just demand destruction from consuming nations to no supply coming out of producing nations.

Frightened people often behave irrationally and that typically contributes to the economic downturn as well. Not the US economy was especially healthy before this event. In August, a survey of economists by the National Association for Business Economics 72% of analysts expected a US recession by the end of 2021. Of them 38% believed a recession will strike by the end of this year. A UN report published in September similarly warned of a worldwide recession this year.

If coronavirus COVID-19 is like other Coronaviruses it probably, like President Trump suggested,  will “go away” in April, as temperatures warm. Most Coronaviruses are seasonal, but there was an outbreak in Dominical Republic resorts in summer 2018 which was atypical. So it it’s not yet clear if the new virus will follow the same pattern — and experts caution against banking on the weather to resolve this outbreak (Will the New Coronavirus 'Go Away' in April - FactCheck.org)

Several days later, in a White House meeting with state governors, he repeated the idea and was more specific on the outbreak’s timeline.

Trump, Feb. 10: Now, the virus that we’re talking about having to do — you know, a lot of people think that goes away in April with the heat — as the heat comes in. Typically, that will go away in April. We’re in great shape though. We have 12 cases — 11 cases, and many of them are in good shape now.

At the time, the Centers for Disease Control and Prevention had confirmed 12 cases in the U.S., although the agency announced an additional case in California that day. As of Feb. 13, the tally had risen to a total of 15.

Later in his remarks to the governors, Trump praised China for “doing a good job” with the outbreak, and again mentioned his call with the Chinese leader. 

“I had a long talk with President Xi — for the people in this room — two nights ago, and he feels very confident,” Trump said. “He feels very confident. And he feels that, again, as I mentioned, by April or during the month of April, the heat, generally speaking, kills this kind of virus.”

But time definitely works against the virus as more sunny days are more deadly for it.

On Feb 27, 2020 US markets just had their fastest ever correction (10% drop of S&P500), and things aren't looking great economically for the next couple of months. Global recession is a real possibility by the middle of the year and central banks don't have mach space for stimulus. In some places  people are already scrambling for supplies, and they are likely panicking because there are numerous infected people confirmed in the local area... not the best situation to be shopping in.

I am also concerned about the global supply chain disruptions, The impact on the supply chain is a delayed effect. Several major manufacturers have already had to completely shut down manufacturing in China. That means that we will likely see spreading shutdowns as well soon.

This page about is mainly unsubstantiated, inflated by MSM panic and false narrative. The level of Fearmongering in US MSM  does not correlate with the known facts about the virus. See also [ORIGINAL VIDEO] Torn - Natalie Imbruglia (#Coronavirus Parody) - YouTube  The panic can do more damage than the virus itself.

 


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Sep 28, 2020] Massive Labor Income Losses Worldwide As Recovery Falters

Sep 28, 2020 | www.zerohedge.com

The latest data compiled by the International Labour Organization (ILO) sheds new light on COVID-19's "devastating" impact on the labor market reveals a "massive" drop in labor income and hours for workers worldwide.

Global labor income plunged 10.7%, or $3.5 trillion, in the first nine months of 2020, compared with the same period in 2019, ILO's new report found, which is one of the first measurements to quantify the deep economic scarring that has left the global economy paralyzed. The figure excludes income derived by governments to compensate for labor loss during the pandemic.

The report, titled " ILO Monitor: COVID-19 and the world of work. Sixth edition," was published on Wednesday (Sept. 23), notes how global labor hour losses in the first nine months of 2020 have been "considerably larger" than the estimate from the previous report issued in late June.

The report found the largest income loss was primarily in lower-middle income countries, where the labor income losses reached 15.1%.

"Workplace closures continue to disrupt labor markets around the world, leading to working-hour losses that are higher than previously estimated," ILO said.

The United Nations agency said global working-hour losses are expected to remain elevated in 3Q20, at 12.1%, or equivalent to 345 million full-time equivalent (FTE) jobs (based on a 48-hour working week). The revised downside projections for 4Q20 suggest a more pessimistic outlook for the global economy is ahead .

ILO's baseline scenario, for working-hour losses, in the fourth quarter, is -8.6%. The most optimistic is +5.7%, while the most pessimistic is -18%.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

"The latest data confirm that working-hour losses are reflected in higher levels of unemployment and inactivity, with inactivity increasing to a greater extent than unemployment. Rising inactivity is a notable feature of the current job crisis calling for strong policy attention. The decline in employment numbers has generally been greater for women than for men," ILO said.

The driver behind increased working-hour losses in developing and emerging economies is that informal employment continues to be affected by strict public health orders to mitigate the virus spread.

ILO said there's a "clear correlation" between how much fiscal stimulus a country does and working-hour losses. For example, more stimulus has offset a reduction in working hours. Many of these stimulus packages have been observed in high-income countries, as emerging and developing economies had limited borrowing capacity to finance such measures.

ILO Director-General Guy Ryder warned about a "huge fiscal stimulus gap," and the dire need for governments to unleash more fiscal stimulus to mitigate additional stresses in the global labor market.

"Just as we need to redouble our efforts to beat the virus, so we need to act urgently and at scale to overcome its economic, social, and employment impacts. That includes sustaining support for jobs, businesses, and incomes," Ryder said in a statement.

The report debuted as the US entered the 53rd day of the fiscal cliff. As discussed extensively in late July in" ' Look Out Below': Why The Economy Is About To Fly Off A Fiscal Cliff " , a lapse in stimulus has the risk in reversing the economic recovery.

A record of 25% of all personal income in the US is derived from the government via stimulus programs. Without stimulus, the economy craters.

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

With ILO's report noting more labor market stress is ahead for the final quarter of the year, it all suggests there will be no "V"- shaped recovery in 2H20.

And this could be the moment where Wall Street realizes the shape of the recovery was never a "V," resulting in the next wave down in stocks.


[Sep 26, 2020] As for the 'rules-based international order,' at best it is a euphemism for privately-controlled financial capitalism on a global scale

Sep 26, 2020 | www.moonofalabama.org

karlof1 , Sep 23 2020 15:56 utc | 84

Escobar reviews the UNGA's first day that revealed Trump's desperation a few alluded to above. Psychohistorian will be pleased to read Pepe's channeling his #1 premise:

" As for the 'rules-based international order,' at best it is a euphemism for privately-controlled financial capitalism on a global scale ." [My Emphasis]

As I wrote yesterday, every national leader I read backed a Multilateral UN and its Charter while including various degrees of reproach for the illegalities of the Outlaw US Empire and its vassals, even the Emir of Qatar :

"The outbreak of the Covid-19 pandemic has reminded us that we live on the same planet, and that multilateral cooperation is the only way to address the challenges of epidemics, climate and the environment in general, and it's also preferable to remember this when dealing with the issues of poverty, war and peace, and realizing our common goals for security and stability....

"And during the unjust and unlawful blockade it is going through it also has securely established its policy founded on respecting the rules and principles of international law and the United Nations Charter, especially, the principle of respecting the sovereignty of states and rejecting intervention in their internal affairs.

"And based on our moral and legal responsibilities towards our peoples, we have affirmed, and we will continue to reaffirm, that unconditional dialogue based on common interests and respect for the sovereignty of states is the way to solve this crisis which had started with an illegal blockade, and whose solution starts with lifting this blockade."

If the Saudi blockade is "unjust and unlawful," then all those imposed by the Outlaw US Empire are also.

Pepe apparently doesn't agree with Lieven's essay and writes:

"Sinophobia is the perfect tool for shifting blame -- for the abysmal response to Covid-19, the extinction of small businesses and the looming New Great Depression -- to the Chinese 'existential threat.'

"The whole process has nothing to do with 'moral defeat' [Lieven] and complaints that 'we risk losing the competition and endangering the world.'

"The world is not 'endangered' because at least vast swathes of the Global South are fully aware that the much-ballyhooed 'rules-based international order' is nothing but a quite appealing euphemism for Pax Americana -- or exceptionalism [Neocolonialism].

"What was designed by Washington for post-World War II, the Cold War and the 'unilateral moment' does not apply anymore."

As the dirty domestic underwear of the Outlaw US Empire becomes more visible to nations, they are emboldened to stand up for themselves and join the Strategic Partnership's Eurasian project.

[Sep 22, 2020] Why does neoclassical economics produce ponzi schemes of inflated asset prices?

Sep 22, 2020 | www.zerohedge.com

Sound of the Suburbs , 54 minutes ago

Why does neoclassical economics produce ponzi schemes of inflated asset prices?

  1. It makes you think you are creating wealth by inflating asset prices
  2. Bank credit flows into inflating asset prices, debt rises faster than GDP and you eventually get a financial crisis.
  3. No one notices the private debt building up in the economy as neoclassical economics doesn't consider debt.

This economics still has its 1920s problems. What is the fundamental flaw in the free market theory of neoclassical economics? The University of Chicago worked that out in the 1930s after last time. Banks can inflate asset prices with the money they create from bank loans.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.

"Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of "bank-financed inflation of securities and real estate" through the leveraged creation of secondary forms of money."

https://www.newworldencyclopedia.org/entry/Henry_Calvert_Simons

The IMF re-visited the Chicago plan after 2008.

https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

It looks like they did have some idea what the problem was.At the end of the 1920s, the US was a ponzi scheme of inflated asset prices. The use of neoclassical economics and the belief in free markets, made them think that inflated asset prices represented real wealth accumulation.

1929 – Wakey, wakey time. Why did it cause the US financial system to collapse in 1929? Bankers get to create money out of nothing, through bank loans, and get to charge interest on it.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

What could possibly go wrong?

Bankers do need to ensure the vast majority of that money gets paid back, and this is where they get into serious trouble.

Banking requires prudent lending.

If someone can't repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices they get into a world of trouble when those asset prices collapse.

As the real estate and stock market collapsed the banks became insolvent as their assets didn't cover their liabilities.

They could no longer repossess and sell those assets to cover the outstanding loans and they do need to get most of the money they lend out back again to balance their books.

The banks become insolvent and collapsed, along with the US economy.

When banks have been lending to inflate asset prices the financial system is in a precarious state and can easily collapse.

What was the ponzi scheme of inflated asset prices that collapsed in Japan in 1991?

Japanese real estate.

They avoided a Great Depression by saving the banks.

They killed growth for the next 30 years by leaving the debt in place.

https://www.youtube.com/watch?v=8YTyJzmiHGk

Debt repayments to banks destroy money, this is the problem.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

What was the ponzi scheme of inflated asset prices that collapsed in 2008?

"It's nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world" All the Presidents Bankers, Nomi Prins.

They avoided a Great Depression by saving the banks.

They left Western economies struggling by leaving the debt in place, just like Japan.

It's not as bad as Japan as we didn't let asset prices crash in the West, but it is this problem has made our economies so sluggish since 2008.

In 2020, the world is a ponzi scheme of inflated asset prices.

The use of neoclassical economics and the belief in free markets, made them think that inflated asset prices represented real wealth accumulation.

The central banks have to keep pumping in liquidity to stop all the ponzi schemes collapsing.

If the ponzi schemes collapse, this feeds back into the financial system when bankers have been lending to inflate asset prices.


play_arrow
Sound of the Suburbs , 1 hour ago

Bankers make the most money when they are driving your economy towards a financial crisis.

You don't want to leave them to their own devices.

On a BBC documentary, comparing 1929 to 2008, it said the last time US bankers made as much money as they did before 2008 was in the 1920s.

Bankers make the most money when they are driving your economy into a financial crisis.

https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

At 18 mins.

The bankers loaded the US economy up with their debt products until they got financial crises in 1929 and 2008.

As you head towards the financial crisis, the economy booms due to the money creation of bank loans.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

The financial crisis appears to come out of a clear blue sky when you use an economics that doesn't consider debt.

The economics of globalisation has always had an Achilles' heel.

The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn't look at debt, neoclassical economics.

Not considering private debt is the Achilles' heel of neoclassical economics.

Sound of the Suburbs , 1 hour ago

Come on.

Wakey, wakey.

You are just repeating 1920s mistakes.

The Americans wrapped a new ideology, neoliberalism, around 1920s economics and repeated the economic mistakes of the 1920s.

Policymakers couldn't see what Glass-Steagall did, as they thought banks were financial intermediaries.

It separates the money creation side of banking from the investment side of banking, and stops bankers producing securities; they buy themselves with money they create out of nothing.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

(There are intermediaries involved so it's not obvious, but this is effectively what is happening)

The whole thing turns into a ponzi scheme and you get a 1929 or 2008 type event.

1929 and 2008 look so similar because they are.

https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6

At 18 mins.

1929 and 2008 -- Minsky Moments, the financial crises where debt has over whelmed the economy.

They did save the banks this time, which avoided another Great Depression.

They left the debt in place, which caused a balance sheet recession.

As a CEO, I can use the company's money to do share buybacks, to boost the share price; get my bonus and top dollar for my shares.

Share buybacks were found to be a cause of the 1929 crash and made illegal in the 1930s.

What lifted US stocks to 1929 levels in 1929?

Margin lending and share buybacks.

What lifted US stocks to 1929 levels in 2019?

Margin lending and share buybacks.

A former US congressman has been looking at the data.

https://www.youtube.com/watch?v=7zu3SgXx3q4

"The Great Crash 1929" John Kenneth Galbraith

"By early 1929, loans from these non-banking sources were approximately equal to those from the banks. Later they became much greater. The Federal Reserve Authorities took it for granted that they had no influence over these funds"

He's talking about "shadow banking".

They thought leverage was great before 1929; they saw what happened when it worked in reverse after 1929.

Leverage acts like a multiplier.

It multiplies profits on the way up.

It multiplies losses on the way down.

Today's bankers seem to have learnt something from past mistakes.

They took the multiplied profits on the way up.

Taxpayers picked up the multiplied losses on the way down.

Mariner Eccles, FED chair 1934 -- 48, observed what the capital accumulation of neoclassical economics did to the US economy in the 1920s.

"a giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. This served then as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products which would justify reinvestment of the capital accumulation in new plants. In consequence as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped"

The problem; wealth concentrates until the system collapses.

"The other fellows could stay in the game only by borrowing." Mariner Eccles, FED chair 1934 -- 48

Your wages aren't high enough, have a Payday loan.

You need a house, have a sub-prime mortgage.

You need a car, have a sub-prime auto loan.

You need a good education, have a student loan.

Still not getting by?

Load up on credit cards.

"When the credit ran out, the game stopped" Mariner Eccles, FED chair 1934 -- 48

...... etc .....

x_Maurizio , 1 hour ago

DISAGREE ON EVERY SINGLE WORD, in particular with this:

rules/regulations/capital requirements have infected the global banking system and rendered it a harvesting operation for retail and a derivatives rule/regulation/capital requirment evasion device for the pursuit of profit

absolutely false.

Banking system is in the 4th part of a cycle that they have created !

  1. The first part has been capital harvesting (1970-1980)
  2. The second part has been deregulation and hunt for stellar return on investment
  3. The third part is financialisation and plunder of real economy
  4. The fourth part is the destruction of real economy through debt, deflation, extreme financial activity seeking for Yields. The banks have been the fortresses of globalisation. Commercial banking has been absorbed by investment banking. In this deflationary environment Commercial Banking has practice NO ROI.

You want to see the Banks working again? Reintroduce the Glass Steagall and separate again investment and commercial banking. Repeal all what has been done between 1987 and 1999. THAT will stop globalisation, that will stop the slow bleeding-to-death of westerne economies, that will save commercial banking and our capitalistic societies.

Pumpkin , 1 hour ago

Fake money, fake banks. All lies die in the end.

[Sep 20, 2020] David Stockman- How The Stock Market Got To Be So Out Of Touch With Reality -

Sep 20, 2020 | www.zerohedge.com

David Stockman: How The Stock Market Got To Be So Out Of Touch With Reality by Tyler Durden Sat, 09/19/2020 - 19:30 Twitter Facebook Reddit Email Print

Via InternationalMan.com,

International Man : Thanks to the shutdowns, economic activity on main street is at a standstill. Government, corporate, and personal debt is skyrocketing. Yet, the stock market is in a mania. Has the stock market become out of touch with reality, and if so, what are the consequences of that?

David Stockman : Both ends of the Acela Corridor have lost their marbles. This year, Uncle Sam borrowed $4 trillion in six months, the Fed printed $3 trillion in three months, and Wall Street drove the S&P 500 to 52X reported LTM earnings in the context of a deeper economic plunge than occurred in the worst quarter of the 1930s.

Therefore, Washington has become disconnected from any semblance of fidelity to sound money and fiscal rectitude, while Wall Street has turned into an outright casino, valuing stocks based on endless Fed liquidity injections and the delusion that momentum chasing is an investment strategy.

With respect to the rampant folly in the Imperial City, Treasury Secretary Stevie Mnuchin has always reminded us of Alfred E. Neuman of "Me Worry?" fame at Mad Magazine. Recently, he more than earned that moniker when, in the context of the current monetary and fiscal lunacy, he proclaimed that, "Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet."

That was the so-called Conservative Party speaking, and it is a shrill reminder that the Trumpified GOP has gone utterly AWOL when it comes to its true job in American democracy, namely, resisting the Government Party (Dems) and its affinity for feeding the Leviathan on the Potomac.

That is to say, according to even the Keynesian deficit apologists at the CBO, Uncle Sam will spend $6.6 trillion during the current fiscal year (FY 2020) while collecting only $3.3 trillion in revenue. That's Banana Republic stuff -- borrowing 50% of every dollar spent.

Yet the advisory ranks of the potentially incoming Kamala Harris regency are even worse. They are loaded with "deficits don't matter" ideologues and MMT crackpots who noisily argue that massive monetization of the public debt is not just a virtue, but utterly imperative.

Needless to say, this bipartisan commitment to all-in stimulus is financial catnip to the Wall Street gamblers because they are actually capitalizing into today's nosebleed stock prices, not the present drastically impaired economy on Main Street but a pro forma simulacrum of future prosperity based on the delusional presumption that massive debt and money-pumping actually create economic growth and wealth.

about:blank

me title=

The fact is, industrial production in August posted at a level first achieved in March 2006, and manufacturing output weighed in at levels originally attained in December 2004. So the misbegotten lockdowns and COVID-hysteria have cost the US economy 14–16 years of industrial production growth, yet this massive setback was not caused by some mysterious Keynesian-style faltering of "demand" that can allegedly be compensated for by new Fed credits plucked from thin air.

To the contrary, the current depression is the result of the visible shutdown and quarantine orders of the state, which are likely to linger for months to come or even intensify as the fall-winter flu season arrives. Undoubtedly, the Virus Patrol will spur further outbreaks of public fear based on "bad numbers" from the CDC, which are actually an agglomeration of cases and deaths from normal influenza, pneumonia, and a myriad of life-threatening comorbidities, not pure cases of the COVID alone.

But beguiled by "stimulus" and hopium, Wall Street completely ignores the contradiction between over-the-top demand stimulus and what amounts to supply-side contraction owing to economic martial law.

So, at 3400 on the S&P 500, the current LTM price-to-earnings ratio ranges between 52.1 times the earnings CEOs and CFOs certify on penalty of jail time ($65 per share) or 27 times the Wall Street brush-stroked and curated version ($125 per share), from which all asset write-offs, restructuring charges, and other one-timers/mistakes have been finessed out.

Of course, these deleted GAAP charges reflect the consumption of real corporate resources, such as purchase price goodwill that gets written off when a merger or acquisition goes sour, or the write-down of investments in factories, warehouses, and stores that get closed. As such, they absolutely do diminish company resources and shareholder net worth over time.

But for decades now, Wall Street has so relentlessly and assiduously ripped anything that smells like a "one-timer" out of company earnings filings with the Securities and Exchange Commission (SEC) that it no longer even knows what GAAP earnings actually are.

And it pretends that these discarded debits (and credits) to income are simply lumpy things that even out in the wash over time. They do not.

If ex-items reporting was merely a neutral smoothing mechanism, reported GAAP earnings and "operating earnings" would be equal when aggregated over several years, or even a full business cycle.

Yet during the last 100 quarters, there have been essentially zero instances in which reported GAAP earnings exceeded "operating income."

So, in aggregate terms, several trillions of corporate write-downs and losses have been swept under the rug.

During the second quarter of 2020, for example, GAAP earnings reported to the SEC totaled $145.8 billion for the S&P 500 companies, while the ex-items earnings curated by the street posted at $222.3 billion. That amounts to the deletion of nearly $77 billion of write-downs and mistakes, and it inflated the aggregate earnings number by more than 52%.

The game is all about goosing the earnings number in order to minimize the apparent price-to-earnings multiple, thereby supporting the fiction that stocks are reasonably valued and that nary a bubble is to be found, at least in the broad market represented by the S&P 500.

Still, valuing the market at 52 times trailing-12-month earnings during the present parlous moment in time -- or even 27 times if you want to give the financial engineering jockeys in the C-suites a hall-pass for $77 billion of mistakes and losses this quarter alone -- is nothing short of nuts.

Yet, the gamblers in the casino hardly know it.

Wall Street has already decided that current-year results don't matter a whit: the nosebleed-level trailing P/E multiples currently being racked up are simply being shoved into the memory hole on the presumption that the sell side's evergreen hockey sticks will come true about four quarters into the future, and if they don't, a heavy dose of ex-items bark-stripping will gussy up actual earnings when they come in.

Still, if you think that a forward P/E multiple of, say, 17.5 times is just fine and that flushing the one-timers is OK, then you still need $193 per share of operating earnings by the second quarter of 2021 to justify today's index level.

Then again, a 54% gain in operating earnings over the next four quarters ($193 per share in the second quarter of 2021 versus $125 per share in the second quarter of 2020) is not simply a tall order; it's downright delusional.

International Man : What could derail the Fed's ability to pump up the stock market casino with all this easy money? They simultaneously want zero interest rates and more inflation. It seems something has to give.

David Stockman : Yes, what's going to "give" sooner or later is the entire house of monetary cards erected by the Fed and its fellow-traveling global central banks over the last several decades. What they are doing is based on the triple error that inflation is too low, that deeply repressed and falsified interest rates fuel real growth, and that private savers are a hindrance to optimal economic function and need to be euthanized via confiscation of the real (after-inflation) value of their capital.

In the first place, as Paul Volcker pointedly reminded, there is nothing in the pre-1990 textbooks that says 2.00% inflation is desirable and is to be pursued with fanatical intensity -- even if actual inflation comes in only a few basis points below the magic target.

Indeed, if the 2% target is zealously pursued via prolonged pegging of interest rates to the zero bound and the massive purchase of bonds and other securities, the result is actually inimical to economic growth and sustainable gains in real wealth.

That's because falsified interest rates and inflated financial asset values lead to massive malinvestment via rampant financial engineering in the corporate sector and reckless borrowing to fund transfer payments and economic waste in the public sector.

Nor is that a mere theoretical possibility. The rolling 10-year real GDP growth rate has now fallen to just 1.5% per annum, or barely one-third of the 3–4% per year rolling averages which prevailed during the heyday of reasonably sound money and fiscal rectitude prior to 1971.

Beyond that, there really hasn't been any inflation shortfall from the 2% target, unless measured by the Fed's flakey yardstick called the PCE deflator. For instance, since December 1996, when Greenspan uttered his irrational exuberance warning, the CPI is up by 2.09% per annum and the more stable 16% trimmed-mean CPI is up by 2.12% per annum.

That hardly constitutes a "shortfall" from target, but the Eccles Building money-printers make the claim anyway because the PCE deflator gained slightly less over that 23 year period, averaging an increase of 1.71 per annum.

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

The truth is, no one except groupthink besotted central bankers would think that a mere 30 basis point shortfall over more than two decades justifies the massive financial fraud of pumping trillions of fiat credit into the financial system.

That's especially the case because the PCE deflator drastically underweights shelter costs and doesn't even measure the purchasing power of money against a fixed basket of goods and services over time, anyway. Instead, it is actually a tool of GDP accounting that reflects the changing mix of goods and services supplied to the household sector.

That is to say, if someone chooses to live in a tepee and spend nearly all of their paycheck on computers, TVs, and other high-tech gadgets that have been rapidly falling in price, that doesn't improve the exchange value of the dollar wages they earn; it just means that their tepee may be getting crowded with tech gadgets.

The same is true of the aggregate level. Just because the mix of goods and services changes over time, that doesn't miraculously rescue the purchasing power of the dollar from the ravages of inflation .

Nor does it alleviate the savaging of lower- and middle-class living standards that are the direct product of the Fed's misguided commitment to inflation targeting. In fact, during that same 23-year period, the annual rate of increase for professional services, shelter, food away from home, medical services, and education expense has been 2.6%, 2.7%, 2.8%, 3.5%, and 4.5%, respectively.

So once you set aside the foolishness of 2% inflation targeting and the Fed's sawed-off inflation measuring stick (the PCE deflator), what you really have is growth stunting monetary madness. There is no other way to explain a Fed balance sheet that went from $4.2 trillion on March 4 this year to $7.2 trillion by June 10.

After all, the first $3 trillion of Fed balance sheet took nearly 100 years to generate, from its opening in 1914 to breaching the $3 trillion marker for the first time in March 2013. That the Fed has now become a monetary doomsday machine, therefore, is no longer in doubt.

* * *

The truth is, we're on the cusp of a economic crisis that could eclipse anything we've seen before. And most people won't be prepared for what's coming. That's exactly why bestselling author Doug Casey and his team just released a free report with all the details on how to survive an economic collapse. Click here to download the PDF now.


[Sep 20, 2020] Newton, Physics, The Market Bubble -

Sep 20, 2020 | www.zerohedge.com

Newton, Physics, & The Market Bubble by Tyler Durden Sat, 09/19/2020 - 20:30 Twitter Facebook Reddit Email Print

Authored by Lance Roberts via RealInvestmentAdvice.com,

I have previously discussed the importance of understanding how "physics" plays a crucial role in the stock market. As Sir Issac Newton once discovered, "what goes up, must come down."

Andy Kessler, via the Wall Street Journa l, recently discussed a similar point with respect to the momentum in stock prices. To wit:

"Does this sound familiar: Smart guy owns stock in March at $200, sells it in June at around $600, but then buys it back in July and August for between $900 and $1,000. By September it's back at $200. Ouch. Tesla this year? Yahoo in 2000? Nope. That was Sir Isaac Newton getting pulled into the great momentum trade of the South Sea Co., which cratered 300 years ago this month. He lost the equivalent of more than $3 million today. Newton, whose second law of motion is about the momentum of a body equaling the force acting on it, didn't know that works for stocks too."

To understand what happened to the South Sea Corporation, you need a bit of history.

The South Sea History

In 1720, in return for a loan of £7 million to finance the war against France, the House of Lords passed the South Sea Bill, which allowed the South Sea Company a monopoly in trade with South America.

England was already a financial disaster and was struggling to finance its war with France. As debts mounted, England needed a solution to stay afloat. The scheme was that in exchange for exclusive trading rights, the South Sea Company would underwrite the English National Debt. At that time, the debt stood at £30 million and carried a 5% interest coupon from the Government. The South Sea company converted the Government debt into its own shares. They would collect the interest from the Government and then pass it on to their shareholders.

Interesting Absurdities

At the time, England was in the midst of rampant market speculation. As soon as the South Sea Company concluded its deal with Parliament, the shares surged to more than 10 times their value. As South Sea Company shares bubbled up to incredible new heights, numerous other joint-stock companies IPO'd to take advantage of the booming investor demand for speculative investments.

me title=

Many of these new companies made outrageous, and often fraudulent, claims about their business ventures for the purpose of raising capital and boosting share prices. Here are some examples of these companies' business proposals (History House, 1997):

A Speculative Mania

However, in the midst of the "mania," things like valuation, revenue, or even viable business models didn't matter. It was the "Fear Of Missing Out," which sucked investors into the fray without regard for the underlying risk.

Though South Sea Company shares were skyrocketing, the company's profitability was mediocre at best, despite abundant promises of future growth by company directors.

The eventual selloff in Company shares was exacerbated by a previous plan of lending investors money to buy its shares. This "margin loan," meant that many shareholders had to sell their shares to cover the plan's first installment of payments.

As South Sea Company and other "bubble " company share prices imploded, speculators who had purchased shares on credit went bankrupt. The popping of the South Sea Bubble then resulted in a contagion that spread across Europe.

Newton's Folly

Sir Issac Newton, the brilliant mathematician, was an early investor in South Sea Corporation. Newton quickly made a lot of money and recognized the early stages of a speculative mania. Knowing that it would eventually end badly, he liquidated his stake at a large profit.

However, after he exited, South Sea stock experienced one of the most legendary rises in history. As the bubble kept inflating, Newton allowed his emotions to overtake his previous logic and he jumped back into the shares. Unfortunately, it was near the peak.

It is noteworthy that once Newton decided to go back into South Sea stock, he moved essentially all his financial assets into it. In general, Newton was intimately familiar with commodities and finance. As Master of the Mint, his post required him to make many decisions that depended on market prices and conditions.

The story of Newton's losses in the South Sea Bubble has become one of the most famous in popular finance literature. While surveying his losses, Newton allegedly said that he could "calculate the motions of the heavenly bodies, but not the madness of people."

For More On The History Of Speculative Bubbles: "Devil Take The Hindmost."

History Never Repeats, But It Rhymes

Throughout financial history, markets have evolved from one speculative "bubble," to bust, to the next with each one being believed "it was different this time."

The slides below are from a presentation I made to a large mutual fund company.

What we some common denominators between all previous bubbles and now.

The table below shows a listing of assets classes that have experienced bubbles throughout history, with the ones related to the current environment highlighted in yellow.

It is not hard to see the similarities between today and the previous market bubbles in history. Investors are currently chasing "new technology" stocks from Zoom to Tesla, piling into speculative call options, and piling into leverage. What could possibly go wrong?

Oh, by the way, the slides above are from a 2008 presentation just one month before the Lehman crisis.

The point here is that speculative cycles are always the same.

The Speculative Cycle

Charles Kindleberger suggested that speculative manias typically commence with a "displacement" which excites speculative interest. The displacement may come from either an entirely new object of investment (IPO) or from increased profitability of established investments.

The speculation is then reinforced by a "positive feedback" loop from rising prices. which ultimately induces "inexperienced investors" to enter the market. As the positive feedback loop continues, and the "euphoria" increases, retail investors then begin to "leverage" their risk in the market as "rationality" weakens.

The full cycle is shown below.

During the course of the mania, speculation becomes more diffused and spreads to different asset classes. New companies are floated to take advantage of the euphoria, and investors leverage their gains using derivatives, stock loans, and leveraged instruments.

As the mania leads to complacency, fraud and manipulation enter the market place. Eventually, the market crashes and speculators are wiped out. The Government and Regulators react by passing new laws and legislations to ensure the previous events never happen again.

The Latest Mania

Let's go back to Andy for a moment:

"When bull markets get going, investors come out of the woodwork to pile in. These momentum investors -- I call them momos -- figure if a stock is going up, it will keep going up. But usually, there is some source of hot air inflating stocks: either a structural anomaly that fools investors into thinking ever-rising stock prices are real or a source of capital that buys, buys, buys -- proverbial 'dumb money.' Think of it as a giant fireplace bellows, an accordion-like contraption that pumps in fresh oxygen to keep flames growing." – Andy Kessler

We have seen these manias repeated throughout history.

In 2020?

What about today? Look back at the chart of the South Sea Company above. Now, the one below.

See any similarities.

Yes, that's Tesla

However, you can't solely blame the Federal Reserve as noted by Andy:

"Most simply blame the Federal Reserve -- especially today, with its zero-interest-rate policy -- for pumping the hot air that gets the momos going. Fair enough, but that's only part of the story. Long market runs have always allured investors who figure they're smart to jump in, even if it's late.

Everyone forgets the adage, 'Don't mistake brains for a bull market.'"

This Time Is Different NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

As stated, while no two financial manias are ever alike, the end results are always the same.

Are there any similarities in today's market? You decide.

"From SPACs, or special purpose acquisition companies, which are modern-day blind pools that often don't end well. Today's momos also chase stock splits, which mean nothing for a company's actual value. Same for a new listing in indexes like the S&P 500. Isaac Newton could explain the math." – Andy Kessler

You get the idea. But one of the tell-tale indications is the speculative chase of "zombie" companies which are only still alive primarily due to the Federal Reserve's interventions.

Fixing The Cause Of The Crash

Historically, all market crashes have been the result of things unrelated to valuation levels. Issues such as liquidity, government actions, monetary policy mistakes, recessions, or inflationary spikes are the culprits that trigger the "reversion in sentiment."

Importantly, the "bubbles" and "busts" are never the same.

I previously quoted Bob Bronson on this point:

"It can be most reasonably assumed that markets are efficient enough that every bubble is significantly different than the previous one. A new bubble will always be different from the previous one(s). Such is since investors will only bid prices to extreme overvaluation levels if they are sure it is not repeating what led to the previous bubbles. Comparing the current extreme overvaluation to the dotcom is intellectually silly.

I would argue that when comparisons to previous bubbles become most popular, it's a reliable timing marker of the top in a current bubble. As an analogy, no matter how thoroughly a fatal car crash is studied, there will still be other fatal car crashes. Such is true even if we avoid all previous accident-causing mistakes."

Comparing the current market to any previous period in the market is rather pointless. The current market is not like 1995, 1999, or 2007? Valuations, economics, drivers, etc. are all different from cycle to the next.

Most importantly, however, the financial markets always adapt to the cause of the previous "fatal crash."

Unfortunately, that adaptation won't prevent the next one.

Yes, this time is different.

"Like all bubbles, it ends when the money runs out." – Andy Kessler


[Sep 18, 2020] The New Year Gift, by Israel Shamir

Israel raises an important question about the role on neoliberal MSM is spreading COVID-19 panic.
Notable quotes:
"... Sinaisky claims that they brought the pandemics upon us because of the high debt problem, or by their inability to continue colonial plunder. Alternatively, a notable commenter to his text suggests that it was done because of overproduction of capital. In other words, the bank-lending rate is so close to zero, or even negative, that the whole machinery of capitalism was deluged in a flood of capital, and needed a major war, or indeed a global pandemic, to use it up. ..."
"... Because of this freak combination of forces, Sweden left its health policy in the hands of local professionals and remained free, while its neighbouring countries transferred the responsibility to globalist politicians and embraced quarantine. ..."
"... Thus the liberal Blairite media (beginning with the NY Times and the Guardian) played a key part in the Corona crisis. They were the piper; but who ordered the piper? ..."
Sep 18, 2020 | www.unz.com

...Do the US plutocrats (that is, the American über-wealthy) control all that? I think they would be amazed to learn that, especially "for generations", bearing in mind that the US was not a very significant factor before the WWI. In my view, the rich are not that smart. But the network exists; I have called its obscure controllers The Masters of Discourse .

Sinaisky claims that they brought the pandemics upon us because of the high debt problem, or by their inability to continue colonial plunder. Alternatively, a notable commenter to his text suggests that it was done because of overproduction of capital. In other words, the bank-lending rate is so close to zero, or even negative, that the whole machinery of capitalism was deluged in a flood of capital, and needed a major war, or indeed a global pandemic, to use it up.

Finally, Sinaisky claims that "atomization of society, breaking up community solidarity, eroding all non-monetary connections between people, destroying family relations and weakening blood ties, is a long-standing plutocratic project. Now, using this fake pandemic, the plutocrats have gone even further, now they train us to see each other not as friend, not as brother, not even as a source of profit, but mainly as a source of mortal infection." I wonder what makes him think that is an object of plutocratic desire? Certainly rich people want to make money and have more power, agreed. Is it necessary for them to atomise society? Who will they and their kids socialize with in such a ruined world?

I am not sure that there is a human agency with such goals. A non-human factor is a much more suitable culprit. In the old days, such a culprit was called Satan, and there were mighty organisations aka churches that fought Satan. In a charming movie, Luc Besson's Fifth Element, 'Love' defeats 'the Shadow', the personified evil that was about to obliterate Earth. Call it Satan, call it Shadow, the thing surely has human collaborationists in the mainstream media. I wrote about it in a piece called The Shadow of Zog . Indeed media should be sorted out in order to deal with it.

Sweden, this lucky country that avoided lockdown and its consequences, was saved by a rare media misstep. (This story has never been published though it is known to many Swedes.) Corona propaganda was carried out by the same liberal Bonnier-owned newspaper, DN (Dagens Nyheter), that played up Greta Thunberg. (Sinaisky's senses served him right: indeed Covid is a new Greta multiplied by a factor of 50). The Greta campaign had as its favourite high horse flygskam , or flight-shaming. Stop taking flights to lower carbon emissions , was the idea. Now we have no flights at all, so this movement disappeared after achieving its goals.

In February 2020, the DN organised a week-long sleeper train culture trip to North Italy for the Greta-following liberal elite. A berth on this train was priced starting at ten thousand Euros. The group went up to the Italian Alps and down to the Carnival in Venice and finally returned home, full to the brim with interesting experiences and coronavirus infections. A few days after the train returned to Stockholm, the disease broke out at large. Many of the liberal journalists that travelled on the Corona Express (as the train became known) fell sick, and their close relatives suffered, too. This incident caused the death of many elderly Jews, parents or uncles of those liberal journalists. It was a media phenomenon, and the Jewish media reported that the death rate among Swedish Jews was 14 times higher than their share of the population (well, it is not as bad as it sounds; only nine very old Jews died, all over 80).

As the people in authority knew all about the Corona Express, the liberal lobby was too ashamed to call for quarantine against the disease they has carried to Sweden. (Or they did call, but in sotto voce.) Furthermore, the DN was their only significant liberal media outlet, as Bonnier had sold his TV channel to a state-owned company in December 2019, making heaps of money but losing his ability to influence people.

Because of this freak combination of forces, Sweden left its health policy in the hands of local professionals and remained free, while its neighbouring countries transferred the responsibility to globalist politicians and embraced quarantine.

Thus the liberal Blairite media (beginning with the NY Times and the Guardian) played a key part in the Corona crisis. They were the piper; but who ordered the piper?

Israel Shamir can be reached at adam@israelshamir.net

[Sep 17, 2020] Dr. Quack- CDC's Redfield Claims Masks -- Guaranteed To Protect Against COVID

Sep 17, 2020 | www.zerohedge.com

Dr. Quack? CDC's Redfield Claims Masks "Guaranteed To Protect Against COVID" by Tyler Durden Thu, 09/17/2020 - 14:09 Twitter Facebook Reddit Email Print

Authored by Jordan Schachtel via The Mass Illusion,

In February, Redfield said healthy people should *not* wear masks.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-0&frame=false&hideCard=false&hideThread=false&id=1306270050261831683&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fmedical%2Fdr-quack-cdcs-redfield-claims-masks-guaranteed-protect-against-covid&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

Testifying before the Senate Appropriations Committee Wednesday morning, CDC Director Robert Redfield entered further into quack doctor territory, claiming that wearing a mask protects the wearer against the novel coronavirus, even more so than a high-efficacy vaccine.

"These facemasks are the important, powerful public health tool we have," Redfield said, while touching both sides of his mask and unconsciously contaminating it with his hands. "I might even go so far as to say that this facemask is more guaranteed to protect me against COVID than when I take a COVID vaccine," he added.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-1&frame=false&hideCard=false&hideThread=false&id=1306274937456529415&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fmedical%2Fdr-quack-cdcs-redfield-claims-masks-guaranteed-protect-against-covid&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

This appears to be another "scientific" evolution on masks from the "public health expert" class. At first, we were advised not to wear masks. Then, the "my mask protects you. Your mask protects me" mantra became the widely disseminated narrative. Now, masks apparently have the incredible power of protecting the mask wearer from the virus.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-2&frame=false&hideCard=false&hideThread=false&id=1306265374367850497&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fmedical%2Fdr-quack-cdcs-redfield-claims-masks-guaranteed-protect-against-covid&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

me title=

In February, Redfield said the exact opposite about masks.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-3&frame=false&hideCard=false&hideThread=false&id=1306290933596553217&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fmedical%2Fdr-quack-cdcs-redfield-claims-masks-guaranteed-protect-against-covid&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px

In the February hearing, Redfield told Americans not to buy medical-grade masks , saying there's "no role for these masks in the community."

There remains zero evidence that cloth masks or the earloop masks displayed by Redfield helps to slow the spread of COVID-19 or protect the wearer from infection. No country in the world has proven a link in slowing or stopping the spread due to mask wearing mandates, which are in effect in countless nations.

Given the lack of demonstrated evidence supporting it, mask-wearing has become a cult-like religious movement in the United States , one that relies on complete subservience to total mysticism. Members of the mask movement frequently target Americans who engage in non-compliance, likening these individuals to evil, plague-carrying menaces. Redfield's testimony will only add fuel to the mask mania that is sowing discord in America.

In his testimony, Redfield added that a COVID vaccine probably won't be available to the general public until at least the second or third quarter of 2021.

"If you're asking me when is it going to be generally available to the American public, so we can begin to take advantage of vaccine to get back to our regular life, I think we're probably looking at third, late second quarter, third quarter 2021," he testified, adding that first responders may have access to the vaccine before the end of the year.

Like many institutional bureaucracies in the federal government, the CDC has become plagued with corruption and "woke" politics. A whistleblower recently revealed that the CDC was forcing its staff to undergo "critical race theory" training.

https://platform.twitter.com/embed/index.html?dnt=false&embedId=twitter-widget-4&frame=false&hideCard=false&hideThread=false&id=1305619445520318465&lang=en&origin=https%3A%2F%2Fwww.zerohedge.com%2Fmedical%2Fdr-quack-cdcs-redfield-claims-masks-guaranteed-protect-against-covid&siteScreenName=zerohedge&theme=light&widgetsVersion=219d021%3A1598982042171&width=550px NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

Under Redfield's leadership, the CDC dropped the ball on preparing Americans for the U.S. coronavirus outbreak, as shown through internal emails displaying the bureaucracy as an organizational mess.

* * *

Thanks for reading! I would be honored if you are willing to support my work and subscribe to The Mass Illusion, my newsletter for people concerned about our "new normal."

[Sep 14, 2020] Gundlach Says High-Yield Bond Defaults May Almost Double - Bloomberg

Sep 14, 2020 | www.bloomberg.com

High-yield bond default rates may double as companies struggle with a protracted economic downturn even as the Federal Reserve props up valuations, said Jeffrey Gundlach.

The investment grade corporate debt market has skewed toward lower quality BBB- rated debt, but if just 50% of that were to be downgraded it could fuel a near doubling of the high-yield market, Gundlach said Tuesday on a webcast for his firm's flagship DoubleLine Total Return Bond Fund .

Gundlach's views reflect broad skepticism about the market's connection to economic realities. He criticized the Fed's emergency actions as buoying asset prices and spurring unsustainable corporate borrowing binges.

Risk assets such as equities and high yield credit markets are responding to this support, and government stimulus, disproportionately as the Covid-19 pandemic remains a threat to the recovery, he said.

"It's foolhardy to believe that one can have this kind of a shock to an economy and it just gets healed through a one-shot deal" from the Treasury, he said.

Gundlach pointed out that the global GDP forecast is -3.9%, whereas the U.S. lags at -5% despite the country's response to the Covid-19 crisis being "one of the highest in the world."

Highlighting the effect of the weekly $600 stimulus checks, he called it a distortion of the personal-income spending picture akin to the Fed's effect on the markets.

"This is a large incentive to stay on public assistance," Gundlach said, noting that benefit payments have exceeded many workers' regular income.

Gundlach also snubbed one of the market's favorite trades on a U.S. recovery, saying he's "betting against" the inflation-linked bond market. TIPS products have seen some of the strongest monthly inflows in four years, and market-implied expectations for inflation have touched a 2020 high. Gundlach repeated that the impact of the pandemic is deflationary.

[Sep 12, 2020] Some -Corporate Fear- Is Needed, Blain Urges -A Little Bit Of Good Old Creative Capitalist Destruction- -

Sep 12, 2020 | www.zerohedge.com


xxx 1 hour ago (Edited) remove link

DISAGREE ON EVERY SINGLE WORD, in particular with this:

rules/regulations/capital requirements have infected the global banking system and rendered it a harvesting operation for retail and a derivatives rule/regulation/capital requirment evasion device for the pursuit of profit

absolutely false.

Banking system is in the 4th part of a cycle that they have created !

The first part has been capital harvesting (1970-1980)

The second part has been deregulation and hunt for stellar return on investment

The third part is financialisation and plunder of real economy

The fourth part is the destruction of real economy through debt, deflation, extreme financial activity seeking for Yields.

The banks have been the fortresses of globalisation. Commercial banking has been absorbed by investment banking. In this deflationary environment Commercial Banking has practice NO ROI.

You want to see the Banks working again?

Reintroduce the Glass Steagall and separate again investment and commercial banking.

Repeal all what has been done between 1987 and 1999.

THAT will stop globalisation, that will stop the slow bleeding-to-death of westerne economies, that will save commercial banking and our capitalistic societies.

