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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.

 


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[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.

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[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.

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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 .

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[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.

* * *

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[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...

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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)

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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.

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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?

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[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 .

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[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..."

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"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

* * *

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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.

---
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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 .

[Jun 28, 2020] Restaurant Of The Future - KFC Unveils Automated Store With Robots And Food Lockers

Jun 28, 2020 | www.zerohedge.com

"Restaurant Of The Future" - KFC Unveils Automated Store With Robots And Food Lockers by Tyler Durden Fri, 06/26/2020 - 22:05 Fast-food chain Kentucky Fried Chicken (KFC) has debuted the "restaurant of the future," one where automation dominates the storefront, and little to no interaction is seen between customers and employees, reported NBC News .

After the chicken is fried and sides are prepped by humans, the order is placed on a conveyor belt and travels to the front of the store. A robotic arm waits for the order to arrive, then grabs it off the conveyor belt and places it into a secured food locker.

KFC Moscow robotic-arm takes the order off the conveyor belt

Customers use their credit/debit cards and or the facial recognition system on the food locker to retrieve their order.

KFC Moscow food locker

A KFC representative told NBC News that the new store is located in Moscow and was built months before the virus outbreak. The representative said the contactless store is the future of frontend fast-food restaurants because it's more sanitary.

KFC Moscow storefront

Disbanding human cashiers and order preppers at the front of a fast-food store will be the next big trend in the industry through 2030. Making these restaurants contactless between customers and employees will lower the probabilities of transmitting the virus.

Automating the frontend of a fast-food restaurant will come at a tremendous cost, that is, significant job loss . Nationwide (as of 2018), there were around 3.8 million employed at fast-food restaurants. Automation and artificial intelligence are set displace millions of jobs in the years ahead.

As for the new automated KFC restaurant in Moscow, well, it's a glimpse of what is coming to America - this will lead to the widespread job loss that will force politicians to unveil universal basic income .

[Jun 26, 2020] The Depression Dominoes Are Toppling

Notable quotes:
"... The lockdown would have been survivable if the economy hadn't been over-indebted, over-leveraged, burdened by insanely high costs, stripmined by greedy monopolies, dependent on stock market fraud, destabilized by extreme inequality, corrupted by political pay-to-play and addicted to speculation. ..."
"... The top 5% technocrat/managerial class have done very well for themselves in the speculative run-up of destabilizing inequality, and since they run the narrative machines, we're swamped with happy stories about the economy, all of which boil down to this absurd fantasy: since I'm doing so well, everyone else must be doing well, too. ..."
"... Zombie corporations are rushing to borrow billions of dollars (thanks to the Federal Reserve) but increasing their debt is only doing more of what created their fragility in the first place . ..."
Jun 25, 2020 | www.zerohedge.com
Authored by Charles Hugh Smith via OfTwoMinds blog,

Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting, monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable.

The pandemic lockdown will be blamed for the Greater Depression, but the lockdown only toppled all the dominoes that were already lined up. The lockdown would have been survivable if the economy hadn't been over-indebted, over-leveraged, burdened by insanely high costs, stripmined by greedy monopolies, dependent on stock market fraud, destabilized by extreme inequality, corrupted by political pay-to-play and addicted to speculation.

The apologists always blame depressions on central banks not printing money fast enough, while overlooking the real drivers: debt, high costs and dependence on speculative bubbles. As noted here many times, revenues and income can quickly slide lower, but debt must be serviced regardless of revenues and income.

Once debt payments dominate expenses, any wobble in revenues / income / cash flow triggers default.

Regarding unbearably high costs that only go higher, year after year: as noted here many times, Sickcare Will Bankrupt the Nation all by itself , never mind soaring higher education / student loan debt serfdom, skyrocketing rents, junk fees, taxes, etc.

U.S. Lifestyle + "Healthcare" = Bankruptcy (June 19, 2008)

How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)

The truth is the cost of living is unaffordable but we can't even acknowledge this obvious fact because even acknowledging it would threaten the entire house of cards. So instead we play-act as if we believe the bogus "inflation is dead" narratives.

The top 5% technocrat/managerial class have done very well for themselves in the speculative run-up of destabilizing inequality, and since they run the narrative machines, we're swamped with happy stories about the economy, all of which boil down to this absurd fantasy: since I'm doing so well, everyone else must be doing well, too.

Since the top 5% own the lion's share of the nation's productive assets--stocks, bonds, business equity, investment real estate, etc.-- the enormous asset bubbles have greatly boosted their wealth and income. This has enabled the wealthy to service their debt or pay it off. The bottom 95% aren't quite so well-placed to survive a decline in income.

Everyone who was barely keeping their head above water in making their debt payments is already in default or will soon be in default. Since the banks and shadow-banking lenders have gorged on the profits skimmed by loaning huge sums to marginal borrowers, now that these marginal borrowers are defaulting en masse the banks and lenders are about to be crushed by one wave of catastrophic losses after another.

Student loans--already in mass default. Credit cards--the wave is rolling in as we speak. Auto loans--looking like Waimea Bay on a big day. Mortgages--better not to look.

Corporate debt has exploded to unprecedented levels, and this is what will break the financial system. Zombie corporations are rushing to borrow billions of dollars (thanks to the Federal Reserve) but increasing their debt is only doing more of what created their fragility in the first place .

Being able to borrow more to service your old debts is not solvency, it's merely the semblance of solvency. We're in the eye of the hurricane right now, as everyone holds their breath and hopes some sort of magic will make all the debt that has to be serviced every month vanish.

It's worth recalling that every dollar of debt is someone else's asset and the source of their income. So when the defaults and bankruptcies sweep through the financial system, they'll obliterate all the "wealth" of those holding bundled student and auto loan securities, mortgage backed securities, corporate bonds, and destroy the income streams these trillions in debt generated.

All the linked fragilities and dependencies of our economy are like lines of dominoes: one default topples the entire line of dominoes of debt, leverage, derivatives, counterparty risk, credit default swaps and most devastating of all, any certainty that borrowers won't default in the future.

If banks and lenders can't lend with a high degree of certainty, lending dries up and profits collapse, along with the consumer spending that was enabled by the borrowing.

Despite their high incomes and net worth, some consequential percentage of top 5% households bringing in $300,000 a year are one layoff away from default: never mind their pristine 830 credit score; that was last month. Next month,next quarter, next year--all bets are off.

Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting , monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable. The only question is "when," and that's been answered, though nobody wants to hear it: 2020 and beyond.

It didn't have to end this way. If our leadership / Power Elites had acted to reduce all these painfully obvious speculative extremes, dependencies and fragilities and made even modest efforts to limit the exploitation of predatory parasites that generated unprecedented inequality and corruption over the past 12 years, the economy would have been much less brittle / fragile.

Unfortunately, the pandemic chart I composed on February 2, 2020 is still playing out, increasing uncertainty.

What's the price of systemic fragility and uncertainty? I fear it will be steeper than we're prepared to pay.

* * *

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* * *

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[Jun 26, 2020] Wealthy Americans Flock To Turks Caicos During Pandemic

Real estate does not show a signs of collapse, line after2008 crisis.
Jun 26, 2020 | www.zerohedge.com
mad rush " of people leaving the San Francisco Bay Area for rural communities, for Marin County, Napa wine country, and south to Monterey's Carmel Valley.

Despite a plunge in existing home sales in May - Lawrence Yun, National Association of Realtors' chief economist, confirmed the outbound trend of migration from cities to suburbs :

"Relatively better performance of single-family homes in relation to multifamily condominium properties clearly suggests migration from the city centers to the suburbs," Yun said.

" After witnessing several consecutive years of urban revival, the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home ."

And second-home buyers surged...

Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in May, up from 10% in April 2020 and from 13% in May 2019. All-cash sales accounted for 17% of transactions in May, up from 15% in April 2020 and down from 19% in May 2019.

Readers now know that wealthy folks aren't just fleeing cities for rural communities - these folks are leaving the country for the Caribbean as America implodes from within.

[Jun 23, 2020] What America's Economic Troubles Mean for November's Presidential Election (And Trump) The National Interest

Notable quotes:
"... The fitness of U.S. employers was unsteady as well. The 2010s saw C-suites skeletonize their companies by spending profits on stock buybacks rather than CapEx, never mind setting funds aside for a rainy day. As a result, many firms–large and small–are long overdue for restructuring or liquidation, a Darwinian process that could hamper economic growth for years, possibly even a decade. ..."
Jun 23, 2020 | nationalinterest.org

Even to an inveterate bull-like Cramer, it is obvious that the post-coronavirus American economy is as brittle as Faberge eggs.