[Sep 11, 2020] Funny how "new normals" are rushing at us .9-11 was the new normal only 19 years ago, and 19 years later going on 20, a new "new normal" is upon us.

Sep 11, 2020 | www.unz.com

Priss Factor , says: Website Next New Comment September 11, 2020 at 4:09 am GMT

911 Truth for Grown ups

https://www.youtube.com/embed/7B7Tn2T5VDk?feature=oembed

omegabooks , says: Next New Comment September 11, 2020 at 4:44 am GMT

Funny how "new normals" are rushing at us .9-11 was the new normal only 19 years ago, and 19 years later going on 20, a new "new normal" is upon us. The next "new normal" will only be a few years away, 9 at the most Agenda 2030 and all that. By then, AI-enhanced RNA/DNA altered "new humanity" will be upon us, and anyone not in this new "new normal" will be outcast, shunned, shamed, and unemployed and if retired will not be able to get their SS and MC.

I don't care, screw the Great Reset!

Ralph B. Seymour , says: Next New Comment September 11, 2020 at 4:50 am GMT

"As it stands, there's only one thing we do know: the establishment at the core of the Hegemon and the drooling orcs of Empire will only adopt a Great Reset if that helps to postpone a decline accelerated on a fateful morning 19 years ago."

What?

I thought Covid 19 was a tool that the establishment is using to spark a Reset. And that Agenda 21 is part of a Reset.

So why would the establishment object to a "decline"?

Pft , says: Next New Comment September 11, 2020 at 5:12 am GMT

9/11 was just the first operation of the 21st century designed to accelerate the disintegration of society and economy to achieve Agenda 21 . It was actually a continuation of the 1975 TLC Project Democracy (sardonically named) that was kicked off by the Carter administration in 1977 and went into warp speed under Reagan/Bush. Its continued ever since but is picking up speed with the agreement of Agenda 21 in the 90's and its update Agenda 2030 in 2015. 2020 is the start of the final phase which will accomplish all of the Sustainable Development Goals of Agenda 2030, which is basically means total control over every individual and all resources.

Its pretty much been an Open Conspiracy. Those who refused to question 9/11 will double up on their blue pills to deny the Plandemic and expect a return to normal, dooming their descendants to a life of serfdom should they be lucky enough to avoid the culling.

The new Normal will make some dystopian films seem like utopia. Watch some old movies and TV series to remind you of old normal. They wont be available much longer unless you have the DVD or VHS and a machines to play it. The tapes and discs age so don't last forever. Books will last longer but those with digital collections will one day fund them disappeared

Miro23 , says: Next New Comment September 11, 2020 at 5:26 am GMT

The beating heart of this matrix is – what else – the Strategic Intelligence Platform, encompassing, literally, everything: "sustainable development", "global governance", capital markets, climate change, biodiversity, human rights, gender parity, LGBTI, systemic racism, international trade and investment, the – wobbly – future of the travel and tourism industries, food, air pollution, digital identity, blockchain, 5G, robotics, artificial intelligence (AI).

Since the US is a global has-been with most of its industry gone and living on debt – it's probably useful for it to claim leadership of a "Strategic Intelligence Platform". It can bury US problems internationally (same as it did with the dollar reserve) but in a more comprehensive way than simple Globalization (only economic). If the USA NWO claims international leadership of everything on all fronts, then they become the arbiters (in their opinion) of everything everywhere on the grounds of a higher morality.

It actually looks more like the folie de grandeur of a old alcoholic than the foundation of a new religion – and not something to pay attention to – apart from the fact that he tends to get violent with anyone who disagrees.

Intelligent Dasein , says: Next New Comment September 11, 2020 at 5:41 am GMT

Regarding your 50 questions, the fact that German and Russian intelligent warned the FBI about an imminent Muslim terrorist attack is not compatible with the idea that there was a controlled demolition.

Majority of One , says: Next New Comment September 11, 2020 at 5:46 am GMT

Ah yes, the Beast reveals itself as a sensurround global hamster cage with a plethora of control mechanisms hardwired through emergent software memes in celebration of the planned future of total abstraction. Abstract reality. The hubris of the plutocratic, oligarchic and technocratic elites is of a Promethean orgasm of trans humanistic values systematically gorging itself on their perceived future of an enserfed humanity comprised of those who will compromise truth, honor, justice, beauty and love–all in the service of mammon.

Not only is human nature to be subsumed to a mechanistic mindset gone ballistic in the visions of absolute domination, but the ongoing assault on the natural world will be a by-product of this Re-set. Stated simply, these schemers are playing God and have assembled the tool-kit, which in their minds, will allow for no compromise, no mistakes. These people are either spiritually vacuous or are imbued with an evil that totally negates a natural order which is cosmic and universal in scope. Ultimately their dreams and schemes will implode like the legendary Tower of Babel. Creation is not about to be undone by those who have convinced themselves that they can control everything.

Mother Nature is not a mere lump of matter. She is a sentient being who is cosmically connected and connective. Consider the storms, the blizzards, the fires and the systematic destruction of our very atmospheres, to say nothing of oceanic life in all its magnificent manifestations. Mama is not in a good mood and when she has had all she can take ..

R.C. , says: Next New Comment September 11, 2020 at 5:59 am GMT

"Strategic Intelligence Platform" should be renamed something like "s Strategic Intelligence Millennial Platform" (SIMP)
R.C.

TheTrumanShow , says: Next New Comment September 11, 2020 at 7:37 am GMT
@Intelligent Dasein

" the fact that German and Russian intelligent (sic) warned the FBI about an imminent Muslim terrorist attack is not compatible with the idea that there was a controlled demolition."

How so? The US architects of a controlled demolition could have quite easily created fake "chatter" and fake "intelligence" about an imminent Muslim terrorist attack.

Thomasina , says: Next New Comment September 11, 2020 at 8:15 am GMT
@Intelligent Dasein be found on Youtube titled "Former NIST Employee Speaks Out On World Trade Centre Towers Collapse Investigation". It's 31 minutes long, but he says the following at approximately 18 minutes in:

"Look at the symmetry. These buildings come straight down, or almost straight down.

Asymmetric damage does not lead to symmetric collapse. It's very difficult to get something to collapse symmetrically because it is the Law of Physics that things tend towards chaos. Collapsing symmetrically represents order, very strict order.

It is not the nature of physics to gravitate towards order for no reason. It will gravitate towards chaos. It is very difficult to get a building to collapse symmetrically."

dimples , says: Next New Comment September 11, 2020 at 8:25 am GMT

I can't make any sense out of this article. It reads like a lot of stock sentences jumbled together by a computer program.

Nancy Pelosi's Latina Maid , says: Next New Comment September 11, 2020 at 8:35 am GMT
@PetrOldSack actor/author, how could he be, our cherished "thinkers" are as few and making up as they go, seconded by the crude second tier public domain politicians, the corporate mongers, them being even less prone to visionary skill. This "thing" can go wrong in all kinds of ways, but real it is, and some derivative globally altered reality is there to stay. Brusquely, genuinely."


The Atlantic
tells us that "Overall, bots are responsible for 52 percent of web traffic" and I think we're looking at Exhibit A.

https://www.theatlantic.com/technology/archive/2017/01/bots-bots-bots/515043/

skrik , says: Next New Comment September 11, 2020 at 8:48 am GMT
@Intelligent Dasein

an imminent Muslim terrorist attack is not compatible with the idea that there was a controlled demolition

Q: Why not? In fact, just as the 3 WTC towers were pre-loaded with explosives, so the alleged hijacker-piloted a/cs and resulting photogenic explosions were pre-planned 'Hollywood special effects' as critical components. How else to convince the insouciant punters, except with a well-scripted and executed 'whiz-bang?' Then, see the reports of putative Muslim hijackers doing dope and/or booze with lap-dancing bar-girls beforehand. You do yourself a disservice by denying *humongously obvious* controlled demolition. Tip: Try not to be silly.

EL PMIS , says: Next New Comment September 11, 2020 at 8:52 am GMT

To unravel the enigma i wonder if one does not need to go completely eurocentric.
1848 unraveling the empires or at last a planting of the seeds.

1948 the new_world order is established. With its counterpart in the east. Essentially a ynraveling of 1848 which was a crystallisation of the 30 year was and the peace of westphalia. Neither established empire being a nation while a very different nationbuiling started in europe compared to the pre-great war.

2048, no doubt some kind of replacing the new_world order with a new world_order.
One way or anothr to serve europes plutocrats. And with an eye on unraveling the previous 1948 situation. Soviets are gone, so now the disunited states of america has to go and be reduced to a new balkans.
Perhaps sweeping away europe too this time. Arabobantustan unable to sustain a developed economy certainly is on the timeline for europe.

Now. Regardless of whether the ghost of Herr Weishaupt is hanging around, the timeline is awfully useful for anyone like the anglozionist cabal of assorted late 1800s multimillionaires and their respective business empires cross inheritances into socalled NGOs. The names being quite well known like rockefeller, carnegie, rhodes etc.

Then again maybe no one really knows what they are doing anymore and there is no plan at all, just many very confused very badly planned plans. And all that will ensue is chaos and destruction and no order afterwards worthy of the name. 150 years of pisspoor mismanagement tends to have such consequences.

Alfred , says: Next New Comment September 11, 2020 at 9:34 am GMT
@Robert White billion from its Term Securities Lending Facility. It wasn't until May 31, 2008, when JPMorgan Chase closed its deal with Bear Stearns. However, the GAO reported that Bear Stearns "was consistently the largest PDCF borrower until June 2008." The Fed shows that Bear Stearns continued to receive funds until June 23, 2008.

Did the Fed Begin Secret Bailouts in 2007 Before Anyone Knew of the Pending Crisis? | Armstrong Economics

gotmituns , says: Next New Comment September 11, 2020 at 9:49 am GMT

9/11 – inside job – implosion.

Timur The Lame , says: Next New Comment September 11, 2020 at 10:05 am GMT

This article pretty much sums it up as best as I can understand. I had often stated to people of similar mind to watch for the next major 'move' after 9/11, it will be a dandy because with possibly a few white knuckle moments, the Masters will have concluded that they can get away with ANYTHING, internet or no. Truth simply fails to get traction in the minds of the majority of 'screen zombies' and the majority is all they ever needed.

Now where things might get really scary is if/when they decide to implement the great cull. From a dispassionate perspective, it is something they simply have to do. In 1950 the world population was about 2 billion. Now it is about 8 billion. If a population graph was drawn from say, 50,000 years ago it would be long and flat and then it would shoot up near vertically at the end.

The problem now of course is that with technology and agricultural machinery of all sorts the system doesn't even require the population of 1950. I recall one Master being on record as mentioning 500 million as being ideal. That is somewhat more than a cull.

Some fools say that a war is imminent for that express purpose. Sorry wars (even nuclear, which would affect the Masters too), won't result in the butcher's bill required. Only a global pandemic could conceivably attain the goal and like a neutron bomb, leave the infrastructure intact.

But this Covid is a hoax you say. Probably so, but what about this proverbial 'second wave' that is repeated like a Hare Krishna mantra everywhere. What if they released a REAL nasty virus (which we know they have somewhere) that has a proven vaccine for the 1% and then let the fun begin knowing full well that they would not be fingered for it because a pandemic is already on the move?

If it doesn't happen this fall then I may be wrong in my speculation. I always hope to be wrong when dealing with topics of unfathomable evil.

Cheers-

Liza , says: Next New Comment September 11, 2020 at 10:18 am GMT
@Majority of One

Mama is not in a good mood and when she has had all she can take ..

Or, as some folks like to say, "God is mad". But it's all the same thing. Maybe the schemers should be forced to read The Fisherman's Wife. However, they probably won't have any little hovel to go back to.

Robjil , says: Next New Comment September 11, 2020 at 10:51 am GMT
@skrik neither eyewitness testimony nor a visual documentation of the boarding process.

19 hijackers myth taken as " fact" by the 9/11 Commission. Any contradictions of this myth were ignored by this Commission.

•By ignoring the numerous and glaring contradictions regarding the identities of the alleged hijackers, the 9/11 Commission manifested its intent to maintain the official myth of 19 Muslim terrorists.

•By refusing to allow interviews with personnel who were responsible for passengers boarding the four aircraft of 9/11, the airlines manifested their intent to conceal evidence about the circumstances of the aircraft boarding.

Svevlad , says: Next New Comment September 11, 2020 at 11:30 am GMT

Sooo

Torch the power plants, you say?

Abdul Alhazred , says: Next New Comment September 11, 2020 at 11:38 am GMT

When 9/11 occurred my immediate thoughts went back to an January 2001 when Lyndon LaRouche warned that if John Ashcroft were to become Attorney General that then one could look forward to a new Reichstag fire type situation occurring within the context of the fact that the world financial system was finished and that the financial oligarchy was prepared to throw over the chess board so to speak.

LaRouche was right and because his understanding of history was correct as it is based upon a method of hypothesis that had already demonstrated the trajectories of economic collapse and attendant political operations long before, with an understanding of how to get out of the mess as demonstrated in history, particularly the Renaissance.

Of note here is a recent article of interest, which helps tell why LaRouche is hated!

https://larouchepac.com/20200908/antifa-back-future-1967-68-counterintelligence-primer-further-investigation-and-action

Hank Rearden678 , says: Next New Comment September 11, 2020 at 11:58 am GMT

This is a very interesting, all encompassing article, well done indeed. For a simpler and perhaps more digestible and more narrowly focused look at the SARS-Cov2 issue specifically, this is a worthwhile video https://www.youtube.com/watch?v=sQE7S6c-SCk&t=50s

Alfred , says: Next New Comment September 11, 2020 at 12:16 pm GMT
@gotmituns

9/11 – inside job – implosion.

Lots of micro nukes. Plenty of distractions from alleged "conspiracy theorists" in the pay of you know who.

The nanothermite theory was a psyop from the beginning to hide the nuclear event at the towers.

Startling: The Story of the 9/11 Breath-though that Solved it all and debunked the 'truthers' forever

annamaria , says: Next New Comment September 11, 2020 at 12:21 pm GMT
@PetrOldSack ght in wars or participated in other combat operations in at least 24 countries. The destruction inflicted by warfare in these countries has been incalculable for civilians and combatants Between 2010 and 2019, the total number of refugees and IDPs globally has nearly doubled from 41 million to 79.5 million .

These babies-loving American X-tians and other Samantha Powers and Obamas, have arranged quite a spectacular mass slaughter of children of all ages to please the "deciders" (Masters of the Universe).
None of the murderous idiots has been punished, yet Assange the truthteller is in a high-security prison Belmarsh, handled by the same murderous scum. Kali , says: Next New Comment September 11, 2020 at 12:24 pm GMT

@PetrOldSack

My annotations are incomplete, but a mere "what comes to mind".

I would be interested to read them complete.
I appreciate your comment.

Thanks.

With love,
Kali.

Kali , says: Next New Comment September 11, 2020 at 12:53 pm GMT
@Majority of One eation is not about to be undone by those who have convinced themselves that they can control everything.

I couldn't agree more with this.

The intelligence of Existance Itself, the very Nature of Being is anathema to to those specs of dirt who would attempt to determine the will of God.

The same sentience which is manifest in Man is repeated and applified throughout all of existance. How could it be any other way when everything we experience is fractal? Just as God may be experience at the centre of our very Being, so the same God is observed within the All of Everything.

Thank you for your comment.

With love,
Kali. Johnny Walker Read , says: Next New Comment September 11, 2020 at 12:55 pm GMT

A great look into what is going on, and what is still to come. Yet the sleeping, brain dead, face diapered, mind controlled masses of the global corporation formerly known as he United States spend every waking hour saying "hooray for our guy". Never once does it occur to the sheeple both are puppets, controlled by the international banksters and their minions.

One of these morons has undeniable ties to the Russian mob, while the other has deep ties to the Chinese Communist Party. If that weren't bad enough, they both swear undying loyalty to that little shit stain in the Middle East which seems to project more influence on world politics than the two formerly mentioned giants.

I know it is no accident the printing of this article occurred on the anniversary date of the last, greatest mind fuck to hit America since Dec. 7th, 1941. I guess the infidels have been shown a lesson and the world is now safe for a one world government technocratic Corporatocracy.

So here's to 3/11/2020(my official date for the roll out of the CV hoax), the ushering in of a new slave system, and the idiocy and gullibility of the global citizenry.

So enjoy your new bosses, as they are going to be far more tyrannical than your old.

https://www.youtube.com/embed/Un5oEdfrm_A?feature=oembed

skrik , says: Next New Comment September 11, 2020 at 1:01 pm GMT
@Robjil ry:'
[I see that the 1st image is not visible, kindly try this link:
alleged 'recovered' flight recorder ]
Q: How soft was that ground, anyway? Does anyone 'believe' that part of the official 9/11 narrative? Haw. Only the 'insouciant punters' were ever hoodwinked by such offensive, lying rubbish, all faithfully echoed by the 'lame-stream media.' rgds
ploni almoni , says: Next New Comment September 11, 2020 at 1:04 pm GMT
@Intelligent Dasein

Condoleeza Rice resisting at Congressional enquiry "N-o-o-o" and then admitting in a faint there was an "intelligence report" that said said "Ben Laden planning to use airplanes in terrorist attack" was play acting to confirm what they wanted people to believe. You will remember that you were taught to prepare in advance "red herrings" and leave deliberate confusions behind you to cover your trail.

Johnny Walker Read , says: Next New Comment September 11, 2020 at 1:18 pm GMT
@Majority of One

Here's hoping you're right, but I must say I have my doubts.

Getaclue , says: Next New Comment September 11, 2020 at 1:29 pm GMT
@Robert White traitors and infiltrated enemies not by any brilliance of the vicious Chinese Communist mass murderers -- if you like the idea of taking a van ride for expressing your anti-Government thoughts you'll love the ChiCom "Model" being installed here now on all of us -- Ron Unz would be one of the first for the van ride if he tried to run a site like this in China by the way -- there is zero disputing this fact. David Rockefeller gave us the CFR, Trilateral Commission etc. and of course the WHO and: https://vigilantcitizen.com/latestnews/the-true-agenda-of-the-who-a-new-world-order-modeled-after-china/
skrik , says: September 11, 2020 at 1:45 pm GMT
@Alfred Haw. Or was that suppressed as well, along with the bulk-wreckage [=crime-scene evidence] which was destroyed by being exported as scrap? Haw again.

Nitty-gritty: There is no need to posit any 'exotics,' from nukes to DEW; standard explosives [both with OR without thermite/mate; only the 'best' tools = most suitable would have been deployed]; standard explosives could quite easily do the job, for example det-cord threaded into the floor-slab conduits can fully explain both the absence of floor in the rubble plus the billowing pyroclastic white dust-clouds [incidentally, explaining scorched vehicles]. And so it goes. A term for such reasoning = Occam's razor.

[Sep 11, 2020] Are Junk Bonds Suggesting A Stock Market Top Is Near by kimblecharting

The stock market now is completely disconnected from the economy. Stein's Law, which he expressed in 1976 states: "If something cannot go on forever, it will stop."
Notable quotes:
"... Junk Bonds play a critical role in highlighted investor sentiment. When junk bonds (lower-rated debt) is performing well, then that means investors are taking more risks. When junk bonds struggle, that means investors are taking on less risk. ..."
"... At the same time, there is a divergence between the stock market (the S&P 500 made new all-time highs) and Junk Bonds (well below all-time highs and 5 percent off 2019 highs). ..."
Sep 10, 2020 | www.zerohedge.com

As investors, we have several tools and indicators at our disposal.

Whether it is technical indicators such as Fibonacci levels, moving averages, or price supports, or fundamental indicators such as corporate earnings or economic data, we have a lot of information to use when making decisions.

Today's chart incorporates both. Junk Bonds play a critical role in highlighted investor sentiment. When junk bonds (lower-rated debt) is performing well, then that means investors are taking more risks. When junk bonds struggle, that means investors are taking on less risk.

So today, we highlight the Junk Bonds ETF (JNK). Using technical analysis, we can see that JNK is trading near line (A), a price level that has served as support and resistance over the past several years. It is currently serving as price resistance.

At the same time, there is a divergence between the stock market (the S&P 500 made new all-time highs) and Junk Bonds (well below all-time highs and 5 percent off 2019 highs).

So this is an important resistance test for junk bonds. Will Junk Bonds (JNK) break down from here (bearish) or break out (bullish).

What happens here will send an important message to stocks (and investors)!

[Aug 24, 2020] Why neoclassical economics is a yet another secular religious doctrine, and not a science

Highly recommended!
In a sense the USA is a theocratic society with neoliberal religion as the state religion. Not that different from the USSR whioch also was a theocratic society with some perversion of Marxism as the state religion.
Aug 24, 2020 | peakoilbarrel.com

Hickory Ignored says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak.
Post Peak

OK, now what?
It is so strange to be post-peak and not have high prices for crude,
and food.
I guess that will be coming.

note- biofuels should not be counted in liquids tally. It is a different animal, with the source being dependent on farming and soil, not drilling and geology. Just because ethanol is used for propulsion shouldn't matter- electrons and batteries aren't counted either, and rightly so. Those belong in a different category- transportation energy.

Schinzy Ignored says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see
https://www.youtube.com/watch?v=EYPapE-3FRw ). The problem is that it is always satisfied and hence gives absolutely no information about prices.

The latest iteration of our article on the oil cycle can be found at
http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

alimbiquated Ignored says: 08/16/2020 AT 9:52 AM

Another problem with market theory (beyond vagueness) is that it lacks a time axis.

The theory states that the relationship between price and supply moves along the demand curve, but doesn't say how fast, just that "in the long run" the system will reach equilibrium. Being in equilibrium means being somewhere on the demand curve.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

So for example, if prices go up, the demand quantity is expected to go down. The question is when.

Where does this go wrong? In classical market theory, for example, unemployment is impossible, because if labor supply outstrips demand prices (wages) should fall until until equilibrium is attained. This has been observed to be false on many occasions, including right now.

As Feymann states in the video, "If it disagrees with experiment, it's WRONG! That's all there is to it." Classical economics isn't just too vague, it is wrong.

Keynes joked about this that in the long term we'll all be dead. He meant equilibrium will never be reached, so we are never on the demand curve. He argued that "sticky prices", meaning the unwillingness to accept pay cuts, kept labor markets permanently out of equilibrium.

It's worth pondering whether oil prices are "sticky" as well. Saying yes is saying the law of supply and demand doesn't apply (in the short term). This year we have seen that both OPEC's politicking and panicky traders can cause wild swings in price unrelated to supply and demand.

Where market theory is vague is the shape of the demand curve. For example, if oil supply can't meet demand in the near future, as some here have posited, how high will prices go? Some claim it will go over $200, as people get desperate for it. Some claim that higher prices would increase efforts to find and drill more, putting a lid on prices. Some claim the shortage would crash the world economy, depressing prices. Some claim that faced with oil shortages, the world would simply switch to EVs, or stop wasting the gunk on poorly designed transportation systems, so prices would stay more or less the same.

Who is right? Nobody knows. So we don't know the shape of the demand curve. The theory is hopelessly vague.

Schinzy Ignored says: 08/16/2020 AT 12:25 PM

Good points. For all these reasons it is not surprising that the journalist Robert Samuelson noted last year that frequently economists don't know what they're talking about: https://www.washingtonpost.com/opinions/economists-often-dont-know-what-theyre-talking-about/2019/05/12/f91517d4-7338-11e9-9eb4-0828f5389013_story.html?noredirect=on&utm_term=.dc651d463df7 .

Han Neumann Ignored says: 08/17/2020 AT 8:25 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

Schinzy,

The price of crude oil is only part of the Peakoil phenomenon. How much is left in the ground counts, however more important is at which velocity the remaining Gb can be extracted. I am not a geologist, but common sense says that when an oilfield is well depleted (50-70%) the most of the remaining barrels will be extracted at a much lower speed, even at very high oilprices. With secondary and tertiary EOR technology most conventional oilfields will not produce the same or close to the same amount of barrels/day as before for many more years. That's also my conclusion from what I have read more than a decade ago.
Of course with high oilprices new, relatively small, oil fields will come online and (more advanced) EOR will start in other fields, but no matter how you look at it: depletion never stops. With most oilfields in the world past-peak, only a tremendous amount of money (needed to develop EOR) can prevent world crude oilproduction from falling like a rock. And all those EOR technologies will deplete oilfields faster. Big gains in the beginning, more disappointments later.
Will there be significant amount of shale oil developed in the future in other countries than the U.S. ? If so, is that wise, regarding an already existing runaway climate change ?

[Aug 24, 2020] I think its economy, stupid! in 2020 and it will decide the elections

Aug 24, 2020 | angrybearblog.com
Likbez, August 24, 2020 10:58 pm

I think "its' economy, stupid!" in 2020.

To be clear; none more deserving of dignity than the working people of America; they keep the nation running; they are America's better angels; and, they deserve to be better paid.

Those are lofty words. But what to do when there is not enough cookies for everybody. That's when economic ruptures occur (with one form being Minsky moments)

IMHO we need another Keynes now. Here is a quote from Keynesianism, Social Conflict and Political Economy, By Massimo De Angelis

In a sense, going back to Joan Robinson, the idea of rupture within the notion of historical time can also be found in Keynes, although with an important difference. Here the emphasis put on irreversibility implies of course qualitative change, and indeed the emphasis is put on the changing conditions underlying economic phenomena. Thus, for example, Joan Robinson discusses the notion of scarcity in relation to historical time:

The question of scarce means with alternative uses becomes self‐ contradictory when it is set in historical time, where today is an ever-moving break between the irrevocable past and the unknown future. At any moment, certainly, resources are scarce, but they have hardly any range of alternative uses.

The workers available to be employed are not a supply of "labor", but a number of carpenters or coal miners. The uses of land depend largely on transport; industrial equipment was created to assist the output of particular products.

To change the use of resources requires investment and training, which alters the resources themselves. As for choice among investment projects, this involves the whole analysis of the nature of capitalism and of its evolution through time. (Robinson 1977: 8)

Although the emphasis on rupture is introduced, in this historical time, "where today is an ever moving break between the irrevocable past and the unknown future," the sense of the "break," of rupture, is confined within the problems of capitalist accumulation, of the problems posed by the right proportions of, following Robinson's example, carpenters and coal miners.

History here does not present alternatives and defines itself clearly and simply as "historical objectivism" in the continuum of the capitalist relation, as contemplation of "what really was," that is, the "irrevocable [capitalist] past," and speculations about an "unknown [capitalist] future."

In Keynes, the unknown character of this future is translated in the status of the long run expectations of the investors which, to emphasize the difficulty of their modeling, in turn depends on their "animal spirits."

In Keynes, rupture as revolutionary, transcendental, rupture exists only in the form of a threat, implicit in the theoretical apparatus, in the difficulty to endogenize variables, in the reliance on "psychological factors," on investors' animal spirits which mysteriously respond to hints of this historical rupture, in the recognition of the difficulty to model behavioral functions, etc.

This threat is recognized through the status of long run expectations of the investors.

In the case of the liquidity trap, in which the infinitely elastic demand for money curve is used to portray a situation of hoarding that is, of capital's refusal to put people to work the threat is hanging over investors who perceive a gloomy future without hope for their profit.

The truly unknown future from the capitalists' perspective, the true moment of rupture in their temporal dimension, is recognized in order to be avoided, to organize the rescue of the capitalist relation of work. For this reason Keynes is not talking about given functional relations, and is presupposing a moving marginal efficiency of capital schedule (Minsky 1975.

The future is there to puzzle the investors in the present. The aim of economic theory is to inform economic policy to limit the puzzle within the borders of the capitalist relation of work. Although Keynes' theoretical apparatus is presupposing uncertainty for the future, this uncertainty is seen with the sense of urgency typical of a world in transition. In the discussion of the postwar Keynesian orthodoxy, it will be seen how this sense of urgency was lost, and the concept of time in economic theory changed, although it was far from returning to the "timeless models" of the classical period.

[Aug 24, 2020] Another rolling stone that illuminates the US necrotic process...unregulated dumping of radwaste onthe roads

Aug 24, 2020 | www.moonofalabama.org

Walter , Aug 24 2020 14:11 utc | 99

@ 95 another rolling stone that illuminates the US necrotic process...unregulated dumping of radwaste

tinyurl[dot]com/v3pva55

Evidently they actually spray the stuff on roads and, well, it's puckininsane stupid.

"..thing in this stuff and ingesting it are the worst types of exposure," Stolz continues. "You are irradiating your tissues from the inside out." The radioactive particles fired off by radium can be blocked by the skin, but radium readily attaches to dust,..."

(Honestly, I know it's hard to believe, but several immediate neighbors, possibly 1/3 of the town, actually expect to be levitated to heaven in "rapture". Thus, according to their a priori assumption, the poisoning is perfectly ok."

Anyway, both the bizarre beliefs and the idiotic actions (including with radwaste) are, like Trump, a product, a manifestation. We agree.

About Rockefeller - Corbett Report has a very deep examination of that family and their less well-known policy set.

[Aug 24, 2020] OPEC July 2020 Production Charts " Peak Oil Barrel

Notable quotes:
"... $40s WTI and Brent are wholly unsustainable prices. I'd argue that $50s and $60s are also if growth is being sought outside of a few areas. ..."
"... SS, there is no doubt that the pandemic will hasten peak oil supply. Many shut-in wells will not re-open. Frac spreads are being sold for scrap. Rigs are being decommissioned. Plus we are still producing at 80 to 90% of former levels. That means depletion is still continuing. So when they do get around to producing flat out again, the oil will just not be there. ..."
"... close to 100,000 job losses in the oil industry, many folks in their 50s and 60s. Hard to see how they bring folks on for another boom with the loss of all that skilled labor. ..."
"... So, maybe $100 oil over a period of time could turn this tide, but sub-$50 WTI sure won't. ..."
"... Yes, the future is hard to predict. But absent some tremendous financial return potential, why would young people have any interest in making a career of US upstream E & P? ..."
Aug 24, 2020 | peakoilbarrel.com

Ron Patterson Ignored says: 08/15/2020 AT 8:15 AM

OPEC peaked in 2016, Russia peaked in 2019, and the USA very likely peaked in 2019 also. And the vast majority of all other nations have peaked also as evidenced by their continuing decline. That should be enough evidence for anyone.

shallow sand Ignored says: 08/15/2020 AT 8:33 AM

Ron.

$40s WTI and Brent are wholly unsustainable prices. I'd argue that $50s and $60s are also if growth is being sought outside of a few areas.

The longer prices stay low due to the pandemic, the more likely the world has passed peak supply.

I don't see any sign that this pandemic will be over anytime soon.

Ron Patterson Ignored says: 08/15/2020 AT 8:46 AM

SS, there is no doubt that the pandemic will hasten peak oil supply. Many shut-in wells will not re-open. Frac spreads are being sold for scrap. Rigs are being decommissioned. Plus we are still producing at 80 to 90% of former levels. That means depletion is still continuing. So when they do get around to producing flat out again, the oil will just not be there.

As to the longevity of the pandemic, one can only guess. But things will never be back to the free and easy ways of the past. International travel will never be back to what it once was. There will be fewer travel vacations even within nations. The possibility of the virus returning will forever be on everyone's mind.

Stephen Hren Ignored says: 08/15/2020 AT 12:47 PM

Also close to 100,000 job losses in the oil industry, many folks in their 50s and 60s. Hard to see how they bring folks on for another boom with the loss of all that skilled labor.

Han Neumann Ignored says: 08/16/2020 AT 8:08 PM

Ron,

Once that a, in most cases, curative combination of medicines is available and one or a few very effective vaccins are registered and rolled out, it remains to be seen how 'normal' life will get again.

I don't think the virus will be forever on everyone's mind. Already now many young people have started to party like before the pandemic, even in Europe (infections rising in almost all European countries, so a lot of 'Trumpites' and Bolsonarites' also in Europe).

When vaccines are widely available at least everyone who is planning to travel by plane will be going to get a vaccin.
A good chance that vacations and air travel is close to normal somewhere in 2022 or 2023.

Dennis Coyne Ignored says: 08/16/2020 AT 9:42 AM

Shallow sand,

The pandemic will eventually subside an the US and other nations that have responded poorly to the pandemic will eventually learn from nations that have responded relatively better, compare Europe and US.

If peak supply is reached, but demand resumes 1% annual growth, I expect we will soon see Brent at $65/bo+/-5 at minimum, by 2025 to 2030.

shallow sand Ignored says: 08/16/2020 AT 10:37 AM

Dennis. Brent $65 in 2025-30 is only helpful if one or both of the following happens:

1. Capital markets continue to the pattern of 2015-19 and fund drilling that provides marginal returns or losses, but has no hope of providing superior returns.

2. Some other new, economical supply source is discovered.

Low oil prices to 2025-2030 would seem to mean supply will be constrained unless one or both of the above occur.

Conventional oil pretty much peaked in 2005.

I look at $10K invested in a major oil company in 2010. I look at $10K invested in a shale company in 2010. I then compare that to the S&P 500 return since 2010, all other industry groups, specific companies, etc.

Investing in oil is like investing in tobacco. The only allure is yield. Upstream E & P will have to keep borrowing to pay the dividend even if oil returns to $50 Brent. Same with $60 Brent.

shallow sand Ignored says: 08/16/2020 AT 11:03 AM

Dennis. One thing that you are missing is just how poor the future of the upstream oil industry is.

When the shale boom started, EV's were a pipe dream.

When the shale boom started, there wasn't widespread sentiment against oil. Global warming/climate change was on the radar, but not like now.

BP is trying to remake itself in large part because they cannot find talented and skilled younger workers who want to work for a fossil fuel company.

We have been in this industry since the 1970s. We have some of the best leases in our field and have made more money in this industry than in our professions or in other investments. There is a third generation in our family ranging from late teens to mid twenties. None are interested at all in this family business/investment. Same for one of my best friends who makes his living at this. Same for another, whose engineer son started working with him out of college, but before oil crashed in 2014 left and took a job in a "Green Energy" field.

Mike is in the same boat.

I know all of the major players in our field. All companies are family owned. There are a total of four in all of those families working in oil and gas who are under the age of 50, and those four are at or nearing 40, and started working in their family oil companies at least over 15 years ago.

As I have posted before, our employees range from 47-61 years of age. The two we hired who were in their twenties have both long ago left, and no longer work in upstream E & P.

We have participated in some Zoom meetings with the National Stripper Well Association. Almost all on those meetings is old (50-80 years old).

We hope to sell out on the next recovery, if that ever comes. But we are concerned there will not be any buyers.

So, maybe $100 oil over a period of time could turn this tide, but sub-$50 WTI sure won't.

Yes, the future is hard to predict. But absent some tremendous financial return potential, why would young people have any interest in making a career of US upstream E & P?

Hickory Ignored says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak.
Post Peak

OK, now what?
It is so strange to be post-peak and not have high prices for crude,
and food.
I guess that will be coming.

note- biofuels should not be counted in liquids tally. It is a different animal, with the source being dependent on farming and soil, not drilling and geology. Just because ethanol is used for propulsion shouldn't matter- electrons and batteries aren't counted either, and rightly so. Those belong in a different category- transportation energy.

Schinzy Ignored says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see
https://www.youtube.com/watch?v=EYPapE-3FRw ). The problem is that it is always satisfied and hence gives absolutely no information about prices.

The latest iteration of our article on the oil cycle can be found at
http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

alimbiquated Ignored says: 08/16/2020 AT 9:52 AM

Another problem with market theory (beyond vagueness) is that it lacks a time axis.

The theory states that the relationship between price and supply moves along the demand curve, but doesn't say how fast, just that "in the long run" the system will reach equilibrium. Being in equilibrium means being somewhere on the demand curve.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

So for example, if prices go up, the demand quantity is expected to go down. The question is when.

Where does this go wrong? In classical market theory, for example, unemployment is impossible, because if labor supply outstrips demand prices (wages) should fall until until equilibrium is attained. This has been observed to be false on many occasions, including right now.

As Feymann states in the video, "If it disagrees with experiment, it's WRONG! That's all there is to it." Classical economics isn't just too vague, it is wrong.

Keynes joked about this that in the long term we'll all be dead. He meant equilibrium will never be reached, so we are never on the demand curve. He argued that "sticky prices", meaning the unwillingness to accept pay cuts, kept labor markets permanently out of equilibrium.

It's worth pondering whether oil prices are "sticky" as well. Saying yes is saying the law of supply and demand doesn't apply (in the short term). This year we have seen that both OPEC's politicking and panicky traders can cause wild swings in price unrelated to supply and demand.

Where market theory is vague is the shape of the demand curve. For example, if oil supply can't meet demand in the near future, as some here have posited, how high will prices go? Some claim it will go over $200, as people get desperate for it. Some claim that higher prices would increase efforts to find and drill more, putting a lid on prices. Some claim the shortage would crash the world economy, depressing prices. Some claim that faced with oil shortages, the world would simply switch to EVs, or stop wasting the gunk on poorly designed transportation systems, so prices would stay more or less the same.

Who is right? Nobody knows. So we don't know the shape of the demand curve. The theory is hopelessly vague.

hole in head Ignored says: 08/16/2020 AT 1:48 PM

A comment posted on ^peakoil.com^ . Interesting .
"The price action of WTI shows it quite clearly that the non oil extracting part of the economy can't afford to pay a high enough price that would allow the extracting, processing and delivery of oil products to it.

It's that simple, most of the oil still in the ground will stay there unless somehow you find a way to pay $100++ per barrel. The last 12 years has shown that we can't!

The best yearly average weekly price of WTI was right around $100
Average weekly price of WTI for years 2008 thru 2013 was $88.
Average weekly price of WTI for years 2014 thru 2019 was $53.

The trend is what it is and it shows no signs of changing, the price of WTI is still hitting lower lows and lower high.

I have no idea what the future will bring but the next 3 years are going to be interesting and not in a good way.

Have fun everyone."

Dennis,repeating myself ,the price of oil is going to trend down . Supply and demand curves do not apply where the world^s economic system is now placed . Alimbiquated has done a very good job explaining that .

Ron Patterson Ignored says: 08/15/2020 AT 6:38 PM

Much of the fall in output of the other 9 is from Iran, Nigeria, Libya, and Venezuela, much of that decline is due to political problems

No doubt it was. But political upheaval is part of the story, and always will be. There will be political problems ongoing for decades. Dennis, if your model excludes political problems, then you are living in a dream world.

Anyway, in addition to the political problems that you point out in those four nations, which will most likely continue, we have the natural decline in the other five nations in the chart below.

Hightrekker Ignored says: 08/15/2020 AT 6:42 PM

Nov 2018 is getting further in the rear view mirror -- –

Dennis Coyne Ignored says: 08/16/2020 AT 9:03 AM

Hightrekker,

Yes and oil prices have been low from Nov 2018 until now, do you expect that to continue for the next 10 years? I do not, perhaps that's the difference. 2025 to 2030 there is likely to be a new peak for World C plus C centered 12 month average output probably 1 to 3 Mb per day higher than the Nov 2018 peak. This assumes oil prices reach $64/bo or higher in 2020$ by June 2030.

Hightrekker Ignored says: 08/16/2020 AT 9:51 AM

Yes, I do not think we will surpass Nov 2018.
But I'm a European Historian, viewing other factors.

Survivalist Ignored says: 08/18/2020 AT 1:54 AM

I seem to recall, not too long ago, various talking heads prattling on about how USA LTO is now the new "swing producer"/source of swing supply. I guess we'll now get to see how well it swings on and off, as swing producers are wont to do.
My WAG is that it doesn't swing back on so well, as the swing off phase seems to be damaging (not just a tap you see), and when demand recovers after COVID, circa 2023, we'll see a price run up. Perhaps it'll be a damaging price run up. 2023 will be in the middle of Biden's first term, presumably.

Westexasfanclub Ignored says: 08/16/2020 AT 3:57 AM

And: Nigeria and Venezuela could ramp up their production only very, very slowly. They could not stem the general trend. Lybia is too little to make any serious difference. The only real wildcard is Iran. And it's the less probable to be played.

[Aug 24, 2020] If the Dollar dies, so will the country because the dollar's status is the only thing preventing hyperinflation and a total lockup of everything that moves at least for a few months.

Aug 24, 2020 | www.unz.com

RoatanBill , says: Next New Comment August 23, 2020 at 10:17 am GMT

The economy will roll over soon, probably by early 2021. Whatever party has the presidency won't matter. As the Dollar dies, so will the country because the dollar's status is the only thing preventing hyperinflation and a total lockup of everything that moves at least for a few months.

The carnival barkers in both parties are just rearranging the deck chairs on the Titanic. If you haven't stocked up on food, water and ammo you better do so now.

Lawlessness in the major cities is just the opening act. Wait till people are hungry and thrown out on the streets due to the stupidity of the Covid lock down madness.

tempus , says: Next New Comment August 23, 2020 at 12:17 pm GMT

It is beginning to look like the country as a whole is going to experience what the South suffered during Reconstruction (1865-1877): https://tcallenco.blogspot.com/2012/03/southern-history-first-reconstruction.html

[Aug 24, 2020] Why neoclassical economics is a yet another secular religious doctrine, and not a science

Aug 24, 2020 | peakoilbarrel.com

Hickory says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak. Post Peak

OK, now what? It is so strange to be post-peak and not have high prices for crude, and food. I guess that will be coming.

NOTE:

Schinzy , says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see https://www.youtube.com/watch?v=EYPapE-3FRw ). The problem is that it is always satisfied and hence gives absolutely no information about prices.

The latest iteration of our article on the oil cycle can be found at: http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

alimbiquated , says: 08/16/2020 AT 9:52 AM

Another problem with market theory (beyond vagueness) is that it lacks a time axis. The theory states that the relationship between price and supply moves along the demand curve, but doesn't say how fast, just that "in the long run" the system will reach equilibrium. Being in equilibrium means being somewhere on the demand curve.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

So for example, if prices go up, the demand quantity is expected to go down. The question is when.

Where does this go wrong? In classical market theory, for example, unemployment is impossible, because if labor supply outstrips demand prices (wages) should fall until until equilibrium is attained. This has been observed to be false on many occasions, including right now.

As Feymann states in the video, "If it disagrees with experiment, it's WRONG! That's all there is to it." Classical economics isn't just too vague, it is wrong.

Keynes joked about this that in the long term we'll all be dead. He meant equilibrium will never be reached, so we are never on the demand curve. He argued that "sticky prices", meaning the unwillingness to accept pay cuts, kept labor markets permanently out of equilibrium.

It's worth pondering whether oil prices are "sticky" as well. Saying yes is saying the law of supply and demand doesn't apply (in the short term). This year we have seen that both OPEC's politicking and panicky traders can cause wild swings in price unrelated to supply and demand.

Where market theory is vague is the shape of the demand curve. For example, if oil supply can't meet demand in the near future, as some here have posited, how high will prices go? Some claim it will go over $200, as people get desperate for it. Some claim that higher prices would increase efforts to find and drill more, putting a lid on prices. Some claim the shortage would crash the world economy, depressing prices. Some claim that faced with oil shortages, the world would simply switch to EVs, or stop wasting the gunk on poorly designed transportation systems, so prices would stay more or less the same.

Who is right? Nobody knows. So we don't know the shape of the demand curve. The theory is hopelessly vague.

Schinzy , says: 08/16/2020 AT 12:25 PM

Good points. For all these reasons it is not surprising that the journalist Robert Samuelson noted last year that frequently economists don't know what they're talking about: https://www.washingtonpost.com/opinions/economists-often-dont-know-what-theyre-talking-about/2019/05/12/f91517d4-7338-11e9-9eb4-0828f5389013_story.html?noredirect=on&utm_term=.dc651d463df7 .

Han Neumann , says: 08/17/2020 AT 8:25 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

Schinzy,

The price of crude oil is only part of the Peakoil phenomenon.

How much is left in the ground counts, however more important is at which velocity the remaining Gb can be extracted. I am not a geologist, but common sense says that when an oilfield is well depleted (50-70%) the most of the remaining barrels will be extracted at a much lower speed, even at very high oilprices.

With secondary and tertiary EOR technology most conventional oilfields will not produce the same or close to the same amount of barrels/day as before for many more years. That's also my conclusion from what I have read more than a decade ago.

Of course with high oilprices new, relatively small, oil fields will come online and (more advanced) EOR will start in other fields, but no matter how you look at it: depletion never stops.

With most oilfields in the world past-peak, only a tremendous amount of money (needed to develop EOR) can prevent world crude oil production from falling like a rock. And all those EOR technologies will deplete oilfields faster.

Big gains in the beginning, more disappointments later.
Will there be significant amount of shale oil developed in the future in other countries than the U.S. ? If so, is that wise, regarding an already existing runaway climate change ?