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Such economic fragility could mean that November's presidential election may not be the game-changer many assume it will be. What is becoming clearer by the day is that the virus is more of an accelerant than a prime mover, an added layer of malodorous excrement on a dung heap already piercing the nostrils. Long before social-distancing went into effect pension systems were teetering, rents and mortgages were unaffordable, real unemployment was higher than the Bureau of Labor Statistics reported, industrial production was anemic, and inflation dwarfed Consumer Price Index (food and energy is excluded). Worse, the most reliable consumers in the U.S. economy heretofore have been Baby Boomers, now the most susceptible demographic to the virus.

The fitness of U.S. employers was unsteady as well. The 2010s saw C-suites skeletonize their companies by spending profits on stock buybacks rather than CapEx, never mind setting funds aside for a rainy day. As a result, many firms–large and small–are long overdue for restructuring or liquidation, a Darwinian process that could hamper economic growth for years, possibly even a decade.

Against these headwinds, the next administration is facing monstrous storms ahead. Contrary to the soothsayers of "V" shaped recoveries, the prospects for a robust rebound are fading by the month. All this is to say that it might not matter who wins in November as much as previously thought. If Biden wins his chances at stimulating economic recovery, then soothing Washington's dysfunctional rancor, and speedily recalibrating U.S. trade vis-à-vis China et al in a deglobalizing world are slim to none. A seasoned Trump second term might fair better but whoever is elected president will experience far less freedom of maneuver as economic turbulence resets the policy agenda.

Trump's struggles might be encouraging to the soporific septuagenarian Joe Biden whose political fortunes appear ascendant, at least for the moment. As the Trump administration scrambles to suppress the coronavirus brush fire and more incendiary economic conflagrations spread democrats are foaming at the mouth. However, while the situation may oust a wobbly Trump the economic woes of the country are severe enough to bury the Democratic Party the way the Great Depression slaughtered the Republicans.

... ... ...

In a sense, elections are often lagging indicators that the unrealized ambitions of bungled administrations allow presidential winners to right the ship by riding the swing of public sentiment from trough to peak. For the next U.S. president, however, it may be a trough-to-trough tenure. Hundreds of billions in federal funds may have saved the economy in 2008 but this time around the economic crisis is far deeper and Washington's tools are far more limited despite Jerome Powell's optimism. Urologist Try This if You Have Enlarged Prostate (Watch) Newhealthylife How Dogs Cry For Help: 3 Warning Signs Your Dog Is Crying For Help Dr. Marty Toxic Enzyme Reveals Root Cause of Hair Loss and How to Fix It Today Revital Hair "They Almost Killed Me" Why Tommy Chong Doesn't Trust CBD Tommy Chong T

On these points, it seems to me that history does not rhyme as much as clarify. It appears as though U.S. politics is headed for a permutation, a fundamental restructuring that will change how Americans are governed every bit as much as it reshapes the economy. Thomas Kuhn's classic The Structure of Scientific Revolutions reminds us that "crisis often proliferates new discoveries," ones that often result in "paradigm destruction." Regardless of who is elected in November, it is very likely the next president is fated to defend a besieged paradigm, a twentieth-century government that lacks the policy tools, financial resources and transmission mechanisms required to solve twenty-first-century economic puzzles.

As the election fast approaches Treasury Secretary Steven Mnuchin and Chairman Jerome Powell–the dynamic duo of the wryly dubbed "Feasury"–are pulling out all the stops to mitigate economic fallout. Many sectors are begging for federal help as are municipalities who fear that recovery without federal money is doubtful. At their request, trillions more in relief are likely on their way. The question is: will there be any ammunition left for the next president, whoever he is, to govern effectively?

Cameron Macgregor is an entrepreneur, blogger and writer. He is the CEO of Ad Actum, a Global Free Speech Alliance.

[Jun 23, 2020] Meet BlackRock, the New Great Vampire Squid by Ellen Brown

Jun 23, 2020 | www.unz.com

Exchange traded funds are bought and sold like shares but operate as index-tracking funds, passively following specific indices such as the S&P 500, the benchmark index of America's largest corporations and the index in which most people invest. Today the fast-growing ETF sector controls nearly half of all investments in US stocks, and it is highly concentrated. The sector is dominated by just three giant American asset managers – BlackRock, Vanguard and State Street, the "Big Three" – with BlackRock the clear global leader. By 2017, the Big Three together had become the largest shareholder in almost 90% of S&P 500 firms, including Apple, Microsoft, ExxonMobil, General Electric and Coca-Cola. BlackRock also owns major interests in nearly every mega-bank and in major media.

In March 2020, based on its expertise with the Maiden Lane facilities and its sophisticated Aladdin risk-monitoring software, BlackRock got the job of dispensing Federal Reserve funds through eleven "special purpose vehicles" authorized under the CARES Act. Like the Maiden Lane facilities, these vehicles were designed to allow the Fed, which is legally limited to purchasing safe federally-guaranteed assets, to finance the purchase of riskier assets in the market.

Blackrock Bails Itself Out

The national lockdown left states, cities and local businesses in desperate need of federal government aid. But according to David Dayen in The American Prospect , as of May 30 (the Fed's last monthly report), the only purchases made under the Fed's new BlackRock-administered SPVs were ETFs, mainly owned by BlackRock itself. Between May 14 and May 20, about $1.58 billion in ETFs were bought through the Secondary Market Corporate Credit Facility (SMCCF), of which $746 million or about 47% came from BlackRock ETFs. The Fed continued to buy more ETFs after May 20, and investors piled in behind, resulting in huge inflows into BlackRock's corporate bond ETFs.

In fact, these ETFs needed a bailout; and BlackRock used its very favorable position with the government to get one. The complicated mechanisms and risks underlying ETFs are explained in an April 3 article by business law professor Ryan Clements, who begins his post:

Exchange-Traded Funds (ETFs) are at the heart of the COVID-19 financial crisis . Over forty percent of the trading volume during the mid-March selloff was in ETFs .

The ETFs were trading well below the value of their underlying bonds, which were dropping like a rock . Some ETFs were failing altogether. The problem was something critics had long warned of: while ETFs are very liquid, trading on demand like stocks, the assets that make up their portfolios are not. When the market drops and investors flee, the ETFs can have trouble coming up with the funds to settle up without trading at a deep discount; and that is what was happening in March.

According to a May 3 article in The National , "The sector was ultimately saved by the US Federal Reserve's pledge on March 23 to buy investment-grade credit and certain ETFs. This provided the liquidity needed to rescue bonds that had been floundering in a market with no buyers."

Prof. Clements states that if the Fed had not stepped in, "a 'doom loop' could have materialized where continued selling pressure in the ETF market exacerbated a fire-sale in the underlying [bonds], and again vice-versa, in a procyclical pile-on with devastating consequences." He observes:

There's an unsettling form of market alchemy that takes place when illiquid, over-the-counter bonds are transformed into instantly liquid ETFs. ETF "liquidity transformation" is now being supported by the government, just like liquidity transformation in mortgage backed securities and shadow banking was supported in 2008.

Working for Whom?

BlackRock got a bailout with no debate in Congress, no "penalty" interest rate of the sort imposed on states and cities borrowing in the Fed's Municipal Liquidity Facility, no complicated paperwork or waiting in line for scarce Small Business Administration loans, no strings attached. It just quietly bailed itself out.

It might be argued that this bailout was good and necessary, since the market was saved from a disastrous "doom loop," and so were the pension funds and the savings of millions of investors. Although BlackRock has a controlling interest in all the major corporations in the S&P 500, it professes not to "own" the funds. It just acts as a kind of "custodian" for its investors -- or so it claims. But BlackRock and the other Big 3 ETFs vote the corporations' shares; so from the point of view of management, they are the owners. And as observed in a 2017 article from the University of Amsterdam titled " These Three Firms Own Corporate America ," they vote 90% of the time in favor of management. That means they tend to vote against shareholder initiatives, against labor, and against the public interest. BlackRock is not actually working for us, although we the American people have now become its largest client base.

In a 2018 review titled " Blackrock – The Company That Owns the World ", a multinational research group called Investigate Europe concluded that BlackRock "undermines competition through owning shares in competing companies, blurs boundaries between private capital and government affairs by working closely with regulators, and advocates for privatization of pension schemes in order to channel savings capital into its own funds."

Daniela Gabor, Professor of Macroeconomics at the University of Western England in Bristol, concluded after following a number of regulatory debates in Brussels that it was no longer the banks that wielded the financial power; it was the asset managers. She said :

We are often told that a manager is there to invest our money for our old age. But it's much more than that. In my opinion, BlackRock reflects the renunciation of the welfare state. Its rise in power goes hand-in-hand with ongoing structural changes; in finance, but also in the nature of the social contract that unites the citizen and the state.

That these structural changes are planned and deliberate is evident in BlackRock's August 2019 white paper laying out an economic reset that has now been implemented with BlackRock at the helm.

Public policy is made today in ways that favor the stock market, which is considered the barometer of the economy, although it has little to do with the strength of the real, productive economy. Giant pension and other investment funds largely control the stock market, and the asset managers control the funds. That effectively puts BlackRock, the largest and most influential asset manager, in the driver's seat in controlling the economy.

As Peter Ewart notes in a May 14 article on BlackRock titled "Foxes in the Henhouse," today the economic system "is not classical capitalism but rather state monopoly capitalism, where giant enterprises are regularly backstopped with public funds and the boundaries between the state and the financial oligarchy are virtually non-existent."

If the corporate oligarchs are too big and strategically important to be broken up under the antitrust laws, rather than bailing them out they should be nationalized and put directly into the service of the public. At the very least, BlackRock should be regulated as a too-big-to-fail Systemically Important Financial Institution. Better yet would be to regulate it as a public utility. No private, unelected entity should have the power over the economy that BlackRock has, without a legally enforceable fiduciary duty to wield it in the public interest.

Ellen Brown is an attorney, chair of the Public Banking Institute , and author of thirteen books including Web of Debt , The Public Bank Solution , and Banking on the People: Democratizing Money in the Digital Age . She also co-hosts a radio program on PRN.FM called " It's Our Money ." Her 300+ blog articles are posted at EllenBrown.com .


Ad70titusrevenge , says: Show Comment June 22, 2020 at 12:46 am GMT

Wonder who runs BlackRock?
Mustapha Mond , says: Show Comment June 22, 2020 at 4:00 am GMT
To paraphrase a famous line from The Who's, "Won't Get Fooled Again":

Meet the new Squid, same as the old Squid

Ultrafart the Brave , says: Website Show Comment June 22, 2020 at 4:26 am GMT
@jadan

The rich do not understand the concept of "public interest" or "public utility".

Of course they do. They just don't care for it.

Pft , says: Show Comment
Nepemnr , says: Website Show Comment June 22, 2020 at 6:47 am GMT
Those for whom the American economy is a cash cow & a play thing would quite simply never allow nationalization.
Desert Fox , says: Show Comment June 22, 2020 at 1:43 pm GMT
The covid-19 scam was created to bailout wallstreet
Brian O'Brien , says: Website Show Comment June 22, 2020 at 2:16 pm GMT
@jadan I believe Ellen Brown has long called for nationalization of the Fed.

She has been a tireless advocate for state banks and for public control of the money supply, and a leading critic of the private control of the issuance of money through debt.

The Federal Reserve Act was created in conspiracy and its passage was a great crime against the American people.

"You gotta hand it to the conspiracy theorists, because, in fact, there was a conspiracy," Roger Lowenstein told Ky Ryssdall during an interview on NPR about Lowenstein's book "America's Bank."

The men who wrote the Federal Reserve Act even wore disguises and snuck off in the night to a Victorian mansion on the ominously named Jekyll Island where they did their dirty work:

http://thetyrannyofthefederalreserve.blogspot.com/2015/11/lowenstein-and-ghost-of-andrew-jackson.html

Mike321 , says: Show Comment June 22, 2020 at 3:39 pm GMT
@Anonymous Read "Web of Debt" by Helen Brown. I may be a dumb Alabama hic, but I think she went after the Fed in that book .Just sayin'.

[Jun 22, 2020] The neoliberal MSM has found a shiny new object called "Juneteenth" but the catastrophe for 30 million unemployed workers is steady getting worse.

Jun 22, 2020 | www.moonofalabama.org

Trailer Trash , Jun 20 2020 3:13 utc | 87

> Americans have trouble deciding what's fake and what's not
> until reality personally bites them on the ass.
> Posted by: jadan | Jun 20 2020 2:00 utc | 79

They know the economic devastation is real. There are 50,000 unpaid unemployment claims -- just in Kentucky. The establishment press has found a shiny new object called "Juneteenth" but the catastrophe for 30 million unemployed workers is steady getting worse.

For the county I live in, out of 72,000 people, ten got sick and one died, for the past six months. Meanwhile, about 350 people die every six months from all causes (about 1%). So no one here knows anyone sick or dead from the virus, but the crisis, including getting food, is everywhere.

[Jun 21, 2020] A Tidal Wave of Bankruptcies Is Coming

Jun 21, 2020 | www.nakedcapitalism.com

BRADLEY L MAYER , , June 18, 2020 at 6:49 pm

Today's NYT backs up Yves virtually verbatim:

A Tidal Wave of Bankruptcies Is Coming

By Mary Williams Walsh

https://www.nytimes.com/2020/06/18/business/corporate-bankruptcy-coronavirus.html

Almost any passage is quotable, but this caught my eye:

"Expect "a Covid-19 cliff" in the next 30 to 60 days, he said."

It's only a question now of reorg or liquidation bankruptcy.

[Jun 21, 2020] Ivy league universities and low cost state colleges will be OK, while private colleges in the middle are screwed

Notable quotes:
"... State universities have a much larger enrollment (the California State system has 23 campuses with an average of 22K students each) and the elites have featherbedded the Ivies, so both will survive, even if the former have some belt-tightening. ..."
Jun 21, 2020 | www.nakedcapitalism.com

grhabyt , , June 18, 2020 at 7:35 pm

Professor/Administrator in California State University here. I'm on the campus team trying to respond and thus reading everything current in Higher Ed on this. The conclusion is that high end and low end will be OK, but private colleges in the middle are screwed.
Students go to college for four reasons:

a) signalling;
b) networking;
c) skills acquisition; and
d) parties

With instruction online, b) and d) disappear. The elite universities can coast because of a) and endowments, the lower cost state universities like mine are seeing enrollment *increase* because, in a recession, many students on the line about attending college choose c) over unemployment. And as our tuition is only $7K ($12K for out-of-state/international), plenty of the cash-strapped middle class will dial down to us.

But expensive, tuition-driven (eg little endowment) private colleges are going to be hit very hard if they can't offer the whole traditional in-person experience. Most of these have announced that they will be meeting in-person, but the unspoken assumption is that they are lying to their prospective students, and will pull the football away at the last minute.

The media will dwell on "the death of higher education" at length, because these were the colleges that many of them went to.

But the reality is that their share of the pie is relatively small. State universities have a much larger enrollment (the California State system has 23 campuses with an average of 22K students each) and the elites have featherbedded the Ivies, so both will survive, even if the former have some belt-tightening.

Democrita , , June 19, 2020 at 7:16 am

To label 'd' partying is unfair. D is being with their peers, building their first independent relationships, falling in love.

Mine will be a soph in UC system, and is processing the announcement from the school yesterday that only some students will have classes, the rest will be online. They all read that to mean STEM majors will get the in person experience.

He and his friends are all deciding whether they will bother or take a term or two off -- because zoom school sucks. Or, as he put it, "why would we pay $20,000 for me to rent an apartment in Santa Cruz and attend Phoenix University?" Universities may find students not willing to waste resources on distance learning. Especially if there's no job at the end of the rainbow.

BUT if he skips a term, what to do in that time? Jobs hard to come by and risky.

I feel for the kids. Unlike that family blogger Joe Biden.

Re small biz and recovery: my employer got some PPP money, although the impact has not hit our magazine in a big way. Yet.

But we, like other business-niche publishers, made a good bit of money from conferences and such live events. Partly, it's direct earnings, but there are other ways live events fueled our biz. I believe Institutional Investor had basically ditched publishing for the conference business. We hadnt gone that far (we weren't that good at it).