[Aug 23, 2020] US Default Bomb Goes Off- 2020 Will Have A Record Number Of Large Corporate Bankruptcies -

Aug 23, 2020 | www.zerohedge.com

US Default Bomb Goes Off: 2020 Will Have A Record Number Of Large Corporate Bankruptcies by Tyler Durden Sun, 08/23/2020 - 21:30 Twitter Facebook Reddit Email Print

The disconnect between the all time highs in the stock market and the broader economy has never been greater (with even Janet Yellen , one of the main architects of this disconnect, agreeing), and one of the places where this chasm is most glaring, is in the staggering number of major corporations filing for bankruptcy in 2020. Indeed, this year large US corporate bankruptcy filings are running at a record pace and are set to surpass levels reached during the financial crisis in 2009 (when the S&P was far from an all time high).

According to FT calculations , as of August 17, a record 45 companies each with more than $1 billion in assets has filed for Chapter 11 this year; this compares with 38 for the same period of 2009 during the depths of the financial crisis and is more than double last year's figure of 18 over the comparable period .

In total, 157 companies with liabilities over $50 million have filed for Chapter 11 bankruptcy this year and as we warned several months ago, many more are coming.

"We are in the first innings of this bankruptcy cycle. It will spread far across industries as we get deeper into the crisis. It's going to be a bumpy ride," said Ben Schlafman, chief operating officer at New Generation Research.

The spike in bankruptcies comes despite trillions of dollars in government aid to mitigate the fallout of the coronavirus pandemic on businesses, highlighting the catastrophic and lasting impact Covid-19 is having on the US economy. Or perhaps those trillions in government aid are going to the wrong recipients, and as a result companies that stand to benefit from mass defaults are now sporting record market caps. In fact, the irony is that in its pursuit to crush monopolies such as Amazon and Google, the government has made them bigger and stronger than they have ever been.

Meanwhile, with the US economy driving right over the fiscal cliff as Congress failed to extend emergency covid benefits, sending spending by those receiving Unemployment Insurance sharply lower ...

... and millions of Americans about to lose their job (again), a new default wave is just waiting to be unleashed.

me title=

"Ending the $600 per week federal unemployment benefits will push tens of millions of Americans into, or uncomfortably close to, poverty. They won't have the money to buy billions of dollars worth of goods and services. As a result, the entire economy will suffer. Small businesses will continue to suffer the most because they're already precarious," said Robert Reich, Bill Clinton's labor secretary.

For now, the brunt of the default wave has been felt by oil and gas companies as low (and on one historic occasion, negative) crude prices crippled dozens of businesses. There have been 33 filings to date according to the Oil Patch Bankruptcy Monitor from Haynes and Boone, including Chesapeake, Whiting Petroleum and Diamond Offshore Drilling. There were only 14 last year.


While not quite as bad as the E&P sector, retail businesses with assets of more than $50MM have also been severely affected with 24 filing for bankruptcy, a three-fold jump from last year. They have been among the hardest hit by the government-mandated lockdowns, which prevented stores from opening and drove consumers to online retailers such as Amazon. Burdened by debts, some of which were built up under private equity ownership, several prominent retailers have been forced to file for Chapter 11.

Some of the most iconic names that have filed this year include Neiman Marcus, which struggled for years with a heavy debt burden from its 2005 leveraged buyout by TPG and Warburg Pincus, and which finally filed for bankruptcy in May with liabilities of $6.7bn. JCPenney, also saddled with billions in debt, filed for Chapter 11 bankruptcy in May. Brooks Brothers, the venerable suit retailer that once counted Abraham Lincoln and John F Kennedy among its clients, did the same in July.

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

"The Covid-19 pandemic is reshaping consumer buying habits. Therefore, we will continue to see large retail, energy, and transportation businesses taking advantage of the tools provided by a formal bankruptcy to restructure to be more profitable and competitive in the long term," said Deirdre O'Connor, managing director of corporate restructuring at legal services group Epiq.

And while several businesses tried to reopen in late May and June (and some amusingly tried to unfile for bankruptcy just so they were eligible for bailout loans), a recent flare-up in coronavirus cases and deaths in several US states choked the recovery, forcing many business owners to close again.

"It pains me to say this, but bankruptcy is a growth industry in America," New Generation's Schlafman dismally concluded.

[Aug 23, 2020] This week in Trumponomics -- The two market bubbles get bigger

Aug 23, 2020 | finance.yahoo.com

The last recession, from 2007 to 2009, was brutal because of twin crashes in both the financial and housing markets. The S&P 500 plunged 56% from top to bottom, and home values fell 27% . The daunting loss of wealth took years to recover and left prolonged scars on the U.S. economy.

The Federal Reserve wasn't about to let that happen again as the coronavirus pandemic began to explode in March, causing widespread business shutdowns and surging unemployment. Through a set of massive monetary stimulus programs , the Fed promptly reversed a stock-market slide that turned out to be the shortest bear market in recorded history . The Fed has also pushed borrowing rates to record lows, which is now fueling a boom in housing.

These twin bubbles are detached from what's happening in the real economy, where unemployed has nearly tripled, from 5.8 million workers in February to 16.3 million now. Most broad measures of economic activity show that the coronavirus recession bottomed out in May, with gradual progress since then. But we've only recovered about one-third of the jobs and output we've lost, and there's no sign of a quick improvement any time soon. A return to normal only seems possible once there's a widely available coronavirus vaccine, maybe within 9 or 12 months.

The Fed's aggressive action is a political lifeline to President Trump, who would have a far worse mess to explain to voters if the Fed weren't administering emergency CPR. As is, millions of Americans benefiting from the twin bubbles stoked by the Federal Reserve might feel okay. The S&P 500 set a record high this week , with the index now up 52% from its bear-market low on March 23. Many analysts say it makes no sense for stocks to be on a tear while the real economy is on its knees, but if you sold stocks today for a 51% gain that would be real money in your bank account. Those gains are largely due to the Fed goosing asset prices, but that doesn't make the money less real.

Homeowners are benefitting, too. Historically low mortgage rates pushed existing home sales to the highest level in 14 years this week. Sales of new homes are soaring, too, and the increased demand is pushing home values up.

This might seem unfair. The Fed's actions are benefiting shareholders and homeowners, who arguably need help least. But it's the usual trickle-down wait for families not lucky enough to own stocks or real estate. But for all its might, the Fed has limited power to reach into the economy and target aid beyond financial markets. That's Congress's job. And this economy would be dreadfully worse if the stock-market was down 30% or 40% and homeowners were losing equity rather than gaining it.

This week's Trump-o-meter reads WEAK, the third-lowest rating, which is an improving over the FAILING and SAD readings of the last several weeks.

Source: Yahoo Finance
More

Trump still faces an uphill path to reelection, on account of his dismissive response to the coronavirus, which has kept the economy from entering the quick, V-shaped recovery he's hoping for. Democratic nominee Joe Biden leads Trump by 7.4 percentage points nationally , a larger edge than Hillary Clinton had over Trump at the same point in 2016. Biden's Democrats held a solid virtual convention this week, and Biden easily disproved Trump's claim that he's senile. Trump will now fill the airwaves with his own four-day nominating convention, though he could be upstaged by the mounting uproar at the postal service , the strange new indictment of his 2016 campaign manager Steve Bannon or some other brewing scandal.

With 10 weeks until the election, the economy shows halting progress, suggesting it may not be much better by the time voters cast their ballots. The Oxford Economics weekly economy tracker improved slightly this week, but initial unemployment claims once again shot past the startling 1 million level. In a new Yahoo Finance-Harris poll , 51% of respondents said they expect the economy to worsen within the next three months, while only 31% expect it to improve. Trump obviously hopes otherwise, and he will likely claim exaggerated progress as the election hits the home stretch. After all, look at that record stock market.

Rick Newman is the author of four books, including " Rebounders: How Winners Pivot from Setback to Success ." Follow him on Twitter: @rickjnewman . Confidential tip line: rickjnewman@yahoo.com . Encrypted communication available. Click here to get Rick's stories by email .

[Aug 23, 2020] The Tyranny Of Groupthink -

Aug 23, 2020 | www.zerohedge.com

The Tyranny Of Groupthink


by Tyler Durden Sun, 08/23/2020 - 11:00 Twitter Facebook Reddit Email Print

Authored by David Stockman of Contra Corner blog , via LewRockwell.com ,

The broad market (S&P 500) is trading at the highest forward PE multiples since November 1999, but the financial press is rife with mendacious piffle claiming there is no bubble. For example, in celebration of Tuesday's all-time high on the S&P 500, one James Mackintosh of the Wall Street Journal minced no words:

Except, the Everything Bubble is in the imagination of the many investors complaining about it. First, it isn't everything. Second, it isn't a bubble .

Right. Supposedly, the above statement is true because energy sector stock prices are in the tank, but the market is being rationally led by the tech giants where allegedly solid prospects for earnings growth are being rewarded with higher PE multiples owing to ultra-low interest rates.

...Lower rates mean profits further in the future matter more to the share price , so companies with steady earnings no matter what the economy does are worth more. Those that are sensitive to the economy are worth less, because future earnings are expected to be hit. Growth stocks do incredibly well, because their future earnings are expected to be higher and, at least for those thought immune to economic weakness, worth more as well thanks to lower rates.

Apply this framework and there's no bubble. U.S. stocks are more highly valued than in the past because they are dominated by big growth stocks, themselves justifiably more highly valued thanks to low rates.

The sheer laziness and conformism of today's so-called financial journalists is a wonder to behold. When the leader of the tech growth stocks, Apple, crossed the $2 trillion market cap barrier for the first time today, thereby embodying more market cap than the entire Russell 2000 of small cap US companies, Mackintosh's colleague at the Wall Street Journal spewed the same groupthink:

The stock has more than doubled from its March 23 low, boosted by steady demand for the company's devices and better-than-feared results in its core iPhone business as millions of Americans work from home.

Steady sales growth is driving the string of achievements. Apple's sales rose to $260 billion in the fiscal year ended in September from $216 billion three years prior. The company has even grown sales during the pandemic: For the quarter ended in June, they rose 11% from a year earlier to nearly $60 billion, exceeding Wall Street expectations. Earnings surged to $11.25 billion.

Apple is not a growth stock. Period.

The three-year sales gain cited by the WSJ amounted to only 6.4% per annum, but also reflects what amounts to journalistic malpractice.

That's because the starting figure of $216 billion for Apple's FY 2016 sales actually reflected a 7.8% decline from sales of $234 billion in FY 2015. So the four-years growth rate of sales through FY 2019 was, well, a mere 2.67% per annum.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

Likewise, the 11% sales gain during the June 2020 quarter versus prior year is completely misleading. During the past four quarters, the year-over-year sales gains have been all over the lot, posting at 10.9%, 1.0%, 8.8% and 1.8% respectively. Accordingly, for the LTM period ended in June, the sales gain was just 5.7% – hardly a barn-burning growth figure.

Likewise, the purported June quarter earnings "surge" to $11.25 billion was nothing of the kind. During the 2018 June quarter, for instance, net income posted higher at $11.52 billion . The surging at issue, therefore, was one of backward motion.

In fact, the only thing about Apple which has been in a growth mode during the last five years is the company's PE multiple, which has essentially doubled from 14X to 35X at today's record share price.

As to the actual 5-year trend of sales and earnings growth, not so much.

Back in June 2015 Apple was valued at $715 billion on the strength of its unparalleled tech product franchise, which was reflected in $224 billion of annual sales and $50.7 billion of LTM profits.

Still, there was a reason for the modest implied PE multiple of 14.1X : Namely, the tech behemoth's growth rate was rapidly slowing – freighted down by the inherent limits embedded in its enormous scale and the then modest expectations for earnings expansion in the immediate years ahead.

Those modest expectations were accurate. Five years later, the LTM figures for June 2020 came in at $273.9 billion of sales and $58.4 billion of net income.

Yes, the latter figure represents a lot of profits, but it embodies hardly a modicum of growth. In fact, Apple's five-year sales growth rate was just 4.1% , while its net income growth rate clocked in at only 2.9% per annum.

Moreover, there has been no recent growth spurt to accelerate these five-year trend rates of growth. The two-year growth rates are even slower, with sales posting at 3.6% per annum and net income rising by just 2.03% per year. Wiser: Getting Beyond ... Hastie, ReidBest Price: $1.07Buy New $14.14(as of 04:01 EDT - Details)

Needless to say, the doubling of Apple's PE multiple has nothing to do with its punk five-year net income growth rate of 2.9% per annum; it's about the Fed's radical repression of interest rate and the resulting diversion of trillions of borrowed capital into the inflation of risk asset capitalization rates.

Nor is Apple some kind of outlier, albeit it is the monster of the tech midway. Overall, the so-called Fab Five (Amazon, Apple, Microsoft, Facebook and Google) reflect the same multiple inflation story; and they are obviously the pile driver that is pushing the heavily ETF and indexer-driven stock market up into the nosebleed section of history.

Thus, back in June 2014, the Fab Five's combined market cap weighed-in at $1.63 trillion and accounted for 9.5% of the overall S&P 500's market cap of about $17.0 trillion .

Fast forward six years, and the Fab Five were valued at today's close at $7.1 trillion , which accounts for 26% of the $27.7 trillion total market cap of the S&P 500.

So, yes, the term "pile-driver" is probably an understatement. Fully 50% of the S&P 500's $10.7 trillion market cap gain since June 2014 is attributable to the Fab Five.

At the same time, the combined net income of the Fab Five has risen from $76.3 billion to $170.7 billion, meaning that the already frisky PE multiple of 21.4X for the group as a whole in June 2014 has now stands at 42.0X .

Obviously, averages can be misleading, but they do not lie. The composite net income growth rate of the Fab Five "growth stocks" has been just 14.4% over the past six years.

In a world which is literally unwinding at the seams owing to the Covid pandemic and a $260 trillion burden of debt, a valuation multiple equal to 42X or nearly three times the trailing growth rate makes no sense whatsoever.

That's because the James Mackintosh groupthink cited above is marred with a mighty flaw. To wit, you can't value earnings into the indefinite future owing to today's ultra-low interest rates that are definitely not sustainable.

The Fed's policy of radical interest rate repression simply defies the laws of finance and common sense because real yields are negative, and in the long-run negative real yields are an oxymoron.

The chart below is the smoking gun. Once upon a time there was meaningful daylight between the brown line (nominal yield on the benchmark 10-year UST) and the purple line (running inflation rate measured by the 16% trimmed mean CPI).

That is, even so-called risk-free US Treasury debt had a real yield of 200-400 basis points to account for taxes and a real return on investment.

But after the final leap into monetary madness commencing with the financial crisis of 2008-2009, the real yield had virtually disappeared; and then after the massive $3 trillion Fed bond-buying spree commencing in mid-March, the benchmark security of the entire global fixed income market went deeply negative in real terms.

As of the latest month, the running inflation rate clocked-in at 2.27% (June LTM) compared to an all-time low yield on the 10-year UST of 52 basis points a few weeks back.

Needless to say, when the real cost of risk-free benchmark debt is negative 175 basis points , you are not in an indefinitely sustainable steady state. You are actually courting financial disaster.

That's especially because fiscal policy in the US and elsewhere around the world has become completely unhinged.

So unless the Fed and other central banks continue their massive bond purchases in response to this tsunami of public debt, the bond pits are heading for a train-wreck some time soon; and if the central banks continue to print at current lunatic rates, the monetary system itself will go into meltdown.

Still, the misbegotten idea that the stock market isn't overvalued because bond prices have been massively inflated by central bank money-pumping is just one instance of the present tyranny of groupthink – called to attention by Apple's crossing the $2 trillion market cap barrier.

In fact, groupthink is omnipresent in the the mainstream narrative and so-called news. The nearly universal belief that the Covid-lockdowns were necessary and effective and that the coronavirus can be stopped by brute-force economic and social regimentation is another case in point – underscored by a new analysis of the Swedish outcome.

The mainstream narrative, of course, is that Sweden's no lockdown policy – the schools, restaurants, movies, gyms, malls etc. remained open – was a disastrous failure, thereby vindicating the universal quarantine approach of Dr. Fauci, Governor Cuomo and the rest of the Blue State Virus Patrol.

But that's based on the irrelevant observation that Sweden's overall WITH-Covid mortality rate of 56 per 100,000 is far higher than that of Norway, Finland and Denmark.

The truth is, Sweden's mortality rate happened in the long-term care facilities, where 75% of the country's 5,800 WITH-Covid deaths to date (August 18) have occurred, and which is neither here nor there when it comes to lockdowns of the non-elderly population.

Fortunately, a breakdown of Sweden's WITH-covid deaths by detailed age brackets is readily available and it puts the kibosh on Dr. Fauci's Lockdown Nation folly.

Number of WITH-Covid deaths/ Population/Rate per 100,000 by age cohort:

So, yes, Sweden has a WITH-Covid mortality rate of 56 per 100,000 for the entire country. But 26% of those deaths occurred among the population 90 years and older, which accounts for just 1.1% of Sweden's population.

Similarly, 67% of the deaths were among the population 80 years and older and 93% were among those aged 65 or more. By contrast, persons 65 and older account for just 19% of Sweden's population, and the preponderant share of the latter, who have suffered serious illness or death from the Covid, were already in long-term care facilities and programs. Nudge: Improving Decis... Richard H. Thaler, Cas...Best Price: $5.26Buy New $9.75(as of 09:25 EST - Details)

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

Needless to say, locking down the schools, gyms, restaurants and malls does nothing for the institutionalized population of the vulnerable elderly and co-morbid. Sheltering and treating the latter in place, rather than quarantining the younger, healthier populations, is the self-evident answer.

Indeed, the virtue of Sweden's anti-lockdown strategy virtually screams out from the schedule above. Sweden did not close its schools, yet there has been just one WITH-Covid death among its 2.4 million school age children under 20 years.

Likewise, there have been just 71 deaths among its 4.0 million prime working and consuming age population (age 20-49). That's a rounding error mortality rate of 1.77 per 100,000. Who in their right mind would want to shutdown the economy based on such infinitesimal risks?

Stated differently, the risk of death from Covid in Sweden has been 720X higher for the largely institutionalized 90 and over population compared to the prime working age group (20-49 years); and has also been 157X higher for the entire population 65 and over than for prime workers and the population that is the preponderant patron of the social congregation sectors of the economy.

Fortunately, Sweden also has readily available data on normal, year-in-and-year-out mortality, which rate is about 862 per 100,000 for the total population. But when you breakdown these normal mortality rates by age cohort and cause of death, the insanity of Lockdown Nation become all the more apparent.

Specifically, there are about 3,429 deaths per year in Sweden from auto crashes, falls, drownings, electrocutions, poisonings and other accidents, and these account for about 4% of Sweden's 2019 death total from all causes of 89,000.

However, when you look at mortality rates per 100,000 from accidents alone, the starling result is that the existing risk of death from accidents is far higher than from the Covid for the entire 8.4 million population under 65 years of age, and for the young and middle-aged decidedly so.

Mortality rates per 100,000 for accidents versus Covid and ratio of accident/Covid risk:

In short, when the ordinary risk of death is 10-25X greater for accidents than from the Covid for the young and working population, you don't shutdown the economy and the main avenues of social congregation.

Due to enlightened leadership by Sweden's health professionals and leading epidemiologists, they got it right, and now both new cases and WITH-Covid deaths have virtually disappeared.

And that's to say nothing of the fact, that Sweden's Q2 GDP decline of just 8.6% was far better than the double digit declines in the US and most European countries, which imposed far more draconian lockdowns.

In America, by contrast, the tyranny of groupthink on the matter has become so great that college football and in-person college classes are being closed from coast-to-coast when the risk of serious illness or death among the college age population here, like in Sweden, is virtually nil. Roacheforque , 1 hour ago

It never ceases to amaze me what social media has revealed. 90% of people who use social media are FOLLOWERS. They may have original thoughts but are afraid to express them. So they copy and paste other people's thoughts as their own, to either intentionally or inadvertently encourage groupthink.

Social correctness, political correctness and the outrageous fear of 'being different" are a huge part of the reason as to why meritocracy, individualism and the freedoms and liberties that come with them, are under attack. It's presented as socialism or even collectivism, but it's really about conformity, obedience and fear.

In a word "disgusting" to the exceptional people who used to thrive in the merit-based, free market capitalist environment that is now being obliterated.

Salisarsims , 50 minutes ago

It's mostly sociopaths and psychopaths who thrive in capitalism, and there's nothing merit based to most of corporate America.

snatchpounder , 38 minutes ago

It's mostly sociopaths and psychopaths who thrive in politics, and there's nothing merit based to most of corporate America.

fify

worstpersonintheworld , 38 minutes ago

nah it's people with a functioning brain

Cluster_Frak , 8 minutes ago

I thought, it was all about being different among the liberal woke. However, the woke proved themselves to be nothing but Bolshevik Facist. You either must think what they think or you are discriminated against. It only took 10 years to reach a point of extreme intolerance.

NIRP_BTFD , 43 minutes ago

The power of propaganda. People overestimate covid death toll by a factor of 100. Btw not only in the UK.

UK public 'believe coronavirus death toll 100 times higher than it really is'

https://www.telegraph.co.uk/news/2020/08/20/uk-public-believe-coronavirus-death-toll-100-times-higher-really/

[Aug 23, 2020] Glitzy Convention Conceals Neoliberal Tyranny that both parties support by Mike Whitney

Highly recommended!
Notable quotes:
"... The Guardian ..."
Aug 23, 2020 | www.unz.com

Here are a few takeaways from the Democratic Convention:

The Democrats are running on the same platform they ran on in 2016. The Democrats put style above substance, flashy optics above ideas or issues. The Democrats think that hollow tributes to "diversity" and "inclusion" will win the election. The Democrats have abandoned white, working class voters opting instead for people of color. The Democrats have learned nothing from Hillary Clinton's defeat in 2016.

In 2016, Democrat front-runner, Hillary Clinton lost the election because she failed to see her support was eroding in the key Rust Belt states of Pennsylvania, Michigan and Wisconsin. Trump won all three states with a measly 77, 651 votes total. All three states were expected to go Democrat but flipped to the GOP due to Clinton's support for free trade and immigration policies that cost jobs and imposed unwelcome demographic changes on the working people of those states. The Democrats and Hillary have never accepted the factual version of how the election was lost. Instead, they fabricated a conspiracy theory about Trump colluding with Russia. Although the Mueller Report proved that the claims of meddling were baseless, Clinton and the Dems continue to trot them out at every opportunity. On Tuesday at the convention, Hillary again reiterated the lie that Trump stole the election. She said:

"Vote like our lives and livelihoods are on the line, because they are. Remember: Joe and Kamala can win 3 million more votes and still lose. Take it from me. We need numbers so overwhelming Trump can't sneak or steal his way to victory."

The determination on the part of the Democrats to mischaracterize what actually happened in the election is not a trivial matter. It suggests that deception is central to their governing style. Party leaders do not think their supporters are entitled to know the truth but rather believe that events must be shaped in a way that best serves their overall political interests. For Democrats, lying is not a personal failing, but an opportunity for enhancing their grip on power. This is from an article in The Guardian:

"Donald Trump's electoral college victory rests on the shoulders of more than 200 so-called "pivot counties" across the US. That is, counties that voted for Barack Obama only four years earlier. The most decisive of these swings occurred in Pennsylvania's Luzerne county, nestled in the north-east part of the state There, voters gave Trump a nearly 20-point victory after going for Obama by almost 5% in 2012. But Trump's win in Luzerne was also noteworthy for its magnitude. His 26,000 vote plurality in Luzerne comprised almost three-fifths of his plurality in the state as a whole, and with it Pennsylvania's 20 coveted electoral votes ." (" The Forgotten review: Ben Bradlee Jr delivers 2020 lessons for Democrats" , The Guardian )

Critical battleground states tilted in Trump's favor because Democratic policies had decimated their communities and eviscerated their standard of living. Author Ben Bradlee Jr. explains this phenom in his book "The Forgotten" which should be required reading at the DNC. Here's a clip from the review at the Guardian:

"The Forgotten documents the ravages of deindustrialization, lost jobs, crime and drugs. It captures the sense of displacement tied to a changing and less monochromatic America. Once upon a time, Luzerne was home to coal and textiles, dominated by Protestants from Wales and Catholics from Ireland and continental Europe. Not any more. Luzerne is poorer and smaller, for many a less recognizable place. Not surprisingly, immigration and Nafta come in for constant criticism. " (The Guardian)

This is the real reason Hillary was defeated. Russia had nothing to do with it. The Dems abandoned the white working-class people who had always voted for them and began to cobble together their Rainbow coalition. When Hillary denounced these people as "Deplorables", it forced more of them to join Trump team. The rest is history. Here's more from the same article:

"In the absence of a recession, however, the party stands to face the same electoral map it did in 2016. In fact, Ohio now looks an even tougher nut to crack. Much as the Democratic base loathes the president, reality cannot be wished away. Luzerne would be a good place for the party to start addressing this reality. " ( The Guardian )

The point we're trying to make is that the effectiveness of the Democrat Convention can only be measured in terms of its impact on potential voters. So, why have the Dems shrugged off any effort to reach out to the people who could help them win?

It's not that complicated. The Dems are merely abandoning the people who, they believe, will leave anyway as their globalist economic agenda becomes more apparent putting more downward pressure on overall living standards. It's worth noting, that when Obama left office in 2016, this process was already well-underway. According to a Gallup poll, 71 percent of the people said they were dissatisfied with the way things were going. (in Obama's last year.) Only 27 percent said they're satisfied. So, even though Obama's personal approval ratings remained high, his handling of the economy was extremely unpopular. (except on Wall Street, of course.)

During this same period, the PEW Research Center conducted a survey titled: "Campaign Exposes Fissures Over Issues, Values and How Life Has Changed in the U.S" which showed why Trump was steadily gaining on Hillary. Here are a few excerpts from the report:

"Among GOP voters, fully 75% of those who support Donald Trump for the Republican presidential nomination say life for people like them has gotten worse "

"GOP voters who support Trump also stand out for their pessimism about the nation's economy and their own financial situations: 48% rate current economic conditions in the U.S. as "poor.

"Within the GOP, anger at government is heavily concentrated among Trump supporters – 50% say they are angry at government "

"Among Republicans, a majority of those who back Trump (61%) view the system as unfair among Trump supporters, 67% say trade agreements are bad thing "

"Half of Trump supporters (50%) say they are angry at the federal government . Anger at government – and politics – is much more pronounced among Trump backers than among supporters of any other presidential candidate, Republican or Democrat " (" Campaign Exposes Fissures Over Issues, Values and How Life Has Changed in the U.S ", PEW Research Center)

So, a higher percentage of Trump supporters think they are getting screwed-over by an unfair system. They think "free trade" only benefits the rich, they think the government is unresponsive to their needs, they think the system is rigged, and they're really, really mad.

So, which speaker at the Democrat Convention addressed the concerns or complaints of white working-class people who now almost-universally harbor these same feelings??

No one, because no one in the Democrat party plans to do anything about these issues, in fact, just the opposite. Now that the Dems have been subsumed by Wall Street and their big globalist donors, things are going to get dramatically worse for working people who will see a vicious attack on essential social services and programs as soon as the election is over. The massive build-up of debt– by mainly Democrat Governors who deliberately drove their states into bankruptcy at the behest of Fauci's Vaccine Gestapo– will now be met by a growing demand for austerity on a scale unlike anything we've experienced in the last century. The country is being prepared for an excruciating restructuring that will create a permanent underclass that will provide an endless source of sweatshop labor for the multinational carpetbaggers. Those jobs will likely go to members of the Dems rainbow coalition while white, working class people in America's heartland –with their strong sense of patriotism– will be seen as a potential threat to the emerging new order.

It's clear that the Dems anticipate resistance to their plan by the contemptible way they have branded struggling workers as "white nationalists" and "racists". But is it true or are the Democrats and their deep-pocket allies preemptively denigrating these people and supporting BLM rioters to head-off growing resistance to their strategy of total control through widespread mayhem, decimation of the economy and extermination of the American middle class? Author CJ Hopkins summed it up like this in a recent article at The Unz Review:

"What we are experiencing is not the "return of fascism." It is the global capitalist empire restoring order, putting down the populist insurgency that took them by surprise in 2016.

The White Black Nationalist Color Revolution, the fake apocalyptic plague, all the insanity of 2020 it has been in the pipeline all along. It has been since the moment Trump won the election. No, it is not about Trump, the man. It has never been about Trump, the man

GloboCap needs to crush Donald Trump not because he is a threat to the empire , but because he became a symbol of populist resistance to global capitalism and its increasingly aggressive "woke" ideology . It is this populist resistance to its ideology that GloboCap is determined to crush, no matter how much social chaos and destruction it unleashes in the process.. ." (" The White Black Nationalist Color Revolution" , CJ Hopkins, The Unz Review )

Bingo. It is the "populist resistance to global capitalism" that is the defacto enemy of the Party elite, the same elites who conspired with senior-level members of the Intelligence Community, the FBI, the DOJ and the Obama White House to spy on the Trump Campaign, infiltrate the presidential transition, and to try to topple the elected government. And while the coup plotters have still not been brought to justice, they are now within spitting distance of their ultimate objective, which is seizing executive power and using it to crush the fledgling opposition, impose a one-party system of government, and transform America into a corporate superstate ruled by Global Capital. Here's a clip from an article by Gary D. Barnett at Lew Rockwell:

"By the end of this next planned phase of the 'virus' scare, a global reset of the world economy will be ready to launch. This reset will be mammoth in scope, as everything we have known will be restructured. Those out of work in the final stage will most likely stay out of work, pushing the dependency state to new levels sought by the ruling class. Controlling the population will be a key component of the plan, including population size, birth rates, movement, and personal contact among individuals. The elimination of normal human interaction is sought, and this is only the beginning . The ultimate goal is total control, and every tool in the box of the tyrants will be used to gain that control. Restraint by the ruling class will be non-existent, as this staged reset is now going forward at a very accelerated pace." ( "The Economic Insanity of This Coronavirus Pandemic Plot and the Coming Global Reset ", Lew Rockwell )

The coup plotters have chosen the candidates they want to carry out the next phase of their operation. All they need now is to win the election.

[Aug 21, 2020] Von Greyerz- Is COVID The Most Perfect Distraction- -

Aug 21, 2020 | www.zerohedge.com

Von Greyerz: Is COVID The Most Perfect Distraction? by Tyler Durden Thu, 08/20/2020 - 17:05 Twitter Facebook Reddit Email Print

Authored by Egon von Greyerz via GoldSwitzerland.com,

Is Covid the most perfect distraction that could have hit the world? The timing couldn't have been more perfect for the European and American economies. We know that there were major problems in the financial system back in August-September 2019 when both the ECB and the Fed declared that they would do what it takes. And since then we have seen massive injections of liquidity in the form of QE and Repos.

The world was never informed what the financial problems were but it is obvious that this was the hangover from the 2006-9 financial crisis which was never solved but just deferred with the help of unlimited money printing and credit expansion. There was clearly something rotten in the kingdom of the financial world.

So was it just coincidence that Coronavirus started spreading around the world in January-February this year in the middle of a serious crisis in the financial system? Throughout history, initiating a crisis has always been a popular remedy that leaders have applied to divert attention from the real problem whether it be political or financial.

The normal course of action would be a military conflict. This would both enable massive money printing and also alarming the people which would result in more votes for the ruling government.

The American writer Henry Louis Mencken understood the purpose of these actions:

I am not someone who subscribes to conspiracy theories. But however the Coronavirus started, the timing seems more than coincidental. CV has certainly diverted the attention away from the underlying problems in the financial system and undeniably seems like a hobgoblin. But whether it is a hobgoblin or not, it has allowed some governments around the world to blame it all on CV and run huge deficits combined with massive liquidity injections.

The coming likely implosion of the financial system and depression will for decades be blamed on a pandemic which was only a catalyst and never the cause of the fall of the global economy. The real cause is a rotten financial system and an unmanageable debt burden which I have discussed in many articles.

CORONAVIRUS – OUTCOME WORSE WITH AUTOCRATIC LEADERS

If we look at the effects of CV on various countries the differences are astounding. Sweden which has had virtually no lockdown saw an 8.6% fall in GDP in Q2. Much of the fall was due to lower exports as other countries bought less Swedish products. Switzerland which only has had a very limited lockdown had a 6.4% GDP fall in Q2.

If we then look at the two countries which have totally mismanaged the situation – USA and UK, the outcome is disastrous. US GDP fell 32.9% in Q2 and the UK GDP was down 20.4%.

(MIS-)MANAGEMENT OF CV

It is clear that the countries that have big ego autocratic leaders have fared the worst. Sweden and Switzerland have delegated the CV policy to health officials whilst in the US and UK much of the policy, or lack of, has come from the top.

Sadly the US and the UK have both had high numbers of CV cases and deaths. And in spite of major lockdowns, these two countries have seen a catastrophic decline in their economies, a fall which will take many years to recover from.

BEST RUN COUNTRIES HAVE BEST CORONA RECORD

It is clearly no coincidence that Sweden and Switzerland have strong and well managed economies also whilst the US and the UK are running big deficits and debts. And with the poor economic state of the two latter countries, their economies will continue to suffer badly. Personally I don't believe that there will be an effective vaccine for years or ever. Historically, any flu vaccine takes years to develop and is only effective in less than 30% of vaccinated people.

We are also seeing CV coming back in many countries that have lifted the lockdowns like for example Germany, Spain and France. Therefore it seems very likely that there will not be any major global recovery in 2021 either.

The biggest dilemma is that CV is not the real cause of the economic downturn but only the catalyst. As I explained above, the virus has allowed weak countries to print huge amounts of worthless money to prop up a financial system in an economy which was already on the verge of imploding before CV started. But fortunately for leaders such as Trump and Johnson they have been lucky to hide their ailing economies behind the CV curtain. So for them CV has been a very lucky excuse.

As the US, UK and many economies will be forced to continue or increase government handouts to suffering people and companies, all these countries' will fall further into the quagmire of debt, deficits and economic decline.

... ... ...

[Aug 20, 2020] In an era of fake news, can we trust the MSM polls that show Trump badly trailing Biden in the race for the US presidency by Robert Bridge

Notable quotes:
"... McLaughlin and Associates, a national survey research group requested by Trump to examine the findings, said the results were an effort on the part of "Democratic operatives" to "counter the enthusiasm of Trump voters." Meanwhile, the right-leaning polling agency, Rasmussen, reported that Trump enjoys a 44 percent approval rating, which reflects the usual margin of difference. ..."
"... At the same time, many people must be wondering how Joe Biden, 77, has been able to garner such glowing poll numbers. After all, when the former vice president finally ventured to speak in public after an 88-day disappearing act, it only served to make people question the possibility of his "cognitive decline," a subject the mainstream media seems unwilling to consider in any great depth. ..."
"... Although the United States has certainly suffered from a double whammy of Covid-19 and race riots, the situation does not appear to be as bleak as the media would have everyone believe. In May, for example, analysts expressed disbelief as the economy added 2.5 million jobs, with the unemployment rate declining to 13.3 percent from 14.7 percent. Market watchers had been anticipating a loss of 7.25 million jobs and an unemployment rate of 19.0 percent. Meanwhile, Wall Street continues to weather the storm. ..."
Jul 02, 2020 | www.rt.com

In an era of fake news, can we trust the MSM polls that show Trump badly trailing Biden in the race for the US presidency?

Consult just about any US media resource and a trend is quickly discernible: Donald Trump is sagging in popularity while his likely Democratic opponent, Joe Biden, soars like an eagle. Are these polls really to be believed?

Is there a conflict of interest greater than that of the US media conducting a public opinion poll on Donald J. Trump?

It appears to be a self-indulgent activity, a bit like climate change activists gathering opinions on the merits of air travel, for example, or a New York Yankees fan organizing a poll to determine who the best baseball player was, Babe Ruth or David Wright.

In other words, those asking the questions may be very tempted, in deference to their own prejudices, to get the answers they seek.

Perform a quick Google search on 'Trump poll numbers' and you will likely experience some deja vu. As in 2016, when the media showed Trump trailing far behind Hillary Clinton, the same media want us to believe that the presidential incumbent is now eating Joe Biden's dust on the road to the White House.

The New York Times, for example, in an opinion poll it conducted in cahoots with ultra-liberal Siena College, showed Biden ahead of Trump by 14 percentage points, pulling 50 percent of the vote compared with just 36 percent for the president.

In another survey, this one carried out by USA Today and Suffolk University, Trump garnered 41 percent to Biden's 53 percent. What the poll failed to say, however, is that in 2016, the editorial board at USA Today took the unprecedented step of taking sides in that year's presidential race, declaring Trump "unfit for the presidency."

Suffolk University, meanwhile, is situated in snobby Boston, Massachusetts, a formidable Democratic stronghold where Hillary Clinton secured 60 percent of the 2016 vote compared to Trump's 32.8 percent. No chance of bias there.

Then there was the poll by CNN, which Trump regularly slams as 'fake news,' where it was said that the incumbent leader was trailing Biden by a whopping 14 points. The Trump campaign, arguing that just 25 percent of the contacted respondents were Republican, condemned the survey as "defamatory, and misleading" with the goal of creating "an anti-Trump narrative."

McLaughlin and Associates, a national survey research group requested by Trump to examine the findings, said the results were an effort on the part of "Democratic operatives" to "counter the enthusiasm of Trump voters." Meanwhile, the right-leaning polling agency, Rasmussen, reported that Trump enjoys a 44 percent approval rating, which reflects the usual margin of difference.

It's important to note that the media, which has a snarling political dog in the Trump-Biden fight, follows up on its dubious polls with stories based on those very same polls. CNN, for example, aired a segment that asked, 'What would happen if Trump lost in November but refused to leave office?' Even Fox News, considered to be 'Trump friendly,' wondered if Trump would drop out of the race due to low poll numbers.

At the same time, many people must be wondering how Joe Biden, 77, has been able to garner such glowing poll numbers. After all, when the former vice president finally ventured to speak in public after an 88-day disappearing act, it only served to make people question the possibility of his "cognitive decline," a subject the mainstream media seems unwilling to consider in any great depth.

Although the United States has certainly suffered from a double whammy of Covid-19 and race riots, the situation does not appear to be as bleak as the media would have everyone believe. In May, for example, analysts expressed disbelief as the economy added 2.5 million jobs, with the unemployment rate declining to 13.3 percent from 14.7 percent. Market watchers had been anticipating a loss of 7.25 million jobs and an unemployment rate of 19.0 percent. Meanwhile, Wall Street continues to weather the storm.

In short, the country remains resilient in the face of unprecedented challenges, yet Trump's popularity continues to dwindle. Does the US leader have good reason to question the media-sponsored polls that show him in the basement, exactly where Joe Biden has been organizing his campaign from for months, or should the American people trust the findings?

Given the way the mainstream media has treated Trump over the course of his first term in office, it seems that whatever the media reports on the most divisive American president in living memory must be taken with a very generous handful of salt.

Think your friends would be interested? Share this story!

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

READ MORE Robert Bridge is an American writer and journalist. He is the author of the book, 'Midnight in the American Empire,' How Corporations and Their Political Servants are Destroying the American Dream.

[Aug 19, 2020] How Covid-19 Signals the End of the American Era - Rolling Stone

Aug 19, 2020 | www.rollingstone.com

The Unraveling of America

Anthropologist Wade Davis on how COVID-19 signals the end of the American era

By WADE DAVIS ,

[Aug 02, 2020] TikTok ban demonstrates barbaric act of rogue US: Global Times editorial

The mafia methods used are often packaged as monopoly powers such copyrights, patents, transformation of public goods into for profit private enterprizes (privatization), takeovers and bankruptcy, private ownership of the highest levels of nearly all governments, and just 6 own 92% of all media.
Takeover of Tik Toc by Microsoft is just one demonstrating of a wider trend -- the tend toward gangster capitalism. BTW Chinese proposes complete divestment. That spells big trouble for US heavyweights such as Amazon, Google and Facebook.
"We lie to deceive ourselves, we lie to comfort others, we lie out of pity, we lie out of shame, to encourage, to hide our misery, we lie out of honesty. We lie for freedom."
Trump blames China every chance he can and the Democrats either agree or offer mealy-mouthed protest.
Notable quotes:
"... It comes to light that at least 125 US companies owned or invested in by Chinese entities, including Chinese SOE, received hundreds of millions in PPP loans backed by the US SBS. ..."
"... This level of capitalust interconnection between elite investors and governments belies all the heated talk of cold war by politicians on both sides as well as useful idiots the world over. ..."
"... "If this is also national security, then US national security is synonymous with hegemony." ..."
Aug 02, 2020 | www.moonofalabama.org
vk , Aug 2 2020 15:04 utc | 8

TikTok ban demonstrates barbaric act of rogue US: Global Times editorial

China has never banned US high-tech companies from doing business in the country. What the Chinese government demands is that what they do in China should comply with Chinese law. That's all . It was some US companies that refused to comply with Chinese laws. Google used to have a position in the Chinese market. It itself pulled out of China a decade ago, while other companies were accused in the US of kowtowing to China when they tried to design their specific versions for the Chinese market. This leaves no US internet giant currently operating in China.

TikTok operates in the US in full compliance with US laws and is completely cut off from Douyin, its Chinese equivalent. Users in the Chinese mainland cannot register for TikTok even if they bypass the so-called great firewall . TikTok does not violate any US law but fully cooperates with the US administration.

The US claim that TikTok threatens its own national security is a purely hypothetical and unwarranted charge - just like the groundless accusation that Huawei gathers intelligence for the Chinese government. This is fundamentally different from China's refusal to allow the original versions of Facebook and Twitter to enter China and require them to operate in accordance with Chinese laws.

In just three paragraphs, the Global Times killed two myths: that a "great firewall" exists and that China censorship things from the West (i.e. that the Chinese people is "living in the darkness").

I had a teacher who traveled to China recently. He went to a local bar (100% Mainland Chinese) as soon as he landed. He was having difficulty accessing Google (I think it was either Gmail or Google Drive). He tried, tried, tried but couldn't do it. When the locals there realized he was trying to access Google products, they promptly and calmly told him he should use VPN because Google didn't operate in China. No drama, no fear of a local police officer suddenly coming to the place to arrest them.

They know what Apple, Google and Facebook are. It's just that China has better local options for the same product.

--//--

New cold war will not stop US decline

Bingo.


donkeytale , Aug 2 2020 20:25 utc | 45

Not that globalization is a one way street by any means.

It comes to light that at least 125 US companies owned or invested in by Chinese entities, including Chinese SOE, received hundreds of millions in PPP loans backed by the US SBS.

This level of capitalust interconnection between elite investors and governments belies all the heated talk of cold war by politicians on both sides as well as useful idiots the world over.

Why even favorite Chinese PR flack Pepe Escobar recently characterized the Stupidity Trap aka Thucydides Trap as childish nonsense.

ptb , Aug 2 2020 20:28 utc | 46

@karlof1 32

"If this is also national security, then US national security is synonymous with hegemony."

That is precisely the problem. Unfortunately, the current US economy has become dependent on advantages arising from unrivaled geopolitical power. Take it away too suddenly, and there would be a painful economic transition to become a normal nation again.

... ... ..

[Jul 31, 2020] Plunge in Consumption of Services Leads to Record 32.9 Percent Drop in GDP by DEAN BAKER

Jul 31, 2020 | angrybearblog.com

https://cepr.net/gdp-2020-07/

July 30, 2020

Plunge in Consumption of Services Leads to Record 32.9 Percent Drop in GDP
By DEAN BAKER

The saving rate hit a record 25.7 percent level in the first quarter, indicating that few of the pandemic checks were spent.

The Gross Domestic Product (GDP) shrank at a record 32.9 percent annual rate in the second quarter. While almost all the major categories of GDP fell sharply, a 43.5 percent drop in consumption of services was the largest factor, accounting for 22.9 percentage points of the drop in the quarter. Nonresidential fixed investment also fell sharply, dropping at a 27.0 percent annual rate. Residential investment fell at a 38.7 percent annual rate.

The plunge in service consumption was expected since this was the segment of the economy hardest hit by the shutdowns. Within services, health care, food services and hotels, and recreation were the biggest factors reducing growth by 9.5 percentage points, 5.6 percentage points, and 4.7 percentage points, respectively.

Spending on health care services fell at a 62.7 percent annual rate in the quarter. This was due to people putting off a wide range of medical and dental checkups and procedures, which far more than offset the care needed by coronavirus patients. The annual rate of decline for food and hotel services was 81.2 percent and for recreation services 93.5 percent.

Consumption of nondurable goods fell at a 15.9 percent annual rate. Declines in clothing and gasoline purchases were the biggest factors, taking 1.0 percentage point and 0.9 percentage points off the quarter's growth, respectively. Demand for durable goods fell at just a 1.4 percent rate, but this followed a decline of 12.5 percent in the first quarter. Interestingly, spending on cars actually rose slightly in the quarter, adding 0.15 percentage points to growth.