Also, the boss is drooling over the idea that he can ditch the monthly rent for our manhattan offices. Our ship is so tight that I do not worry about getting laid off, only that the entire enterprise could go under. So far that's not happening, but past performance etc.

Yves Smith Post author , , June 19, 2020 at 1:04 am

I'm not as certain as you are that big name unis will not suffer too. I think this is them believing their own PR.

Harvard is already trying to get employees to take early retirement. And in a long interview, Larry Summers went on in a long Business Insider interview about how universities (clearly including Harvard) should close down entire operations that were losing money. He advocated that Harvard should largely abandon live instruction and instead should become a MOOC, since it could easily get 20 million students.

[Jun 20, 2020] Angry Bear " Weekly Indicators for June 15 19 at Seeking Alpha

Jun 20, 2020 | angrybearblog.com

Comments (1)

  1. likbez , June 20, 2020 10:42 pm

    With this "improvement" we hopefully might see the collapse of some of the most reckless hedge funds the next year, or earlier. Adding to them a couple of private equity sharks would be an icing on the cake, but this scum tends to be pretty resilient. They are masters of offloading losses on public.

    Disconnect between the stock market casino and the status of the USA manufacturing is real and it can't last forever. The FIRE sector which dominates the USA GDP is parasitic in nature, and parasite usually weakens the host to the point of collapse.

    Moreover, Covid19 serves as a powerful catalyst for further degrading the neoliberal globalization even in areas that are not connected with the role of China.

    As Herbert Stein put it on a different subject, but which now is fully applicable to the neoliberal globalization:

    If something cannot go on forever, it will stop.

    Per table 1 in https://fas.org/sgp/crs/misc/R45090.pdf , real wages for USA men at the 50% percentile level are down -5.1% over the 1979 to 2018 time frame. Now we can probably talk about over 10%.

    That's another sign that the USA financial casino might eventually go the way of Trump's Taj Mahal.

    And many middle class lemmings who are completely indoctrinated into neoliberalism and connected with it deification of markets might be mercilessly fleeced. Especially those who recklessly play with the stock market having zero understanding of the economics, and relying on some crazy "chartist" recommendations :-)

    Or who stupidly preserved overweighed stocks allocation in the 401K plans after retirement. That might includes some "Vanguard loving" folk, who posts here.

[Jun 20, 2020] Colleges will have a lot of trouble this fall

Another issue with all types of education is that lots of students, especially foreign students, depend very heavily on restarats temp jobs and casual hospitality work.
Jun 20, 2020 | www.nakedcapitalism.com

4. Colleges will have a lot of trouble this fall . First, they are losing nearly all their full-freight-paying Chinese students, between concern over US Covid-19 risks, Administration hostility, and travel restrictions. That alone is a big blow.

On top of that, some are planning to reopen but MIT's announcement yesterday, that it will not allow all students to return to campus, probably represents a new normal. Well-placed MIT alumni read the university's decision as driven significantly by a desire to protect faculty and staff; I hear from sources with contacts at other universities that administrators that they see no way to put kids in dorms without running unacceptably high Covid risks.

Remember, even though kids almost never die of Covid-19, but there is a risk of serious damage. 1/2 the asymptomatic cases on the Diamond Princess now show abnormal lungs. And remember those cruises have half the people on board as crew, and the crew skews young. College is a lot less appealing if you don't stay in a dorm.

Just as diminished activity in central business districts has negative knock-on effects to nearby business, so to do hollowed-out colleges and universities have for their communities, as described in more depth in a recent Bloomberg story .

Krystyn Podgajski , June 18, 2020 at 7:52 am

The coming college semester is a big question mark. The influx of students is entangled with real estate, shopping and the biggest in my town, restaurants and bars. Not to mention the college sports season which supported so many AirBnB's here.

They are starting the year early here (UNC Chapel Hill) and ending it early as well, on Thanksgiving! And up to 1000 new students will be learning from home instead of coming to campus.

Vastydeep , June 18, 2020 at 11:30 am

Big question mark -- MIT's president Reif yesterday noted that

"At least for the fall, we can only bring some of our undergraduates back to campus." and "Everything that can be taught effectively online will be taught online."

Courses are comparatively easy, but labs, research, and sports look doubtful if/when case counts start marching up again.

[Jun 19, 2020] "What's being protected? The social order that feeds the wealthy at the expense of the working poor. "

Highly recommended!
Notable quotes:
"... Racism, especially directed toward blacks, along with “identity wedge,” is a perfect tool for disarming poor white, and suppressing their struggle for a better standard of living, which considerably dropped under neoliberalism. ..."
"... In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals manage to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress the protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network. ..."
"... This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, “Floydgate” can be viewed as a variation on the same theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and social protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence against blacks. ..."
"... without a contract at all ..."
Jun 19, 2020 | www.nakedcapitalism.com

flora, June 19, 2020 at 1:36 am

Thanks for this post.

"What's being protected? The social order that feeds the wealthy at the expense of the working poor. " -- Neuberger

In the aftermath of these movements, the police increasingly presented themselves as a thin blue line protecting civilization, by which they meant bourgeois civilization, from the disorder of the working class. -- Mitrani

I think this ties in, if only indirectly, with the way so many peaceful recent protests seemed to turn violent after the police showed up. It's possible I suppose the police want to create disorder to frighten not only the protestors with immediate harm but also frighten the bourgeois about the threate of a "dangerous mob". Historically violent protests created a political backlash that usually benefited political conservatives and the wealthy owners. (The current protests may be different in this regard. The violence seems to have

John Anthony La Pietra, June 19, 2020 at 2:20 am

Sorry, but the title sent my mind back to the days of old -- of old Daley, that is, and his immortal quote from 1968: "Gentlemen, let's get the thing straight, once and for all. The policeman isn't there to create disorder; the policeman is there to preserve disorder."

Adam1, June 19, 2020 at 7:39 am

LOL!!! great quote. Talk about saying it the way it is.

It kind of goes along with, "Police violence is focused overwhelmingly on men lowest on the socio-economic ladder: in rural areas outside the South, predominately white men; in the Southwest, disproportionately Hispanic men; in mid-size and major cities, disproportionately black men. Significantly, in the rural South, where the population is racially mixed, white men and black men are killed by police at nearly identical rates."

I bang my head on the table sometimes because poor white men and poor men of color are so often placed at odds when they increasingly face (mostly) the same problems. God forbid someone tried to unite them, there might really be some pearl clutching then.

run75441, June 19, 2020 at 8:23 am

Great response! I am sure you have more to add to this. A while back, I was researching the issues you state in your last paragraph. Was about ten pages into it and had to stop as I was drawn out of state and country. From my research.

While not as overt in the 20th century, the distinction of black slave versus poor white man has kept the class system alive and well in the US in the development of a discriminatory informal caste system. This distraction of a class level lower than the poorest of the white has kept them from concentrating on the disproportionate, and growing, distribution of wealth and income in the US. For the lower class, an allowed luxury, a place in the hierarchy and a sure form of self esteem insurance.

Sennett and Cobb (1972) observed that class distinction sets up a contest between upper and lower class with the lower social class always losing and promulgating a perception amongst themselves the educated and upper classes are in a position to judge and draw a conclusion of them being less than equal. The hidden injury is in the regard to the person perceiving himself as a piece of the woodwork or seen as a function such as "George the Porter." It was not the status or material wealth causing the harsh feelings; but, the feeling of being treated less than equal, having little status, and the resulting shame. The answer for many was violence.

James Gilligan wrote "Violence; Reflections on A National Epidemic." He worked as a prison psychiatrist and talked with many of the inmates of the issues of inequality and feeling less than those around them. His finding are in his book which is not a long read and adds to the discussion.

A little John Adams for you.

" The poor man's conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind takes no notice of him. He rambles unheeded.

In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar.

He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable ."

likbez , June 19, 2020 at 3:18 pm

That’s a very important observation.

Racism, especially directed toward blacks, along with “identity wedge,” is a perfect tool for disarming poor white, and suppressing their struggle for a better standard of living, which considerably dropped under neoliberalism.

In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals manage to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress the protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network.

This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, “Floydgate” can be viewed as a variation on the same theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and social protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence against blacks.

This is another way to explain “What’s the matter with Kansas” effect.

Carla , June 19, 2020 at 12:39 pm

MLK Jr. tried, and look what happened to him once he really got some traction. If the Rev. William Barber’s Poor People’s Campaign picks up steam, I’m afraid the same thing will happen to him.

I wish it were only pearl-clutching that the money power would resort to, but that’s not the way it works.

km , June 19, 2020 at 11:56 am

In most countries, the police are there solely to protect the Haves from the Have-Nots. In fact, when the average frustrated citizen has trouble, the last people he would consider turning to are the police.

This is why in the Third World, the only job of lower social standing than “policeman” is “police informer”.

cripes , June 19, 2020 at 3:35 am

The anti-rascist identity of the recent protests rests on a much larger base of class warfare waged over the past 40 years against the entire population led by a determined oligarchy and enforced by their political, media and militarized police retainers. This same oligarchy, with a despicable zeal and revolting media-orchestrated campaign–co-branding the movement with it’s usual corporate perpetrators– distorts escalating carceral and economic violence solely through a lens of racial conflict and their time-tested toothless reforms. A few unlucky “peace officers” may have to TOFTT until the furor recedes, can’t be helped.

Crowding out debt relief, single payer health, living wages, affordable housing and actual justice reform from the debate that would benefit African Americans more than any other demographic is the goal.

The handful of Emperors far prefer kabuki theater and random ritual Seppuku than facing the rage of millions of staring down the barrel of zero income, debt, bankruptcy, evictions and dispossession. The Praetorians will follow the money as always.

I suppose we’ll get some boulevards re-named and a paid Juneteenth holiday to compensate for the destruction 100+ years of labor rights struggle, so there’s that..

Boatwright , June 19, 2020 at 7:51 am

Homestead, Ludlow, Haymarket, Matewan — the list is long……

Working men and women asking for justice gunned down by the cops. There will always be men ready to murder on command as long as the orders come from the rich and powerful. We are at a moment in history folks were some of us, today mostly people of color, are willing to put their lives on the line. It’s an ongoing struggle.

MichaelSF , June 19, 2020 at 12:18 pm

Jay Gould, a U.S. robber baron, is supposed to have claimed that he could hire one half of the working class to kill the other half.

https://en.wikipedia.org/wiki/Jay_Gould

rob , June 19, 2020 at 7:58 am

So how can a tier of society(the police)…. be what a society needs…?
When as this story and many others show how and why the police were formed…. to break heads.
When they have been “the tool” of the elite…forever.
when so many of them are such dishonest,immoral ,wanna be fascists.
and the main direction of the US is towards a police state and fascists running the show…. both republican and democrat. With technology being the boot on the neck of the people… and the police are there to take it to the streets.
Can those elusive “good apples” turn the whole rotten barrel into sweet smelling apple pie? That is a big ask.
Or should the structure be liquidated, sell their army toys. fill the ranks with people who are not pathological liars and abusers and /or racists; of one sort or another. Get rid of the mentality of overcompensation by uber machismo. and make them watch the andy griffith show. They ought to learn that they can be respected if they are good people, and that they are not respected because they seek respect through fear and intimidation.
Is that idiot cry of theirs, .. the whole yelling at you; demanding absolute obedience to arbitrary ,assinine orders, really working to get them respect… or is it just something they get off on?
When the police are shown to be bad, they strike by work slowdown, or letting a little chaos loose themselves. So the people know they need them… So any reform of the police will go through the police not doing their jobs…. but then something like better communities may result. less people being busted and harassed , or pulled over for the sake of a quota…. may just show we don’t need so much policing anyway. And then if the new social workers brigade starts intervening in peoples with issues when they are young and in school … maybe fewer will be in the system. Couple that with the police not throwing their family in jail for nothing, and forcing them to pay fines for breaking stupid laws. The system will have less of a load, and the new , better cops without attitudes will be able to handle their communities in a way that works for everyone. Making them a net positive, as opposed to now where they are a net negative.
Also,

The drug war is over.
The cops have only done the bidding of the organized criminal elements who make their bread and butter because of prohibition.
our representatives can legally smoke pot , and grow it in their windowboxes in the capital dc., but people in many places are still living in fear of police using possession of some substance,as a pretext to take all their stuff,throw them in jail.
but besides the cops, there are the prosecutors…. they earn their salaries by stealing it from poor people through fines for things that ought to be legal. This is one way to drain money from poor communities, causing people to go steal from others in society to pay their court costs.
and who is gonna come and bust down your door… when you can’t pay a fine and choose to pay rent and buy your kids food instead…. the cops. just doing their jobs..
Evil is the banality of business as usual

Tom Stone , June 19, 2020 at 8:20 am

The late Kevin R C O’Brien noted that in every case where the Police had been ordered to “Round up the usual suspects” they have done so, and delivered them where ordered.
It did not matter who the “Usual suspects” were, or to what fate they were to be delivered.
They are the King’s men and they do the King’s bidding.

The Rev Kev , June 19, 2020 at 10:10 am

To have a reasonable discussion, I think that it should be recognized that modern police are but one leg of a triad. The first of course is the police who appear to seem themselves as not part of a community but as enforcers in that community. To swipe an idea from Mao, the police should move amongst the people as a fish swims in the sea. Not be a patrolling shark that attacks who they want at will knowing that there will be no repercussions against them. When you get to the point that you have police arresting children in school for infractions of school discipline – giving them a police record – you know that things have gotten out of hand.

The next leg is the courts which of course includes prosecutors. It is my understanding that prosecutors are elected to office in the US and so have incentives to appear to be tough on crime”” . They seem to operate more like ‘Let’s Make a Deal’ from what I have read. When they tell some kid that he has a choice of 1,000 years in prison on trumped up charges or pleads guilty to a smaller offence, you know that that is not justice at work. Judges too operate in their own world and will always take the word of a policeman as a witness.

And the third leg is the prisons which operate as sweatshops for corporate America. It is in the interest of the police and the courts to fill up the prisons to overflowing. Anybody remember the Pennsylvania “kids for cash” scandal where kids lives were being ruined with criminal records that were bogus so that some people could make a profit? And what sort of prison system is it where a private contractor can build a prison without a contract at all , knowing that the government (California in this case) will nonetheless fill it up for a good profit.

In short, in sorting out police doctrine and methods like is happening now, it should be recognized that they are actually only the face of a set of problems.

MLTPB , June 19, 2020 at 11:00 am

How did ancient states police?

Perhaps Wiki is a starting point of this journey…

Per Its entry, Police, in ancient Greece, policing was done by public owned slaves.

In Rome, the army, initially.

In China, prefects…leading to a level of government called prefectures .

Pookah Harvey , June 19, 2020 at 10:54 am

I spent some time in the Silver Valley of northern Idaho. This area was the hot bed of labor unrest during the 1890’s. Federal troops controlled the area 3 separate times,1892, 1894 and 1899. Twice miners hijacked trains loaded them with dynamite and drove them to mining company stamping mills that they then blew up. Dozens of deaths in shoot outs. The entire male population was herded up and placed in concentration camps for weeks. The end result was the assassination of the Governor in 1905.
Interestingly this history has been completely expunged. There is a mining museum in the town which doesn’t mention a word on these events. Even nationwide there seems to be a complete erasure of what real labor unrest can look like..

rob , June 19, 2020 at 11:58 am

Yeah, labor unrest does get swept under the rug.
Howard zinn had examples in his works “the peoples history of the United States”
The pictched battles in upstate new york with the Van Rennselear’s in the 1840’s breaking up rennselearwyk…. the million acre estate of theirs . it was a rent strike.
people remembering , we have been here before doesn’t help the case of the establishment… so they try to not let it happen.
We get experts telling us…. well, this is all new… we need experts… to tell you… what to think.
It is like watching the footage from the past 100 years on film of blacks marching for their rights… and being told.. reform is coming.. the more things change, the more things stay the same. decade after decade.century after century…
time to start figuring this out people.
so, the enemy is us….
now what?

Carolinian , June 19, 2020 at 11:01 am

Doubtless the facts presented above are correct, but shouldn’t one point out that the 21st century is quite different from the 19th and therefore analogizing the current situation to what went on before is quite facile? For example it’s no longer necessary for the police to put down strikes because strike actions barely still exist. In our current US the working class has diminished greatly while the middle class has expanded. We are a much richer country overall with a lot more people–not just those one percenters–concerned about crime. Whatever one thinks of the police, politically an attempt to go back to the 18th century isn’t going to fly.

MLTPB , June 19, 2020 at 11:15 am

Perhaps we are more likely to argue among ourselves, when genetic fallacy is possibly in play.