Consumption expenditures by nonprofits serving households rose at 182.5 percent annual rate, adding 3.0 percentage points to the quarter's growth. This reflects the effort by private foundations and charities to ameliorate the hardships being experienced by many households.

Both structure and equipment investment fell sharply in the quarter, declining at 34.9 percent and 37.7 percent annual rates, respectively. The drop in equipment investment is especially striking since it fell at a 15.2 percent rate in the first quarter. Investment in intellectual products fell at a more modest 7.2 percent annual rate. Residential investment fell at a 38.7 percent annual rate, although this followed a jump of 19.0 percent in the first quarter.

Exports and imports both fell sharply, with exports dropping at a 64.1 percent rate and imports falling at a 53.4 percent rate. Because US imports are so much larger than exports, trade actually added 0.7 percentage points to growth in the quarter.

Federal government spending rose at a 17.4 percent annual rate, driven by a 39.7 percent increase in non-defense spending, presumably most of which is pandemic related. State and local spending fell at a 5.6 percent rate, likely reflecting school closings in the quarter.

[Graph]

Prices fell sharply in the quarter, with the Personal Consumption Expenditure (PCE) deflator falling at a 1.9 percent annual rate and the core PCE falling at a 1.1 percent annual rate. These declines reflected sharp drops in the price of items such as gasoline, hotels, and clothes. Many of these declines were already being reversed by the end of the quarter. They will almost certainly not continue into the third quarter.

The savings rate soared to a record 25.7 percent. This reflects the jump in disposable income attributable to the pandemic checks, coupled with the sharp drop in spending. Nominal disposable income rose at a 42.1 percent annual rate. This rise was, of course, uneven, with people who were still getting their regular paychecks or retirees seeing large jumps in income from the pandemic checks, but with many of the unemployed seeing sharp drops.

With the economy mostly reopened, despite serious outbreaks of the pandemic in large parts of the country, we are virtually certain to see strong growth in the third quarter. But even if the economy grows at a 15 or 20 percent annual rate, it would be nowhere close to recovering the losses from the last two quarters.

The shape of the rescue package currently being debated will also be hugely important. In addition to the unemployment insurance supplements that will be necessary for laid-off workers to sustain their consumption, state and local governments will need large amounts of money both to avoid layoffs and to implement programs for the safe reopening of schools, workplaces and businesses. In this context, it is very difficult to see any economic rationale for the $1,200 pandemic checks.

[Jul 31, 2020] The effect of corporarovirus on the economy

Jul 31, 2020 | www.moonofalabama.org

Ashino , Jul 30 2020 21:09 utc | 16

SOME NUMBERS....

Another 1.416 million Americans filed new claims for unemployment benefits last weekOur politicians want to encourage people "to go back to work", but for millions upon millions of Americans the jobs that they once had are gone forever.

52 million Americans have filed new claims for unemployment benefits over the past 18 weeksBut many people that live in rural communities are feeling pretty good aboutthings right now. Even though more than 52 million Americans have filed new claims for unemployment benefits over the last 18 weeks, the official unemployment rate in many rural counties is still in the single
digits.
New York's unemployment rate rose to 20.4% last month, according to state-level data issued
Friday by the Bureau of Labor Statistics that detailed figures for some large metro areas. That'sup from 18.3% in May and 15% in April.
Los Angeles, the second-largest U.S. city, has seen a similar level of joblessness.Its unemployment rate recovered slightly in June but remains startlingly high -- at 19.5%, versus 20.6% in May, according to data published Friday by California's Employment Development Department.

Census Bureau says that things are particular dire for Black and Hispanic renters This month (JUNE), nearly 28% of Black renters say they haven't paid last month's rent, and \about 46% say they have slight or no confidence they'll be able to pay next month's rent, according to figures from the Census Bureau's Household Pulse Survey. Hispanic renters face similar economic strain: 22% say they missed last month's rent and 46% fear they won't make rent next month.

In April, 78% of those in households experiencing job loss felt that that situation would be temporarily. But now, 47% think that job loss is likely to be permanent, according to The Associated Press-NORC Center for Public Affairs Research.

19 percent of all U.S. small businesses were closed, According to Jefferies,
Nearly a quarter of all small businesses in the entire country are closed
And the really bad news is that many of them will never end up reopening
As many as 76,000 small businesses in New York City – a third of the 230,000
citywide – may never reopen after forced to close during the COVID-19 lockdown,
business leaders have warned.
Nearly half of all small-business members of the San Francisco Chamber of Commerce lost 100% of their sales or closed down completely.

Yelp says that a whopping 60 percent of the restaurants that were initially listed as"temporarily closed" on their site are now classified as permanetly
closed...

Air travel is another industry that is being absolutely devastated by this pandemic.After a modest bounce in June, the number of air passengers is starting to fall again.The resurgence of coronavirus infections is derailing the travel industry's modest recovery. The number of air passengers processed through TSA security lines fell during the week ended July 20, compared with the prior week, according to Bank of America. This metric is down more than 70% from a year ago.

United (UAL) CEO Scott Kirby told CNBC on Wednesday that the airline doesn't "expect to get anywhere close to normal until there's a vaccine that's been wiely distributed to a large portion of the population" !! (Hello Big Pharma Inc.)

http://theeconomiccollapseblog.com/
(Whatever one might think about that blog, but most numbers are proberly back up
with so callled serious sources aka links.)


Peter AU1 , Jul 30 2020 21:48 utc | 21

The cost of herd imunity.

https://www.abc.net.au/news/2020-07-31/coronavirus-covid-19-us-economy-record-plunge/12509976
"The US economy has shrunken at a dizzying 32.9 per cent annual rate in the April–June quarter.

It is by far its worst quarterly plunge, and has thrown tens of millions out of work and sent unemployment surging to 14.7 per cent, the US Government said on Thursday (local time).

The Commerce Department's estimate of the second-quarter decline in the gross domestic product marked the sharpest such drop, according to records dating back to 1947."

psychohistorian , Jul 31 2020 0:05 utc | 38

@ b who wrote
"
The economic damage the pandemic has caused in the U.S. is extreme:
"

The pandemic is a set up for the economic damage more than it caused itself, IMO. The economic system started crashing last September. Empire has been in frantic mode. in case you hadn't noticed, to find a patsy to blame for the economic crash. I believe that response to the pandemic was designed to project the most economic impact to cover for the financial structural deficiencies underneath. Jobs going away to automation is not a new trend, nor is reduction of consumption due to less disposable income.....there really has been no economic recovery for the masses since 2008.

And that great Man for Humanity, as some here still believe, Trump has been proposing things like suspending the payroll tax which would kill the Social Security Insurance program, pushing back the election to a better time`and deflecting responsibility for the hundred thousand and counting dead because Empire is designed for profit, not people and comparison with China's results are telling.

This is what living under the dictatorship of global private finance provides for the masses which pales in comparison with public finance centered nations.

[Jul 30, 2020] Building an Inclusive Post-Pandemic American Workforce by Michele Steeb Michele Steeb

Jul 30, 2020 | www.theamericanconservative.com

>

ll eyes are on the declining number of unemployed. The May and June jobs reports chronicle the reabsorption of 5.3 million who lost their jobs in the COVID-19 pandemic. Twelve million jobs to go to reach pre-pandemic employment.

Yet prior to the pandemic, there were 18 million Americans missing from the economy. These persons were neither employed nor seeking employment -- nor retirees, students or in-home caregivers -- and therefore were excluded from the Bureau of Labor Statistics count of the workforce. In order that America emerge from the pandemic stronger than before, a concerted initiative by federal and state governments to move them back into the economy -- using existing resources -- must begin now.

...

Research on the social determinants of health finds that employment has a very strong correlation with positive health outcomes. To exist as a non-participant in the economy is thus an invitation to dire health outcomes including premature death.

What's more, these individuals are needed as contributors to our national commonweal, fueling increased economic and social progress. And people engaged in productive activities are much less likely to engage in negative and destructive behaviors.

... The USDA's food stamp program has a robustly funded, though underutilized, employment and training grant. States use the excuse of USDA's partial match requirement as a reason to opt out.

[Jul 30, 2020] What Will Happen to Neoliberalism after the COVID-19 Crisis -- Will It Survive by Prof. Joseph H. Chung

Notable quotes:
"... Some of the neoliberal countries may be at the stage of the collusion; some of them may find themselves at the stage of oligarchy; some of them may be at the stage of corruption culture. ..."
"... In Japan, since 1957, there were twenty-one prime ministers of whom 75% were one-year or two-year prime ministers despite the four-year term of prime ministers. The short life span of Japanese prime ministers is essentially due to the short term interest pursued by the corrupted golden triangle composed of big business, bureaucrats and politicians. Unless, Japan uproots the corruption culture, it will be difficult to save the Japanese economy from perpetual stagnation. ..."
"... In the U.S. the big companies are spending a year no less than $2.6 billion lobbying money for the promotion of their interests, while the Congress spends $ 2.9 billion and the Senate, $860 million for their respective annual operation. Some of the big companies deploy as many as 100 lobbyists. ..."
"... It is unbelievable that the amount of lobbying is as much as 70% of the annual budget of the whole legislative of the U.S. ..."
"... Under such lobbying system, each group should deploy lobbyists to promote their interests. The immigrants, the native Indians, the Afro Americans, the alienated white people and other marginal groups cannot afford lobbyists and they are often excluded from fair treatment in the process of making laws and policies ..."
"... In the case of the U.S. its rank increased from 18 in 2016 to 22 in 2019. Thus in three years, the degree of corruption increase by 22.2% ..."
"... The U.S. is the richest country in the world, but it is also a country where income inequality is the most pronounced. I will come back to this issue in the next section. In relation to the corona virus crisis, income inequality means an army of those who are most likely to be infected and who are unable to follow CDC guidelines of testing, self quarantine and social distancing. Finally, the privatization of public health services has made the whole country unprepared for the onslaught of the virus. ..."
"... The experience of Japan shows how this can happen. The economic depression after the bubble burst of 1989, Japan had to endure 30-year deflation. The government of Japan has flooded the country with money to restore the economy, but the money was used for the bail-out of big corporations neglecting the healthy development of the SMEs and impoverishing the ordinary Japanese people. South Korea could have experienced the Japanese-type economic stagnation, if the conservative government ruled the country ten more years. ..."
"... The neoliberal pro-big company policy of Washington has greatly depleted consumer demand and SMEs even before the onslaught of the coronavirus. ..."
"... Fourth, the U.S. economy is shaken up so much that the neoliberal regime will not able to recover the economy. Thus, the survival of neo-liberalism looks uncertain. But, if the coronavirus crisis continues and destroys SMEs and if only the big corporations survive owing to bailout money, neo-liberalism may survive and we may end up with authoritarian governance ruled by the business-politics oligarchy. ..."
Jul 27, 2020 | www.globalresearch.ca

For the last forty years, neo-liberalism has dominated economic thinking and the formulation of economic policies Worldwide.

But the corona virus crisis has exposed, in a dramatic way, its internal contradictions, its incapacity to deal with the corona crisis and its incompetence to restore the real economy ruined by the crisis.

In this article, we will focus on the relationship between Neoliberalism and the Corona Crisis:

To save democracy and the global economy, We need a new economic model which supports the future of humanity, which sustains human livelihood Worldwide.

1. Neoliberalism and the initial Outbreak of the Corona Virus

The most important part of neoliberalism is the relation -often of a corrupt nature- between the government and large corporations. By corruption, we mean illegal or immoral human activities designed to maximize profit at the expense of people's welfare. In this relation, the government may not be able to control and govern the large corporations. In fact, in the present context, the corporations govern and oversee national governments.

Hence, when the corona virus broke out, it was difficult for the government to take immediate actions to control the virus break-out to save human lives; It was quite possible that the price of stocks and large corporations' profit had the priority.

The theory known as neoliberalism distinguishes itself from the old liberalism prevailing before the Great Depression.

It became widely accepted mainly because of its adoption, in the 1970s and 1980s, by Ronald Reagan , president of the U.S. and Margaret Thatcher , prime minister of Great Britain as an economic policy agenda applied nationally and internationally.

The justification of neoliberalism is the belief that the best way to ensure economic growth is to encourage "supply activities" of private sector enterprises.

Now, the proponents of neoliberalism argue that public goods (including health and education) can be produced with greater efficiency by private companies than by the State. Therefore, "it is better" to let the private enterprises produce public goods.

In other words, the production of public goods should be "privatized". Neoliberals put profit as the best measure of efficiency and success. And profit can be sustained with government support. In turn, the private companies' policy is that of reducing the labour costs of production.

Government assistance includes reduction of corporate taxes, subsidies and anti-labour policies such as the prohibition of labour unionization and the abolition of the minimum wage.

Reduction of labour cost can be obtained by the automation of the production of goods

Under such circumstances, close cooperation between the government and the private corporations is inevitable; even it may be necessary.

But, such cooperation is bound to lead to government-business collusion in which the business receives legal and illegal government support in exchange of illicit money such as kick-backs and bribes given to influential politicians and the people close to the power.

As the collusion becomes wider and deeper, an oligarchy is formed; it is composed of corporations, politicians and civil servants. This oligarchy's raison d'être is to make money even at the expense of the interests of the people.

Now, in order to protect its vested interests, the oligarchy expands its network and creates tight-knit political community which shares the wealth and privileges obtained.

In this way, the government-business cooperation can be evolved by stage to give birth to the corruption culture.

Some of the neoliberal countries may be at the stage of the collusion; some of them may find themselves at the stage of oligarchy; some of them may be at the stage of corruption culture.

South Korea

When the progressive government of Moon Jae-in took over power in 2017, South Korea under the 60-year neo-liberal rule by the conservatives was at the stage of corruption culture.

The progressive government of Moon Jae-in has declared a total war against the corruption culture, but it is a very long way to go before eliminating corruption.

In South Korea, of six presidents of the conservative government, four presidents were or are in prison for corruption and abuse of power. This shows how deeply the corruption has penetrated into the fabrics of the Korea society

In Japan, since 1957, there were twenty-one prime ministers of whom 75% were one-year or two-year prime ministers despite the four-year term of prime ministers. The short life span of Japanese prime ministers is essentially due to the short term interest pursued by the corrupted golden triangle composed of big business, bureaucrats and politicians. Unless, Japan uproots the corruption culture, it will be difficult to save the Japanese economy from perpetual stagnation.

Lobbying and "Corruption Culture"

Many of the developed countries in the West are also the victims of corruption culture. In the U.K. the City (London's Wall Street) is the global center of money laundry.

In the U.S. the big companies are spending a year no less than $2.6 billion lobbying money for the promotion of their interests, while the Congress spends $ 2.9 billion and the Senate, $860 million for their respective annual operation. Some of the big companies deploy as many as 100 lobbyists.

It is unbelievable that the amount of lobbying is as much as 70% of the annual budget of the whole legislative of the U.S.

True, in the U.S., lobbying is not illegal, but it may not be morally justified. It is a system where the law makers give privileges to those who spend more money, which can be considered as bribes

Under such lobbying system, each group should deploy lobbyists to promote their interests. The immigrants, the native Indians, the Afro Americans, the alienated white people and other marginal groups cannot afford lobbyists and they are often excluded from fair treatment in the process of making laws and policies

Some of the developed European countries are also very corrupted. The international Transparency Index rank, in 2019, was 23 for France, 30 for Spain and 51 for Italy.

In the case of the U.S. its rank increased from 18 in 2016 to 22 in 2019. Thus in three years, the degree of corruption increase by 22.2%

What is alarming is that, in the corruption culture, national policies are liable to be dictated by big businesses.

In South Korea, under the conservative government, it was suspected that the national policies were determined by the Chaebols (large industrial conglomerates), not by the government.

As matter of fact, during the MERS crisis in 2015, the anti-virus policy was dictated by the Samsung Group. In order to save its profit, Samsung Hospital in Seoul hid the infected so that the number of non-MERS patients would not decrease.

In Japan, the Abe government made the declaration of public health emergency as late as April 6, 2020 despite the fact that the infections were detected as early as January, 2020.

This decision was, most likely, dictated by Keiretsu members (grouping of large enterprises) in order to save investments in the July Olympics. Nobody knows how many Japanese had been infected for more than three months.

Similarly, Trump was well aware of the sure propagation of the virus right form January, but he waited until March 13, 2020 before he declared the state of effective public health emergency. The obvious reason was the possible fear of free fall of stock price and the possible loss of big companies' profits.

The interesting question is: "The delayed declaration of public health emergency, was it Trump's decision or that of his corporate friends?" It doesn't matter whose decision it was, because the government under neoliberal system is controlled the big businesses.

So, as in Japan, Italy, Spain, France and especially, the U.K, Trump lost the golden time to save human lives to keep profit of enterprises.

God knows how many American lives were sacrificed to save stock price and company profit!

Thus, the neoliberal governments have lost the golden chance to prevent the initial outbreak of the dreadful virus.

2. Neo-liberalism and the Propagation of Corona-Virus

We saw that the initial outbreak of the virus was not properly controlled leading to the loss to golden time of saving human lives, most likely because of the priority given to business and political interests.

The initial outbreak of the virus was transformed into never-ending propagation and, even now, in many states in the U.S. the wave of the virus is getting higher and wider.

This tragic reality can be explained by four factors:

  1. people's mistrust in the government,
  2. unbounded competition,
  3. inequitable income distribution,
  4. the absence of public health system.

These four factors (above) are all the legacies of neoliberalism.

The people know well that the corrupted neoliberal government's concern is not the welfare of the people but the interest of a few powerful and the rich. The inevitable outcome is the loss of people's trust in the unreliable government.

This is demonstrated by Trump's indecision, his efforts of ignoring the warning of the professionals, his fabricates stories and above all, his perception of who should be given the right to receive life-saving medical care at the hospital.

Under such circumstances, Americans do not trust the government directives and guidelines, allegedly implemented to protect people from the virus.

The guideline of the CDC (Centers for Disease Control) for self quarantine, social distancing and wearing face masks has little effect. There is another product of neoliberalism which is troublesome. I mean its credo of unbounded competition.

It is true that competition promotes efficiency and better quality of products. However, as competition continues, the number of winners decreases, while that of losers rises. The economy ends up being ruled by a handful of powerful winners. This leads to the segregation of losers and leads to the discrimination of people by income level, religion, race and colour of skin.

In the present context, largely as a result of government policy, there is little to no social solidarity; each individual has to solve his or her own problems. I was sad when I saw on TV a young lady in California saying:

"To be killed by the COVID-19 or starve to death is the same to me. I open my shop to eat!"

This shows how American citizens are left alone to fight the coronavirus. Furthermore, neoliberalism has another unhappy legacy; it is the widening and deepening income inequality.

The U.S. is the richest country in the world, but it is also a country where income inequality is the most pronounced. I will come back to this issue in the next section. In relation to the corona virus crisis, income inequality means an army of those who are most likely to be infected and who are unable to follow CDC guidelines of testing, self quarantine and social distancing. Finally, the privatization of public health services has made the whole country unprepared for the onslaught of the virus.

In fact, in the U.S. there is no public health system. For three months after the first breakout of the virus, the country lacked everything needed to fight the virus.

Thus, neoliberalism has made the U.S not only to lose the golden time to prevent the initial breakout but also it has let the wave of virus to continue. Nobody knows when it will calm down. As a matter of fact, on July 4, there were 2.9 million infected and 132,000 deaths; this gives a death rate of 4.6%. Given U.S. population of 328 million, we have 402.44 deaths per million inhabitants which is one of highest among the developed countries. The trouble is that the wave of virus is still going higher and wider. On July 4, the confirmed cases increased by 50% in two weeks in 12 states and increased 10% to 50% in 22 states.

3. Neo-liberalism and the very Foundation of the U.S. Economy

The message of this section is this. The foundation of the American economy is the purchasing power of the consumers and the job creation by small-and medium-sized enterprises (SMEs). The consumer demand is 70% of the GDP, the SMEs create 66% of jobs. Unfortunately, because of neoliberalism, the consumers have become very poorer and the SMEs have been neglected in the pro-big-company government policies. The COVID-19 has destroyed the SMEs and impoverished the consumers. Nobody would deny the contribution of neo-liberalism to globalization of finance, the creation of the global value chain and, especially the free trade agreement.

All these activities have allowed GDP to grow in developed countries and some of new industrial countries. However, the wealth created by the growth of GDP has gone to countries already developed, some developing countries and a small number of multinational enterprises (MNE). The rich produced by GDP growth has led to the concentration of wealth in the hands of a few privileged. What is more serious is this. If the skewed income distribution in favour of a decreasing number of people continues for long, the GDP will stop growing and decades-long deflation is quite possible, as it has happened in Japan.

According to the OECD data, in the period, 1975-2011, the GDP share of labour income in OECD countries fell by 13.8% from 65% to 56%. In the case of the U.S., in the same period, 1970-2014, it fell by 11%. The falling labour-income share is necessarily translated into unequal household income distribution. There are two popular ways of measuring income distribution: the decile ratio and the Gini coefficient.

The decile ratio is obtained by dividing the income earned by the top 10% income earners by the income earned by the bottom 10% income earners . The decile ratio in 2019 was 18.5 in the U.S. as compared to 5.6 in Finland. The decile ratio of the U.S. was the highest among the developed countries. Thus, in the U.S. the top 10 % has an income 19 times more than the bottom 10%, while, in Finland, the corresponding ratio is only 6 times. This shows how serious the income gap is in the country of Uncle Sam.

The Gini coefficient varies from zero to 100. As the value of the Gini increases, the income distribution becomes favourable to the high-income households. Conversely, as the value of the Gini decreases, the income distribution becomes favourable to low-income households. There are two types of Gini: the gross Gini and the net Gini. The former refers to Gini before taxes and transfer payment, while the latter refers to Gini after taxes and transfer payment. The difference between the gross and the net Gini shows the government efforts to improve the equality and fairness of income distribution The gross U.S.- Gini coefficient in 2019 was 48.6, one of the highest among the developed countries.

Its net Gini was 38.0 so that the difference between the gross and the net Gini was 12.3%. In other words, the U.S. income distribution improved only by 12.3% by government efforts as against, for example, an improvement of 42.9% in the case of Germany, where the gross Gini was 49.9 while the net Gini was 28.5 The net Gini of the U.S. was the highest among the developed countries. The implication is clear. The income distribution in the U.S. was the most unequal. To make the matter worse, the government's effort to improve the unequal income distribution was the poorest among the developed countries. There are countless signs of unfortunate impacts of the inequitable income distribution in the country called the U.S. which Koreans used to admire describing it as "mi-gook- 美國미국 – Beautiful Country". Now, one wonders if it is still a "mi-gook".

The following data indicates the seriousness of poverty in the U.S. (data below prior to the Coronavirus crisis).

These data give us an idea on how so many people have to suffer from poverty in a country where per capita GDP is $65,000 (2019 estimate), the richest country in the world. Most of the Americans work for small- and medium-sized companies (SMEs). In the U.S., there are 30 million SMEs. They create 66% of jobs in the private sector. The SMEs are more severely hit than big companies by the coronavirus.

In fact, 66% of SMEs are adversely affected by the virus against 40% for big firms. As much as 20% of SMEs may be shut down for good within three months, because of the virus. Under the forty years of neoliberal pro-big corporation policies, available financial resources and the best human resources have been allocated to big firms at the expense of the development of SMEs.

The most damaging by-product of neoliberalism is no doubt the widening and deepening unequal income distribution for the benefit of the big corporations and the uprooting of SMEs. This trend means the shrinking domestic demand and the disappearance of jobs for ordinary people.

The destruction of the domestic market caused by the shrinking consumer demand and the disappearance of SMEs can mean the uprooting of the very foundation of the economy.

The experience of Japan shows how this can happen. The economic depression after the bubble burst of 1989, Japan had to endure 30-year deflation. The government of Japan has flooded the country with money to restore the economy, but the money was used for the bail-out of big corporations neglecting the healthy development of the SMEs and impoverishing the ordinary Japanese people. South Korea could have experienced the Japanese-type economic stagnation, if the conservative government ruled the country ten more years.

The neoliberal pro-big company policy of Washington has greatly depleted consumer demand and SMEs even before the onslaught of the coronavirus. But, the COVID-19 has given a coup de grâce to consumer demand and SMEs To better understand the issue, let us go back to the ABC of economics. Looking at the national economy from the demand side, the economy consists of private consumer demand (C), the private investment demand (I), the government demand (G) and Foreign demand represented by exports of domestic products (X) minus domestic demand for imported foreign products (M).

GDP=C + I + G + (X-M)

In 2019, the consumer expenditure (C) in the U.S. was 70% of GDP, whereas the government's spending (G) was 17%. The investments demand (I) was 18%. The net exports demand (X-M) was -5%.

In 2019 the composition of Canadian GDP was: C=57%; I=23 %; G=21 %; X-M=-1%.

Thus, we see that the U.S. economy heavily depends on the private domestic consumption, which represents as much as 70% of GDP compared to 57% in Canada. The government's contribution to the national demand is 17% as against 21% in Canada. In the U.S. a small government is a virtue according to neoliberals. In the U.S. the private investments account for only 18% of GDP as compared to as much as 23% in Canada. In the U.S., off-shoring of manufacturing jobs and the global value chain under neo-liberalism have decreased the need for business investments at home. It is obvious then that to save the American economy, we have to boost the consumers' income. But, the consumer income comes mainly from SMEs. We must remember that the SMEs create 66% of all jobs in the U.S. Therefore, if consumer demand falls and if SMEs do not create jobs, the US economy may have to face the same destiny as the Japanese economy. This is happening in the U.S. The corona virus crisis is destroying SMEs and taking away the income of the people.

The coronavirus crisis is about to demolish the very foundation of the American economy.

4. Corona Virus Crisis and the Survival of Neoliberalism

The interesting question is this. Will neo-liberalism as economic system survive the corona virus crisis in the U.S.?

There are at least four indications suggesting that it will not survive.

  1. First, to overcome major crisis such as the corona virus invasion, we need strong central government and people-loving leader. One of the reasons for the successful anti-virus policy in South Korea, Taiwan and Singapore was the strong central government's role of determining and coordinating the anti-virus policies. As we saw, the gospel of neo-liberalism is the minimization of the central government's role. Having little role in economic policies, the U.S. federal government has proved itself as the most incompetent entity to fight the crisis. It is more than possible that the U.S. and all the neoliberal countries will try to get away from the traditional neoliberal governance in which the government is almost a simple errand boy of big business.
  2. Second, the people's trust in the neoliberal leaders has fallen on the ground. It will be difficult for the neoliberal leaders to be able to lead the country in the post-corona virus era.
  3. Third, the corona virus crisis has made the people aware of the abuse of power by the big companies; the people now know that these companies are interested only in making money. So, it may be more difficult for them to exploit the people in the era of post-COVID-19.
  4. Fourth, the U.S. economy is shaken up so much that the neoliberal regime will not able to recover the economy. Thus, the survival of neo-liberalism looks uncertain. But, if the coronavirus crisis continues and destroys SMEs and if only the big corporations survive owing to bailout money, neo-liberalism may survive and we may end up with authoritarian governance ruled by the business-politics oligarchy.

5. Search for a New Economic Regime: Just-Liberalism

One thing which the corona-virus crisis has demonstrated is the fact that the American neo-liberalism has failed as sustainable regime capable of stopping the virus crisis, restore the economy and save the democracy. Hence, we have to look for a new regime capable of saving the U.S. economy and democracy. We would call this new regime as "Just-liberalism " mission of which is the sustainable economic development and, at the same time, the just distribution of the benefits of economic development. Before we get into the discussion of the main feature of the new regime, there is one thing we should discuss. It is the popular perception of large corporation. Many believe that they make GDP grow and create jobs. It is also the popular view that the success of these large corporations is due to the innovative managing skills of their founders or their CEOs. Therefore, they deserve annual salary of millions of dollars. This is the popular perception of Chaebols in South Korea.

But, a great part of Chaebols income is attributable to the public goods such as national defence, police protection, social infrastructures, the education system, enormous sacrifice of workers and, especially tax allowances, subsidies and privileges. In other words, a great part of the Chaebols' income belongs to the society, not the Chaebols. Many believe that the Chaebols create jobs, but, in reality, they crate less than 10% of jobs in Korea. We may say the same thing about large corporations in the U.S. In other words, much of the company's income is due to public goods. Hence, the company should equitably share its income with the rest of the society. But do they?

The high ranking managers get astronomical salaries; some of them are hiding billions of dollars in tax haven islands.

We ask. Are large corporations sharing equitably their income with the society? Are the corporate tax allowances they get too much? Is the wage they pay too low? Is CEO's income is too high?

It is difficult to answer these questions.

But we should throw away the mysticism surrounding the merits of large corporations; we should closely watch them so that they do not misuse their power and wealth to dictate national policies for their own benefit at the expense of the welfare of the people. The new regime, just-liberalism, should have the following eight features.

First, we need a strong government which is autonomous from big businesses; there should be no business-politics collusion; there should be no self-interest oligarchy of corruption.

Second, it is the time we should reconsider the notion of human right violation. There are several types of human right violation in developed countries including the U.S. For example, the racial discrimination, the inequality before the law, the violation of the right of social security and the violation of the right of social service are some cases of violation of human rights defined by the U.N. The Western media have been criticizing human right violation in "non-democratic countries", but, in the future, they should pay more attention to human right violation in "democratic countries."

Third, the criterion of successful economy should not be limited to the GDP growth; the equitable distribution of the benefits of GDP growth should also be a criterion; proper balance between the growth and the distribution of growth fruits should be maintained.

Fourth, market should not be governed by "efficiency" alone; it must be also "equitable". Efficiency may lead to the concentration of resources and power in the hands of the few at the expense of social benefit; it must be also equitable. As an example, we may refer to the Chaebols (big Korean industrial conglomerates) which kill the traditional village markets which provide livelihood to a great number of poor people. The Chaebols may make the market efficient but not equitable. The Korean government has limited Chaebols' penetration into these markets to make them more equitable.

Fifth, we need a partial direct democracy. The legislative translates people's wish into laws and the executive makes policies on the basis of laws. But, in reality, the legislative and the executive may pass laws and policies for the benefit of big companies or specific group of individuals and institutions close to the power. Therefore, it is important to provide a mechanism through which the people – the real master of the country – should be allowed to intervene all times. In South Korea, if more than 200,000 people send a request to the Blue house (Korean White House) to intervene in matters judged unfair or unjust, the government must intervene.

Sixth, those goods and services which are essential for every citizen must be nationalized. For example, social infrastructure such as parks, roads, railways, harbours, supply of electricity should not be privatized. Education including higher education should be made public goods so that low income people should get higher education as do high income group.

This is the best way to maximize the mass of innovative minds and creative energy to develop the society. Above all, the health service should be nationalized. It is just unbelievable to see that, in a country where the per capita GDP is $63,000, more than 30 million citizens have no medical insurance, just because it is too expensive. Politicians know quite well that big companies related to insurance, pharmaceutical products and medical professions are preventing the nationalization of medical service in the U.S. But, the politicians don't seem to dare go over these vested interests groups and nationalize the public health system. Remember this. There are countries which are much poorer than the U.S. But, they have accessible universal health care insurance system.

Seventh, the economy should allow the system of multi- generational technologies in which not only high-level technologies but also mid-level technologies should be promoted in such a way that both high- tech large corporations and middle-tech SMEs can grow. This is perhaps only way to insure GDP growth and create jobs.

Eighth, in the area of international relations, it is about the time to stop wasteful ideological conflict. The difference among ideologies is narrowing; the number of countries which have abandoned the U.S. imposed democracy has been rising; the ideological basis of socialism is weakening. According to the Economist Intelligence Unit, 48% of countries are democratic, while 52% are not. According to Freedom House, in 2005, 83 countries had net gain in democracy, while 52 countries had net loss in democracy.

But in 2019, only 37 countries had net gain while 64 countries had net loss. Between 2005 and 2018, the number of countries which were not free increased by 26%, while those which were free fell by 44%. On the other hand, it is becoming more and more difficult to find authentic socialism. For example, Chinese regime has lost its pure socialism long time ago. Thus, the world is becoming non-ideological; the world is embracing ideology-neutral pragmatism.

To conclude, the corona virus pandemic has given us the opportunity to look at ourselves; it has given us the opportunity to realize how vulnerable we are in front of the corona virus attack.

Many more pandemics will come and challenge us. We need a world better prepared to fight the coming pandemics. It is high time that we slow down our greedy pursuit for GDP growth; it is about the time to stop a wasteful international ideological conflict in support of multibillion dollar interests behind Big Money and the Military industrial complex.

It is therefore timely to find a system where we care for each other and where we share what we have .

***

Note to readers: please click the share buttons above or below. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

Professor Joseph H. Chung is professor of economics and co- director of the Observatoire de l'Asie de l'Est (ODAE) of the Centre d'Études de l'Intégration et la Mondialisation (CEIM), Université du Québec à Montréal (UQAM). He is Research Associate of the Center of Research on Globalization (CRG). Growing Social and Wealth Inequality in America

[Jul 30, 2020] Financial capitalism is bloodthirstily by definition as it needs new markets. It fuels wars.

Jul 29, 2020 | crookedtimber.org

steven t johnson 07.29.20 at 3:14 pm (50 )

PS likbez@46 reminded me of a line from the movie Reds. Warren Beatty's John Reed spoke of people who "though Karl Marx wrote a good antitrust law." This was not a favorable comment. The confusion of socialism and what might be called populism is quite, quite old. Jack London's The Iron Heel has its hero pointing out even before the Great (Class) War that the normal operations of capitalism, concentration and centralization, destroyed the middle class paradise of equal competition. It wasn't conspiracies.

likbez 07.29.20 at 3:30 pm

@steven t johnson 07.29.20 at 3:14 pm (51)

Jack London's The Iron Heel has its hero pointing out even before the Great (Class) War that the normal operations of capitalism, concentration and centralization, destroyed the middle class paradise of equal competition.

I think the size of the USA military budget by itself means the doom for the middle class, even without referring to famous Jack London book (The Iron Heel is cited by George Orwell 's biographer Michael Shelden as having influenced Orwell's most famous novel Nineteen Eighty-Four.).

Wall Street and MIC (especially intelligence agencies ; Allen Dulles was a Wall Street lawyer) are joined at the hip. And they both fully control MSM. As Jack London aptly said:

"The press of the United States? It is a parasitic growth that battens on the capitalist class. Its function is to serve the established by moulding public opinion, and right well it serves it."
― Jack London, The Iron Heel

Financial capitalism is bloodthirstily by definition as it needs new markets. It fuels wars. In a sense, Bolton is the symbol of financial capitalism foreign policy.

It is important to understand that finance capitalism creates positive feedback loop in the economy increasing instability of the system. So bubbles are immanent feature of finance capitalism, not some exception or the result of excessive greed.

[Jul 30, 2020] Almost 30 Million in U.S. Didn't Have Enough to Eat Last Week by Maeve Sheehey

Jul 29, 2020 | www.bloomberg.com

[Image removed]
People wait in their vehicles to receive food at a drive-thru food
distribution event in Chula Vista, California, on May 1.

Food insecurity for U.S. households last week reached its highest reported level since the Census Bureau started tracking the data in May, with almost 30 million Americans reporting that they'd not had enough to eat at some point in the seven days through July 21.

In the bureau's weekly Household Pulse Survey, roughly 23.9 million of 249 million respondents indicated they had "sometimes not enough to eat" for the week ended July 21, while about 5.42 million indicated they had "often not enough to eat." The survey, which began with the week ended May 5, was published Wednesday.

The number of respondents who sometimes had insufficient food was at its highest point in the survey's 12 weeks. The number who often experienced food insufficiency was at its highest since the week ended May 26.

Food Insufficiency

A growing number of survey respondents say they don't have enough to eat

U.S Census Bureau Household Pulse Survey

This follows deep recession resulting from the pandemic, which put millions of Americans out of work. Unemployed Americans have been receiving an extra $600 per week benefit, which is set to expire at the end of July as Congress debates a new relief package.

Other high-frequency data, including Household Pulse jobs numbers, indicate that the U.S. economic recovery may be stalling out at virus cases spike around the country and states roll back their reopening plans.

[Jul 29, 2020] A Significant Decline Is Coming For The U.S-

Notable quotes:
"... The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world ..."
"... these bans are lose lose situation for both the US and China ..."
"... I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis. ..."
"... Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them. ..."
"... I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway. ..."
Jul 29, 2020 | www.moonofalabama.org

A Significant Decline Is Coming For The U.S. james , Jul 27 2020 18:10 utc | 1

by Passer by

In response to several comments in the last open thread (slightly edited).

Actually there is even some real, and not only relative, decline for the US, for example US life expectancy is dropping. This is a pretty bad sign for a developed country. Same for the UK by the way.

On the issue of China gaining during the Covid crisis, they gained in raw power, for example gained in GDP relatively to the US. And they gained in debt levels too, relatively, as US debt levels exploded due to the crisis. Now you have V-shaped recovery in China and poor, W-shaped double dip recovery in the US. With far more debt added.

Of course there is the issue of public relations and soft power. On the one hand the US blamed China for the pandemic, but on the other hand it embarrassed itself due to its poor performance in containing the pandemic, compared to other countries. And the US lost points around the world due to rejecting WHO right in the middle of the pandemic. Europe and developing countries did not like that at all. Don't forget that Covid also weakened the US military, they have problems with it, including on ships and overseas bases, and even broke the biggest US exercise planned in Europe for the last 30 years. And the pandemic in the US is still raging, its not fixed at all and death rates are increasing again.

Here for example, the futurologists from Pardee Canter that that China gained during the crisis, in raw capabilities. Future research and relative power between countries is their specialty :

Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer use IFs (International Futures) to explore the long-term impact of COVID-19 in China in this Duck Of Minerva blog post" "Where broad measures of material capabilities are concerned, the picture is clear: COVID-19 is closing the gap in relative capabilities for the U.S. and China and accelerating the U.S.-China transition. Through multiple long-term forecast scenarios using the International Futures tool, Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer explain on the Duck of Minerva blog that China is likely to gain approximately one percent of global power relative to the U.S. by 2030 due to the economic and mortality impacts of COVID-19. This share of global power is similar to the relative capabilities of Turkey today.

On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.

On the chip/semiconductor issue. David Goldman is skeptical that the US will be able to stop China on this :

The chip ban gives the world an enormous incentive to circumvent the US
Basically Huawei still has advanced suppliers, from South Korea and Japan. And some of them are refusing to yield. The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world , which gives enormous initiative for private businesses to circumvent US made equipment in order to export to China. Then also China is stashing large quantities of chips. By 2025, it should be able to replace foreign production with homegrown. So these bans are lose lose situation for both the US and China - yes, this will cause come costs to China up to 2025. But it will also lead to US companies, such as Qualcomm, to lose the Chinese chip market, which is the largest in the world, and there is nothing to replace it.

These are hundreds of billions of losses for the US due to gradually losing the most lucrative market. Thus, in relative terms, China does not lose from these games, as the US will pay a large price just as China. It is lose-lose situation, but in relative terms the same. US loses just as China loses. And do not forget that China warned that a full US attack on Huawei will lead to Boeing being kicked from the country, which is becoming the biggest aviation market in the world, and will lead to hundreds of billions of losses for that company too, and will probably burry it under Airbus. China needs lots of planes up to 2028, when they will replace them with their own, worth hundreds of billions of dollars. Elevating Airbus over Boeing, which already has big troubles, will be a significant hit for the US aerospace industry.

So China has cards to play too. On the issue of the US getting some countries to ban Huawei, it is again lose - lose situation - that is both the US and some of its allies will lose due to using more expensive 5G equipment and will lose more time to build their networks. So China loses, and US and some allies lose, but in relative terms things remain the same between them power-wise, as they both lose. Do not forget that Germany said that it will continue to use Huawei equipment, and this is the biggest economy in Europe:

Germany's three major telecommunications operators Deutsche Telekom, Vodafone and Telefonica have been actively promoting 5G in recent years. They implement the "supplier diversification" strategy and use Huawei equipment in their networks among other vendors. Peter Altmaier, German minister of economy, told the Frankfurter Allgemeine Zeitung on July 11 that Germany would not exclude Huawei from the country's 5G network rollout. "There can only be an exclusion if national security is demonstrably at risk. However, we will strengthen our security measures, regardless of which country the products come from," said Altmaier. "There is no change in Germany's position," a spokesperson of the country's Interior Ministry told local broadcaster ARD on July 16.

So we can say that probably half of Europe will be using Huawei. Still, as you said, a large part of the world will exclude it. Maybe half of world's GDP. Unfortunately things are not perfect. One bright spot in that is that Huawei is betting on emerging markets, and emerging markets have higher growth rates than western markets - that is, they will matter more in the future.

I would agree that the US is harming China, but the damage is not large IMO, as these are mostly lose lose situations where relative power stays the same. And with time, there will be significant damages for the US too, such as losing the biggest chip and aviation markets and the empowerment of Boeing competitors such as Airbus.

So its not too bad in China. Thus, after mentioning all of this, I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis.

On Hong Kong China had no options. It was a lose-lose situation. If they allowed everything to stay as it is there would be constant color revolution there and they will be constantly in the media. Maybe it is better to stop this once and for all. They hoped that the Covid crisis will give them cover to do this. It did not work very well.

Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them.

I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway.

The data shows a significant decline incoming for the US.

The Highway Trust Fund (HTF) will be depleted by 2021, the Medicare Hospital Insurance (HI) trust fund by the beginning of 2024, the Social Security Disability Insurance (SSDI) trust fund in the 2020s, the Pension Benefit Guarantee Corporation (PBGC) Multi-Employer fund at some point in the mid-2020s, and the Social Security Old-Age and Survivors Insurance (OASI) trust fund by 2031. We estimate the theoretically combined Social Security OASDI Trust fund will run out of reserves by 2031.

That is not to mention the big divide in US society, and the ongoing Covid crisis, which is still not fixed in the US. But is largely fixed in China. Do you see the decline now? They have a big, big reason to be worried. A significant decline is coming for the US.

Posted by b on July 27, 2020 at 17:53 UTC | Permalink

thanks for highlighting 'passer by's post b... i agree with them for the most part... it reminds me of a game of chess where pieces are being removed from the board.. it is a lose- lose, but ultimately, it is a bigger loss for the usa down the road... for whatever reason the usa can't see that the financial sanctions, bullying and etc, only go so far and others work around this as we see with russia, iran, venezuala and china in particular...

the one comment i would view differently then passer by is this one - "Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them." i think the usa is losing it's position in terms of soft power and world opinion but you won't be reading about it in the western msm.. that is going to come out later after the emergence of a new reality is very clear for all to see... the trump strategy is really more of the same and it is like a medicine that loses it's power over time and becomes ineffective - sort of like antibiotics...


O , Jul 27 2020 18:34 utc | 7

In other words the western oligarchs will lose out to the eastern oligarchs in the Great Trade War under the cover of a fake pandemic.

Or perhaps the global oligarchs in general just want the world to follow more in the Chinese model where the population is more agreeable to total surveillance, social credit scores and even more out right fascistic government/corp model under the cover of a fake pandemic.

Kadath , Jul 27 2020 18:46 utc | 8

Re: James #1,

With respect to "bullying works", in international diplomacy it usually does since weaker powers have more to lose in a direct diplomatic crisis with a larger power. This is not to say that they won't push back, but they will be far more strategic in where they do. In essence, weaker powers have fewer "red lines" but they will still enforce those, while greater powers have more "red lines", because they have more power to squander on fundamentally insignificant issues. However, weaker states will still remember being abused and oppressed, so when the worms turns while they won't be the first to jump ship, they will be more than eager to pile on and extract some juicy retribution once it is clear they will not be singled out. I suspect the Germany will be the bellwether, when (if) Germany breaks from the US on a key aspect on the transatlantic relationship that will be the signal for others to start jumping ship. If Nordstream 2 go through, then there will be a break within 5 years; if Nordstream is killed, then the break might be delayed for 5 years or more but there will still be a break when the US pushes Germany to support the next major US regime change war in the Middle East.

O , Jul 27 2020 19:10 utc | 16

The engineered collapse is being called the "Great Reset" by many outlets already. The covid nonsense is just a cover for it. Instead of Saudi Arabian terrorist it is a basically a harmless coronavirus. Just in the days immediately following 911 the "terrorist'' threat was so overhyped that security theater was employed everywhere. Now sanitation theater is the new act in town.

blum , Jul 27 2020 19:11 utc | 17

Where does anyone get these numbers about military spend as a % of gdp? Have you listened to Katherine Austin Fitts on Corbett Report?
Posted by: oglalla | Jul 27 2020 18:27 utc | 4

If you could dig through the linked Committee for a Responsible Federal Budge links for me. I'd appreicate it a lot. ;)
http://www.crfb.org/blogs/major-trust-funds-headed-insolvency-within-11-years

Long time not heard anything from Katherine. You feel I should check both her and Corbert on Gates, I suppose?

karlof1 , Jul 27 2020 19:24 utc | 19

Article discussing political fallout from info provided @11.

Andrei @14--

Good to see your comment. Lots of anecdotal evidence nationwide about store closures and many vacancies in business centers, particularly within economic engines of NYC and elsewhere along the East Coast. IMO, lots of self-censorship by business media while the reality reported by Shadowstats goes ignored. As for losing the status of #1 economy, that was always going to occur once China or India became a moderately developed economy. It just happened that China is far more efficient politically which allowed it to become #1. And until India improves politically, it will continue to lag behind numerous smaller nations. Too bad there isn't a place where one can bet on the great likelihood that the Outlaw US Empire will outperform all nations in the production of Bullshit and Lies.

Jackrabbit , Jul 27 2020 20:48 utc | 29

I also disagree with the comparison between USA and China gdp and other statistics.

China is not simply competing against USA but against the Empire: 5 eyes, NATO, Euro poodles, Israel and the Gulf States and others like Mexico, Columbia, Brazil, India.

Anyone that is minimizing the conflict and the advantages of one side vs another is doing a disservice.

Cold War I lasted 40 years.

!!

Mark2 , Jul 27 2020 21:13 utc | 39

CitizenX @ 26
Agree with your tone and content.
Particularly the third from last paragraph. I think people are missing by choice the growing ground-swell of public opinion US wide as this blog shows, a multi-faceted detereation of US political morals and legality.
Combined with a world wide growing awareness of how deranged American leaders now are.
Haterd consumes itself as dose greed.
My ear to the ground tells me, the protests at present are growing some in full sight some not.
This is not buseness as usual. Then return to normal. The mood now is -- -- - let's settle this thing once and for all, let's get the job done.
So my personal opinion ? we will see a US regime chainge faster than a lot here predict. Much faster.

jadan , Jul 27 2020 21:50 utc | 54

Passer by is correct, no doubt, thanks to incompetent leadership in the US, but this economic horse race doesn't matter.

What matters above all is that nations should hold it together, "it" being sustainable, survivable support systems capable of providing for mass populations.We have failed that test here in our encounter with this pandemic. We have failed to develop a sustainable financial system. We have failed to meet any sort of environmental goals. We don't even have environmental goals! Our electoral system doesn't work, either, proof being the election of this idiot atavistic rich boy. If anyone thinks the election of Trump reflects the will of the majority of Americans, they are part of the problem.

China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse. Those groups not satisfied with life in the PRC have no outlet for their voices to be heard. They cannot protest. They are under the strict control of an increasingly sophisticated but tiny elitist clique that is only 6.5% of the total population. This clique will not relinquish power and permit more democratic expression. On the contrary, more and more suppression of dissidence of any sort will happen. The social scoring system is an especially insidious program of social control. China's collectivism has turned the country into an ant hill. It is extremely productive, but people are not ants.

Passer by is looking at the world through a keyhole.

O , Jul 27 2020 22:23 utc | 68

Nightmare' conditions at Chinese factories where Hasbro and Disney toys are made


Investigators found there were serious violations at the factories which were endangering workers.

In peak production season, employees were working up to 175 overtime hours per month. Chinese labour law restricts monthly overtime to 36 hours per month, but the report alleged factories would often ask local governments to implement a "comprehensive working hour scheme" to override existing legislation.

https://www.cnbc.com/2018/12/07/nightmare-at-chinese-factories-making-hasbro-and-disney-toys.html

O , Jul 27 2020 22:28 utc | 69

One wonders if China will run into the same problems of the US in the not too distant future?

"The End of Sweatshops? Robotisation and the Making of New Skilled Workers in China"


Over the past four decades China has undergone a process of massive industrialisation that has allowed the country to achieve remarkable economic growth. Because of its large manufacturing capacity based on a seemingly unlimited supply of cheap migrant labour in light industries, China has come to be known as the 'workshop of the world'. However, since the early 2000s the country's labour market has experienced a remarkable transition from labour surplus to a shortage of labour, which has led to sustained increases in the wages of ordinary workers. In such a context, since 2015 robotisation has become a driving policy for industrial upgrading for manufacturing in China, with the slogan 'replacing human workers with industrial robots' (机器换人) frequently appearing in media reports and official policy documents.

https://madeinchinajournal.com/2020/05/07/the-end-of-sweatshops-robotisation-and-the-making-of-new-skilled-workers-in-china/


Jackrabbit , Jul 27 2020 22:39 utc | 72

karlof1 @Jul27 21:50 #55

Thank you for clarifying that.

The early date of "full spectrum dominance" (1996 not 2010) suggests to me that the doctrine was related the "end of history" thinking of that time. USA Deep State believed its own propaganda.

It also strengthens my case for the proximate cause for the current conflict originating in 2014 when the US Deep State suddenly realized the threat that Russia and China Alliance posed to their plans for global domination.

Not only had they believed their own propaganda but they had overreached with their attempt to force Russia to capitulate and had been distracted by Israel interests that wanted to use USA for the greater Israel project.

!!

karlof1 , Jul 27 2020 22:59 utc | 74
When I wrote my economic analysis paper on China in 1999, it was quite clear that the 21st Century was going to become the Asian Century as the Outlaw US Empire would be eclipsed by Asia's economic dynamism. 20+ years later, my prediction holds true, and it's even stronger now than then with Russia's resurgence. Both outcomes clearly go against the 500+ years of Western Global Hegemony and goads numerous people. For students of history like myself, what's occurring isn't a surprise thanks to the West's adoption of--or should I write forced indoctrination into--the Neoliberal political-economic philosophy, which is akin to that of Feudalism since it benefits the same class as that of the Feudal Era. China too was once Feudal and suffered a massive Civil War that destroyed much of its structure, a conflict known to the West as The Taiping Rebellion that lasted almost 14 years, from 1850-1864. One might say that was the first half of China's overall effort to overthrow Feudalism and Western Imperialism, as the second half began in 1927 and finally concluded in 1949. That amounts to a large % of years for a newbie nation like the USA; but for a nation like China inhabited by humans for over 1.3 million years and with 4,500 years of recorded history, it's really just another Dynastic Rollover--something inconceivable to non-Asians.

In reality, China's a conservative nation, culture and society with a several thousand year ethos of Collectivism, although that allowed a significant divergence in social stratification due to the ruling Feudal ways. Those who have read The Good Earth have an excellent grasp on the nature of Chinese Feudalism, which was embodied by the Kuomintang or KMT--as with Feudal lords, KMT leaders were deemed "Gangsters" by US Generals and diplomats during and after WW2. General Marshall wrote in 1947 it was clear to him that the KMT would lose to the CPC, that there was no good reason to throw good money after bad, and it would be best for the USA and the West to accept the fact of a Communist China (all noted by Kolko in his Politics of War ). Contemporary China when compared to China as depicted in 1931 by Pearl Buck is one of the most amazing human achievements of all time, and the conservative Chinese government intends to keep it that way through a series of well thought-out plans. That's the reality. It can be accepted and worked with as numerous nations realize, or it be somehow seen as unacceptable and fought against in what will prove to be a losing effort since all China need do is parry the blows and reflect them back upon its opponent using skills it developed over several thousand years. It would be much easier to join China than fight.

Hoarsewhisperer , Jul 27 2020 23:00 utc | 75
It's misleading to assess the National Military Capability of various countries in $US terms. The West's M-IC is privately owned and puts shareholder profit before all else. And the owners of the Western M-IC also own the politicians who facilitate and approve the rip-offs.

China and Russia's M-IC are owned and controlled by The People via the government and can therefore get $2+ of value for every $1 invested. For example, one can buy some very nifty twin-engine bizjets for less than half the price USG pays for a flying Batmobile (F-35) - a glorified hot-rod with guns.

VietnamVet , Jul 27 2020 23:40 utc | 83

There is definitely a decline in the USA. Deaths of despair and from the coronavirus are too great to ignore anymore. 150,000 dead and counting are not nothing. The Western Empire has fallen. The U.S. federal government failed. The Imperialists are quarantined at home.

The question is if the 19th century North American Empire from Hawaii to Puerto Rico survives. The Elite have bet it all on a vaccine or patentable treatment to give the Pharmaceutical Industry billions of dollars. However, quick cheap paper monoclonal antigen tests would make testing at home before going to work or school practical.

https://www.youtube.com/watch?v=h7Sv_pS8MgQ

This would end viral transmission and the pandemic. No drug jackpot for the 10%. Instead public health is ignored as Americans die. The silence is deafening. The protests in the Pacific Northwest are not about slavery. They are about the 90% of Americans being treated as disposable trash.

Jackrabbit , Jul 28 2020 0:26 utc | 87

VietnamVet | Jul 27 2020 23:40 utc | 83

150,000 dead and counting are not nothing. The Western Empire has fallen.

No offense VV but I can't help thinking that you (and maybe some others) are talking past the issue.

To be clear, the issue is this: Will the West's decline play a role in the US/Empire's ability and willingness to confront Russia-China? Or is the oft-heard refrain that US/Empire can not 'win' against China (implying that they shouldn't/won't bother trying!) because of its decline (usually attributed to 'late-state capitalism') just wishful thinking?

Virtually everyone here has agreed that the West - especially USA - hasn't fought the virus correctly and with vigor. And virtually everyone agrees that there has been a relative decline in USA/West and in some areas an absolute decline.

IMO what is ignored is that:

  1. from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -

    In fact, deliberate mistakes and mounting only a token effort (as we've seen) is exactly what we should expect from a craven power-elite that want to further their interests;

  2. the overall decline, while troublesome - especially to the ordinary blokes who get the short end of that decline - is not yet significant enough to prevent USA/Empire from countering the Russia-China 'upstarts' aggressively.

I likened the hopefulness of the anti-Empire crowd about Western decline to their hopefulness they previously expressed regarding Turkey. "Erdogan is turning east!" proved to be wrong.

!!

Richard Steven Hack , Jul 28 2020 0:37 utc | 89

Posted by: Andrei Martyanov | Jul 27 2020 19:01 utc | 14 Within last 10 years China built surface fleet which in terms of hulls (and "freshness") rivals that of the US. US economy would have it bottom falling off if it tried to accomplish a similar task.

Nice to see you here again. Yes, I mentioned the relative navy building in the previous open thread. China's navy will exceed US capability by 2050 and be on parity by 2030-2040 according to reports I've read. That's just ten years to twenty years from now.

Result: US gets kicked out of the South China Sea and has to share the Pacific, Indian Ocean (as will India with gnashing of teeth) and even the Med with China. China will undoubtedly project naval power all the way to the Med in support of BRI in the Middle East.

Richard Steven Hack , Jul 28 2020 1:12 utc | 92

Posted by: Jackrabbit | Jul 27 2020 20:43 utc | 27 There is decline, and while it has been mostly relative it is also accelerating - but that hasn't significantly constrained USA/Empire's response to the upstarts.

I agree. US military power isn't going away in ten years or twenty. China may achieve parity at some point (and can do serious damage now). But that doesn't obviate the fact that, short of nuclear war, the US is still in a position to throw its weight around and will continue to do so until forced back by a (hopefully conventional) military defeat of serious proportions, i.e., not just "give up and go home". And economic woes won't change that as long as the taxpayer can be fleeced - and they will be, for at least a few more decades.

jadan , Jul 28 2020 1:30 utc | 95

@ 62 A.L. "Would it be a surprise to you than there are many many protests in China at the grass root level everyday?"

There are indeed protests all the time, which is the fire under the local Party leaders that keeps them dancing. Usually the protests are against local corruption or mismanagement and are not serious. People can get what they want this way. Each year at the general Party gathering, however, special note is taken of "mass incidents", that is, protests on a larger scale, and overtly political events such as those in the Uighur province of Xinjiang and in Hong Kong. Any protest that challenges the control of the Party is not permitted. The current protests in the US could not happen in China because they challenge political orthodoxy. The Chinese don't just roll over on command for the CCP to scratch their bellies and the Party knows just how volatile the political situation could be if mishandled. China is developing into the ultimate surveillance state. There are lots of Chinese like that little guy that stood down the tank at Tienanmen in 1989. Eventually that guy is going to say: "There is some shit I will not eat!" The Party knows this.

Seer , Jul 28 2020 1:40 utc | 96

Several years ago (close to 10) I noted that the US would be bringing back US companies from China, that it would actually subsidize their relocation. It's only logical. I saw China as becoming hostile to US corporations: in light of how things are going today it's the US govt becoming hostile toward US companies in China. Make huge profits and then get free money to return back to the US: and be welcomed as victorious troops arriving back from some glorious war.

It's Musical Chairs. As the music plays more and more chairs are being removed. Capitalism has been the most efficient economic system in which to trigger an economic collapse. WTF did people think would happen with basing economic systems on the impossible, basing on perpetual growth on a finite planet. All of this was readily foreseeable using SIMPLE MATH.

Economies of scale in reverse...

Cyril , Jul 28 2020 1:43 utc | 98

@jadan | Jul 27 2020 21:50 utc | 54

China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse.

How do you square your dire prediction of China's collapse with the Edelman trust barometer of 2019 (warning: PDF file), where China scores 88 on the trust index and the US scores 60?

Daniel , Jul 28 2020 1:51 utc | 101

The COVID-19 pandemic revealed that all the "leading" western countries are unable to handle even a relatively moderate public health crisis. The neoliberal economic model considers any aspect of society that isn't generating a profit as ideologically unsound and targets these areas for "reform" (i.e. privatization).

Sometimes this is done outright, as when a public utility or service is sold to a private, for-profit operator (e.g. British Rail in the UK). But when the government thinks the public will resist and push back it is done by stealth, usually by starving the targeted service/organization of funds and then farming out parts of it to for-profit companies in the name of "efficiency", "innovation", "resilience" or some other neoliberal doublespeak concept (they all mean only one thing of course: PROFIT). This is currently happening to the US Postal Service.

Every public healthcare system in the so-called "advanced" nations encompassed by the EU/NATO and Five Spies has been underfunded and subjected to stealth privatization for decades. Furthermore, people in neoliberal societies exist to serve as fodder and raw material for "the economy" (i.e. the plutocrat or oligarch class) and there is no mechanism to deal with emergencies that can't be milked for a profit. Hence, the half arsed, incompetent, making-it up-as-they-go-along response to COVID-19 that simply writes off older and sick people as expendable.

Neoliberalism began as a US/UK project, that's why poverty, crime, inadequate health care and social services etc. and governmental and societal dysfunction generally is more advanced there than in, say, Canada and Germany.

So, yes, the US is in decline, maybe even collapsing, but that doesn't mean the imperial lackey countries are immune to the forces tearing apart the United States. They are just proceeding down that road at a slower pace. If the US falls, the west falls...globalization takes no prisoners.

I live in Canada where sometimes people get a bit smug about how great everything is here compared to the US. In British Columbia, for example, opiate overdose deaths are at a record high and have killed many many more people than COVID-19 since the pandemic began. Housing in cities like Vancouver is increasingly unaffordable, there aren't enough jobs that pay a living wage, permanent homeless camps exist in city parks, there are entire blocks where people who live in their vehicles park etc.etc.

The reality is that it's the west that is in decline, not only the United States.

O , Jul 28 2020 1:51 utc | 102

China is developing into the ultimate surveillance state.
Posted by: jadan | Jul 28 2020 1:30 utc | 95

But don't you see, dear jadan, it is for the good of the people, if only the rest of the world could see the benevolence of Big Brother we would all be much happier at least that is what the thought police has told me to think. One government, one heart, one mind. Long Live the PRC revolution./s

Schmoe , Jul 28 2020 2:04 utc | 105

Amidst all of the nonsense in the discussion section of the following link, I believe there are some germane comments from individuals that work in the semiconductor space that touch on some of the challenges China's chip industry faces. link

This article notes the substantial challenges TSMC and Samsung would face it they tried to build a cutting edge chip facility without US cooperation: can-tsmc-and-samsung-build-a-production-line-for-huawei-without-us-equipment

I hope their hiring of 3,000 experienced chip engineers accelerates their learning curve. Developing a chip industry on a moment's notice, let alone competing with Samsung and TSMC, is no small chore.

One item not mentioned in the above article is whether China could build many consumer components based on domestic 14nm (or larger) technology. Given China used to spend more importing chips than oil, I assume that even less advanced chips used for TVs, etc. as opposed to cellphones, would be very helpful for China's consumer electronics manufacturing.

They are also making some strides in the flash memory and CPU space, but production quantities are still very low.

Peter AU1 , Jul 28 2020 2:54 utc | 108

Lose lose China loses less?

Health, education, infrastructure, research and development. The backbone of prosperity. These will all continue no matter trade war or cold war but barring hot war. There must be a doubling time for this - something like an R0. Cold war and sanctions will only serve to increase R&D

US mistakes, hubris ect move in the opposite direction, mistakes multiplying mistakes.

ptb , Jul 28 2020 2:55 utc | 109

@Schmoe 105
thanks, interesting. Here is a complementary tho less detailed article on some of the same topics I ran across recently: China Speeds Up Advanced Chip Development [semiconductorengineering.com]

One important point, clearly visible in the tables in the seekingalpha article linked by Schmoe, is that the ultra-small 14nm/7nm stuff is for specialized (but strategically important) applications. Most consumer electronics, industry, and everything else is 40-60nm and up, although of course smaller has benefits to older applications in improve power (i.e. mobile applications and servers) and cost (higher density/wafer)


Peter AU1 , Jul 28 2020 3:20 utc | 113

ptb

US as an one excuse for its current hostilities against China is 'intellectual property' theft. Makes me think of ninja Chinese sneaking around removing peoples brains.
But back to semiconductors. One of China's biggest imports is chips, mostly made by machines using US tech. Many industries are highly specialized and it often makes sense from small community level to national and global level to by a product from those that specialist in that product.
China has been content to buy chips, but that will now change due to necessity. Yankistan can now expect to get its brains hacked, but I am also reminded of the Scientists in the Manhattan Project being the ones to pass on much information to the Soviet Union.
Yankistan will be leaking like a sieve. I guess that's why both oz and the poms are beefing up their secret police laws. Wont be long before we are getting shot trying to run through checkpoint charlie to the free east.

gepay , Jul 28 2020 3:46 utc | 114

It is clear that the US is in decline. It is clear the US military is bloated and overpriced but it can still turn most countries into rubble (even without using nuclear weapons) and has done a few recently. Mostly the US uses its reserve currency status and control of financial networks to punish countries that do not go along with its program. Can you say sanctions. but as Hemingway said about bankruptcy - it happens slowly and then all at once - is probably how it will continue to go. It is even losing its technological advantage. Boeing used to be the leader and made reliable planes. Now they sometimes fall out of the air. Things like high speed railways used to be the kind of thing the US did well. Now California can't get one built. China has built thousands of miles of them. Russia built a 19 kilometer bridge to Crimea in 2 years after 2 years of planning. It appears to be competently built on time and on budget. Do you really think this could happen in the USA now? In the 70s the US was the leader in environmental actions. I wonder if the present day Congress could even pass bills comparable to the Clean Air ACT or the Clean water bill. US national politics are a mean joke. Our choice this year for President - two 70+ old white men with mental issues. Our health system is overpriced. Medical bills are one of the main reasons for personal bankruptcies. As others mentioned the US life expectancy is falling. As Dmitri Orlov who watched the Soviet Empire fail said - Empire hollowed out the Soviet Union till it failed, I see it doing the same thing in the US.

John A Lee , Jul 28 2020 4:04 utc | 115

The current 'adjustment' in the USD & living standards is just what the doctor ordered to allow elites to roll out "tech wave 2" - there is precious little gain to be had from further staffing & wages cuts to the average shit-kicker, so now the bourgeoisie, medicos, architects, academics, writers plus all the rest of the tertiary educated types who blew hundreds of thousands on an education guaranteed to keep them employed, are about to be tossed on the scrap heap.

We already know from previous stunts such as 911 & the 2008 'global financial meltdown' that those most disadvantaged by this entirely predictable destruction of lives will be easily diverted into time-wasting and pointless arguments about the real cause of the mess.

This will allow the elites to use that diversion to funnel all federal funds into subsidising the capital costs of the retooling, as both parties have begun to with the despicable CARES Act, supported by the mad christian right in the senate, as well as the so-called socialists in the Congress squad.

All the Cares Act does is inject capital into big corporations, boosting their stock price & leaving citizens to lose most of their unemployment benefit. Citizens get evicted from their homes. This time it will be tenants as well as home owners.

Both of those factions of elite enablers are going to create a great deal of noise and crass finger pointing. The squad will jump up and down about this being a deliberate attack on citizens by the elite while senate fundies will claim that this 'retooling' is the result of unreasonable pay & working conditions demands by the communist unions.

What should be a universal expression of disgust will be reduced to just another culture war.

Neither will ever admit that it is far too late to be worrying about cause, it is time to concern themselves with effect, because to do so would create focus back on where the money was going at time when it is important to be saying "everyone is hurting, including the elites". Fools.

Eventually when the deed has been done assorted scummy senators & creepy congress people will announce "It is time to move on" That will be a signal that treasury tanks are dry, the elites have gotten everything which wasn't nailed down so now the citizens can roll clawing & scratching in the mud.

I have no doubt that will be the direction of discussion here as well, it is much easier to sit at a keyboard digging out obscure 'facts' that 'prove' one point of view or another, than it is to leave the keyboard behind and put work into resisting the elites and in doing so forcing a change that is more citizen friendly.

Peter AU1 , Jul 28 2020 4:31 utc | 116

gepay

With the return of Russia to the geo-political arena, US can no longer destroy counties at will through conventional weapons nor color revolutions and AQ freedom fighters.
Trump decided to go nuclear, so Russia placed its nuclear umbrella over it allies.
US can no longer destroy countries at will. It can attack a country and risk ensuring its own destruction.
So back to hybrid war and proxie war ... but now the field is narrowed down to five-eyes and in the case of China - India.
So to keep Russia out, yankistan has to rely on conventional war and hybrid war, though we are looking at a country where the lunatics are in charge of the asylum so anything could happen.

Antonym , Jul 28 2020 5:29 utc | 119

5G, who wants this?

The MNCs producing it, the MSS, NSA and GCHQ, the IoT idiots and all authoritarians on the globe. Consumers are happy with 3G: many don't even have 4G reception - give that to them.

With IoT more unemployment, more electricity and Internet dependency, more chance of hacks or natural disruptions (solar flares), more 1984.

More is not always better at all.

aquadraht , Jul 28 2020 5:36 utc | 121

Just read an "opinion piece" demonstrated how remote from reality are not only people like Pompeo from a"liberal" commentator:

https://www.msn.com/en-us/news/world/pompeos-surreal-speech-on-china/ar-BB17bk0t

The Chinese Communist Party wants a tributary international system where smaller countries are deferential to larger powers, instead of a rules-based international order where small countries enjoy equal rights.

HAHAHA!

Antonym , Jul 28 2020 5:40 utc | 123

The US/UK declining won't bother most billionaires with those passports: they just buy any other. Stuck are the millions of others.

Equally "China" ascending brings joy for all billionaires around the globe holding stock depending on Chinese near monopolies, including Anglo-es.

Some middle class Chinese are beginning to see that dying "rich" is is very limited goal, as zero can be taken to the Here After and the price for this Now is too high. Money is not everything. Welcome to this select club, Chinese brothers and sisters. Sure, a bit is good to live but amassing is a waste of precious time and attention.

William Gruff , Jul 28 2020 16:19 utc | 160

The US lacks the capacity to erect an "economic wall" that can stop China's development. Trump's "trade war" was an attempt to do just that, and America got steamrolled.

To be sure, the US can attempt even more irrational and desperate acts such as trying to seize assets owned by Chinese people and organizations in the US, but that would be America shooting itself in the head rather than just the foot.

The US simply does not posses the ability to "take the wind out of China's sails" . That is not something that is within America's power to accomplish without going kinetic by, for instance, trying to enforce a naval blockade of China's maritime transport routes. At this point there are no economic measures America can take that will not do vastly more damage to America than to China. Both trade war and bio attack were the best options America had, and America has suffered grievously from those efforts with relatively minimal impact on China. China's economy remains fundamentally strong while America's economy is devastated.

As for disrupting China's international development efforts, America has been trying its hardest for years now with the only impact being minor delays in China's plans. The only way to truly disrupt China's international development efforts would be to offer a better deal, but America no longer has anything to offer that is better. The only option left to America to delay the BRI for longer would be a kinetic one, and the door is closing on that.

juliania , Jul 28 2020 16:23 utc | 161

jack rabbit @ 81,

Your item 1. reads:

from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -

It will not be possible to blame China, simply because no one believes the US press any longer, and there is no convincing the woman or man on the street that US handling of the virus has been in any way competent. We may not understand its virulence, and we perhaps don't understand yet how to cope with it, but the example of China has been clear from the earliest moments, and that speaks louder than any false rhetoric can claim.

We know what we have been experiencing in comparison with others who acted with celerity, and that basically was what was needed. The US chose to go it alone, at its peril. It stuck by a set of rules it had made for itself in these last years - rules which have not benefited the people at large. It all comes down to that.

foolisholdman , Jul 28 2020 16:38 utc | 165

O | Jul 27 2020 21:33 utc | 49

https://en.wikipedia.org/wiki/2010_Chinese_labour_unrest

Care to comment on that.

I would not quote a Zionist dominated source like Wikipedia on anything politically sensitive and the article you refer to is in any case 10 years out of date. However if you read it it refers to two foreign-owned firms, and it mentions that there are (In 2010)plans to double wages in the next ten years which has happened. The article also states"

Strikes are not new in China. Chinese authorities have long tolerated limited, local protests by workers unhappy over wages or other issues.[40] The Pearl River Delta alone has up to 10,000 labor disputes each year. In the spring of 2008, a local union official described strikes as "as natural as arguments between a husband and wife".[41] The Chinese government sought balance on the issue; while it has recently repeated calls for increased domestic consumption through wage increases and regulations, it is also aware that labour unrest could cause political instability.[42][43]

In response to the string of employee suicides at Foxconn, Guangdong CPC chief Wang Yang called on companies to improve their treatment of workers. Wang said that "economic growth should be people-oriented".[44] As the strikes intensified, Wang went further by calling for more effective negotiations mechanisms, particularly the reform of existing trade unions. At the same time, authorities began shutting down some websites reporting on the labour incidents, and have restricted reporting, particularly on strikes occurring at domestic-owned factories.[46][47] Guangdong province also announced plans to "professionalize union staff" by taking union representatives off of company payroll to ensure their independence from management influence.

Which indicates to me that the suicides alerted the government to the fact that these firms were making the lives of their workers miserable and took steps to improve the control of them. They obviously realized that the Union officials had been bought by the management. I wonder how the British government or the USG would have reacted? What I am certain about is that the MSM would have been much less enthusiastic about reporting it.
uncle tungsten , Jul 29 2020 2:13 utc | 197

karlof1 #86

IMO, taking a good look at Brazil's situation provides close to a mirror image for those within the Outlaw US Empire having trouble seeing clearly. Too often we forget to look South at the great sewer and its misery US Imperialism's created. It may be getting defeated in Eurasia, but it's winning in Latin America.

That sewer of misery was running full flush during Susan Rice's rise through the ranks.

National Security Adviser to Obummer 2013 - 2017,
US Ambassador to the UN 2009 - 2013
Do read the rest:

And well beyond South America.

Now she is close to seizing the prize of VP to Biden. She is a iron war horse of formidable capacity and mendacity given her past roles. She has few redeeming features. She will conform exactly to the dictats of the permanent state and she will easily step right over Joe Biden as he either falls or is taken down at the most opportune time.

What drole sense of humour thought of this - the hapless Trump squeezed between two black American presidents. Seems like something the Clintons dreamed up.

Antonym , Jul 29 2020 5:07 utc | 198

David Dayen's New Book Exposes the Dirty Hands of Wall Street Driving Monopoly Power in U.S. https://wallstreetonparade.com/2020/07/david-dayens-new-book-exposes-the-dirty-hands-of-wall-street-driving-monopoly-power-in-u-s/

New York Times Rewrites the Timeline of the Fed's Wall Street Bailouts, Giving Banks a Free Pass
https://wallstreetonparade.com/2020/07/new-york-times-rewrites-the-timeline-of-the-feds-wall-street-bailouts-giving-banks-a-free-pass/

kiwiklown , Jul 29 2020 5:39 utc | 200

Posted by: karlof1 | Jul 28 2020 22:30 utc | 191

"It was asked upthread if the US citizenry would trade its no-longer existing Superpower status for decent living standards.... There're only two forces keeping the American people from attaining freedom from the above fundamental fear and having lifelong security: The Duopoly and its Donor Class, the Rentier Class of Feudalistic Parasites that are the enemy of virtually all humanity."

The US citizenry will choose decent living standards in a heartbeat, but the present arrangement for eating off the labour of deplorables is just too profitable for the Duopoly & Donor Class to be permitted to change for a couple decades more.

Perhaps they will move on when there is no more meat on the American corpse, or when they have built up a sufficiently large group of useful idiots in China to begin eating off the backs of deplorables with Chinese characteristics.

Anything is possible, with the right amount of moolah, even overcoming Confucian morals. Joshua Wong comes to mind, who not only does idiotic, but actually looks idiotic.

class="posted">

[Jul 29, 2020] Roach is calling for the dollar to soon decline 35% against its major rivals

Jul 29, 2020 | www.moonofalabama.org

ptb , Jul 27 2020 18:26 utc | 3

On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.

Quibble on the significance of US dollar; from the cited article "Roach is calling for the dollar to soon decline 35% against its major rivals". That would take the EURUSD back to its 2008 high. Not something that changes the balance of power.

But I think the rest of the story is true.

Certainly in the US we have everything we need to reverse our decline, build a better life for everyone living here, and stop trying to "compete" by sabotaging everyone else. Sadly zero sign of this being a priority on either side of the mainstream political spectrum.


O , Jul 27 2020 19:25 utc | 20

Are We Heading for a Historic Economic Collapse? Why the U.S. GDP Could Fall by 40%.

"The most horrific number I've seen is J.P. Morgan economists' estimate that U.S. gross domestic product is collapsing at a 40% annual rate, a revision from their previous calculation of 25%. It has been said that economists use decimal points in their forecasts to show they have a sense of humor. These numbers are nothing to joke about."
https://www.barrons.com/articles/is-the-economy-going-to-crash-because-of-coronavirus-how-quickly-will-the-economy-revive-51586560301

If JP Morgan, Gold Sacks and other major asset managers are betting on this 'bear' you can be damn certain that they are doing everything in their power to make it a reality. They will shakedown every gutless, spineless politician/health official/scientist they can find to ensure their profits keep rolling in.

vk , Jul 27 2020 19:35 utc | 21

Yes, the conclusion we must take from this crisis is that the USA (and most of the West, if not all the West) is now declining in absolute terms, not only in relative ones. That's what makes this 2020 crisis special for the time period analyzed.

Relative decline is nothing special for the Americans. During the High Cold War itself (1945-1969), the USA itself declined relatively to Japan, which simply grew even more. You can even talk about a relative decline in relation to Germany during the same period, at least in some areas. The difference lied in the fact that Germany and Japan were minuscule countries under full military control and were fellow capitalist nations. When necessity came, the USA simply ordered both countries to value their currencies in relation to the USD and decades of geopolitical gain evaporated in five years. This is not the case with China.

But what fascinates me more is the flux of History. The USSR was better than China in almost every single relevant aspect in the 1950s-1960s, but it lost the Cold War because it had the bad luck to face the capitalist powers at their historical best. China, being much inferior, is being able to gain terrain over the capitalist powers for more than 40 years and counting for the simple fact they were able to survive and live to see capitalism in its decline.

That's why Putin correctly stated the end of the USSR was the biggest catastrophe of the 20th Century. If it could survive for mere 17 years more, it would've lived to face capitalism on all fours, after the 2008 meltdown, and get a second chance.

O , Jul 27 2020 19:56 utc | 22

China, being much inferior, is being able to gain terrain over the capitalist powers for more than 40 years and counting for the simple fact they were able to survive and live to see capitalism in its decline.
Posted by: vk | Jul 27 2020 19:35 utc | 21

I would say it was that China began opening itself up more to capitalist oligarchs and intergrating itself into the world economy beginning with the Nixon years. In particular the western oligarchs shipping their manufacturing base to china. That cheap Chinese labor was too hard to pass up.

The engine of capitalism is cheap labor, slave labor if possible.

Now China has a decent size consumerist/middle class which gives it the leverage along with the manufacturing. It not magic


Digital Spartacus , Jul 27 2020 20:03 utc | 23

Andrei @ 14

Exactly so. Anyone can massage those data points to say anything they want. And that is precisely what's being done by the USG. Since admitting that they are in decline is a non starter for them, these types of numbers are always trotted out. That isn't to say though, that everybody isn't massaging their numbers as well to cast them in a shining light for whomever the audience for which it is intended.

sad canuck , Jul 27 2020 20:29 utc | 24

I cannot take seriously any analysis that suggests another crippled fiat currency will somehow supplant the USD. The Euro? That is laughable. Cleanest dirty shirt analogy still holds true. Look at Japan over the past 30 years of debt accumulation to see how long this can go on. The yuan is no better given China's own debt frenzy since 2008. The only economy that is structured to weather the next 20 years of decline is Russia with abundant land, ample hydrocarbons, a functioning domestic industrial/agricultural base, effective military deterrence, little debt and ample gold reserves. Putin is is far from perfect but he's done an incredible job preparing his country for what comes next.

All fiat is set for a dramatic decline against real assets. You need only look at all fiat currencies dropping against the price of gold which is a surrogate for all hard asset prices. Dirty fiat shirts one and all.

https://shorturl.at/bizM0

You can also just search for the Kitco Gold-Currency Price page if you do not wish to click on the shortened link (but I confirmed destination on checkshorturl).

Sakineh Bagoom , Jul 27 2020 20:41 utc | 25

It's no longer the grand chess board in Eurasia. It is now a whack-a-mole policy.
The hydra's head (BRI) that is flowing out of the dragon will be popping up here and there. Wherever it does, it has to be whacked like a mole. There is so much whacking (no pun intended) that can be done before the empire exhausts itself. In a logistics game, the empire will always lose, to the local actor with enough resources to devour it.
We've also seen that other local actors /empire lackeys (I'm looking at you India) can't be much help stopping the hydra either.

[Jul 28, 2020] A Significant Decline Is Coming For The U.S-

Jul 28, 2020 | www.moonofalabama.org

O , Jul 27 2020 18:51 utc | 10

On Roach's comments, when a Yale University senior fellow and former Morgan Stanley Asia chairman tells you that the USD is about to drop precipitously, you can bet he's working behind the scenes to make that exact event happen. Of course it's logical. He's part of the creation of the chain of logic.
Posted by: Anonymous | Jul 27 2020 18:48 utc | 9

Bingo! Engineered collapse under the guise of a fake pandemic.


karlof1 , Jul 27 2020 18:54 utc | 11

Nice review. Recall Global Times reported China's GDP rose 3.2% in 2Q versus a 5-9% drop for Outlaw US Empire. Also recall the need to deal with Real GDP, not the falsified numbers provided by USG that count negatives as positives. The following are Shadowstats "Economic Headlines" :

"Second-quarter 2020 Real New Orders for Durable Goods plunged an annualized 55% (-55%), down 22% (-22%) year-to-year / June Cass Freight Index® continued bottom-bouncing, running counter to the 'recovered' Retail Sales / June Building Permits and Housing Starts saw some rebound in the month having collapsed respectively at annualized rates of 56% (-56%) and 76% (-76%) in the quarter / Not-credible inflation-adjusted headline June Retail Sales recovered pre-Pandemic levels in a stronger than expected real 6.9% monthly gain (nominal sales gain of 7.5% held just shy of recovery) / Contracting for the third consecutive quarter, second-quarter real Retail Sales fell at a 24.2% (-24.2%) annualized pace / On top of downside revisions, June Industrial Production gained 5.4% in the month, fell 10.8% (-10.8%) year-to-year, with Second-Quarter 2020 activity collapsing at a 42.6% (-42.6%) annualized pace, following a first quarter drop of 6.8% (-6.8%)."

From the sidebar comment of 23 July:

"Reporting of Deepest-Ever GDP Decline Looms on July 30th • Annualized 49.1% (-49.1%) Quarterly Plunge in Household Survey Employed Was Consistent With a Real Second-Quarter 2020 GDP Annualized Collapse of 50% (-50%) and Year-to-Year Drop of 16.1% (-16.1%) • Potential Third-Quarter 2020 GDP Annualized 20% Rebound Still Would Be Down 12.7% (-12.7%) Year-to-Year, Rivaling Great Depression Depths and Post-World War II Readjustment."

Although it's yet to be updated for 2Q figures, here's the GDP chart , which in Real Terms is worse than the blue line depicts

So, contrary to JR's assertions, the Outlaw US Empire is in economic freefall. And unless the eviction moratorium is extended nationally, a massive crisis awaits as noted by the article I linked to in the Week in Review thread. Add the fact that most of China's ASEAN trade partners have recovered from COVID while BRI Eurasian projects continue, China's economy will continue to grow, which is where its focus is at as reiterated almost daily by China's media and reported here.

As for the US Dollar, this William Pesek item reviews the many times it was predicted to drown but didn't, although this time may be different:

"More recently, Stephen Roach of Yale University has hit the speaking circuit to argue that the 'TINA defense' – 'there is no alternative' – is no longer operative.

"'If TINA is the dollar's only hope, look out below,' Roach wrote in a recent Bloomberg column . 'America's saving and current-account problems are about to come into play with a vengeance. And the rest of the world is starting to look less bad.

"'Yes, a weaker dollar would boost US competitiveness, but only for a while. Notwithstanding the hubris of American exceptionalism, no leading nation has ever devalued its way to sustained prosperity.""

There're others cited by Pesek who provide decent reasoning for downgrading the dollar which he balances against past history, thus leading to this conclusion:

"Yet the risk of a reckoning is rising along with awareness of how the Trump era is exacerbating all of America's imbalances, and creating new ones few could have predicted."

What's certain--a great many US citizens are going to experience incredible financial pain for a considerable length of time, which may or may not alter the basic political situation within the Outlaw US Empire.

Andrei Martyanov , Jul 27 2020 19:01 utc | 14
2019 China 1,27 times bigger in GDP/PPP

Absolutely false numbers since actual Chinese economy is much larger than American one. With or w/o PPP adjustments. I would go out on a limb here and state that at this stage in 2020 real size of Chinese economy is about 2.5-3 times larger than that of the US. In other words--it already dwarfs US economy.

Military budget (before Covid estimates, Trump budget) 2019 3,2 % of GDP - 2030 2,5 % of GDP (Could drop to 2,3 % of GDP due to Covid)

These are also meaningless numbers since they do not account for actual military capability, especially when based on a fraudulent US GDP numbers. Within last 10 years China built surface fleet which in terms of hulls (and "freshness") rivals that of the US. US economy would have it bottom falling off if it tried to accomplish a similar task.

[Jul 28, 2020] The end of interest -- Crooked Timber

Jul 28, 2020 | crookedtimber.org

Amid all the strange, alarming and exciting things that have happened lately, the fact that real long-term (30-year) interest rates have fallen below zero has been largely overlooked. Yet this is the end of capitalism, at least as it has traditionally been understood. Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk.

If there is no real return to capital, then then there is no capitalism. In case it isn't obvious, I'll make the point in subsequent posts that there is no reason to expect the system that replaces capitalism (I'll call it plutocracy for the moment) to be an improvement.

But first let's look at the real 30-year bond rate. The US Treasury is currently offering an inflation-protected 30 year bond at a rate of -0.3 per cent. That is, if you buy the bond at say, age 35, you can get your money back, less a 10 per cent reduction in real value, when you are 65. This rate has fallen from 2 per cent, when the bond was introduced in 2010, and started declining sharply in late 2018, before the pandemic, and while the Federal funds rate was rising.

In thinking about the future of the economic system, interest rates on 30-year bonds are much more significant than the 'cash' rates set by central banks, such as the Federal Funds rate, which have been at or near zero ever since the GFC, or the short-term market rates they influence. These rates aren't critical in evaluating long-term investments.

The central idea of capitalism is, as the name implies, that of capital. Capital is accumulated through saving, then invested in machines, buildings and other capital assets to be used by workers in producing goods and services. Part of the value of those goods and services is paid out as wages, and the rest is returned to capital, as interest on loans and bonds or as profits for shareholders. Some of the return to capital is saved and reinvested, allowing growth to continue indefinitely. Workers, on this account, can become capitalists too, by saving and investing some of their wages. At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement.

But what happens if there is no return to capital? The collapse of interest rates on government means that's already true for anyone who wants a secure investment. And the situation isn't any different for the two remaining AAA-rated corporate borrowers, Microsoft and Johnson and Johnson. Microsoft is currently offering a rate of 2.5 per cent on 30-year bonds, and has exchanged lots of outstanding debt for new bonds at that rate (paying a 40 per cent premium for higher-interest bonds). That's a real return of 0.5 per cent if you assume that the Fed sticks to its current 2 per cent target and hits it on average. (There's a lot more room for inflation to surprise on the upside, in my view). If you allow a 15 per cent risk that Microsoft will go bankrupt some time before 2050, the expected real return falls to zero.

To complete the picture of returns to capital, we need to look at stock markets and corporate profits. That'll be the subject of another post.


John Quiggin 07.26.20 at 3:32 am (no link)

It's tempting to link all of this to the long-term historical decline in interest rates that led 19th century economists, most notably Marx, to talk about the declining rate of profit. But that decline came to an end in late C19. Real interest rates bounced about in the 20th century with no obvious trend. Much of the earlier decline may be have been due to a reduction in default risk as capitalism became established, but that's just speculation on my part.

John Quiggin 07.26.20 at 3:33 am ( 2 )

Also, I plan to talk more about Keynes' thoughts on the euthanasia of the rentier, which seems to be happening, although without much in the way of anaesthesia.

bruce wilder 07.26.20 at 4:20 am ( 3 )

There is capital and then there is capital -- calling different things by the same name to avoid (!?) confusion.

The process of capital investment -- using money to mobilize resources to strategically alter the costs of production well in advance of sale or consumption -- that process has always depended directly on the ability to assemble and exercise essentially political power. There is nothing pure about it, and nothing at all, should you exclude any return to monopoly power, corporate control, managerial skills or compensation for risk. The most substantial returns from capital investment are only available to the fount of political power, the state. The debility or senility of the state as provider of public goods might have something to do with the inability to earn a return on investment.

Money, qua money -- "wealth" of the purely nominal sort unrelated to mobilizing resources to productive purpose -- has only one purpose: insurance. "Insurance" in this very broad sense can include cruel uses of money, facilitated by deflation: usury, debt peonage -- even the words are cruel.

Central banks have been trained to flood the markets with "liquidity" to stave off the day of reckoning for fraud and foolishness. It is as if the want to prove every bad thing the Austrians ever said about them.

The true heart of capitalism is "other people's money". Borrowing money to lend money. For this purpose, there is no one interest rate. There is borrowing at 0% to lend at 27% or 400% or whatever horrific rate can be baked into a private equity deal or some crazy scheme of insurance bound to drive up the cost of whatever services the purchase of which they finance parasitically.

Hidari 07.26.20 at 9:10 am (no link)

If anything, this understates the matter, and understates what extraordinarily unusual times we live in.

According to this site (and yes, it looks a bit dodgy, and no I have no idea who these people are, so caveat lector) interest rates are the lowest, worldwide, generally speaking, than they have been in 670 years.

https://www.visualcapitalist.com/700-year-decline-of-interest-rates/

This other dubious site makes the even more dubious claim (based on rather questionable evidence), that current world wide interest rates are the lowest they have ever been .

https://www.businessinsider.com.au/chart-5000-years-of-interest-rates-history-2016-6

The first site suggests some opinions as to why this might be the case (assuming it is the case), which I lightheartedly put forward as semi-serious 'solution' to this mystery.

1: Productivity Growth. As everyone has noticed, in the 'advanced' capitalist states, productivity is dropping, as is 'inventiveness' broadly defined (this can be measured by patents). Have you all noticed that when you were growing up, there was a life changing technology development almost ever year or so, and since the development of the smartphone, it's all basically stopped? (Electrification of existing commodities, e.g. cars, don't count, and nor do things that don't exist and which will never exist, like genuinely self-driving cars or moonbases/trips to Mars). CF John Horgan's The End of Science, and the concept of 'low hanging fruit' which all seem to have been pretty much picked by now. No new products means no new firms to sell them, means less tax money, means less growth.