Pookah Harvey , June 19, 2020 at 11:37 am

” the 21st century is quite different from the 19th ”
From the Guardian

“How Starbucks, Target, Google and Microsoft quietly fund police through private donations”

More than 25 large corporations in the past three years have contributed funding to private police foundations, new report says.

These foundations receive millions of dollars a year from private and corporate donors, according to the report, and are able to use the funds to purchase equipment and weapons with little public input. The analysis notes, for example, how the Los Angeles police department in 2007 used foundation funding to purchase surveillance software from controversial technology firm Palantir. Buying the technology with private foundation funding rather than its public budget allowed the department to bypass requirements to hold public meetings and gain approval from the city council.

The Houston police foundation has purchased for the local police department a variety of equipment, including Swat equipment, sound equipment and dogs for the K-9 unit, according to the report. The Philadelphia police foundation purchased for its police force long guns, drones and ballistic helmets, and the Atlanta police foundation helped fund a major surveillance network of over 12,000 cameras.

In addition to weaponry, foundation funding can also go toward specialized training and support programs that complement the department’s policing strategies, according to one police foundation.

“Not a lot of people are aware of this public-private partnership where corporations and wealthy donors are able to siphon money into police forces with little to no oversight,” said Gin Armstrong, a senior research analyst at LittleSis.

Maybe it is just me, but things don’t seem to be all that different.

Bob , June 19, 2020 at 11:40 am

If we made America Great Again we could go back to the 18th century.

rob , June 19, 2020 at 12:11 pm

While it is true, this is a new century.
knowing how the present came to be, is entirely necessary to be able to attempt any move forward.
The likelihood of making the same old mistakes is almost certain, if one doesn’t try to use the past as a reference.
And considering the effect of propaganda and revisionism in the formation of peoples opinions, we do need ” learning against learning” to borrow a Jesuit strategy against the reformation, but this time it should embrace reality, rather than sow falsehoods.
But I do agree,
We have never been here before, and now is a great time to reset everything. With all due respect to “getting it right” or at least “better”.
and knowing the false fables of righteousness, is what people need to know, before they go about “burning down the house”.

Carolinian , June 19, 2020 at 12:42 pm

You know it’s not as though white people aren’t also afraid of the police. Alfred Hitchcock said he was deathly afraid of police and that paranoia informed many of his movies. Woody Allen has a funny scene in Annie Hall where he is pulled over by a cop and is comically flustered. White people also get shot and killed by the police as the rightwingers are constantly pointing out.

And thousands of people in the streets tell us that police reform is necessary. But the country is not going to get rid of them and replace police with social workers so why even talk about it? I’d say the above is interesting….not terribly relevant.

Mattski , June 19, 2020 at 11:37 am

Straight-up fact: The police weren’t created to preserve and protect. They were created to maintain order, over certain subjected classes and races of people, including–for many white people, too–many of our ancestors, too.*

And the question that arises from this: Are we willing to the subjects in a police state? Are we willing to continue to let our Black and brown brothers and sisters be subjected BY such a police state, and to half-wittingly be party TO it?

Or do we want to exercise AGENCY over “our” government(s), and decide–anew–how we go out our vast, vast array of social ills.

Obviously, armed police officers with an average of six months training–almost all from the white underclass–are a pretty f*cking blunt instrument to bring to bear.

On our own heads. On those who we and history have consigned to second-class citizenship.
Warning: this is a revolutionary situation. We should embrace it.

*Acceding to white supremacy, becoming “white” and often joining that police order, if you were poor, was the road out of such subjectivity. My grandfather’s father, for example, was said to have fled a failed revolution in Bohemia to come here. Look back through history, you will find plenty of reason to feel solidarity, too. Race alone cannot divide us if we are intent on the lessons of that history.

Susan the other , June 19, 2020 at 1:16 pm

It’s a good argument for keeping business small and evenly distributed. Promote the distribution of small enterprises all around the countryside and it’ll be a preventative against mergers and monopolies and giant corporations. Legislate for small business everywhere. When mega corporations turn into godzilla they are no longer efficient. They just tweak the statistics to imply that they are making such a profit that that means they are efficient. Maybe their robots are. Maybe their security forces are. But rapacious capitalism is almost comical, if not pathetic, when there is nothing left to rape. Which is where we now find ourselves. They’ve been allowed to evolve into private monopolies and have sucked the life out of the rest of the economy because they provide no employment, no training, no health care, no responsible maintenance for themselves; they set up tax havens, etc. And they produce way too much crap. We need far less consumption to save the planet. If we need monopolies to create equal distribution let them be state-owned monopolies. States do a good job. I’m thinking here of the State owned liquor stores in Utah. Even tho’ it’d be nice to buy wine in the grocery store, the state does a good job of supplying booze at a good price. (They are in the process now of setting up marijuana stores. Yes, Utah.) And they hire lotsa people. And they generate a nice tax revenue. I think medical care should be the same way – but on a national scale. This way we don’t need to bludgeon the poor. Until we can turn things around, we need to give the poor a state owned and controlled place to live – commonly thought of as a house. We’re gonna need to do food stamps too. If we must put up with private enterprise at the expense of public welfare, just so that we keep a certain optimism toward “free enterprise” and keep it nurtured because: sometimes a great notion, then let’s restrict it from becoming a plague. But let’s not kill capitalism just because it almost killed society. Let’s remake it. As it is now it’s just dragging itself around like a cave troll. It is no longer fit for purpose.

K teh , June 19, 2020 at 2:48 pm

Protect and serve MMT to the 10%. And no, the answer can not be give MMT to everyone and complain about automation replacing the population. Also, slavery is not a white issue; it’s a control issue, going back to Africa, which is once again being pumped with debt.

Looking at how the term redneck was twisted to serve it’s current function is revealing. Fear, insecurity, control. Educate your own.

[Jun 15, 2020] Ending Emergency Unemployment Insurance Supplements

Jun 15, 2020 | angrybearblog.com
  1. anne , June 14, 2020 4:47 pm

    https://cepr.net/ending-emergency-unemployment-insurance-supplements/

    June 10, 2020

    Ending Emergency Unemployment Insurance Supplements
    By DEAN BAKER

    The Republicans have been working hard to ensure that the $600 weekly supplement to unemployment insurance benefits, which was put in place as part of the pandemic rescue package, is not extended beyond the current July 31 cutoff. They argue that we need people to return to work.

    They do have a point. The supplement is equivalent to pay of $15 an hour for someone working a 40-hour week, and this is in addition to a regular benefit that is typically equal to 40 to 50 percent of workers' pay. The supplement translates into an even larger hourly pay rate for workers putting in shorter workweeks, which was the case for most laid off workers in the restaurant and retail sectors.

    It is hard for employers in traditionally low paying sectors to match these pay rates. Even those of us who are big proponents of higher minimum wages would not advocate a jump to more than $20 an hour at a point when businesses are crippled by the pandemic.

    However, there is also the point that we don't want workers to have to expose themselves to the coronavirus. That was the reason for the generous supplement. We wanted to make sure that workers, who in many cases were legally prevented from working, did not suffer as a result.

    There is an obvious solution here. Suppose we reduce or end the supplement in areas where the pandemic is under control.

    This would not be determined by some Trumpian declaration that the pandemic is over, but by solid data. The obvious metric would be positive test rates. Suppose that the supplement was reduced or eliminated in states or counties where the positive test rate is less than 5 percent. (This may not be the right rate.) This would mean that workers going back to work would face relatively little risk of contracting the virus. It would also give states incentive to conduct vigorous testing programs, as well as other control measures, in order to get their positive rates down.

    Our unemployment insurance system is badly broken and it would be desirable to have more generous benefits, and also to focus more on work sharing, as other countries have done. We can recognize this point and still agree that an arbitrary supplement to all benefits is not the right long-term fix even if it was very good policy in the pandemic.

[Jun 14, 2020] Podcast- Pandemic Profiteering - How Billionaires Are Looting American Taxpayers by Mnar Muhawesh Mnar Muhawesh

Notable quotes:
"... MintPress News ..."
"... This program is 100 percent listener supported! You can join the hundreds of financial sponsors who make this show possible by becoming a member on our Patreon page . ..."
Jun 09, 2020 | www.mintpressnews.com

In this episode, we are joined by MintPress News senior staff writer, Alan MacLeod . MacLeod covers everything from socioeconomic inequality, the oligarch class in Western nations, U.S. foreign policy in the Global South, and press freedom. He is also the author of " Bad News From Venezuela: Twenty Years of Fake News and Misreporting and Propaganda in the Information Age: Still Manufacturing Consent. "

https://www.buzzsprout.com/284746/4086824-podcast-pandemic-profiteering-how-billionaires-are-looting-american-taxpayers

Since April, he has uncovered how COVID-19 came to be a boon for the ultra-wealthy , reporting that America's billionaires, including Jeff Bezos, Bill Gates, Warren Buffet, Michael Bloomberg and others, accrued more wealth in the first three weeks of the lockdown than they made in total prior to 1980. Billionaire wealth surged by $484 billion in just three months, while a record 40 million Americans filed for unemployment.

This economic phenomenon, the largest radical transfer of wealth out of the hands of taxpayers and into the hands of billionaires, was the largest taxpayer bailout of the wealthy in American history.

As MacLeod reported,

In the last 30 years, U.S. billionaire wealth soared by over 1100 percent while median household wealth increased by barely five percent. In 1990, the total wealth held by America's billionaire class was $240 billion; today that number stands at $2.95 trillion. Thus, America's billionaires accrued more wealth in just the past three weeks than they made in total prior to 1980."

While the pandemic and subsequent lockdown turned the world upside down for working-class people, forcing upon them school closures, long lines at the grocery store, empty shelves, panic buying, record unemployment, and miles-long bread lines, little media attention was given to the Billionaires buying islands and land where they could enjoy life in first-class bunkers built to withstand a nuclear war.

If anything, the coronavirus has lifted the veil to expose the growing inequality in the United States, an unfortunate reality in the world's richest country.

Macleod leaves us with a salient statistic, explaining that while Amazon owner Jeff Bezos makes $1 million every three minutes, "Amazon staff, directly employed by Bezos, also risk their lives for measly pay. One-third of all Amazon workers in Arizona, for example, are enrolled in the food stamps program, their wages so low that they cannot afford to pay for food."

Alan MacLeod joins MintCast to explain all of this and how the coming economic crash that is expected to contract the economy by 40 percent will only advance the interests of America's ultra-wealthy and increase their wealth even further.

America already faces a reality in which less than one thousand billionaires influence policies that ensure more tax obligations for the working class to the benefit of ultra-wealthy oligarchs. Corporate media ensures this reality by presenting billionaires in a positive light, often as philanthropists who run charitable organizations. Yet, in reality, they are little more than big fish eating off of the hard work of the working class.

This program is 100 percent listener supported! You can join the hundreds of financial sponsors who make this show possible by becoming a member on our Patreon page .

Subscribe to this podcast on iTunes , Spotify and SoundCloud . Please leave us a review and share this segmen t.

Mnar Muhawesh is founder, CEO and editor in chief of MintPress News, and is also a regular speaker on responsible journalism, sexism, neoconservativism within the media and journalism start-ups.

MintPress News is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 International License.

[Jun 13, 2020] CDC Reiterates Mask Recommendations as Virus Continues to Spread - Bloomberg

Admitting their own blunder: Better late then never
Jun 13, 2020 | www.bloomberg.com

Masks "are strongly encouraged in settings where individuals might raise their voice," the CDC guidance said.

The agency also recommended limiting attendance to allow for distancing.

[Jun 12, 2020] Germany Sees Work From Home as Chance for Greener, Better Life

Jun 12, 2020 | www.bloomberg.com

Roughly a third of Germans expect fewer business trips and more video conferences in the years following the outbreak of the coronavirus, according to a study published on Thursday. Explore dynamic updates of the earth's key data points Open the Data Dash Close

While that's slightly less than in the rest of the world, Germany's environment minister sees an opportunity to improve the climate and the quality of life by commuting less.

"Nobody wants life to remain like it was during the pandemic," said Svenja Schulze, who presented the study carried out by Ernst & Young and the Wuppertal Institut think tank. "But we should keep some of the new routines."

About a quarter of employees worked at home at least part of the time during the pandemic, according to the paper. Internet traffic related to video conferences rose 120% in a sample measurement at a digital crosspoint in Frankfurt, the research showed.

According to the authors of the study, passenger traffic could be reduced long-term by around 8% if home office and remote access are promoted.

[Jun 11, 2020] There's a Crisis in US Capitalism but how it will unfold is completely unclear by Richard D. Wolff

Looks like there are some elements of systemic crisis of neoliberalism in the current situation. a revived Cold War (against Russia and China) is a desperate attempt to find a scapegoat and switch attention of population from the subservience of both Party to Wall Street and MIC. To the "Full spectrum Dominance" doctrine which ensure record levels of military spending, sealing money from working class and lower middle class. At the same time top 20% of population still support neoliberalism so the current riots will pass like Occupy Wall Street movement.
Notable quotes:
"... Today's mass unemployment also threatens those still employed, the remaining 120 million members of the U.S. labor force. ..."
"... the predictable results of mass joblessness in the U.S. are deepening social divisions, renewed racism, social protests, and government repression (often violent). ..."
"... By thereby blocking, if only temporarily, a powerful emerging opposition, Democratic Party leaders deterred mass opposition to bailouts, unemployment, minimal COVID-19 testing, and all the government's other failures. They just want to win the November 2020 election. Biden's vague "return to normal" promises are offered as soothing antidotes to the Trump/GOP's crisis-wracked, fear-mongering divisiveness. Trump plunges ahead with a radically pro-capitalist agenda coupled with reactionary cultural and political warfare against civil rights and liberties. ..."
"... Global isolation accompanies the U.S.'s declining economic and political footprints. Its technological supremacy is increasingly challenged globally and especially in and by China. ..."
"... Further China-bashing -- pursued by both major parties -- will only slow global economic growth just when many circumstances converge to make that the least desirable future. Record-breaking levels of government, corporate and household debt make the U.S. economy exceptionally vulnerable to future shocks and cyclical downturns. ..."
"... No "return to normal" after the combined systemic shocks of the COVID-19 pandemic and capitalist depression is likely. ..."
"... Richard D. Wolff, Professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism, both available at democracyatwork.info. This article was produced by Economy for All , a project of the Independent Media Institute. ..."
"... democracy needs an alternative! ..."
"... In a rather simplistic understanding of these issues, I too have often wondered about this endless "growth" goal. How can we have long-term a system, whose inner logic requires constant growth to remain 'viable' – on a planet with finite resources? A collision of the two seems inevitable at some point. Am I missing something? ..."
"... Economic growth and human population growth have been disasters for much of the animal/plant world (insects, large mammals, forests, oceans). ..."
"... Human focused economists seem to ignore this vitally important earth inhabiting non-human constituency in the quest for the, always assumed necessary, headline economic growth. ..."
Jun 10, 2020 | www.nakedcapitalism.com
June 10, 2020 Capitalism has always had business cycles. The capitalist enterprises that produce goods and services are distinctively organized around the conflicted relationship of employer and employees and the competitive relationship of markets. These central relationships of capitalism together generate cyclical instability. Wherever capitalism became a society's economic system over the last three centuries, business cycles recurred every four to seven years. Capitalism has mechanisms to survive its cycles, but they are painful, especially when employers fire employees. Widespread pain (unemployment, bankruptcies, disrupted public finances, etc.) brought the label "crisis" to capitalism's cyclical downturns. Only on special occasions, and rarely, did the cyclical crises in capitalism become crises of capitalism as a system. That has usually required other non-economic problems (political, cultural, and/or natural) to reach crescendo peaks around the same time as a cyclical economic downturn. Today is a time of crisis both in and of U.S. capitalism.

U.S. economic policy now focuses on what is already the worst business cycle downturn since the 1929 crash. As data accumulate, it may well prove to be the worst in global capitalism's entire history. Forty million jobless U.S. workers find incomes lost, savings disappearing and over-indebted family finances worsening.

Today's mass unemployment also threatens those still employed, the remaining 120 million members of the U.S. labor force. Mass unemployment always invites employers to cut wages, benefits and working conditions. If any of their employees quit, many among the millions of unemployed will accept those abandoned jobs. Knowing that, most employees accept their employers' cuts. Employers will justify them as required by "the pandemic" or by what they say are its effects on their profits.