2: Demographics. Some 'optimists' have predicted that population will begin to drop this century. Even assuming they are correct, which is dubious, have you ever considered what that means? Old people are more conservative than young people, less productive, more sick, need more care. Ageing societies are not politically liberal vibrant societies. What we are likely to have is the worst of both worlds, in which population continues to increase for the next few decades in the Global South, increasingly ravaged by climate change, and drops in the Global North, meaning more conservatism, more Trumps, more of a 'gerontocracy', and of course whipping up hostility to immigrants facing their burning countries might keep them in power.

3: Economic Growth. Capitalism needs new markets, and now, as Branko Milanovic has pointed out in 'Capitalism, Alone', there are no new markets. Everywhere is capitalist so there are now no mechanisms available to 'pump prime' growth. There's no new source of cheap labour, no new source of new consumers (China previously supplied that, keeping the global economy booming in the 1990s and until 2008 but that effect seems to be failing).

Also, of course, climate change, the 'death of birth' the ongoing ecopalypse etc.

So, by the mid to late 21st century (science fiction, prediction alert!), negative interest rates might be the norm. Indeed, this has already begun in Japan, which in many ways shows the way ahead to our future: an ageing, conservative, sick population, in a low growth country, where there is very little political or cultural change for decades, and where the major political 'debates' are how best to keep out foreigners.

As John will presumably go onto argue, this will more strongly resemble societies from the ancient world more than post-Renaissance capitalist societies, with gigantic inequality, little scientific or economic growth (or change), huge swathes of the population kept controlled and constrained via debt peonage (a sort of modern feudalism), increasingly hollowed out and pointless 'democratic' polities, and real power remaining with a de facto aristocratic class who made their money by inheriting it and kept it not by building things and making them, but by tax dodging and other 'financial' tricks, in a mediatised world that spends billions persuading the populace that none of this is happening (this is essentially the story of Trump).

So, lots to look forward to!

Paul 07.26.20 at 9:34 am ( 7 )

It seems to me that you are talking from the perspective of the financier, or saver, who buys bonds and receives little, no, or negative return. But the capitalist is a borrower, not a saver; a seller of bonds, not a buyer of bonds. She borrows money in order to make investments in productive, as opposed to financial, capital.

So low interest rates suit the capitalist just fine. What can be a problem for the capitalist is a low return on investment. Low growth – which we also have in the rich economies – is therefore a problem for capitalism because it tends to imply a low average return on investment. But in a world of zero interest rates, of course, you only need a minimal return on your investment in order to make it profitable. So capitalists and capitalism are still doing fine.

Put another way: when talking about 'the return on capital', at a minimum we have to distinguish between the return on financial capital and the return on investment.

Final note: as you know, Larry Summers and co-authors have been writing about the secular decline in interest rates and its causes for a few years now, as part of the discussion of secular stagnation.

reason 07.26.20 at 9:49 am ( 8 )

Will somebody finally admit that the Washington consensus (that a policy mix consisting of tight fiscal policy and loose monetary policy) has been failure, on it's own terms. All it has done has inflated asset prices to such an extent that nobody trusts their value (hence negative expected return).

Secularly increasing the level of private indebtedness doesn't make the system more resiliant. When you express it in those terms it sounds ridiculous, and yet that is what has been official policy for thirty years.

We need to be aiming ot increase government debt at a rate sufficient to maintain the money supply and should be aiming to gradually reduce the level of private indebtedness.

reason 07.26.20 at 9:52 am ( 9 )

Small correction – to maintain the money supply doesn't mean to keep it constant, it should be rising in parallel with desired nominal GDP.

reason 07.26.20 at 10:03 am ( 10 )

I need to make my macro policy ideas more complete I think before people misunderstand what I mean.

We need
1. to run moderate deficits and securarly monetarise at least a significant fraction of them
2. actively redistribute income
3. remove the tax incentives encouraging debt over equity
4. discourage speculative lending on a no redemtion basis (especially lending to risky debters on the basis of expected asset inflation).

Tim Worstall 07.26.20 at 10:32 am (no link)

I think it's Tyler who says never reason from a price change?

"But first let's look at the real 30-year bond rate. The US Treasury is currently offering an inflation-protected 30 year bond at a rate of -0.3 per cent."

How about a minor corollary, be careful of reasoning from a manipulated price?

What is the purpose of QE? To lower the risk free interest rate. We've a lot of QE at present – some $7 trillion on the Fed balance sheet, something like that? That risk free rate is definitely manipulated.

We can, of course, assume that the manipulation is going to last forever. But that would be a strong assumption. If we're trying to think about the underlying structure of the economy, rather than the current surface state of it, perhaps we might want to consider what the risk free interest rate would be without the manipulation. What would the 30 year inflation protected bond be paying in the absence of the $7 trillion of QE?

At a guess I'd say rather more than it currently is. Which is the same statement as QE works at its declared aim. It being that absenceofQE interest rate that should inform this speculation about capitalism.

Maybe.

BenK 07.26.20 at 11:34 am ( 12 )

Capitalism, briefly described, is the 'the rewards of saving, organized' or 'the principle of indefinitely deferred consumption.' Everything else is the results of that. If you repudiate that completely – then what are the implications? In the extreme, everyone must consume everything immediately. One major motivation for this is that if nothing lasts or is at high risk of being confiscated – in infinite regress.

steven t johnson 07.26.20 at 4:26 pm (no link)

As is so usual, there is a handy coincidence: https://thenextrecession.wordpress.com/2020/07/25/a-world-rate-of-profit-a-new-approach/

"The central idea of capitalism is, as the name implies, that of capital. Capital is accumulated through saving, then invested in machines, buildings and other capital assets to be used by workers in producing goods and services. Part of the value of those goods and services is paid out as wages, and the rest is returned to capital, as interest on loans and bonds or as profits for shareholders. Some of the return to capital is saved and reinvested, allowing growth to continue indefinitely. Workers, on this account, can become capitalists too, by saving and investing some of their wages. At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement."

Sentence by sentence

" central idea " is not capital, I think, but capital markets. Perhaps a subtle difference, but important nonetheless. Capital in this sense was held by Roman bankers I think.

" capital is accumulated through saving " Historically capital was accumulated by robbery, taxation, expropriation of church lands, state efforts to create currency -- accumulate gold -- and a national market. Currently, capital is largely credit, from central banks, ordinary banks and shadow banking institutions too numerous to name.

" invested in machines, buildings and other capital assets " I do not think a medieval lord building a water mill was doing capitalism nor a central bank isn't. I don't think a peasant in Tang China was doing capitalism nor do I think a George Washington buying property claims on the frontier wasn't.

" Part of the value of those goods and services is paid out as wages " The labor is borrowed first, then paid later. Currently that's usually two weeks later, but it has been quarterly or even annually if I remember correctly.

" the rest is returned to capital, as interest on loans and bonds or as profits for shareholders." Interest long predated capitalism so it's not even clear how this relates. But if it does, interest historically was a kind of guaranteed profit, where risk was annulled by a property claim in default of re-payment. But if memory serves, there were capitalist enterprises predating a shares market, called partnerships, where ownership of the enterprise and the ongoing profits may be conceptually distinct but weren't in practice.

"Some of the return to capital is saved and reinvested " Credit. Also, the difference between a peasant saving and buying the neighbors' land when they fall on hard times is different from a Rockefeller buying oil companies, much less a mutual fund buying stocks.

" allowing growth to continue indefinitely." In a fully developed capitalist economy, growth is never indefinite, but always goes in cycles. If physical plant was a destructible as money, stocks, bonds, etc., humanity might be back in caves?

"Workers, on this account, can become capitalists too, by saving and investing some of their wages." A practical definition of capitalist would be someone who someone who invests, in a factory or a hedge fund, to make a profit. There is a difference between a worker who buys a house to live in and a capitalist who buys a house to rent out.

"At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement." This is a kind sentiment, which I approve. But given that capitalist countries like imperial Britain in the nineteenth century did not provide enough food for the majority of the working class to reach modern-day stature, this doesn't seem to have much to do with economics. Pious wishes are not useful analysis in my opinion.

Anyone who actually read may think, quibble, quibble, quibble. But framing the issue like this is misleading I think.

MisterMr 07.26.20 at 5:43 pm ( 15 )

My opinion:

Normally (by which I mean during booms) in a capitalist economy part of aggregate demand comes from net investment.
Continuous net investment requires more and more workers, which lowers unemployment and increases the wage share; at some point profits fall too much, capitalists stop investing but they don't buy consumer goods either, so this causes a paradox of thrift effect and a crash.
The specific level of wages where this happens is not fixed though, and in recent times the wage share fell throughout the cycle.
This means that through the cycle and even towards the peak the profit share is quite high, but since capitalists don't want to invest in real capital anymore they invest in speculative capital like houses, bitcoins etc..
Speculative capital reacts to increased demand in terms of price instead than in terms of quantity (in the 19th century this speculative capital was mostly land), so as the profit share increases throughout the cycle the wealth to income ratio increases. This increased wealth with fixed income necessariously lead to lower returns on wealth (note, on wealth, not on physical capital, as the profit share is still high).
This bubbly effect is needed to keep demand up so the government has to get along (e. G. If the fed increased the interest rate now it would cause a huge crisis).
This is not really different from what happened pre WW2; IMHO it is just a consequence of the winding down of the new deal, that caused the wage share to fall.

@Tim Worstall
We don't know what the "natural" interest rate would be, but my understanding is that the fed can only push the interest rate up, not down.
In the end the interest rate reflects the expected return on new investment, but if nobody wants to invest that rate is 0?

J-D 07.27.20 at 4:53 am (no link)

There's production of real goods and services, and then there's money. The relationship between the amount of the first and the amount of the second is not straightforward, nor even present in many cases (eg the roughly half of production that takes place in the non-monetised sectors of the 'economy').

I'm not sure what difference it makes to your general point (maybe it makes none), but since you refer in that easy way to 'production of real goods and services', I want to point out that there's production of goods and then there's production of services.

Consider, as one example of each category, candles and haircuts.

Candles can be produced without being being consumed. The production of candles can easily be understood as distinct from the consumption of candles. Some candles get produced and then never get consumed. It makes sense, when referring to a business which sells candles, to ask how many candles it has available for sale.

Haircuts cannot be produced without being consumed. The production of a haircut and the consumption of a haircut are most easily understood as being the same event. It does not make sense to refer to a haircut as produced but not consumed. It does not make sense, when referring to a business which sells haircuts, to ask how many haircuts it has available for sale.

John Quiggin 07.27.20 at 5:45 am ( 24 )

Paul @7 A capitalist is an owner of capital: therefore a direct investor or lender. Someone who operates on borrowed capital, seeking a profit over and above the market return, is an entrepreneur. This, at least is the standard terminology.

In the standard classical or neoclassical model, the super-profits of the entrepreneur are ultimately competed away. The things that matter, in the long run, are labour and capital.

Risk and uncertainty change this, and I'll talk more about that soon.

John Quiggin 07.27.20 at 5:48 am ( 25 )

Tim W. If the central bank can determine the rate of return to capital indefinitely into the future, capitalism really is finished. The point of QE was to reduce short-term rates in the emergency conditions of the GFC, The emergency has now become permanent, it seems.

Tim Worstall 07.27.20 at 8:23 am ( 26 )

@20 "If either US party genuinely cared about innovation or small businesses as the engine of growth, we'd have had universal health insurance, "

A point Dean Baker has been making for many years. Although it's not quite as slam dunk as he puts it as being. The US has a low rate of new business formation as a whole. And a high rate for businesses designed or funded to expand into reasonably sized workforces. The bit the US is missing is the small company that opens as and intends to remain small.

Which rather supports Baker's point actually. As such larger, better funded start ups etc will have the money to be able to provide health care. In a manner in which the one man bands the US is deficient in don't.

@25 " The point of QE was to reduce short-term rates in the emergency conditions of the GFC,"

We seem to disagree on that point. The traditional tools work rather nicely in determining short term interest rates. We do, generally, say that the central bank controls them after all. It's the longer term that is more market influenced and that longer term that QE was aimed at.

Tim Worstall 07.27.20 at 8:52 am ( 27 )

@25 I also disagree with this:

"If the central bank can determine the rate of return to capital indefinitely into the future, capitalism really is finished."

And this:

"Amid all the strange, alarming and exciting things that have happened lately, the fact that real long-term (30-year) interest rates have fallen below zero has been largely overlooked. Yet this is the end of capitalism, at least as it has traditionally been understood. Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk."

It poses a difficulty, perhaps a decisive one, for investment, yes. But investment and capitalism are not synonymous.

Well, assuming that we agree on hte following. A workers' cooperative is not capitalism. Do we agree? But a workers' cooperative faces all the same decisions about how much of current income should be put by for investment in future production and output. That it's the income of the workers making the decision doesn't change the difference that the absence of interest makes. It's still the same change in how much be given up now in order to gain whatever in the future.

Investment, that is, not being the defining feature of capitalism. So changes in the terms of investment don't, to me at least, seem to kill it off. Whatever it is that will be changed is much wider than capitalsim – it would seem to be the terms of investment in whatever socioeconomic system we've got.

As to what is the defining feature of capitalsim I take that to be that the investors – the capitalists – are not part of whatever organisation is being invested in. I don't see a zero interest rate as changing the desirability – say, investor diversification, possibly limited liability, the possibility of mobilising the assets of tens of thousands, millions, into a project – nor the undesirability – anomie and all that of capitalism.

A zero interest rate changes all calculations about investment, not merely capitalist ones.

nastywoman 07.27.20 at 10:46 am ( 28 )

@
"To complete the picture of returns to capital, we need to look at stock markets and corporate profits".

and at some "Capitalists" – who always look at the whole "Picture" in order to only play only the Casinos which offer the highest returns.

Like "the Stock" or the Real Estate Casino – and as the Real Estate Casino is tanking BIGLY again -(even more "bigly" than in 2008) – there are only Stocks (kind of) left –
and if – there – the gamblers will realise that the Party is over – too – soon "the Utmost Clever Capitalist will have to go back to the "Liquidation Casino" where y'all get EVERYTHING "for peanuts" – (Bugattis – Ferraris – Golden Toilets – Whole Hotels and Casino – some tacky Chandeliers) – from the STUPID -(and overextended) – Capitalist – like Trump.
As I hope that everybody here knows – that Trump already is bankrupt and after he will be send back to golfing – he will have a very difficult time – finding one of his golf courses – who still is profitable – and where his employers don't stare at him – when he cheats – and behind his back tell each other:

"There golfs the Cheating Loser".

AND nothing – NOTHING hurts a Capitalist more -(besides losing all of his Capital) –
than considered to be a really bad golfer!

rjk 07.27.20 at 12:03 pm ( 29 )

Tim @ 11

I think it's Tyler who says never reason from a price change?

The phrase originates with Scott Sumner, though Tyler has definitely used it.

Alex SL 07.27.20 at 1:19 pm ( 30 )

One of the most frustrating aspects of any discussion of capitalism is that no two people seem to mean the same thing with that term. The most common equivocation is, of course, its redefinition into free markets plus democratic elections, cleverly allowing the No True Scotsmanning of anti-communist dictatorships and monopolies as "not capitalism at all" and enabling the person using this definition to tally the victims of capitalist expansion up to a nice round zero.

To me, capitalism is a system where a minority of people own the means of production, and the rest are legally free but forced to sell their labour to the former class to earn their living. A few decades of very poor returns on bonds does not mean that there is a new system of "no capitalism" with social arrangements as comparably different to capitalism as the slave economies of antiquity, tribal societies, or Medieval feudalism, just as not having free elections does not change the economic system into "not capitalism".

Regarding the reason for low returns, I get the problems of constantly reinflating bubbles, but I would take one step further back and ask why they exist in the first place when they had not existed for several decades c. 1940-1980ish. It seems to me as if the underlying problem is low wage growth and inequality. It is a situation of too much money sloshing around in the hands of billionaires and large companies, desperately trying to find some worthwhile investment opportunity but coming up largely with (1) loaning it out or (2) chasing speculative bubble after speculative bubble.

Why? Because most of that money is NOT being moved through the hands of the working class, who therefore cannot buy enough stuff, and therefore investment into producing additional stuff for the working class is not profitable. Too much money is constantly extracted from the economy, so the economy regularly stalls and has to be kept from crashing by the next injection of new money. But that injection goes to those who have enough money already to lobby for getting more, and only rarely to those who would immediately spend it on a new car, renovations, travel, clothes, better food, etc., so the downward spiral continues. (I see that MisterMr has expressed a very similar view.)

But even if that were all resolved by returning to an economically sustainable high tax, high wage system, we would next have to talk about sustainable consumption and limits to economic growth.

So: what Hidari said, only I would use more present tense than future.

Climate change is now. Population grows and aging populations in one place combined with too many young people with too little water and fertile land in another place is now. Very nearly the whole world already having been turned into capitalist market is now.

Perhaps most importantly, because it is what stands in the way of solving any of these problems: the malaise of contemporary politics in the richest countries seems to be precisely that it is dominated by well-off retirees who more reliably vote than young and poor citizens and who very reliably vote conservative. And it is not even only voting. When I was a young adult in my home country I was very politically active. As I remember our meetings, the local SPD (~labour) chapter was 2% young, progressive activists, 18% teachers and public servants in their 50s, and 80% pensioners who would reliably elect the most conservative of the second group to be chapter president, mayoral candidate, etc. The composition of the Tory party membership in the UK is another case in point, as is the primary electorate of the two large parties in the USA.

We are living in the world Hidari envisions for the second half of the century.

Lee Arnold,

I am a bit puzzled by your point "Regulations, zoning, government control, unions, socialization of private financial losses, rent-seeking ("socialism" in the current parlance)". Union power is at the moment extremely weak, and while the other factors are stronger you are mixing extremely different things into one. I don't understand, for example, how socialisation of losses would inhibit innovation, as it would allow an investor to take more risks without going broke. Conversely, "regulations" is the exact opposite in that they aim to keep investors from socialising losses.

reason 07.27.20 at 2:09 pm ( 31 )

I'm just curious why nobody addressed this sentence:

"Secularly increasing the level of private indebtedness doesn't make the system more resiliant. When you express it in those terms it sounds ridiculous, and yet that is what has been official policy for thirty years."

Are you all missing the wood for the trees? Seems to me everybody is looking for something complicated when it is staring them in the face.

William Meyer 07.27.20 at 3:17 pm ( 32 )

Pointing to negative interest rates on 30-year Treasuries doesn't mean that "capitalism" is over. Capitalism is a whole series of political acts (laws, regulations, incentives) that force the population to behave in a certain way. None of that has gone away, despite low or negative interest rates. If you doubt it, note that–at least in the USA–bankruptcy courts are about to have a world-historical run, dealing with an order of magnitude increase in business and personal bankruptcy cases. How will society handle the "social costs" of Covid-19? By putting people through a legal proceeding that largely imposes those costs on those directly involved–because in the USA the legal system (AKA the "real capitalism") absolutely believes in atomistic individualism, and all the manipulations of the Federal Reserve do nothing about any of that.

What this does show is that the economics profession as a ridiculous tendency–without which it would collapse back into the more realistic subject "political economy"–to try to focus on "the economy" as if that were an entity completely divorced from, independent of, and possibly epistemically prior to the political/legal framework surrounding it. In the economics profession, an awful lot of work is done by the phrase "all else being equal," where the most important causal pieces–which are political–are studiously ignored.

nastywoman 07.27.20 at 3:52 pm ( 33 )

@
"–at least in the USA–bankruptcy courts are about to have a world-historical run"

and this morning I went through Stresa – where. it doesn't look a lot better –
BUT in between all the emptiness and the closed symbols of Capitalism there was one
infinity pool – absolutely BEAUTIFUL -(as Trump would say) – with a BEAUTIFUL view over the Lake and not a chaise empty – and when I came back to the Isola Pescatore there wasn't a place empty at lunch – with all the usual joyful Lunchers from the Homeland Italy and Switzerland, France, Germany – and I even saw an Old Dude with a Oxfors University T-Shirt.

AND the two Mahogany Rivas in Front of the restaurant proved that Capitalism isn't dead (yet) and that it will take a lot more to kill at least "Italian Capitalism".

Andres 07.27.20 at 5:05 pm ( 34 )

John: It's not an easy step to equate long-term bond rates (e.g. the 30-year Treasury) to overall capitalist profits. According to Dead Bearded German Guy Who Must Not Be Named in Economics, the following is incorrect:

"Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk."

Interest, monopoly power, corporate control, managerial skills, and compensation for risk are determinants of profits from the point of view of individual capitalists, but Marx would stress that these are superficial aspects of capital and that what matters in the end is first, surplus labor converted into surplus value, and second the ability to realize surplus value in a macroeconomic setting. Interest, dividends, rents, plus corporate profit and proprietor/partner income taxes are all redistribution of surplus value according to him. I am not in full agreement with Marx, as I think resource extraction and non-human labor are also sources of economic surplus, but that is tangential to this point.

I would argue that the downward trend in long term interest rates over the past decade is caused by an increased realization difficulty. Part of this difficulty is under-consumption: the wage share of income has fallen over the past two decades, real median incomes have been stagnant and in many regions real incomes lower than the median have fallen. The only way to prop up consumer spending in such an environment, especially spending on longer-term durable items such as houses and cars and longer-term intangibles such as education, is to have lower interest rates.

Second, the falling long-term rate may be indicative of what some macroeconomists call secular stagnation. As in perceived higher risk for investment projects due to lower productivity growth (in fact, the main driver of equipment investment is to ratify new technologies: potential productivity growth drives investment which drives actual productivity growth). With low potential productivity growth, perceived investment projects are riskier, causing a greater balance of capital to move to safe assets -- Treasuries -- thus driving down the T-bond rate.

What drives potential productivity growth is a black box, but the simplified heterodox economics argument is that strong aggregate demand correlates with strong consumer spending, which correlates with high relative wage costs, which correlates with increased productivity gain searches looking for either Fordist or Marx-specific (i.e. labor-saving) innovations, or niche-specific productivity gain searches where increased use-value for new commodities translates into increased nominal productivity.

Overall, a Marxist or Marx-influenced economist would point to the low labor share as pulling down productivity growth and thus pulling down long-term interest rates for safe assets such a Treasuries, whereas a secular stagnation analyst would point to the lack of epoch-making innovations (e.g., the end of geographical widening and capacity increasing for electronic technologies as opposed to data processing deepening) plus reduced business confidence in the post-2008 period and reduced global financial confidence in quick-flowing capital post-1997 as depressing business investment and thus pushing down on safe asset interest rates. The two explanations are not mutually exclusive.

None of this should point to either a coming end to capitalism or to Keynes's fairy tale euthanasia of the rentier; as long as there is capitalism (and possibly even after capitalism) there will be rentiers. But the trend in interest rates does point to the need for global capitalism to have a new regime that discards neoliberalism. Low interest rates correlate with stagnant or even falling real labor income, which correlates with populist demagogy and increased international instability. Only when the international and domestic political instability is sorted out is it possible to shift back to a non-neoliberal capitalist regime and to usher in another 1945-1970 type growth period in which rentiers are subdued but definitely not euthanized.

Trader Joe 07.27.20 at 5:32 pm ( 35 )

This is somewhat teased by JQs last comment up above, but real 30Y rates are not below zero. Real rates including the risk and liquidity premium attached to Treasuries are below zero and that's a different thing entirely.

From an investment market perspective – which is what's being measured in the rates JQ cites – ever since Dodd Frank there has been an actual scarcity of UST paper of most kinds. That seems hard to believe in the context of +20T of government debt, but in fact from a supply/demand standpoint there is not near enough.

The reason is various collateral and settlement requirements imposed on banks post GFC. It used to be that collateral was anything a counterparty was willing to accept, now its only government paper – full stop. Accordingly the +$20T of debt (not all of which is held in a way that can be used as collateral) is collateralizing several times that amount of commercial and personal borrowing.

When economies grow the demand for Treasuries rises. When the economy contracts uncertainty rises, demanding more collateral and increasing the demand for Treasuries. There is no steady state that produces a liquidation. This is what 50bp of US10T means to the investment markets and why its probable that it will eventually hit zero.

Whether that spells the end of capitalism or not seems dubious since JPM, Goldman, Citi et all seem to have several Trillion of capital and lending acitivity that suggests things are just fine.

Finally, as a practical matter, there is an over-abundance of money or money like instruments. Everything from Bit-coin to collateralized debt all is available to fund the capitalist, the entreprenuer, idiots and fools. This is what will end badly – not government debt at Zero real coupon.

Michael Connolly 07.27.20 at 6:35 pm ( 36 )

When reading about the past, present, and anticipated development of our political economies, I have taken to substituting the neologism "Investorism" for "Capitalism." Marx lies decades back in my reading, but I remember him saying that he was describing social systems. Not religions or ideologies, except as they functioned in social systems. Capitalism / Investorism is the social system in which private investors – who, per #27, "are not part of whatever organisation is being invested in" – call the shots. That the interest rate has dropped below zero has many implications, many of which are opaque to me. But I expect that the investing class is going to have 90% of the input (and a veto over) the responses

Tm 07.27.20 at 7:52 pm ( 37 )

I don't think I understand capitalism more than superficially. And as both the OP and the comments demonstrate, neither does anybody else. I think nobody really has much of a clue, neither the capitalists, the bankers, the Corporate Leaders, the economists, nor unfortunately the anticapitalists, socialists and anarchists.

Lee A. Arnold 07.28.20 at 1:54 am ( 38 )

Alex SL #30: "I am a bit puzzled by your point "

I was trying to make a comprehensive list of all of the reasons, given by both the left and the right, for the perceived lack of jobs and business opportunities, despite the decline of interest rates since around 1980. Whether the reasons are logical or not. So I gathered disparate and opposite reasons under broad categories. Safety nets (Fake Dave #30) is a good addition to the list: the left says we need them to reduce risk, the right says they slow down growth.

Labor unions, always blamed by conservatives for impeding business, saw a decline since around 1980 but of course their decline did not increase the rate of business startups. Public sector unions are still under attack today for making government "inefficient" thus a presumed drag on growth and opportunity. Libertarians e.g. Rand Paul even blame the socialization of losses: I don't understand that, any more than you do. (Although they scarcely practice what they preach.)

My point is that I don't think that any of the reasons, nor all of them together, will explain what has been going on for 40 years. If you smooth out the graphs of 10-year, 30-year Treasury rates and new business formation since around 1980, the declines look almost linear. Maybe capitalism has been massively successful, so successful that it is putting itself out of business, and we are growing out of it, just like Keynes and Schumpeter said we would.

While we are sorting it out, I would suggest creating a government monopsony that guarantees human needs which will still allow private entrepreneurialism for innovations.

Dr. Hilarius 07.28.20 at 3:47 am ( 39 )

Not being an economist of any kind I can only offer my 2 cents worth for consideration. There is so much money floating around in the upper reaches of the economy that interest rates are of little concern to its denizens. Their problem is one shared with drug dealers; where do you stash your money to keep it safe? Investing in zero or negative interest bonds is like paying a small fee for a safety deposit box for your valuables. Having more money than you could possibly spend makes it reasonable to buy luxury real estate and let it sit empty. Property taxes and maintenance represent negative cash flow, but who cares?

nastywoman 07.28.20 at 5:18 am ( 40 )

@37
"I don't think I understand capitalism more than superficially. And as both the OP and the comments demonstrate, neither does anybody else".

Hey!
I did – as I read the definition of "Capitalism" before commenting – and as the definition says:
"An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state".
AND the Virus now made sure that even in the utmost "capitalistic" countries "the economic and political system" HAS to be controlled by "the state"-(at least for the time being) "Capitalism" is dead -(for the time being)

Killed by the Virus.

nastywoman 07.28.20 at 6:29 am ( 41 )

and let's NOT forget how the hunt for "good" returns – motivated all of these people getting into the Stock Casino – during the lockdown – as there was nothing else to do – for a lock downed Capitalist) – than calling his or her broker –

And did you guys ever see the numbers of new "Investors(gamblers) during the lockdown? It included ALL these retirees of my family who NEVER EVER would play with Stocks if there (still) would be "decent" returns from saving accounts.

So in a very (ironius?) way the low interest rates created a whole new "class" of InvestmentCapitalist who NOW pray that sooner than later "Capitalism" -(in accordance to the words definition) returns to "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state".

[Jul 19, 2020] IMF says U.S. economy will drop 6.6% in 2020 in face of pandemic

Jul 19, 2020 | japantimes.co.jp

Another revision by the IMF (the first one was some -2%, and I called here it was "too optimistic").

I think a -6.6% fall in GDP is plausible for the USA. The USA, as the HQ of capitalism, has tools and weapons that the rest of the world doesn't have, so, if they get lucky, a mere 6.6% fall is possible.

But, all in all, I still think it's still too optimistic. For example, the IMF still refuses to admit a second wave will come to the West.

[Jul 18, 2020] Pompeo deeply disappointed in EU court decision to ditch trans-Atlantic data transfer deal

Notable quotes:
"... The ruling effectively ends the privileged access companies in the United States had to personal data from Europe and puts the country on a similar footing to other nations outside the bloc, meaning data transfers are likely to face closer scrutiny. ..."
"... The so-called Privacy Shield was set up in 2016 by Washington and Brussels to protect personal data when it is sent to the United States for commercial use after a previous agreement known as Safe Harbour was ruled invalid in 2015. ..."
Jul 17, 2020 | news.yahoo.com

U.S. Secretary of State Mike Pompeo said on Friday the United States was "deeply disappointed" in a ruling on Thursday by Europe's highest court that a trans-Atlantic data transfer deal is invalid because of concerns about U.S. surveillance.

Pompeo said in a statement that the United States would review the consequences and implications of the decision by the Court of Justice of the European Union that could disrupt thousands of companies that rely on the agreement.

"We are deeply disappointed that the Court of Justice of the European Union ... has invalidated the EU-U.S. Privacy Shield framework," Pompeo said.

"The United States will continue to work closely with the EU to find a mechanism to enable the essential unimpeded commercial transfer of data from the EU to the United States," he added.

The ruling effectively ends the privileged access companies in the United States had to personal data from Europe and puts the country on a similar footing to other nations outside the bloc, meaning data transfers are likely to face closer scrutiny.

The so-called Privacy Shield was set up in 2016 by Washington and Brussels to protect personal data when it is sent to the United States for commercial use after a previous agreement known as Safe Harbour was ruled invalid in 2015.

More than 5,000 companies have signed up to it but the Privacy Shield was challenged in a long-running dispute between Facebook and Austrian privacy activist Max Schrems, who has campaigned about the risk of U.S. intelligence agencies accessing data on Europeans.

(Reporting by Daphne Psaledakis; editing by Jonathan Oatis)

[Jul 18, 2020] 'Work-From-Home' Will Reduce US Driving By 270 Billion Miles Per Year, KPMG Finds - Zero Hedge

Jul 18, 2020 | www.zerohedge.com

by Tyler Durden Fri, 07/17/2020 - 19:45 Twitter Facebook Reddit Email Print

With tens of millions of Americans out of work, people fleeing cities for rural communities, others working from home, online shopping flourishing, and the virus remerging in many states forcing governors to pause or reverse reopenings, consultancy firm KPMG International has some bad news for those betting the economy is going to "rocket ship" recovery as President Trump boasts about at press conferences and on Twitter. The consultancy firm warns "social-distancing measures" will "dramatically cut the amount of miles Americans travel by car" (fewer miles driven is terrible news for an economy driven by consumer spending).

The effects of COVID-19 will be felt for years. The response to the virus has accelerated powerful behavioral changes that will continue to shape how Americans use automobiles. We believe the changes in commuting and e-commerce are here to stay and that the combined effect of reduced commuting and shopping journeys could be as much as 270 billion fewer vehicle miles traveled (VMT) each year in the US. -KPMG

[Jul 14, 2020] China Vehicles Sales Expected To Plunge 10-20% This Year -

Jul 14, 2020 | www.zerohedge.com

Even the good news for the world's auto market seems to be bad news right now.

Day ago, when detailing China's passenger auto sales plunge for the month of June, we noted that the China Association of Automobile Manufacturers has been predicting for the last few months that auto sales would fall between 15% and 25% for the year.

Those predictions have now been adjusted slightly upward , to a drop of 10% to 20%, despite the fact that China's auto market still appears to be leading the global market into several more years of deep recession. Recall, the auto market was already facing headwinds and China's market specifically was already contracting for several years before the pandemic.

And while passenger vehicles fell 6.5% in June , as we noted , total vehicle sales rose 11.6% for the month to 2.3 million units, likely helping lead to the revised predictions for the year. The driving force behind total vehicles rising was a 63% surge in commercial vehicles, which also saw a 8.6% rise in the first half of 2020, likely due to vehicles being used to manage the spread of the virus in the country

... .... ....

This news comes despite better than expected results in May, where sales showed a 12% increase year over year.

According to The Detroit Bureau , premium and luxury passenger car retail sales led the charge in May, rising 28% last month compared with year-ago results. Luxury vehicles maintained their strength in June.

The Chinese government continues to try to spur demand with new policies aimed at enticing buyers.... but as we showed yesterday, it's not working.

Recall, we have recently noted that U.S. auto manufacturers are also teeing up sizeable incentives to get buyers back into showrooms. Europe is following suit, with Volkswagen starting a sales initiative to revive demand, including improved leasing and financing terms.

[Jul 11, 2020] Nearly 70,000 Tech Startup Employees Have Lost Their Jobs Since March

Jul 11, 2020 | news.slashdot.org

Posted by msmash on Friday July 10, 2020 @02:45PM from the closer-look dept. Technology startups have been laying off tens of thousands of workers to cope with the economic fallout of the coronavirus pandemic, potentially blunting a key innovation pipeline for the enterprise information-technology market, according to industry analysts. From a report: "Startups are a great source of innovation in the IT industry, but are now especially cash constrained," said Max Azaham, a senior research director at research and consulting firm Gartner. Mr. Azaham said the coronavirus has made startup investors far more risk averse, resulting in a sharp downturn in investment capital for IT companies looking to raise less than $100 million. As of last week, nearly 70,000 tech-startup employees world-wide had lost jobs since March, led by ventures in the transportation, financial and travel sectors, according to a report by U.K.-based brokerage BuyShares.co.uk.

Startups in the San Francisco region, including Silicon Valley, have shed more than 25,500 jobs, including layoffs at high-profile companies such as Uber, Groupon and Airbnb, the report said. Uber in May announced more than 6,500 layoffs, cutting roughly a quarter of its workforce. A month earlier, Lyft said it would cut about 17% of its workforce, furlough workers and slash pay in cost-cutting efforts to cope with lost sales during the coronavirus pandemic. Startups developing artificial intelligence and other emerging digital tools fall under the category of tech-sector employers, which have cut jobs for four consecutive months, said Tim Herbert, executive vice president for research and market intelligence at IT industry trade group CompTIA. The cuts included a record 112,000 layoffs in April, as tech companies scrambled to slash costs, according to CompTIA's analysis of federal employment data.

[Jul 10, 2020] Sonoma Hotel Employs Robot For Contactless Room Service

Jul 10, 2020 | www.zerohedge.com

During the pandemic, readers may recall several of our pieces describing what life would be like in a post corona world.

From restaurants to flying to gambling to hotels to gyms to interacting with people to even housing trends - we highlighted how social distancing would transform the economy.

As the transformation becomes more evident by the week, we want to focus on automation and artificial intelligence - and how these two things are allowing hotels, well at least one in California, to accommodate patrons with contactless room service.

Hotel Trio in Healdsburg, California, is surrounded by wineries and restaurants in Healdsburg/Sonoma County region, recently hired a new worker named "Rosé the Robot" that delivers food, water, wine, beer, and other necessities, reported Sonoma Magazine .

"As Rosé approaches a room with a delivery, she calls the phone to let the guest know she's outside. A tablet-sized screen on Rosé's head greets the guest as they open the door, and confirms the order. Next, she opens a lid on top of her head and reveals a storage compartment containing the ordered items. Rosé then communicates a handful of questions surrounding customer satisfaction via her screen. She bids farewell, turns around and as she heads back toward her docking station near the front desk, she emits chirps that sound like a mix between R2D2 and a little bird," said Sonoma Magazine.

Henry Harteveldt, a travel industry analyst at Atmospheric Research Group in San Francisco, said robots would be integrated into the hotel experience.

"This is a part of travel that will see major growth in the years ahead," Harteveldt said.

Rosé is manufactured by Savioke, a San Jose-based company that has dozens of robots in hotels nationwide.

The tradeoff of a contactless environment where automation and artificial intelligence replace humans to mitigate the spread of a virus is permanent job loss .

[Jul 10, 2020] Real-Time Data Shows That After Peaking In Late June, Consumer Spending Is Now Declining -

Jul 10, 2020 | www.zerohedge.com

Real-Time Data Shows That After Peaking In Late June, Consumer Spending Is Now Declining


by Tyler Durden Fri, 07/10/2020 - 14:49 Twitter Facebook Reddit Email Print

When we last looked at real-time consumer spending data one month ago , we saw a stunning rebound in Bank of America credit and debit card spending trends, with total card spending ex-autos essentially recovering pre-covid levels by early June.

No doubt, a big part of this was due to the surge in Personal Income since the start of the current recession, which as we explained earlier was a function of the extremely generous fiscal stimulus which meant that on a per capita basis, claimants received roughly $788/week ($41k annualized) on average, well above the usual amount of roughly $300 in a normal labor environment ($15-$16k annualized).

Let it Go , 6 minutes ago

What consumers buy matters a great deal. When looking at the policies flowing out of Washington it is clear many politicians seem to have no idea that all consumer spending and purchases are not created equal. The fact is, consumers should take a long look at how their purchases will impact the economy over time.

Where money flows and who it enriches is a key component of economics, the failure to consider this is a blind spot many people have. The article below delves into this important issue.

https://The Importance Of Where And What Consumers Buy.html

ScalNeCus , 2 hours ago

People are stupid.
Me, I have money in the bank, but a low income, so I spend less than my income, my bank-account grows. That is me, in Old skool Europe. My bank-account = > 750.000€.
But I don't need it, I'm a minimalist, always was, but I like the thought that I have it, to fall back when I'm tired.

America, credit cards, spends all you want. Even if you don't get it.
I remember that interview with a woman, after the sacking of Lehman Brothers. She made a super-high figure income (more than I wish for), but she spend it all while it lasted.
And now she was on the streets and homeless. How is that even possible?

She worked for Lehman, but she was utterly stupid? "Can I apply for that job, coz I'm so much smarter."

It happens here in the old continent too, but the impact is lessened, because of our social systems.

I rest my case.

Let it Go , 44 seconds ago

Yes they are stupid! It is difficult to reconcile the fact that 60% of the millennials surveyed say they believe they will be wealthy "within 1 to 10 years" considering that 59% of those in this age group said they still live paycheck to paycheck . Making this even harder to understand is it appears many people now feel that in order to be "rich," they need to be worth an average of $2.3 million.

This amount is more than 20 times the actual median net worth of U.S. households. More on the subject of wealth in America in the article below.

https://The Mind Of The Common Millionaire Is Worth Studying .html

Steven Vincent , 2 hours ago

We are in, or transitioning to, an entirely new systemic paradigm. Metrics of the past will not behave according to expectations.

NEW REPORT!

Understanding The Apparent Mismatch Between Current Economic Conditions and the Financial System

Summary

Recently, in the wake of the dramatic, catalyzing events associated with the COVID-19 pandemic, analysts have struggled to match the action in the Economy with that of the Financial System. Existing disparities of inequality and maldistribution have been dramatically exacerbated as the financial indices have soared. In no quarter is there found any real explanation for the utter failure of all existent theories to anticipate or explain our current experience. The general reaction is one of befuddled annoyance. Irrespective of viewpoint, left or right, economists and market analysts are trying to figure out why the emergent reality does not conform to their model of how things should be and the default tendency is to wag a finger of blame at the other side of the aisle.

Continue reading: https://bit.ly/3ekYPoW

[Jul 09, 2020] In the Eisenhower era, corporations paid over 1/3 of the federal budget.

Jul 09, 2020 | turcopolier.typepad.com

In the Eisenhower era, corporations paid over 1/3 of the federal budget. Tariffs on imports also paid a large percentage. The top marginal personal income tax rate was 70%.

In the 1960s, my father worked for Bell Aerosystems. The CEO made $120K managing 20,000 employees and building surface ship and rocket engines for Gemini and Apollo. Dad made $12K in an administrative role and experienced machinists made $18K.

The system WORKED for most everyone.

Today, chief executives make 300X the earning of peons. Corporations pay only 6% of the federal budget. Amazon paid ZERO corporate income tax. Apple paid 2%. Lockheed Martin paid 14%.

And where are they going to move, Colonel? Maybe LM will go to Russia or China? Maybe Amazon will move to Alexandria and make life miserable there? Microsoft to Bangalore or Little Rock?

Race to the bottom pandering to corporations, which has been the case for 40+ years now. There is absolutely nothing wrong with expecting corporations to pay taxes. I have no idea what is the basis of the objection. Do any of the readers here pay more than corporations? I sure do!

Posted by: upstater | 09 July 2020 at 05:49 PM

[Jul 09, 2020] 83% Of German Firms With International Exposure Warn of Collapsing Revenues

Jul 09, 2020 | www.zerohedge.com

by Tyler Durden Thu, 07/09/2020 - 02:45 Twitter Facebook Reddit Email Print

Germany eased strict social distancing restrictions on April 20 and started the process of reopening its economy as the virus pandemic curve flatten. However, the consequence of closing businesses and forcing people to stay home, along with shutdowns of international commerce, resulted in a deep recession in the first half of the year for the exporting nation.

A new survey via the German Chambers of Commerce (reported by Reuters ) said 83% of domestic firms with high international exposure had experienced a collapse in revenues. Many of these firms, about 93% of respondents, said the global economy could improve in 2021 or beyond.

The survey is an eye-opener for Europe's largest economy, and one of the largest exporting nations in the world, suggesting a global economic recovery in the shape of a "V" is not feasible for the back half of 2020. About 15% of the 3,300 companies surveyed said their annual turnover is expected to be halved.

It was noted the impact of the virus-induced downturn, whereas at the start of the pandemic, crushed travel and tourism, has now impacted other sectors and rippled through the economy in the form of a demand shock.

Fifty-nine percent of respondents this month (July) warned of slumping demand for their products and services, up from 57% in April.

Under such conditions, firms are unwilling to invest - more than half of the respondents said they're cutting CapEx abroad, compared with 35% in April.

We noted on Tuesday, global CapEx is expected to be slashed, on average, 12%, which is much larger than the 11.3% decline during the global financial crisis in 2008-09. Global capital expenditure weakness suggests a weak recovery is ahead.

German Chambers of Industry and Commerce released a report on Wednesday indicating exports will drop by 15% in 2020 with a slight recovery in 2021.

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

The German government has unveiled a $146 billion stimulus package to jump-start the severely damaged economy. However, it appears the recovery, so far, has been a dead cat bounce that will not revert to 2019 growth activity levels for the next several years, or longer...

German industrial production has a long ways to go...

So what must be done to supercharge a recovery? Well, we offer insight here .

me name=


[Jul 09, 2020] No V-Shaped Recovery For Airlines- Ticket Sales Re-Slump As Second-Wave Strikes Sentiment -

Notable quotes:
"... The "involuntary furloughs" would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1, the company said. ..."
"... Delta Airlines told pilots in late June that it would send WARN notices to 2,558 pilots, or nearly 20% of its pilots, notifying them of potential furloughs. Last week, Delta said that it may cut the number of flights it had scheduled for August due to lack of demand. A month ago, Delta issued the mother or all revenue warnings . ..."
Jul 09, 2020 | www.zerohedge.com

Authored by Wolf Richter via Wolf Street,

With Covid-19 cases surging in the US and in other countries, airline industry ticket sales for both domestic and international flights are declining again, as demand has turned south, according to a presentation to employees by United Airlines, filed with the SEC on July 7.

UA's presentation included the two charts below of new ticket sales for future travel, by "all carriers and sales channels," based on data by Direct Data Solutions (DDS) through July 2. They show the percentage decline in industry-wide ticket sales for domestic and international travel from the same period last year (in a 7-day moving average). The charts are titled, "Increase in Covid-19 cases negatively impacting industry demand":

The first chart shows the decline in ticket sales for domestic flights, in terms of the number of passengers (blue line) and dollar revenues by the industry (purple line):

This second chart shows the decline in international ticket sales in terms of the number of passengers:

So that's the end of any pretense of a "V-shaped" recovery of ticket sales. And it's likely that not just airlines are impacted by this resurgence in Covid-19 cases. But airlines are already teetering on the edge.

Yesterday, United Airlines announced that 36,000 employees in the US, or 45% of its US workforce, could face "involuntary furloughs" on on or after October 1. That's the day after the restrictions attached to the $25 billion in payroll aid under the CARES act expire.

United's memo of the layoffs went out to employees in order to comply with a federal law that requires employers to give employees at least 60 days' prior warning before mass layoffs, the so-called WARN notices.

The "involuntary furloughs" would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1, the company said.

"The reality is that United simply cannot continue at our current payroll level past October 1 in an environment where travel demand is so depressed. And involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising," the company said.

Delta Airlines told pilots in late June that it would send WARN notices to 2,558 pilots, or nearly 20% of its pilots, notifying them of potential furloughs. Last week, Delta said that it may cut the number of flights it had scheduled for August due to lack of demand. A month ago, Delta issued the mother or all revenue warnings .

All airlines have been trying to cut their workforce with voluntary measures and have been offering severance packages and early retirement packages to nudge employees out the door without having to lay them off. Over the next few weeks, as the 60-day period before October 1 approaches, more airlines will follow United in announcing mass layoffs.

The drama of the dropping ticket sales due to the Covid-19 resurgence is not yet reflected in the TSA's checkpoint screenings at US airports – a measure of how many people are getting on a plane. They were still down 74.4% yesterday, compared to the same weekday last year. They have risen since the low point in April, but at a painfully slow pace.

The TSA checkpoint screenings are a lagging indicator. These people bought their tickets often weeks or months ago. The declining ticket purchases in recent days will be reflected in future TSA screenings:

Four months into the crisis, airlines are still only flying a quarter of the passengers that they flew last year at this time, and they're having trouble hanging on.

United told reporters today that despite the radical cost cuts and capacity reductions, it is still burning $40 million per day. That's $1.2 billion a month, month after month. And it said that it could not count on further government support to cover payroll costs from October 1 forward. The company said that 26,000 employees had already taken part in the voluntary severance programs so far this year.

The V-shaped recovery of airline stocks is also funny looking. The WOLF STREET airline index of the seven largest US airlines – Alaska, American, Delta, JetBlue, Southwest, Spirit, and United – remains in dismal territory, down 49% from the Good Times in mid-January 2020, and down 60% from the Better Times in January 2018 (market cap data via YCharts ):

The market cap of all seven airlines has plunged since mid-January, but with different nuances, as of the close today:

It's going to be a long tough slog for passenger traffic to recover. In addition to the issues related to the Pandemic, there is now a structural issue: Business travelers, the most profitable segment for airlines, may not fully recover in a very long time because companies have now discovered that video conferencing and video chats can effectively replace many trips.

Sure, there will be some business travel after the Pandemic disappears as an issue, but a lot less than there was before. This is a huge savings in time and money for companies. But it's a deep long-term hole for airlines.

* * *

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely.

[Jul 09, 2020] Almost 50 Million Americans Have Now Filed For First-Time Jobless Benefits Since Lockdowns Began -

Jul 09, 2020 | www.zerohedge.com

Almost 50 Million Americans Have Now Filed For First-Time Jobless Benefits Since Lockdowns Began by Tyler Durden Thu, 07/09/2020 - 08:34 Twitter Facebook Reddit Email Print

Despite the hope-restoring nonfarm payrolls "recovery" and the over-hyped bounce in retail sales (ignoring the lack of 'V' in industrial production) and 'soft' sentiment surveys (which are biased by their nature as diffusion indices to bounce back hard), for the sixteenth week in a row, over 1 million Americans filed for unemployment benefits for the first time (1.314mm was slightly better than the 1.375mm expected).

Source: Bloomberg

Texas, New Jersey, and Louisiana suffered the biggest increases in jobless claims in the prior week...

me title=

https://imasdk.googleapis.com/js/core/bridge3.393.1_en.html#goog_884524510

https://imasdk.googleapis.com/js/core/bridge3.393.1_en.html#goog_441484867 NOW PLAYING

Friday's April Jobs Report Leaves Economists Aghast

Airbus planning to cut 1,700 jobs in UK as result of coronavirus crisis

Airbnb Lays Off 1,900 Employees

Low-Paid Workers Hurt More During Surge Of Job Losses During The Pandemic

Accountability Might Be an Issue as Data Shows 500,000 Businesses Retained No Jobs Yet Received PPP Loans

Pick your own fruit: Thousands of Finns replace foreign workers save summer strawberry harvest

UK Chancellor Rishi Sunak slashes VAT on tourism and hospitality from 20% to 5% until January

Meal deal among new UK £30 billion stimulus plans

That brings the sixteen-week total to 49.993 million, dramatically more than at any period in American history. However, as the chart above shows, the second derivative is slowing down drastically (even though the 1.314 million rise this last week is still higher than any other week in history outside of the pandemic)

Continuing Claims did drop very modestly but hardly a signal that "re-opening" is accelerating! And definitely not confirming the payrolls or sentiment data...

Source: Bloomberg

And as we noted previously, what is most disturbing is that in the last sixteen weeks, far more than twice as many Americans have filed for unemployment than jobs gained during the last decade since the end of the Great Recession ... (22.13 million gained in a decade, 49.993 million lost in 16 weeks)

about:blank

about:blank

me title=

Worse still, the final numbers will likely be worsened due to the bailout itself (and its fiscal cliff): as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31.

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

Finally, it is notable, we have lost 378 jobs for every confirmed US death from COVID-19 (132,309) .

Was it worth it?

The big question remains - what happens when the $600 CARES Act bonuses stop flowing?

me name=


[Jul 08, 2020] 53% Of Restaurants Closed During COVID-Lockdown Have Shuttered Permanently, Yelp Data Shows -

There were a gut of restaurants int he USA anyway... So this is not that bad: COVID-19 was just a capatlist of the porcess that started before it.
Jul 08, 2020 | www.zerohedge.com

Authored by Alicia Kelso via RestaurantDive.com,

Predictions about the restaurant industry's fate in a post-pandemic world have been abundant throughout the crisis . The National Restaurant Association estimated that 15% of restaurants could close, while Barclay's estimate is more optimistic, predicting approximately 10% of restaurants will shutter permanently.

Though it's hard to find a silver lining in Yelp's data, some predictions have been more dire still. In May, OpenTable said one in four restaurants were at risk for closure, for example, though those numbers focus on restaurants that use the reservations platform. Casual or fine dining sit-down restaurants and mom-and-pop concepts that are not well capitalized are expected to experience the brunt of this crisis. The Independent Restaurant Coalition , for example, forecast that as many as 85% of independent restaurants could permanently close by the end of the year.

Yelp's data does illustrate how some restaurants have been able to weather the storm, however, reporting a 10-fold increase in searches for takeout since March 10, for example. Takeout and delivery searches are up 148%, with Yelp predicting this off-premise trend could be here to stay.

The research also shows that restaurants catering to group dining are making a comeback, with fondue searches up 123%, tapas bars up 98%, hot pot up 49% and buffets up 17%. Conversely, searches for cuisines that were popular during the past three months have begun to wane, including pizza (down 28%), Chinese (down 26%) and fast food (down 18%).

While the pendulum has swung toward group dining, perhaps due to pent up demand after three-plus-months of safer at home orders and dining room closures in some markets, this interest could be short lived. This data was released before a number of states -- New Jersey , New York and California among them -- have delayed or re-closed some or all of their restaurants due to spiking coronavirus cases. Extended closures will further challenge operators who are burning through cash to maintain rent, labor and other costs. Restaurants with the strongest balance sheets and best access to capital have the best chance to endure sustained closures. The industry will favor the haves and weed out the have-nots, a trend that has become clearer as major chains like Taco Bell, Domino's and McDonald's have announced massive hiring sprees .

[Jul 08, 2020] Real Estate Expert Warns 'Exodus' From Cities Will Last Two Years

Jul 08, 2020 | www.zerohedge.com

The virus pandemic and socio-economic shockwave across the US (read ad hoc protests and riots), and more specifically in top metro areas, has created much uncertainty for city dwellers who are now fleeing for suburbs.

Over the past several months, we have documented city dwellers leaving big cities for suburbs, small towns and communities to isolate from the virus and socio-economic tensions unfolding in many metros. While the exodus from cities is still in the early stages, it's now believed by at least one expert, that city dwellers could continue to flee US metros for the next 18-24 months.

"I think the next 18 to 24 months are going to show a lot of exodus out of central business districts, as you can expect," Hessam Nadji, president and CEO of Marcus & Millichap, who spoke with CNBC on Tuesday.

"We're seeing there's a lot of office vacancy, for example, in the suburbs that have now been absorbed; there's a lot of demand for rental homes that we're seeing because people are fleeing especially hot spots like New York, but ... you just have to keep a long-term view on it," Nadji said.

He said over the next several years - suburban areas will see exponential demand. Already, real estate searches for suburban zip codes surged 13% in May, according to data via Realtor.com.

We've already noted that New York and the Bay Area are seeing residents migrate to suburbs.

Nadji said people are also fleeing to the outskirts of Seattle and Miami.

"It was a trend that was starting to happen already over the last two or three years. You have to remember that 60% of millennials are now in their 30s," Nadji said. "While they really enjoyed the lifestyle of central business districts and the lack of commuting ... we were beginning to see them migrate back out as they were getting married and having kids," and the "health crisis has really accelerated that pattern."

He said the outbound migration from cities would also result in businesses chasing employees to the suburbs. Nadji said people won't "permanently" lose interest in cities - at the moment, this is an "overreaction" to the ongoing virus pandemic.

"We saw that [demand sap] post 9/11 and those tragedies, of course, because of the reluctance to want to locate in high-visibility high rises in downtown[s]," Nadji explained. "Eighteen to 24 months later, that [concern] began to dissipate. So, it's a normal reaction. I just don't think we should count out the long-term prospects of the benefits of central business districts."

What's different today is that the country has stumbled into one of the worst public health crises in decades, tens of millions of people are unemployed, and the entire transformation of the economy, which includes working remotely will lead to permanent population loss for city centers - where living standards are in declines - as well as cost of living as a Manhattan studio costs the same as a "mansion" in the suburbs.

Guess who is most excited about this exodus? Well, baby boomers, because they bought/built oversized McMansions , with brick on front and stucco on back, in the late 1990s and early 2000s - and whose attempts to offload this real estate has been met with poor demand... until now.

yellowsub , 8 hours ago

It can't last for 2 years, the property bubble in many areas outside of NYC on the NJ side is already close to peak prices before the crash... Most of these areas are not places where you want to raise your child in their schools.

[Jul 08, 2020] The American Economy In Four Words- Neofeudal Extortion, Decline, Collapse by Charles Hugh Smith

Notable quotes:
"... This gradual, almost imperceptible erosion is the essence of neofeudalism, a process of transferring political and economic power from commoners to a new Financial Aristocracy/Nobility. ..."
Jul 08, 2020 | www.zerohedge.com

Authored by Charles Hugh Smith via OfTwoMinds blog,

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy.

Now that the pandemic is over and the economy is roaring again--so the stock market says--we're heading straight back up into the good old days of 2019. Nothing to worry about, we've recovered the trajectory of higher and higher, better every day in every way.

Everything's great except the fatal rot at the heart of the U.S. economy hasn't even been acknowledged, much less addressed: every sector of the economy is nothing but one form of neofeudal extortion or another.

Let's spin the time machine back to the late Middle Ages, at the height of feudalism, and imagine we're trying to get a boatload of goods to the nearest city to sell. As we drift down the river, we're constantly being stopped and charged a fee for transiting one small fiefdom after another. When we finally reach the city, there's an entry fee for bringing our goods to market.

Note that none of these fees were payments for improvements to transport or for services rendered; they were simply extortion. This was the economic structure of feudalism : petty fiefdoms levied extortionate fees that funded the lifestyles of nobility.

This is why I have long called America's economy neofeudal : we pay ever higher fees for services that are degrading, not improving. This is the essence of extortion: we don't get any improvement in goods and services for the extra money we're forced to pay.

Consider higher education: costs are soaring while the value of the "product"--a college diploma--declines. What extra value are students receiving for the doubling of tuition and fees? The short answer is "none." College diplomas are in over-supply, and studies have found that a majority of students learn remarkably little of value in college.

As I explain in my book The Nearly Free University and the Emerging Economy , the solution is to accredit the student, not the institution . If the student learned very little, he/she doesn't get credentialed.

Were students to have access to the best classroom lectures online (nearly free), and on-the-job apprenticeships in the workplace, (nearly free or perhaps even paid), learning would be significantly improved and costs reduced by 80% to 90%.

In this structure, there's no need for costly campuses or administration; the entire structure of higher education could be largely automated with software, except for the workplace apprenticeships which focus on case studies and real-world projects that are creating value in the here and now.

Consider healthcare: has the quality of healthcare doubled along with costs? Are Americans significantly healthier as the costs of healthcare have tripled? The aggregate health of Americans has arguably declined, while the stresses placed on frontline care providers by the ever-heavier burdens of compliance and paperwork have increased.

What about the $200 hammers and $300 million F-35 aircraft of the defense industry? Once again, as costs have soared, the quality and effectiveness of the products being supplied has arguable declined.

How about state and local government services? Are they improving as taxes and junk fees rise? Once again, government services are often declining in quality as taxes and fees increase by leaps and bounds.

In sector after sector, the quality of the goods and services has declined while costs have soared. This is the acme of neofeudalism: insiders and the New Nobility are skimming fortunes as prices skyrocket and the quality of the goods and services provided plummet.

Look at the cost increases in higher education, healthcare and childcare and ask yourself if the quality of those services have risen in lockstep with price increases.

This is nothing but neofeudal extortion. The cartels raise prices and we're forced to pay them, just as feudal commoners were forced to pay.

But extortion isn't the only feature of neofeudalism that is leading to collapse. Just as important is the slow erosion of commoners' self-rule and ownership of meaningful, productive capital.

This dynamic is explored in depth in The Inheritance of Rome: Illuminating the Dark Ages 400-1000 .

This gradual, almost imperceptible erosion is the essence of neofeudalism, a process of transferring political and economic power from commoners to a new Financial Aristocracy/Nobility.

If we examine the "wealth" of the middle class/working class (however you define them, the defining characteristic of both is the reliance on labor for income, as opposed to living off the income earned by capital), we find the primary capital asset is the family home, which as I have explained many times, is unproductive--in essence, a form of consumption rather than a source of income.

In a globalized, financialized economy, the only capital worth owning is mobile capital, capital that can be shifted by a keystroke to avoid devaluation or earn a a higher return.

Housing and pensions are "stranded capital," forms of capital that are not mobile unless they are liquidated before crises or expropriations occur.

I am also struck by the ever-rising barriers to starting or even operating small businesses, a core form of capital, as enterprises generate income and (potentially) capital gains. (The pandemic has only increased barriers that were already high.)

The capital and managerial expertise required to launch and grow a legal enterprise is significant, which is at least partly why a nation of self-employed farmers, shopkeepers, artisans and traders is now a nation of employees of government and large corporations.

What sort of capital can be acquired by the average commoner now? Enough to match the wealth and political power of financial Nobility?

As for political influence: a recent study found that voters had very little power in the U.S., which is effectively an oligarchy: Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens .

Summary: "The U.S. government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern universities has concluded."

Neofeudalism is not a re-run of feudalism. It's a new and improved, state-corporate version of indentured servitude. The process of devolving to feudalism required the erosion of peasants' rights to own productive assets, which in an agrarian economy meant ownership of land.

Ownership of land was replaced with various obligations to the local feudal lord or monastery-- free labor for time periods ranging from a few days to months; a share of one's grain harvest, and so on.

The other key dynamic of feudalism was the removal of the peasantry from the public sphere. In the pre-feudal era (for example, the reign of Charlemagne), peasants could still attend public councils and make their voices heard, and there was a rough system of justice in which peasants could petition authorities for redress.

From the capitalist perspective, feudalism restricted serfs' access to cash markets where they could sell their labor or harvests. The key feature of capitalism isn't just markets-- it's unrestricted ownership of productive assets --land, tools, workshops, and the social capital of skills, networks, trading associations, guilds, etc.

Our system is Neofeudal because the non-elites have no real voice in the public sphere, and ownership of productive capital is indirectly suppressed by the state-corporate duopoly.

Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy. The decline is visible, and so is the trajectory to collapse.

My recent books:

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF) .

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook ): Read the first section for free (PDF) .

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

* * *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com .

me name=

https://www.dianomi.com/smartads.epl?id=4879&num_ads=18&cf=1258.5.zerohedge%20190919&url=https%3A%2F%2Fwww.zerohedge.com%2Fmarkets%2Famerican-economy-four-words-neofeudal-extortion-decline-collapse From Our Partners 64-Year-Old Woman Choked, Robbed in Broad Daylight in Manhattan: Police Disney Actor Dead at 24 Florida man fired after angry outburst, yelling 'I feel threatened' Show 129 Comments

me title=

Login CHANNELS

me title=

me title=

NEVER MISS THE NEWS THAT MATTERS MOST ZEROHEDGE DIRECTLY TO YOUR INBOX

Don't have time to read every single post on ZeroHedge?

Receive a daily recap featuring a curated list of must-read stories. Today's Top Stories

me title=

Contact Information Suggested Reading

me title=

[Jul 08, 2020] Retail Apocalypse Accelerates - 8,700 Stores Closing, Number Set To Rise

Jul 08, 2020 | www.zerohedge.com

Retail Apocalypse Accelerates - 8,700 Stores Closing, Number Set To Rise by Tyler Durden Wed, 07/08/2020 - 17:25 Twitter Facebook Reddit Email Print

The unprecedented implosion of U.S. commercial real estate during the coronavirus pandemic is likely to get worse as newly delinquent CMBS loans are surging as the list of retail store closures continues to rise.

Trepp's June CMBS remittance report showed CMBS delinquencies hit a high of 10.32%, not seen since 2012. It was noted that that retail CRE loans were in rough shape.

Many retail shops are heavily indebted, some have already declared bankruptcy, while others are quickly shrinking their operating size, by reducing store footprint to rein in cost as the virus-induced recession, blended with a plunge in consumption, along with a shift to online, is resulting in a rapid acceleration of the retail apocalypse.

Coresight Research's latest forecast has upwards of 25,000 retail stores could close by year end.

Forbes has released an updated list of confirmed store closures. So far, it looks like 8,708 store units have or will shutter operations this year, and could quickly surpass 2019 totals of 9,302, in a matter of months.

With thousands of retail stores closing and the economy contracting, the next conversation Wall Street will have is about deep economic scarring and permanent job loss.

Already, 3 million jobs have been eliminated from the economy, some of which have come from the closure of retail stores. The bad news about permanent job loss is that it's a consumption killer, resulting in less spending at retailers, suggesting an even greater amount of store closures beyond anyone's wild guess could be seen over the next 12-24 months.

This all suggests there's no V-shaped recovery this year - one might want to hunker down for a prolonged downturn, as explained here .


[Jul 06, 2020] It is July. By January 2021, the US economy will have suffered a structural collapse in multiple sectors. That is the economic consequence of the pandemic. Restaurants, shopping malls, bars, colleges, hotels, airlines, cruise lines -- easily 15% of the workforce will be unemployed and another 25% seriously underemployed.

Notable quotes:
"... I would submit that the legitimacy of the elite professional and managerial classes is being called into question, for want of performance or any sense of responsibility. The urban PMC are the core constituency of the establishment Democratic Party. The vestigial working class elements and the ideological Left are distant memories and oppressed minorities seeking social justice, mere props. ..."
"... The thing is, the political classes -- the millionaire media pundits, the politicians, the lobbyists, the generals, the journamalists, the manipulative political operatives and propagandists, the pious policy "experts", the highly paid executives and financial managers running monopolies into the ground and non-profits into irrelevance -- they have enacted their neo-liberal agenda and it doesn't work. ..."
"... This in a country that cannot manufacture PPE. Or win a war. Trump, in his fumbling way, might get the U.S. out of Afghanistan, but the NY Times -- who brought us WMD not that long ago -- reports the Russians are paying bounties on American soldiers killed. No report on the treatment of Julian Assange though. Boeing is going to get the 737 Max in the air real soon now. Citibank is borrowing at 0.03 from the Fed and lending to credit card users at 27% and may be insolvent. ..."
"... So, let us assume the Democrats, after nominating an elderly SOB who had a hand in the crime bill that gave the U.S. the highest incarceration rate in the world, the bankruptcy bill that saddled tens of millions with credit card and student debt that cannot be discharged, and every stupid war of the last nearly twenty years, will suddenly see the necessity of radical change. And, after making an alliance with conservative Republicans hostile to even Trump's fake populism in order to elect Biden, seeing the light on radical reform is so likely! So plausible. ..."
Jul 06, 2020 | crookedtimber.org

bruce wilder 07.06.20 at 4:11 am (45 )

mainstream Democrats recognize the need for radical change, and Biden will align with the mainstream position as he always has done

You said you would leave this, your third assumption, to comments, so here is my comment.

The U.S. is in the midst of a deep legitimacy crisis and contrary to popular belief among liberals, it is not Trump particularly whose legitimacy is being called into question. Oh, sure, there have been relentless attacks on him -- from partisan opponents and from much of mainstream media -- but like the "anti-racism" of the recent protests -- much of it is dissembling and distraction. Charges of colluding with Putin to win the 2016 election turned out to be fake news -- rather obviously so from the beginning -- but a big enough mob went down that path with no self-awareness. I am not saying Trump is not an egregiously bad President; he is. But, notice please, before you go assuming that mainstream Democrats are going wake up in 2021 wanting to govern in the real world , that they have not shown much inclination toward truth-telling or critical realism these last 20 years.

It is July. By January 2021, the U.S. economy will have suffered a structural collapse in multiple sectors. That is the economic consequence of the pandemic. Restaurants, shopping malls, bars, colleges, hotels, airlines, cruise lines -- easily 15% of the workforce will be unemployed and another 25% seriously underemployed.

Did I mention that the U.S. is undergoing a legitimacy crisis?? Whose legitimacy is being called into question?

I would submit that the legitimacy of the elite professional and managerial classes is being called into question, for want of performance or any sense of responsibility. The urban PMC are the core constituency of the establishment Democratic Party. The vestigial working class elements and the ideological Left are distant memories and oppressed minorities seeking social justice, mere props.

I would say the Party establishment is confident they can put the re-animated corpse of Biden into the White House. And look how gleefully they welcome Republican never-Trumpers into the clubhouse! If you were one of the fools and tools who thought Obama did not want Republicans to control Congress, you are getting another chance to see how the Obama Alumni Association works with the Lincoln Project, how happy they are to deliver the kind of policy that appeals to rich, old, suburban Republican women.

The thing is, the political classes -- the millionaire media pundits, the politicians, the lobbyists, the generals, the journamalists, the manipulative political operatives and propagandists, the pious policy "experts", the highly paid executives and financial managers running monopolies into the ground and non-profits into irrelevance -- they have enacted their neo-liberal agenda and it doesn't work.

We have just watched the once highly touted CDC completely botch the great Pandemic. They could not devise a test. They screwed up the rules on who could or should be tested. They lied early on about the need to wear masks. They staged a moral panic over a need for ventilators, when ventilators are a terrible therapeutic alternative. In the new Puritanism, they shut down public beaches but they watched passively as liberal heroes like Cuomo set off a holocaust by sending COVID-19 patients to nursing homes.

This in a country that cannot manufacture PPE. Or win a war. Trump, in his fumbling way, might get the U.S. out of Afghanistan, but the NY Times -- who brought us WMD not that long ago -- reports the Russians are paying bounties on American soldiers killed. No report on the treatment of Julian Assange though. Boeing is going to get the 737 Max in the air real soon now. Citibank is borrowing at 0.03 from the Fed and lending to credit card users at 27% and may be insolvent.

So, let us assume the Democrats, after nominating an elderly SOB who had a hand in the crime bill that gave the U.S. the highest incarceration rate in the world, the bankruptcy bill that saddled tens of millions with credit card and student debt that cannot be discharged, and every stupid war of the last nearly twenty years, will suddenly see the necessity of radical change. And, after making an alliance with conservative Republicans hostile to even Trump's fake populism in order to elect Biden, seeing the light on radical reform is so likely! So plausible.

And, what's the play? The carrot of bi-partisan cooperation coupled with the fearful stick of abolishing the filibuster someday somehow if they don't play nice. You do realize that only Republicans are allowed to manipulate the filibuster and only in ways that favor their agenda of, say, stacking the courts? And, the strategic vision? Reinforcing the Rube Goldberg contraption which is Obamacare? You do know Biden is on record as adamantly opposed to Medicare4all? And, that Medicaid is a need-based nightmare of controlled deprivation? In a country where public health is such a shambles that a pandemic is running out of control.

You can do better.

Hidari 07.06.20 at 9:59 am ( 51 )

'All the attention in this thread so far has been on the political dimension of uncertainty, but it seems to me the public health dimension is also crucial and quite up in the air. What will the trajectory of the virus look like in the US over the next several months? Will infections continue to explode out of control?'

Not just the public health, but the economic effects of the public health. As I pointed out in a previous thread, it's not difficult to work out why Trump looked like he was going to win in January: the stock market was booming, unemployment was low, crime was low, there were no new wars it's not a mystery.

People vote with their wallets.

If Trump someone manages to face down the neo-liberals in his own party and arrange for a gigantic stimulus bill (bigger than the last one) and keeps 'benefits' going past August, he is in with a shout. If he doesn't, and if the economy continues its path to free fall, he will lose.

People vote with their wallets. It is not difficult. You don't need to invoke Russia and etc. to work out why Trump won in 2016 (the impact of the Obama stimulus package, which was too small, hadn't et 'percolated through' to people's bank balances at that point). And, if Trump loses in 2020, the reasons will be self-evident and nothing to do with 'people seeing through him' or 'brave liberals averted a turn to fascism'. If he loses it will be because he screwed up on the 'good' economy.

People vote with their wallets.

[Jul 06, 2020] Prins- -We're Living In A Permanent Distortion- -

Jul 06, 2020 | www.zerohedge.com

Via Greg Hunter's USAWatchdog.com,

Three time best-selling book author Nomi Prins says long before the Covid 19 crisis, the global economy was faltering big time. The Fed stepped in with the start of massive money printing in late 2019 to save the day.

Prins explains, " We were already in crisis mode as I mentioned at the end of my last book going into 2019."

"What did we see at the end of 2019? We saw this pivot, and I call it phase two. . . . Central banks had pivoted to easing mode . . . . Come September, October, November and December, the Fed is producing repo operations. Those are short-term lending operations that are supposed to be the purview of the banks . . . . The Fed is not supposed to get involved, but it did. The Fed had all kinds of excuses. It said it was not QE, but it was. . . . The debt at the end of 2019 for the world was three times GDP. For every $3 borrowed, only $1 of economic activity occurred. That's what we started 2020 with. Throw a pandemic into that . . . and you have a long drawn out financial and economic crisis."

Now, the money printing has gone into overdrive to save the system from the virus crisis. The social and economic damage, according to Prins, is profound and not going away. Prins points out,

"We are not going to pay back this debt, and this is global. Nobody is even considering trying to pay back the debt that has been created. Let's think about why that debt has been created. It's not just because the economy slowed down. That's one reason and kind of an excuse. The reality is the Fed is on steroids, and other central banks are on steroids . . . throughout the world in a larger number and larger magnitude than in the wake of the financial crisis of 2008. This means all this new debt created is even cheaper than the debt created going into the 2008 crisis. So, more debt, created more cheaply, means less incentive to pay it back and more incentive to push it down the road and grow it. You've got this snowball of debt rolling down this high mountain, and it's rolling and growing and getting bigger. The mountain, which is the main street economy, is coming down as the snow ball is coming down, and the main street economy itself, that foundation, is really shaky. . . . How does this end? It ends with us, the foundation, which is the main street economy, by both that snowball of debt and the avalanche of the mountain. That's going to be a multi-decade problem. "

Prins says this next stage has a brand new name and explains,

" I call this a 'Permanent Distortion.' I have not used this term in prior books, but I am using it because . . . the disconnect between financial assets, equity markets and the real economy . . . has become massive ...

There is going to be this endless supply of artificial stimulation into the markets. . . . Former New York Fed President Bill Dudley said the Fed's balance sheet is going to $10 trillion. That's what I have been saying, and now he finally said it. That's not going away anytime soon. That's not being unwound anytime soon. That becomes permanent lift to financial assets . . . . In the wake of that, less real capital gets used for infrastructure, research and development, growth and retooling the economy and getting jobs into this new period."

Prins says gold prices are going to "follow the expansion of the Fed's balance sheet." It is that simple, and Prins predicts,

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

"As we saw in the wake of the financial crisis of 2008, gold and silver will have the ability to go up quite substantially as the Fed's book increases in size, which we know it is going to do. We have been told that multiple times by many different words by Federal Reserve Chairman Jerome Powell."

In closing, Prins says, " We are continuing to drive up asset bubbles where we don't have the real economy to back it up..."

NEVER MISS THE NEWS THAT MATTERS MOST

ZEROHEDGE DIRECTLY TO YOUR INBOX

Receive a daily recap featuring a curated list of must-read stories.

"The more this 'Permanent Distortion' gets bigger, the more the likelihood the next crisis will happen... and it will be from a higher height. It will be from a larger bubble, a bigger snowball accelerating downward more quickly. I don't think we are out of this crisis. I think the markets are going to have a bumpy ride as the economy has a bumpier ride ."

Join Greg Hunter as he goes One-on-One with three time best-selling author Nomi Prins.

https://www.youtube.com/embed/erwrulvyIqk

* * *

To Donate to USAWatchdog.com Click Here


Posa , 6 minutes ago

The Central Banks will buy up the debt and then liquidate it. Some currencies may be re-issued. Get over it. Not the end of the world.

hugin-o-munin , 20 minutes ago

I used to listen closely to what Nomi said before but now it is only more of the usual talk. The world is a very slow place and it takes a long time until new realizations spread but when they do there is little possibility to stop it. Right now the USD is dying as a world reserve currency. It is slow and strictly kept away as a talking point in media.

The US behaves and continues down a path that is only accelerating this process because it is not up to the US what happens to the USD, it is up to the rest of the world. This is a truth that no American wants to accept but it is a fact. The more aggressive and arrogant the US becomes the faster this will happen and a part of me thinks that is precisely the plan. It will not matter what either the Fed or Treasury does.

Nomi talks about price inflation hitting smaller and poorer nations right now but doesn't even come close to the fact that this is also happening in the US right now albeit much slower. Greg Hunter was too stuck on finding ways to praise Trump as usual to even push this question, if he even recognized it. The gospel from Wall Street and most certainly Goldman Sachs that the USD can never be questioned is all over this interview and which is why these 'former' truth tellers are just that - former.

algol_dog , 35 minutes ago

Futures at new highs tonight. This week will break S&P highs for the year. Amazing time ...

Motorhead , 40 minutes ago

We've been hearing the same old stuff for easily 10-15 years from Jim Willie, Eric King, Peter Schiff, various/numerous gold bugs. et al., ad nauseam. Yeah, one day, they might be right, but repeating the same mantra for over a decade, one is bound to be right eventually.

Balance-Sheet , 54 minutes ago

If it is permanent it is reality not a distortion and this is the point. The 1900s are long over and will not be returning nor will the 1800s be returning for that matter.

Will the National Debt ever be paid off? No and there was never any intention to do so.

The Fed is in charge and does not need to account to anyone other than Congress and its Banking and Budgeting committees therefore provides explanations it hopes people can understand though this might be ill advised in and of itself.

Will the Fed balance sheet go to 10T? It might but only if it seems necessary and that depends of future circumstances which in very fluid conditions cannot be forecast accurately especially when politicians snap the economy on and off again and again.

Do taxpayers have to pay back the Fed balance sheet? No.

Does the US Treasury or the Fed crowd out private investment making it less available or at higher interest rates. NO! and obviously not, right? Everyone can see that.

The Gold Standard is o-v-e-r and there are no practical limitations to the amount of dollars that can be authorized by Congress to the level deemed necessary.

Doesn't this mean the USG will issue unlimited e-dollars? No, anything can happen in a thought experiment of course but the target is to make sure that the supply of USD is just a little more than enough.

If a mistake is made can excess USD is issued can the excess be withdrawn? Yes, billions of dollars die every day anyway as loans mature and all UST issues like bonds that mature in Fed custody simply disappear automatically upon maturity. All of the 'dollars' and the bonds are electronic and are simply deleted electronically invisibly and with no PR issues.

Does Nomi Prins know this? Probably but, hey, she is trying to make a living here so must slightly overfulfill your existing expectations. That is just excellent marketing- you want the customer- that's you- to get a slightly heavy pour. :-)

indus creed , 58 minutes ago

Prins has co-hosted the TYT (The Young Turks) program on Youtube. In case you are wondering, TYT are deluded, woke supporters of AOC/The_Squad types.

[Jul 04, 2020] Low-Income American Households Suffer Inflation Shock From Virus

Notable quotes:
"... "In a period of protest and increasing anger about inequality, the differential inflation rate experienced by low- and high-income households is a concern," said Bloomberg Economics' Björn van Roye and Tom Orlik. ..."
Jul 04, 2020 | www.bloomberg.com

The coronavirus is inflicting a price shock on low income Americans that risks further driving up inequality.

In a study released this week, Bloomberg Economics estimated higher grocery and housing costs for lockdown necessities meant those households whose incomes are in the bottom 10% currently face inflation of 1.5% compared with 1.0% for the top 10% and the official 0.1% overall average recorded in May.

Recalculating Inflation

'Have nots' suffered disproportionately as virus changed buying patterns

https://www.bloomberg.com

Sources: Bloomberg Economics, BLS, https://opportunityinsights.org

Note: Inflation for the lowest (highest) 10% takes the alternative CPI basket for the lowest (highest) decile of household income before taxes from the 2018 Consumer Expenditure Survey

The explanation for the difference lies in how the Covid-19 pandemic has changed consumption patterns by forcing households to buy more food while spending less on transportation or recreational activities.

"In a period of protest and increasing anger about inequality, the differential inflation rate experienced by low- and high-income households is a concern," said Bloomberg Economics' Björn van Roye and Tom Orlik.

The suggestion the virus is less disinflationary than many economists believe poses a challenge for the Federal Reserve which is eyeing a slower inflation rate than that experienced by lower earners, who are instead facing a steady erosion of their purchasing power.

"Taken together with concerns about central banks bailing out investors ahead of firms and workers, and the benefits rich, asset-owning households gain from quantitative easing, it adds to the sense that central banks are unintentional contributors to the problem of inequality," van Roye and Orlik said.

[Jul 04, 2020] The Economic Consequences of the Pandemic by JOHN QUIGGIN

Notable quotes:
"... So called “Democrats”, especially Biden himself, and Biden entourage are sellouts to financial oligarchy. They represent defeated in 2016 wing of the US neoliberal elite — adherents to classic neoliberalism and neoliberal globalization. ..."
"... To expect them to attempt anything of value other the kicking the neoliberalism can down the road is extremely naive. ..."
Jul 04, 2020 | crookedtimber.org
J-D 07.04.20 at 7:59 am ( 2 )

The more you tie your analysis of economic consequences to the assumption of a Democratic victory in the Presidential election and a Democratic majority in the Senate, the more of it will be at risk of being rendered moot by the Republicans retaining either the Presidency or a Senate majority or both, but I guess you know that and are implicitly accepting the risk of having to do a lot of rewriting in that event (if the book is supposed to appear after the elections) or of the book rapidly losing value after the elections (if it’s supposed to appear earlier).

By the same logic, the more you tie your analysis of economic consequences to one particular the way the political strategic battle will play out following the election of a Democratic President and Congressional majority, the more of it will be at risk of being rendered moot by the Democrats pursuing a different strategy. Given the initial assumption of a Democratic President with Democratic majorities in both houses of Congress, I suggest you would do better with a short discussion at a very high level of generality about why

I’m assuming that the title is supposed to be a genuine indication of the main topic of the book and not a way of disguising a real topic of ‘What’s Going to Happen Next’ or ‘What Should Happen Next’, which would not be quite the same.

Lee A. Arnold 07.04.20 at 5:20 pm ( 12 )

If the Democrats take the White House and Congress they’ll have a very short window to get anything done. The plutocracy will react by weakening the dollar e.g. by moving small amounts into the euro, cryptocurrencies and/or even the renmimbi. Interest rates will rise, and this will frighten many (or most) of the Democrats into austerity measures to reduce the budget deficit.

Thus will arise the old propaganda refrain that Democrats don’t know what they are doing, and the resulting frustrations, and Fox News falsehoods, might prompt voters to return Congress to Republican control in the midterms.

Therefore the Democrats should adopt a strategy of getting a few irreversible things done at the very beginning by ditching the filibuster and passing some popular programs which might ALSO help the party against Republican propaganda in future elections. This can be done in healthcare, comprehensive immigration reform, infrastructure, and new constitutional amendments.

Amendment against executive misconduct: A. Executive branch inspectors general shall not be removed but by Congressional approval. B. Not complying with Congressional subpoenas is an impeachable offense. C. In the case of House impeachment, “executive privilege” is automatically voided. D. If a President is removed from office, all of his or her pardons are automatically voided and the miscreants returned to jail.

likbez 07.05.20 at 2:29 am

So called “Democrats”, especially Biden himself, and Biden entourage are sellouts to financial oligarchy. They represent defeated in 2016 wing of the US neoliberal elite — adherents to classic neoliberalism and neoliberal globalization.

To expect them to attempt anything of value other the kicking the neoliberalism can down the road is extremely naive.

In this sense Lee A. Arnold post ( 07.04.20 at 5:20 pm #12) is completely detached from reality.

[Jul 03, 2020] The world s economy is in contraction. Although capital, what actual capital exists, will have to try and do something productive, it is confronted by this fact, that everything is facing contraction.

Highly recommended!
Notable quotes:
"... I agree that globalism is/will be heading into the dumpers, but I see no chance that US-based manufacturing is going to make any significant come-back. ..."
"... What market will there be for US-manufactured goods? US "consumers" are heavily in debt and facing continued downward pressures on income. ..."
"... There will certainly be, especially given the eye-opener of COVID-19, a big push to have medical (which includes associated tech) production capacities reinvigorated in the US. ..."
"... More "disposable" income goes toward medical expenditures. Less money goes toward creating export items; wealth creation only occurs through a positive increase in balance of trade. And on the opposite end of the spectrum, death, the US will likely continue, for the mid-term, to export weaponry; but, don't expect enough growth here to mean much (margins will drop as competition increases, so figure downward pressure on net export $$). ..."
"... the planet cannot comply with our economic model's dependency on perpetual growth: there can NOT be perpetual growth on a finite planet. US manufacturing requires, as it always has, export markets; requires ever-increasing exports: this is really true for all others. Higher standards of living in the US (and add in increasing medical costs which factor into cost of goods sold) means that the price of US-manufactured goods will be less affordable to peoples outside of the US. ..."
"... I'll also note that the notion of there being a cycle, a parabolic curve, in civilizations is well noted/documented in Sir John Glubb's The Fate of Empires and Search for Survival (you can find electronic bootlegged copies on the Internet)- HIGHLY recommended reading! ..."
"... All of this is pretty much reflected in Wall Street companies ramp-ups in stock-buy-backs. That's money that's NOT put in R&D or expansion. I'm pretty sure that the brains in all of this KNOW what the situation is: growth is never coming back. ..."
"... Make no mistake, what we're facing is NOT another recession or depression, it's not part of what we think as a downturn in the "business cycle," as though we'll "pull out of it," it's basically an end to the super-cycle ..."
"... We are at the peak (slightly past peak, but not far enough to realize it yet) and there is no returning. Per-capita income and energy consumption have peaked. There's not enough resources and not enough new demand (younger people, people that have wealth) to keep the perpetual growth machine going. ..."
Jul 03, 2020 | www.moonofalabama.org

Seer , Jul 3 2020 10:34 utc | 125

NemesisCalling @ 28

I agree that globalism is/will be heading into the dumpers, but I see no chance that US-based manufacturing is going to make any significant come-back.

The world's economy is in contraction. Although capital, what actual capital exists, will have to try and do something "productive," it is confronted by this fact, that everything is facing contraction. During times of contraction it's a game of acquisition rather than expanding capacity: the sum total is STILL contraction; and the contraction WILL be a reduction in excess, excess manufacturing and labor.

What market will there be for US-manufactured goods? US "consumers" are heavily in debt and facing continued downward pressures on income. China is self-sufficient (enough) other than energy (which can be acquired outside of US markets). Most every other country is in a position of declining wealth (per capita income levels peaked and in decline). And manufacturing continues to increase its automation (less workers means less consumers).

There will certainly be, especially given the eye-opener of COVID-19, a big push to have medical (which includes associated tech) production capacities reinvigorated in the US. One has to look at this in The Big Picture of what it means, and that's that the US population is aging (and in poor health).

More "disposable" income goes toward medical expenditures. Less money goes toward creating export items; wealth creation only occurs through a positive increase in balance of trade. And on the opposite end of the spectrum, death, the US will likely continue, for the mid-term, to export weaponry; but, don't expect enough growth here to mean much (margins will drop as competition increases, so figure downward pressure on net export $$).

Lastly, and it's the reason why global trade is being knocked down, is that the planet cannot comply with our economic model's dependency on perpetual growth: there can NOT be perpetual growth on a finite planet. US manufacturing requires, as it always has, export markets; requires ever-increasing exports: this is really true for all others. Higher standards of living in the US (and add in increasing medical costs which factor into cost of goods sold) means that the price of US-manufactured goods will be less affordable to peoples outside of the US.

And here too is the fact that other countries' populations are also aging. Years ago I dove into the demographics angle/assessment to find out that ALL countries ramp and age and that you can see countries' energy consumption rise and their their net trade balance swing negative- there's a direct correlation: go to the CIA's Factbook and look at demographics and energy and the graphs tell the story.

I'll also note that the notion of there being a cycle, a parabolic curve, in civilizations is well noted/documented in Sir John Glubb's The Fate of Empires and Search for Survival (you can find electronic bootlegged copies on the Internet)- HIGHLY recommended reading!

All of this is pretty much reflected in Wall Street companies ramp-ups in stock-buy-backs. That's money that's NOT put in R&D or expansion. I'm pretty sure that the brains in all of this KNOW what the situation is: growth is never coming back.

MANY years ago I stated that we will one day face "economies of scale in reverse." We NEVER considered that growth couldn't continue forever. There was never a though about what would happen with the reverse "of economies of scale."

Make no mistake, what we're facing is NOT another recession or depression, it's not part of what we think as a downturn in the "business cycle," as though we'll "pull out of it," it's basically an end to the super-cycle.

We will never be able to replicate the state of things as they are. We are at the peak (slightly past peak, but not far enough to realize it yet) and there is no returning. Per-capita income and energy consumption have peaked. There's not enough resources and not enough new demand (younger people, people that have wealth) to keep the perpetual growth machine going.

[Jul 01, 2020] Today, a CEO would be embarrassed to admit he sacrificed profits to protect employees or a community

Jul 01, 2020 | www.amazon.com


J.L. Populist Top Contributor: Guitars

The Close Relationship Between the Rich and Politics.

5.0 out of 5 stars The Close Relationship Between the Rich and Politics. Reviewed in the United States on January 15, 2009 Verified Purchase In this large book Kevin Phillips takes the reader on a lesson of economics and politics. Much of the history in WEALTH AND DEMOCRACY is of the American variety. He does, however, examine Spain, Holland,and Britain and the commonality these past governments have with the current American political and economic scene. The biggest common thread is the shrinking of the middle class a/k/a stratification of wealth.

One of Mr. Phillips observations is that in the 1990s transnational corporations posted record earnings while hiring few Americans. Sometimes slashing employment to boost the bottom line.
Along that line he quotes Peter Cepelli, a professor at Wharton School of Business- "Today, a CEO would be embarrassed to admit he sacrificed profits to protect employees or a community."

He also describes the shifting of the tax burden from corporations to low and middle income individuals through FICA taxes.

His quote on page 242 sums up American politics of the 1890s- "For two or three decades, then, democracy was corrupted at its constitutional core. Control of the Senate secured not just that chamber but the federal courts, the U.S.Supreme Court, and the U.S. Army to the service of American industry and finance."

He demonstrates in this book that wealth has been a factor in the politics of the United States from the very start. Finance (banking) has had it's proponents like Hamilton and some presidents through time while it has also had it's opponents; most notably Thomas Jefferson and Andrew Jackson.

The author takes a look at the worth of some former Cabinet members, Warren Harding's especially, although he wasn't the only president to tap the wealthy for his service.

Another interesting point that Mr. Phillips makes is that globalization can be, and has been in the past, reversed.

One of the curious inclusions in this book is found on page 71. It's an excerpt of a letter from FDR to Col. Edmund Mandell House. (House is a rather controversial, mysterious figure in American political history and the subject of conspiracy theories. He was a close adviser to Woodrow Wilson during his presidency). "The real truth... is, as you and I know, that a financial element in the larger centers has owned the government ever since the days of Andrew Jackson- and I am not wholly excepting the Administration of W.W. The country is going through a repetition of Jackson's fight with the Bank of the United Sates- only on a bigger and broader basis."

The author also quotes such figures as John Kenneth Galbraith and Thorstein Veblen

The moral of WEALTH AND DEMOCRACY as I take it, is that our economic ills now are nothing more than a recurring pattern that has been experienced by various powerful governments in their heydays. Part of the problem is hubris or the belief that it can't happen again.
This is a large book and some sections are laborious to read, but the message of the book is comprehensible and detailed very well. It may just be the most detailed book on the subject of wealth and it's adverse affect on government, especially a democratic form of government.

[Jul 01, 2020] The Covid-BLM Diversion; -Shock Therapy- behind a smokescreen of hysteria and racial incitement by Mike Whitney

Jul 01, 2020 | www.unz.com

The imposition of the nationwide lockdowns required elite consensus. There's no way that a project of that magnitude could have been carried out absent the nearly universal support of establishment elites and their lackeys in the political class. There must have also been a fairly-detailed media strategy that excluded the voices of lockdown opponents while– at the same time– promoting an extremely dubious theory of universal quarantine that had no basis in science, no historical precedent, and no chance of preventing the long-term spread of the infection. All of this suggests that the lockdowns were not a spontaneous overreaction to a fairly-mild virus that kills roughly 1 in 500 mainly-older and infirm victims, but a comprehensive and thoroughly-vetted plan to impose "shock therapy" on the US economy in order to achieve the long-term strategic ambitions of ruling class elites. As one sardonic official opined, "Never let a crisis go to waste."

It was clear from the beginning, that the lockdowns were going to have a catastrophic effect on the economy, and so they have. As of today, 30 million people have lost their jobs, tens of thousands of small and medium-sized businesses have been shuttered, second quarter GDP has plunged to an eye watering -45.5 percent (Atlanta Fed), and the economy has experienced its greatest shock in history. Even so, pundits in the mainstream media, remain steadfast in their opposition to lifting the lockdowns or modifying the medical martial law edicts that have been arbitrarily imposed by mainly-liberal governors across the country. Why? Why would the so-called "experts throw their weight behind such a sketchy policy when they knew how much suffering it was going to cause for ordinary working people? And why has the media continued to attack countries like Sweden who merely settled on a more conventional approach instead of imposing a full-blown lockdown? Swedish leaders and epidemiologists were unaware that adopting their own policy would be seen as a sign of defiance by their global overlords, but it was. Elites have decided that there can be no challenge to their idiotic lockdown model which is why Sweden had to be punished, ridiculed, and dragged through the mud. The treatment of Sweden further underscores the fact that the lockdown policy (and the destruction of the US economy) was not a random and impulsive act, but one part of a broader plan to restructure the economy to better serve the interests of elites. That's what's really going on. The lockdowns are being used to "reset" the economy and impose a new social order.

But why would corporate mandarins agree to a plan that would shrink their earnings and eviscerate short-term profitability?

Why? Because of the the stock market, that's why. The recycling of earnings into financial assets has replaced product sales as the primary driver of profits. As you may have noticed, both the Fed and the US Treasury have taken unprecedented steps to ensure that stock prices will only go higher. To date, the Fed and Treasury have committed $8 trillion dollars to backstopping the weaker areas of the market in an effort to flood the market with liquidity. "Backstopping" is an innocuous-sounding term that analysts use to conceal what is really going on, which is, the Fed is "price fixing", buying up trillions of dollars of corporate debt, ETF's, MBS, and US Treasuries to keep prices artificially high in order to reward the investor class it secretly serves. This is why the corporations and Tech giants are not concerned about the vast devastation that has been inflicted on the economy. They'll still be raking hefty profits via the stock market while the real economy slips deeper into a long-term coma. Besides, when the lockdowns are finally lifted, these same corporations will see a surge of consolidation brought on by the destruction of so many Mom and Pop industries that couldn't survive the downturn. No doubt, the expansion of America's tenacious monopolies factored heavily into the calculation to blow up the economy. Meanwhile, the deepening slump will undoubtedly create a permanent underclass that will eagerly work for a pittance of what they earned before the crash. So, there you have it: Profitability, consolidation and cheap labor. Why wouldn't corporate bosses love the idea of crashing the economy? It's a win-win situation for them.

We should have seen this coming. It's been clear since the Russiagate fiasco that elites had settled on a more aggressive form of social control via nonstop disinformation presented as headline news based on spurious accusations from anonymous sources, none of who were were ever identified, and none of whose claims could ever be verified. The media continued this "breathless" saturation campaign without pause and without the slightest hesitation even after its central claims were exposed as lies. If you are a liberal who watches the liberal cable channels or reads the New York Times, you might still be unaware that the central claim that the emails were stolen from the DNC by Russia (or anyone else for that matter) has not only been disproved, but also, that Mueller, Comey, Clapper etc knew the story was false way back in 2017. Let that sink in for a minute. They all knew it was a lie after the cyber security team (Crowdstrike) that inspected the DNC computers testified that there was no evidence that the emails had been "exfiltrated". In other words, there was no proof the emails were stolen. There was no justification for the Mueller investigation because there was no evidence that the DNC emails had been hacked, downloaded or pilfered. The whole thing was a hoax from the get go.

There's no way to overstate the importance these recent findings, in fact, our understanding of Russiagate must be applied to the lockdowns, the Black Lives Matter protests and other psychological operations still in the making. What's critical to grasp is not simply that the allegations were based on false claims, (which they were) but that a large number of senior-level officials in law enforcement (FBI), intel agencies, media and the White House knew with absolute certainty that the claims were false (from 2017 and on) but continued to propagate fake stories, spy on members of the new administration and use whatever tools they had at their disposal to overthrow an elected president. The guilty parties in this ruse have never admitted their guilt nor have they changed their fictitious storyline which still routinely appears in the media to this day. What we can glean from this incident, is that there is a vast secret state operating within the government, media and the DNC, that does not accept our system of government, does not accept the results of elections and will lie, cheat and steal to achieve their nefarious objectives. . That's the lesson of Russiagate that has to be applied to both the lockdowns and the Black Lives Matter protests. They are just the next phase of the ongoing war on the American people.

The lockdowns are an Americanized version of the "Shock Doctrine", that is, the country has been thrust into a severe crisis that will result in the implementing of neoliberal economic policies such as privatization, deregulation and cuts to social services. Already many of the liberal governors have driven their states into bankruptcy ensuring that budgets will have to be slashed, more jobs will be lost, funding for education and vital infrastructure will shrink, and assistance to the poor and needy will be sharply reduced. Shutting down the US economy, will create a catastrophe unlike anything we have ever seen in the United States. US Treasuries will likely loose their risk-free status while the dollar's as days as the "world's reserve currency" are probably numbered. That "exorbitant privilege" is based on confidence, and confidence in US leadership is at its lowest point in history.

It's not surprising that the Black Lives Matter protests took place at the same time as the lockdowns. The looting, rioting and desecration of statues provided the perfect one-two punch for those who see some tactical advantage in intensifying public anxiety by exacerbating racial tensions and splitting the country into two warring camps. Divide and conquer remains the modus operandi of imperialists everywhere. That same rule applies here. Here's more background from an article at the Off-Guardian:

"It is no coincidence that another Soros funded activism group Black Lives Matter has diverted the spotlight away from the lockdown's broader impact on the fundamental human rights of billions of people, using the reliable methods of divide and rule, to highlight the plight of specific strata's of society, and not all.

It's worth pointing out that BLM's activity spikes every four years . Always prior to the elections in the US, as African Americans make up an important social segment of Democrat votes. The same Democrats who play both sides like any smart gambler would. The Clintons, for example, are investors into BLM"s partner, the anti-fascist ANTIFA. While Hilary Clinton's mentor (and best friend) was former KKK leader Robert Byrd.

BLM is a massively hyped, TV-made, politicized event, that panders to the populist and escapist appetite of the people. Blinding them from their true call to arms in defense of the universal rights of everyone . Cashing in on the youths pent-up aggression . And weaponising the tiger locked in a rattled cage for 3-months, and unleashed by puppet masters as the mob

As a general rule of thumb, it is safe to assume that if a social movement has the backing of big industry, big philanthropy or big politics, then its ideals run contrary to citizen empowerment." (" The Co-opting of Activism by the State ", Off-Guardian)

Black Lives Matter protests provide another significant diversion from the massive destruction of the US economy. This basic plan has been used effectively many times in the past, most notably in the year following the invasion of Iraq. Some readers will remember how Iraqis militants fought US occupation forces following the invasion in 2003. The escalating violence and rising death-toll created a public relations nightmare for the Bush team that finally settled on a plan for crushing the resistance by arming and training Shia death squads. But the Bushies wanted to confuse the public about what they were really up to, so they concocted a narrative about a "sectarian war" that was intended to divert attention from the attacks on American soldiers.

In order to make the narrative more believable, US intel agents devised a plan to blow up the Shia's most sacred religious site, the Golden Dome Mosque of Samarra, and blame it on Sunni extremists. The incident was then used to convince the American people that what was taking place in Iraq was not a war over foreign occupation, but a bitter sectarian conflict between Sunnis and Shia in which the US was just an impartial referee. The killing of George Floyd has been used in much the same way as the implosion of the mosque. It creates a credible narrative for a massive and coordinated protests that have less to do with racial injustice than they do with diverting attention from the destruction of the economy and sowing division among the American people. This is a classic example of how elites use myth and media to conceal their trouble-making and escape any accountability for their actions.

Check out this excerpt from a paper by Carlo Caduff, an academic at King's College London, in a journal called Medical Anthropology Quarterly. It's entitled "What Went Wrong: Corona and the World After the Full Stop":

" Across the world, the pandemic unleashed authoritarian longings in democratic societies allowing governments to seize the opportunity, create states of exception and push political agendas. Commentators have presented the pandemic as a chance for the West to learn authoritarianism from the East. This pandemic risks teaching people to love power and call for its meticulous application . As a result of the unforeseeable social, political and economic consequences of today's sweeping measures, governments across the world have launched record "stimulus" bills costing trillions of dollars, pounds, pesos, rand and rupees . The trillions that governments are spending now as "stimulus" packages surpass even those of the 2008 financial crisis and will need to be paid for somehow. . .. If austerity policies of the past are at the root of the current crisis with overwhelmed healthcare systems in some countries, the rapidly rising public debt is creating the perfect conditions for more austerity in the future. The pandemic response will have major implications for the public funding of education, welfare, social security, environment and health in the future." ( Lockdownskeptics.org )

This is precisely right. The country has been deliberately plunged into another Great Depression with the clear intention of imposing harsh austerity measures that will eviscerate Social Security, Medicare, Medicaid and any other social safteynet programs that benefit ordinary working people, retirees, or anyone else for that matter. None of it is random, spontaneous or spur-of-the-moment policymaking. It's all drawn from a centuries-old Imperial Playbook that's being used by scheming elites to implement their final plan for America: Tear down the statues, destroy the icons and symbols, rewrite the history, crush the populist resistance, create a permanent underclass that will work for pennies on the dollar, pit one group against the other by inciting racial hatred, political polarization and fratricidal warfare, promote the vandals who burn and loot our cities, attack anyone who speaks the truth, and offer unlimited support to the party that has aligned itself with the corrupt Intel agencies, the traitorous media, the sinister deep state, and the tyrannical elites who are determined to control the all the levers of state power and crush anyone who gets in their way.

[Jul 01, 2020] Elites may have to contend with a real economy which becomes so bad it affects the fictitious economy of equities bonds. An economy that no amount of Fed injections can save. And in trying to save it, maybe the Fed will finally injure the dollar to the point where is effectively loses it reserve status.

Jul 01, 2020 | www.unz.com

animalogic , says: June 30, 2020 at 10:04 am GMT

I think there's a lot to what Mike says. However, if we accept his premise we must also accept dangers of that premise.
Essentially, Mike is saying that Elites have used Covid & BLM etc shenanigans to advance a political/economic purpose: ie that the Fed/Treasury will blast huge chunks of liquidity to them via buying up any equities & bonds however dubious or junk they are. Secondary benefits include across the board austerity & working people desperate enough to almost sell themselves into slavery.

Elites have therefore bet BIG. Big returns but a potential for big losses Elites may have to contend with a real economy which becomes so bad it affects the fictitious economy of equities & bonds. An economy that no amount of Fed injections can save. And in trying to save it, maybe the Fed will finally injure the dollar to the point where is effectively loses it reserve status.

Dangerous times.

[Jun 29, 2020] Gilead Will Charge More Than $3,000 For A Course Of COVID-19 Drug Remdesivir

Highly recommended!
Corrupt Fauci, stupid customers. IT the same neoliberal story of profiteering as a virtue all over again.
The government bought by Big Pharma, and Big Pharma out or control with questionable drugs and methods are two side of the same coin
Jun 29, 2020 | www.zerohedge.com

On Monday, Gilead disclosed its pricing plan for Gilead as it prepares to begin charging for the drug at the beginning of next month (several international governments have already placed orders). Given the high demand, thanks in part due to the breathless media coverage despite the drug's still-questionable study data, Gilead apparently feels justified in charging $3,120 for a patient getting the shorter, more common, treatment course, and $5,720 for the longer course for more seriously ill patients. These are the prices for patients with commercial insurance in the US, according to Gilead's official pricing plan.

As per usual, the price charged to those on government plans will be lower, and hospitals will also receive a slight discount. Additionally, the US is the only developed country where Gilead will charge two prices, according to Gilead CEO Daniel O'Day. In much of Europe and Canada, governments negotiate drug prices directly with drugmakers (in the US, laws dictate that drug makers must "discount" their drugs for Medicare and Medicaid plans).

But according to O'Day, the drug is priced "far below the value it brings" to the health-care system.

However, we'd argue that this actually isn't true. Remdesivir was developed by Gilead to treat Ebola, but the drug was never approved by the FDA for this use, which caused Gilead to shelve the drug until COVID-19 presented another opportunity. Even before the first study had finished, the company was already pushing propaganda about the promising nature of the drug. Meanwhile, the CDC, WHO and other organizations were raising doubts about the effectiveness of steroid medications.

Months later, the only study on the steroid dexomethasone, a cheap steroid that costs less than $50 for a 100-dose regimen, has shown that dexomethasone is the only drug so far that has proven effective at lowering COVID-19 related mortality. Remdesivir, despite the fact that it has been tested in several high quality trials, has not.

So, why is the American government in partnership with Gilead still pushing this questionable, and staggeringly expensive, medication on the public?

[Jun 28, 2020] The COVID-Crisis Could Bring A New Era Of Decline For American Core Cities by Ryan McMaken

Jun 26, 2020 | www.zerohedge.com
Authored by Ryan McMaken via The Mises Institute,

Manufacturing company 7-Sigma made headlines when it decided to leave Minneapolis as a result of the company's plant being burned by rioters. "They don't care about my business," 7-Sigma owner Kris Wyrobek old the Star-Tribune . After more than 30 years in the city, the company isn't staying, nor are any of the company's fifty jobs. But the costs of being victimized in protests is just one of many reasons homeowners and businesses may be realizing life and business in central cities has lost its luster. The ongoing threat of more business lockdowns, more riots, higher taxes, and failing schools may induce many Americans to flee, once again, to the suburbs as their parents or grandparents did.

This goes well beyond the fear of the disease many journalists have assumed is behind the observed beginnings of an exodus from cities. Yes, many in the upper classes have fled the cities for their mountain homes and yachts for "health reasons." But these people are relatively few in number and their thinking quixotic. They can afford to drop everything and leave cities overnight.

But the larger impacts are likely to be felt as middle class homeowners and business owners conclude they'd simply rather avoid the edicts and neglect of mayors and city councils in central cities who thinking nothing of issuing job-destroying "stay-at-home" orders while allowing rioters and vandals free rein.

The real cost to cities is likely to emerge over time. It will come in the form of families and shop owners who decide it's best to move their businesses ten miles down the road to a neighboring city that will actually do something about rioters. It will come in the form of families which decide their next home will be just a little bit farther from the urban dictator-mayors who have the heaviest hands in enforcing lockdowns and business closures. It will come in the form of potential new business owners and homeowners will be decide to never purchase property to start a business in central cities in the first place.

The Decline of Cities at Mid-Century

We may be seeing something reminiscent what happened in America's large central cities during the 1970s and 1980s. Many Americans concluded these cities had become unlivable and crime infested. Many concluded these were places that were quite inhospitable to doing business. So they left. (Forced busing for "integration" purposes was a factor as well.)

In some cases, there were dramatic events that illustrated the trend. The late sixties in New York saw several strikes by city workers. Transit and sanitation in the city became a disaster. The 1977 blackout in New York City ended in widespread riots that induced many businesses to pack up and never return. Many households followed.

But for the most part, cities saw an exodus that took many years and slowly hollowed out the finances and tax revenues of big cities. Areas of Detroit fell into ruin. By the mid seventies, New York City was lurching from one fiscal crisis to another.

"Nearly half of large cities lost cities shrank by at least 10 percent" during the 1970s, according to the Kansas City Fed :

St. Louis, Cleveland, Buffalo, and Detroit each shrank by more than 20 percent. Vast stretches of urban land were left virtually deserted.

More than half of large cities lost population from 1950 to 1980.

There were other factors at work as well, of course. The central cities were often hit the hardest as the old Rust Belt went into decline after the region was destroyed by labor unions and city and state laws that made business in the region inefficient and uncompetitive. Business owners and workers who possessed any real ambition or entrepreneurial spirit had good reason to leave the region altogether.

City centers, built on an old manufacturing-based working class never recovered.

The situation today is a bit different. During the 1990s, core cities began to recover from their mid-century decline and many officials and intellectuals in these areas began cultivating the so-called " creative class " (also known as the " bohemian bourgeoisie ") with the idea that young artists, engineers, architects, and tech workers might be convinced to move into city centers and and revitalize local urban economies. It appears to have worked in many cases.

But in 2020 America the hey day of the new techno-city may be over.

Civil Unrest

The case of the Sigma-7 closure in Minneapolis is just the most famous case of central cities' hostility to businesses within their borders. We're not hearing about the many small less-notable businesses that won't re-open in the wake of riots. In other cities, such as Chicago, city officials are now begging retailers to not leave the city.

Meanwhile, a number of small businesses now within the "CHOP" zone in Seattle is suing the city for abandoning businesses to the whims of the leftist mob.

As reported by the local NBC affiliate, local businesses have been threatened and harassed by the bosses of the "Capitol Hill Occupation Protest" (CHOP) zone in the city. The city government, the plaintiffs have concluded, essentially have abandoned these businesses to the new "government":

The City's decision has subjected businesses, employees, and residents of that neighborhood to extensive property damage, public safety dangers, and an inability to use and access their properties.

Minneapolis and Seattle aren't the only cities the prospect of continued civil unrest. with forty million new unemployment filings in recent months, the US faces a worrisome period of highly elevated unemployment. Many of the worst-affected workers will be lower-income populations living in core cities. This won't help the prospect of a speedy return to placid city environments.

Regime Uncertainty

As government experts and media pundits emphasize growth in reported COVID-19 cases, the prospect of renewed lockdowns now looms, as well. This is a threat at the state level and in many suburban local governments. But experience strongly suggests that those political jurisdictions controled by political leftists are likely to embrace the longest and harshest lockdowns. In many states, such as Texas and Colorado and California and Pennsylvania, local governments in big cities embraced lockdowns more enthusiastically than the surrounding regions and at the state capitols. "Regime uncertainty" -- uncertainty about what business-killing regulations a government might embrace next -- appears to be greater in central cities.

Business owners are likely to remember this. In the medium- and long-term, business owners and potential business owners will gravitate to those areas where the threat of harsh lockdowns is smaller.

The Rise of the "Work-at-Home" Trend

If the work-at-home trend persists, core cities will have lost one of their main draws: namely, the prospect of a shorter commute for those who can afford a home close-in to the employment centers. Even if daily commutes are just reduced -- say, to a three-days-per-week schedule -- the commute-time cost of a home in the suburbs falls dramatically. Without the need to sit in traffic five days per week, more expensive city homes and the congrestion and crime of city centers becomes far less attractive.

Declining Tax Revenue and Urban Blight

On top of it all will come big cuts to city budgets as COVID lockdowns decimated tax revenues . All cities and states will be impacted , but if the most productive taxpayers move out of the core cities, it is these areas that will feel the brunt of revenue shortfalls. In other words, a shift of productivity toward the suburbs and small cities will hollow out big city budgets and school district budgets as well. This will only encourage businesses and families to stay away in even larger numbers. Families will seek to avoid school districts and decline, and employers won't want to become part of a shrinking tax base where tax increases are frequently eyed by politicians as a way out.

The Beginnings of a Trend?

All of this will take time to play out. Yes, we've started to see those with means leave big cities already. The New York Times has reported on numerous former residents of New York City who have left for the surrounding regions. The Times asks "is New York City worth it anymore?" and points out "the pandemic send young New Yorkers packing."

Meanwhile, some real estate agents report a "mad rush" of wealthy buyers to get out of the city center and into the wealthy suburbs of San Francisco. These are just the early movers. The exiles of more modest means will come later. Not surprisingly, the median rent in San Francisco for a one-bedroom apartment dropped 9.2 percent in May, compared year-over-year.

But these remains a small percentage of the overall population. Most homeowners, families, and business owners need time to move their businesses, sell their properties, and be convinced it's time to move on.

None of this should be interpreted, however, as a trend away from metropolitan areas overall. There appears to be little risk that large numbers of Americans will be quitting metro areas for rural villages and towns. Some will. But most will notice that metro areas still have most of the jobs, most of the cultural institutions, and most of the health care services. What can't be said is that core cities have a monopoly on these resources. In recent decades, suburbs and small cities have increasingly become places that host a wide variety of sports teams, museums, convention centers, hospitals, and more. Metro areas are still a good place to be. But old core cities? Not so much.

[Jun 28, 2020] Deutsche Lufthansa Deal Shows How Bailouts Should Be Done

History will repeat itself as the grand experiment of bloated private finance capitalist theft unravels and so it is worth reviewing how this transformation was achieved and to avoid old errors and uninformed blunders.
Jun 28, 2020 | www.moonofalabama.org
Deutsche Lufthansa Deal Shows How Bailouts Should Be Done karlof1 , Jun 26 2020 18:47 utc | 5

The corona pandemic has brought many companies to the brink of bankruptcy. Some can and should be saved by the government.

Lufthansa, the 94 years old Germany airline, just made a deal with the German government that shows how this should be done.


bigger

Yesterday the shareholders of Lufthansa voted to accept the government bailout:

Lufthansa (LHAG.DE) shareholders on Thursday backed a 9 billion euro ($10 billion) government bailout, securing the future of Germany's flagship airline after it was brought to the brink of collapse by the COVID-19 pandemic.

The plan, backed by 98% of the shareholder capital that cast a vote at the online meeting, will see Berlin take a 20% stake in Lufthansa and two board seats.

Shares in the company, which employs around 138,000 people, closed 7.1% higher, having risen strongly earlier after top shareholder Heinz Hermann Thiele dropped objections to the deal.

Also on Thursday, European Union regulators approved Lufthansa's 6 billion euro recapitalisation, part of the bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid .

The deal structuring is interesting and quite favorable for the government.

The government bought newly issued Lufthansa shares for a total of $300 million which will give it 20% of the ownership of the company. These shares were valued at a quarter of their current value. The government will additionally provide €5.7 billion in 'silent capital'. That is a loan structured as a form of preferred shares that are entitled to a preferred dividend. This will have to be paid back before other shareholders will again get dividends. Lufthansa has a right to pay back the silent capital. But the 20% of the ownership via shares will stay with the government until it decides to sell it.

An additional 3 billion euro credit line is provided by a government owned bank.

This is a much better deal for the taxpayer than in the U.S. where the airlines which were bailed out only had to provide stock warrants which allow the government to buy some shares if it chooses to.

The Lufthansa deal prevents the bankruptcy of the company and a potentially unfriendly foreign takeover. Lufthansa was quite profitable before the onset of the coronavirus crisis. It is a good airline and it is now likely to survive. In a few years it will again make profits.

Seeking Alpha has more technical details of the deal and says that the current Lufthansa share price is too high :

Currently, the share price is about €10.4, which corresponds to a very generous valuation of about 4 times estimated book value. It is also way higher than the €2.56 per share the German government paid. This discount of more than 75% suggests shares of Deutsche Lufthansa are way overvalued.

The share price may currently be overvalued and may well sink. But without the bailout deal the shares would have been worthless.

There is also a deal that will keep most of Lufthansa's employees in their jobs :

[T]ough decisions lie ahead, with Lufthansa working on a restructuring plan in which up to 22,000 jobs could be at risk - although CEO Carsten Spohr told Bild newspaper that hours and wages could be reduced by a fifth instead of axing a fifth of jobs .

This sounds like a company wide introduction of a four day work week though with only 80% of the former full pay.

The cabin crew union has already agreed to such a deal and the pilot and ground worker unions will likely also do so. There currently ain't many airline jobs available elsewhere so for most of the employees this is a better deal than a potential long term unemployment.

I really like how this has turned out. A good company has been saved. The government has set the right conditions and it may even profit from the deal. The shareholders have taken a large haircut but will not lose all of their money. The employees will keep their jobs but with a reduced time and pay.

It would have been better if all this had not been necessary. But in the current situation it is the best that can be done.

All parties have taken a "we are all in the same boat" attitude to make this happen.

This should be an example for those bailout deals that will still have to be made.

---
Twice a year I ask readers to support this blog. Please consider contributing .

Posted by b on June 26, 2020 at 18:13 UTC | Permalink Yes, a Galaxy of difference between the cash giveaways called bailouts by the Outlaw US Empire and the partial nationalization of the airline that gains something for the German public in exchange for the infusion of capital. I expect to see more of this sort of activity as the EU begins to overthrow Neoliberalism.


Et Tu , Jun 26 2020 18:31 utc | 2

No comment on the shocking US corporate theft. Actually, here's one: that country is looking worse than the USSR in the late 80's and the Marie Antoinette class will have to offer much more than cake to avoid a revolution...

However, a quick look at Lufthansa's figures for 2019 on Wikipedia reveals:
https://en.wikipedia.org/wiki/Lufthansa

Revenue Increase €36.42 billion (2019
Operating income Decrease €2.0 billion (2019
Net income Decrease €1.21 billion (2019
Total assets Increase €42.66 billion (2019
Total equity Increase €10.15 billion (2019

So the German Gov't paid 10 billion for a 20% stake in a company that yielded only a 3-4 % net profit at 100% of its total equity value. Never mind share valuations... can someone explain how that is actually a good deal for the German Govt please? Perhaps i am just giving the numbers a simplified look. Perhaps, given the immense power of private equity these days, everything has become relative.

MegaMicro , Jun 26 2020 19:20 utc | 9
Better deal ?

--------------------------------
Lufthansa CEO compensation

"According to our data, Deutsche Lufthansa AG ...
... and paid its CEO total annual compensation worth
€4.4m over the year to December 2018"

--------------------------------

Did our carsten spohr CEO:
take a cut, help the TEAM effort, fall on the sword ?

~4,400,000 EUR = carsten's take

Perhaps carsten provide the example to take a 90% cut of ~3,960,000 EUR, leaving him with a "paltry"
~~~440,000 EUR ( ~10 x average_German_salary )

@~~~44,000 EUR salary, then employee cost = ~80,000 EUR

cost-of-employee-in-germany-calculator

49.5 = ( 3.96 Mega EUR ) / ( 80 k EUR )

therefore carsten alone, by taking a pay cut
can save the jobs of
~49.5 average Germans
and still earn ~10x more than average German employee.

PS: i'll do it for 440 k EUR

( there are studies showing that CEOs have almost no impact )

TG , Jun 26 2020 19:39 utc | 11
Granted, the Lufthansa deal is far less toxic than the corporate bailouts we have seen in the United States, which are really just theft, and encouraging financially sloppy behavior and effectively subsidizing stock-buy back programs and other financial engineering rubbish.

But I am still skeptical that it's all THAT good a deal. I mean, don't forget, if a company goes bankrupt its assets don't go up in smoke. It goes into receivership, the stockholders lose money, and the management that steered the company onto the rocks get fired, and replaced with hopefully better managers. The planes are still there, the employees are still working, etc. Granted that a government has a vested interest in not letting it get chopped up and dispersed, there is no need to preserve either stockholders or current management to keep the airline functioning.

The essence of capitalism is that people who make bad investments should lose money.

TG , Jun 26 2020 19:39 utc | 11
Granted, the Lufthansa deal is far less toxic than the corporate bailouts we have seen in the United States, which are really just theft, and encouraging financially sloppy behavior and effectively subsidizing stock-buy back programs and other financial engineering rubbish.

But I am still skeptical that it's all THAT good a deal. I mean, don't forget, if a company goes bankrupt its assets don't go up in smoke. It goes into receivership, the stockholders lose money, and the management that steered the company onto the rocks get fired, and replaced with hopefully better managers. The planes are still there, the employees are still working, etc. Granted that a government has a vested interest in not letting it get chopped up and dispersed, there is no need to preserve either stockholders or current management to keep the airline functioning.

The essence of capitalism is that people who make bad investments should lose money.

Hoarsewhisperer , Jun 26 2020 20:35 utc | 15
QANTAS CEO Alan Joyce took home A$23.9m in 2018.
In March 2020 he offered to work for free for the rest of the year ...
the Financial Year ...
which ends June 30, 2020.
BG13 , Jun 26 2020 20:39 utc | 16
If somebody still calls this "market economy" the normal way would be: bankruptcy, first are served the employees, second the creditors. Shareholders lose, risk doesn't pay off all the time (except you own the government). The trade mark "Lufthansa" would be part of the insolvency estate, as well as all the planes. Used planes would be very cheap following the market rule of high offer vs. low demand. Personal is available as well. Good conditions for creating a new airline ... What exactly is the reason to throw billions of Euros into this? The gouvernement could for a part of this money create a national state owned carrier out of the insolvency estate.
psychohistorian , Jun 26 2020 20:56 utc | 17
The roadway to hell is paved with the best of intentions.

If a government is going to subsidize the transportation industry in its country to the benefit of the most public, why start with airlines that serve the top few of the public.

Is this deal better than what is happening in the US? It is too soon to tell but I think it is quite possible that the shift to fast train increases and airlines are reduced to more intercontinental.

Without this action being done within a larger context of nationalization (partial or otherwise) of segments of core economic sectors, I question its efficacy. Where is the public discussion about bigger picture futures for countries?....crickets!!!

A.L. , Jun 26 2020 21:08 utc | 18
A similar deal as Lufthansa was done between the Hong Kong government and its flag carrier Cathay Pacific. Even though Cathay's employees were some of the most vocal and organisers of strikes and various anti-government protests and riots.

talking about biting the hand that feeds it....

vk , Jun 26 2020 21:14 utc | 19
And, to top it off, this bail out violates one of the most sacred moral principles of capitalism/liberalism: the risk is the onus of the entrepreneur by definition; that's what justifies his absorption of the entire lucre if it pans out.

The worker gave up his freedom of enterprise in exchange for the security and constancy ("fixity") of the wage. Therefore it is his right within the capitalist moral code that he/she be weathered from risk taken by his/her entrepreneur. Those Lufhansa workers should've never have come to the point of taking a 20% cut in their salaries to cover for their bosses' risks. Pandemics are natural disasters, and, for natural disasters, the capitalist system has the insurance industry - which was created exactly for situations like these (as is well historically documented).

Curious fact: in the 2008 meltdown, the USG had to bail out the world's biggest insurance company - AIG - because it flat out went bust (too many of its clients went bankrupt at the same time). Ironies of ironies - or, as I like to say, the farce of the "self-regulating" myth of the "free market".

BraveNewWorld , Jun 26 2020 21:30 utc | 20
Yup, all around the world this is where the real fleecing of the poor and middle class will happen. Take ungodly sums of money from the poor and give it to the rich and then the rich can use loop holes not to pay it back. Any poor person not paying their taxes will go to jail. Any CEO who finds a loop hole to not pay back will be obscenely rewarded. Welcome to the real world Neo.
arby , Jun 27 2020 0:43 utc | 39
Whatever happened to Austerity?
A User , Jun 27 2020 1:05 utc | 40
Similar to the model the Clark government came up with on Air NZ after the idiot private shareholders nearly destroyed the airline in the noughties. Except the government insisted on a complete takeover, then during the Natz term in office the shareholding by government has been reduced to 52%. Everyone else was meant to be kiwi shareholder for such a 'strategic' asset but of course the right left plenty of loopholes and the foreign ownership increased dramatically.
The reason governments even neolib ones move to protect national airlines is simple. They are needed in times of disaster or war to be used for emergency transport but the big one is the way that landing rights were allocated back in the old days still holds largely. Losing an airline to an overseas buyer can mean the destruction of the reciprocal basis upon which international landing rights are allocated, if one allows their national carrier to be bought by an external airline hell can be wrought with tourism.

Lufthansa may have 80 slots a week for landing in NY then departing. Emirates buys into Lufthansa, get controlling stake, then then decides that all the NY slots be routed through Dubai, then Germany loses access for tourists from amerika to Germany. Emirates hooks up the new slots with the China timetable establishing new big route and Lufthansa goes down the gurgler.
This stuff is common because slots at major airports are very hard to come by, no nation state wants to lose them.

Bob , Jun 27 2020 1:07 utc | 41
I dont wish to go deep in the numbers. But im sure the german government is not as corrupt as usa in bailouts. Thats why its citzens still trust in its governing. Here in good o usa no one trust government or even each other
Deimetri , Jun 27 2020 1:14 utc | 42
So, please, get off your high horse.

Posted by: Yeah, Right | Jun 26 2020 23:40 utc | 34

??

Choosing winners/losers has worked out so well in the case of Amtrak to name one example, pointing this out is riding a high horse?

But as you say, it has always been this way, it will always be this way, so we should just ignore the fraud and incompetence that .gov bailout encourage and be a happy little debt slaves..-got it,good point /sarc

Deimetri , Jun 27 2020 1:34 utc | 43
For more see:

https://mises.org/wire/never-ending-story-bailouts-moral-hazard-and-low-economic-growth

A User , Jun 27 2020 1:36 utc | 44
The so called market purists who believe that capitalism is some thing sacred which must be left free of interference from the people who use it pay for it and depend upon it always miss the basic point especially if they are amerikan where high levels of selfish corruption have endured for centuries. Not all administrations are that dissolute, the trick of separating citizens from their government is advanced in amerika so far that most see government as separate entity from citizens, whereas in Germany where standards are decaying they have not decayed to the point that no one trusts all politicians all the time.

Therefore government ownership can be seen as citizen participation which is vital at a time like this because the effects of a national airline failing extend well beyond a few wealthy shareholders losing some wealth.
In the case of Air NZ the board was sacked, most senior execs were shown the door without abnormal compensation & the shareholders were bought out at close to current market valuation, they got pennies for their greedy investment.
I do not know the structure of the Lufthansa buyin but the fact that shareholders resisted indicates that they don't feel as though they are going to do well from the deal.Perhaps they had buyers for Lufthansa's international landing slots already lined up on the side and hoped to make big bucks on that - screw German workers, small businesses dependent on tourism or the public faced with uncertain travel routes.

Antonym , Jun 27 2020 2:00 utc | 45
Lufthansa might have been viable before Covid19 but their stock was and is over valued. US companies like Boeing and banks were zombies in August 2019 and got their first financial IVs already then: Evidence Suggests U.S. Financial Crisis Started on August 14, 2019

One difference is the brand of the fiat notes (money): while Germany has the Euro - fairly ok -, the US has the magic dollar, the world's trade and finance medium, so they can print them almost scot-free.

The German central government deal with Lufthansa is indeed better than the self payment of the privatized FED to its owner banks and friends for all Germans. Democratic governments are openly elected every 4-5 years by the public; not so the FED directors.

vk , Jun 27 2020 2:41 utc | 47
@ Posted by: A User | Jun 27 2020 1:36 utc | 44

The problem is that Germany is a capitalist State. That's not how a capitalist State should work. This is a sign worse things are yet to come (decline). Take for example the human body: you can feel the signs of old age, and you know they mean permanent decline, not the beginning of something new. There is no alchemy in the real world.

I didn't propose Lufthansa to go down: I proposed for Lufthansa management to go down. Chop some upper-management heads off and you get your solvency back. EUR 18 billion is nothing for a company of that size: I'm sure if they gave up one year of their profits would already be more than enough to cover for the hole.

Unless, of course, the hole is bigger than the officially declared.

The management of a company is not the company: the soul of a company is its infrastructure, its organization and its workers - specially its highly specialized workers (the ones with the "know-how"). The first hydroelectric dam of the USSR was built with American engineers - not American management or American money. You don't have to have a bunch of executives to build civilization and wealth; it is the worker who is the soul of civilization and progress.

As I said: if Lufthansa was in such a good shape and only needed mere EUR 18 billion, there would be a line of private banks offering the loan with generously low interest (as it would be an automatic win for the bank, no matter how low the "return on capital"; and wins are rare in today's world, so you can't be too picky). Either it did resort to the government because it could (a show of strength to the German people) or its finances are not so great as the owner of this blog state they are. I hope, for the general welfare of the German people, that it was just a show of strength, because if it is dire finances, then those EUR 18 billion are just the amuse-buche.

P.S.: Governments owning some share of the key national companies is common practice in the First World nations. In France, if I'm not mistaken, there's a Law where the government must be the owner of at least 16% of the shares of every "strategic" companies. The UK frequently nationalizes bankrupt companies it deems strategic - only to re-privatize them later, when they are profitable again (the Thatcher method). If State ownership of shares was equal to socialism, we would've been living in a socialist world many decades ago.

[Jun 28, 2020] David Stockman On What Could Happen If The Fed Loses Control

Jun 27, 2020 | www.zerohedge.com
Via InternationalMan.com,

International Man : Recently, Fed Chairman Jerome Powell said the central bank's money printing is designed to help average Americans, and not Wall Street.

What's your take on this?

David Stockman : Yes, and if dogs could whistle, the world would be a chorus!

The truth is, in an economy encumbered with nearly $78 trillion of debt already -- including $16.2 trillion on households, $16.8 trillion on business, $23 trillion on governments -- the last thing we need is even lower interest rates and even bigger incentives to take on debt and leverage.

In fact, in a debt-saturated system, the Fed's massive bond purchases never transmit anything outside the canyons of Wall Street. This money-printing madness only drives bond prices higher and cap rates lower -- meaning relentless and systematic inflation of financial assets' prices.

As a practical matter, of course, the bottom 90% don't own enough stock or even inflated government and corporate bonds to shake a stick at. Instead, what meager savings they have accumulated languish in bank deposits, CDs or money market funds earning exactly what the Fed has decreed -- nothing!

So, when Powell says he's only trying to help the average American, you have to wonder whether he is just stupid or the greatest lying fraud yet to occupy the big chair at the Fed.

Then again, it doesn't really matter why.

The Fed is now a completely rogue institution that is a clear and present danger to the future of prosperity and liberty in America. The tragedy is that the clueless speculators on Wall Street and politicians in Washington don't even get the joke.

International Man : So far, the Fed has been able to successfully manipulate interest rates to historic lows.

What are some catalysts that could cause the Fed to lose control and interest rates to spike?

David Stockman : They are chasing their tail, faster and faster. The more they expand their balance sheet, thereby injecting into the bond pits a massive artificial bid for governments, corporates, munis, commercial paper and junk, the lower the yields go, and the demand for more debt becomes greater.

Needless to say, when incomes drastically shrink due to the folly of Lockdown Nation, debt should be liquidated, not massively increased. So, the Fed and its fellow-traveling global central banks are setting up our Humpty-Dumpty economy for a very great fall.

That is to say, what will cause the central banks to lose control is the greatest wave of debt defaults in recorded history. On that score, the Fed just issued its Flow of Funds data for Q1, and it leaves nothing to the imagination. Total public and private debt on the US economy now stands at $77.6 trillion, or 3.5X GDP, and we'll be lucky to post at $21 trillion for the full year of 2020 GDP.

Recall that we supposedly got a wakeup call back in 2008, when the economy plunged into financial crisis and the worst recession since the 1930s; way too much debt was widely identified as the fall guy. But back then, total debt outstanding was just $52.6 trillion, meaning that during the last decade of purported recovery, the US economy actually took on $25 trillion of new debt -- a 48% increase.

Moreover, big-spending politicians were not the only culprit. That's because when the central banks drastically falsify interest rates to sub-economic levels, everyone is incentivized to borrow hand-over-fist. And, most often, it's for unproductive purposes, such as more transfer payments in the government sector and more financial engineering among the C-suites.

On the eve of the Great Recession, for example, total business debt (corporate and non-corporate) stood at $10.1 trillion and has subsequently soared to $16.8 trillion. That $6.7 trillion gain represents fully 98% of the $6.85 trillion increase in nominal GDP during the same period.

This orgy of borrowing also means that business debt over the past 13 years has grown by 66.5% -- far more than the 46.7% expansion of nominal GDP. Accordingly, the business debt burden on GDP has now gone off the charts, and at 78% of GDP, is more than double the pre-1970 level:

Business Debt as Percent of GDP:

Stated differently, chronic financial repression and clubbing of interest rates by the central bank have amounted to a slow-motion burial of the business sector in debt; debt that in recent decades has been overwhelmingly allocated to shrinking the equity base of business enterprises, thereby cycling wealth from the productive economy to the rent-capturing precincts of Wall Street.

Indeed, the Fed's cheap credit never really leaves the canyons of Wall Street, where it fulsomely rewards carry-traders and risk asset speculators because zero cost money is always and everywhere the mother's milk of leveraged speculation.

It also causes corporate C-suites to become maniacally obsessed with goosing their stock options via financial engineering gambits like stock buybacks, leveraged recaps and wildly over-priced M&A deals as a substitute for organic growth. Yet these maneuvers merely supplant equity and financial resilience with debt and financial fragility.

So when business bankruptcies soar to unprecedented levels in the month ahead as the economy reels from the folly of Lockdown Nation, the financial fragility part will become crystal clear.

But it also needs to be recalled that even as the interest rate clubbers at the Fed fostered a massive explosion of business debt after the 2008 financial crisis, it did not translate into any growth in productive investment at all.

In fact, real business CapEx minus current capital consumption (depreciation and amortization charged to current period production) is today barely a tad higher than it was 20 years ago on the eve of the dotcom bust.

In short, the Fed has fostered a zombie economy, and it is the collapse of the zombies that will eventually take it down.

International Man : The Fed has printed more money in recent months than it has for its entire history. The government is spending as if trillion is the new billion .

What is going on here?

David Stockman : Here's an eye-opener to put this madness in perspective. Annual federal outlays posted at $3.896 trillion in 2014 and were the product of 225 years of relentless expansion by the Leviathan on the Potomac.

But it now appears quite certain that the annual deficit in FY 2020 will actually be larger than the total spending level that took more than two centuries to achieve.

That's right. Owing to the mushrooming coast-to-coast soup lines hastily erected by Washington in response to the collapse of jobs, incomes and business cash flows brought on by Lockdown Nation and the evaporation of tax revenues, Uncle Sam will borrow more this year than the total spending just six years ago.

Stated differently, back in the day, we struggled to keep total federal spending during 1981 under $700 billion. By contrast, the Donald has borrowed nearly 4X that in the last 90 days!

So, yes, perhaps Trump's one truthful boast is that he is indeed the king of debt.

Needless to say, there is nothing remotely rational, plausible or sustainable about an FY 2020 budget that's going to end up with revenue south of $3 trillion and spending north of $7 trillion.

That's not even banana republic league profligacy; it's just sheer stupidity and madness, bespeaking a bipartisan duopoly in Washington that has had its collective brains turned into sawdust by the relentless, egregious money pumping of the central banks.

For want of doubt, just consider what has happened since March 11 on the eve of the Lockdown Nation's commencement.

Of course, you can't blame the Donald alone for this insanity; he's been enabled by two of the greatest crackpots to hold high economic policy positions in American history -- Treasury Secretary Mnuchin and Fed Chairman Jay Powell.

As it has happened, we have closely observed every combination of Fed chairman and US treasury secretary since 1970, when we headed off for our first job in the Imperial City, eager to better the world and our own prospects, too.

So, we can say without reservation that the current duo is the worst combo of spineless, principle-free empty suits to plague the nation during the last half-century. And it's not a close call -- even against a ship of fools, which include John B. Connally, G. William Miller, Ben Bernanke, Hank Paulson Jr., Timothy Geithner and Janet Yellen, among considerable others.

After all, if the Treasury Secretary and Fed Chairman are utterly clueless about the grave dangers of the fiscal and monetary bacchanalia now rampant in the imperial city, how in the world will it stop except in some fiery collapse?

* * *

Unfortunately there's little any individual can practically do to change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible. That's precisely why New York Times bestselling author Doug Casey just released an urgent new report on how to survive and thrive an economic collapse. Click here download the free PDF now .