Led by Trump and the Republicans and tolerated by the Democrats' leaders, U.S. employers are intensifying class war against workers. That is what mass joblessness accomplishes. On one hand, Washington bails out employers with trillions of dollars. On the other, Washington enables (by funding) a mass joblessness that directly undermines the entire working class. Germany and France, for example, could not allow such joblessness because of their labor movements' and socialist parties' social influences. In sharp contrast, the predictable results of mass joblessness in the U.S. are deepening social divisions, renewed racism, social protests, and government repression (often violent).

... ... ...

By thereby blocking, if only temporarily, a powerful emerging opposition, Democratic Party leaders deterred mass opposition to bailouts, unemployment, minimal COVID-19 testing, and all the government's other failures. They just want to win the November 2020 election. Biden's vague "return to normal" promises are offered as soothing antidotes to the Trump/GOP's crisis-wracked, fear-mongering divisiveness. Trump plunges ahead with a radically pro-capitalist agenda coupled with reactionary cultural and political warfare against civil rights and liberties.

It is the old GOP strategy but a much more extreme version. The Democrats counter with reactionary responses: a revived Cold War (against Russia and/or China) and a domestic safety less shredded than what the GOP plans. Culture wars are perhaps the only realm where Democrats sense some votes in not caving further to right-wing pressures.

Alternating Democratic and Republican governments produced today's impasse. Global isolation accompanies the U.S.'s declining economic and political footprints. Its technological supremacy is increasingly challenged globally and especially in and by China. Efforts to break that challenge have not succeeded and will not likely do better in the future. Further China-bashing -- pursued by both major parties -- will only slow global economic growth just when many circumstances converge to make that the least desirable future. Record-breaking levels of government, corporate and household debt make the U.S. economy exceptionally vulnerable to future shocks and cyclical downturns.

The U.S. population below 40 years of age struggles increasingly with unsustainable debts. The jobs and incomes it faces have already undermined access to the "American Dream" they were promised as children. Nor have they much hope for the future as today's pandemic-cum-crash imposes more hardships on them. That protests surge, provoked further by government repression, should surprise no one.

Repeated polls where half the young "prefer socialism over capitalism" reflect growing antipathy to their deteriorating capitalist reality. In the Cold War-shaped U.S. school system since the late 1940s, socialism's substantive theories and practices were not seriously taught. Debates among socialists over how socialism was changing or should change remain largely unknown. Today's growing interests in critiques of capitalism and in socialism's varieties reflect young peoples' rejection of Cold War taboos as well as a capitalism that has failed them.

No "return to normal" after the combined systemic shocks of the COVID-19 pandemic and capitalist depression is likely. Many want no such return because they believe that that normal led to both the pandemic and the economic crash. They also believe that the managers of that old normal -- corporate CEOs in both their private and governmental positions -- should face tough public scrutiny and opposition because of where that normal led and where it will likely lead again.

Those managers are not solving the problems they helped to create: utterly inadequate testing for the virus, bigger-than-ever bailouts for the biggest banks and corporations, mass unemployment, and deepening wealth and income inequalities.

Why then keep those managers in power? We should not expect different results from them now than when conditions were "normal."

Of course protests flared up in and around African American communities. Beyond their long history of suffering social and employment discrimination and police oppression, it is important to remember that those communities suffered worst in the Great Recession of 2008-2009. Their unemployment then shot up, they lost homes disproportionately to foreclosures, etc. They have died from the coronavirus significantly more than white communities. Because of disproportionate reliance on low-paid service sector jobs, they have once again suffered disproportionately in 2020's crash of U.S. capitalism. When a president then blatantly panders to white supremacy and white supremacists, while making and repeating racist comments, the ingredients are in place to provoke protests. However useful for Trump/GOP electoral campaigns, social protests and oppressive police responses add sharp social conflicts to the already disastrous combination of viral pandemic and economic crash.

Trump is a product and sign of U.S. capitalism's exhaustion. The long, cozy governmental alternation between GOP and Democrats after the trauma of the 1930s Great Depression had achieved its purpose. It had undone FDR's redistribution of wealth from the top to the middle and the bottom. It had "fixed" that problem by reversing the redistribution of wealth and income. The ideological cover for that "fix" was bipartisan demonization of domestic socialism combined with bipartisan pursuit of Cold War with the USSR. The major GOP vs. Democratic Party dispute concerned the modes and extents of governmental support for private capitalism (as in Keynes vs. Friedman, etc.). That minor squabble got raised to the status of "the major issue" for politicians, journalists, and academics to debate because they caved to the taboo on debates over capitalism vs. socialism.

Capitalism has so extremely redistributed wealth and income to the top 1 percent, so mired the vast majority in overwork and excess debt, and so extinguished "good jobs" (via relocating them abroad and automation) that the system itself draws ever-deeper disaffection, criticism, and opposition. At first, deepening social divisions expressed the system's disintegration. Now open street protests take the U.S. a step closer to a full-on crisis of the system.

Trump subordinated the old managers of capitalism by politically threatening them with aroused, angry small businesses and middle-income workers. Trump promises the latter a return to what they had before the upwards redistribution of wealth hurt them. He tells the old managers that he and his base alone can secure their social positions atop an upwardly redistributed contemporary capitalism. They will save the old managers from Bernie, "progressivism" and "socialism." The Democratic Party's old, "centrist" leadership offers weak, partial opposition, hoping Trump goes too far and implodes the GOP.

In the wake of the pandemic and the massive unemployment used to "manage" it, wages and benefits will take major hits in the months and years ahead. Wealth will be further redistributed upward. Social divisions will deepen and so will social protests. This crisis in capitalism is also a crisis of capitalism.

Richard D. Wolff, Professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism, both available at democracyatwork.info. This article was produced by Economy for All , a project of the Independent Media Institute.


Louis Fyne , June 10, 2020 at 10:28 am

(IMO) things could've been righted in 2009-2010, when US capitalism had two wheels over the precipice and the political will was there for systemic change.

instead the system floored the accelerator and the bus is off the cliff

If only Democrats, Pelosi and Bide were around to do something then! (sarc)

Rolf , June 10, 2020 at 2:22 pm

+2 The good ship America, capsized, can right itself and escape what seems to be inevitable submergence by reversing regressive policies embraced by both political parties since the Reagan "revolution". But both parties also seemed doomed to irrelevance, because both have, as Wolff describes, just played musical chairs over four decades. Little surprise that the only growing political affiliation is "Independent": democracy needs an alternative! Even BEFORE COVID-19, those under 40 could not find sustainable employment, and those over 40 were jettisoned as too expensive to maintain. Meanwhile the mainstream media supply a steady diet of trivia and misinformation, gushing over stock market rebounds or growth in Jeff Bezos' literal mountain of wealth, while a realistic 25% of the work force (including those in the darling "gig" economy) don't have a job or a paycheck, and can't make the rent. Unbelievable. And a disgrace in any country with the means to correct it.

The political response to this virus and the ensuing economic collapse is but one preview to our future: we should study it, and hard. A vaccine may take a few years to put in place, but there is no "vaccine" against profound environmental shifts on the horizon, broadly labeled climate change. A response that avoids enormous human suffering requires planning and transformations on space and time scales unlike anything we have faced heretofore. The bad news: these shifts are already manifest and likely irreversible. The good news: a response will require everyone's labor, creativity, and collaboration. This means planning, cooperation, and work , much of which can't be automated easily. These are political and economic transformations in which we will have no choice, if we are to survive.

John Steinbach , June 10, 2020 at 4:48 pm

Emphasizing that there will be radical reduction in energy/resource use in the near future, either planned or unplanned. The Club of Rome models appear to be still spot on.

ChrisFromGeorgia , June 10, 2020 at 10:32 am

Good article that makes many valid points. One I disagree with though is:

will only slow global economic growth just when many circumstances converge to make that the least desirable future

Why is growth always the goal? Given the looming climate change catastrophe, economic growth is the enemy. We must figure out how to live in a zero-growth (i.e. balanced) economy or we will kill off the human race. A lot of the tensions we see are because it is no longer possible to "grow" the economy in a way that benefits all segments of society. Energy and GDP are related. As we run out of the former the latter must adjust.

Olga , June 10, 2020 at 11:46 am

In a rather simplistic understanding of these issues, I too have often wondered about this endless "growth" goal. How can we have long-term a system, whose inner logic requires constant growth to remain 'viable' – on a planet with finite resources? A collision of the two seems inevitable at some point. Am I missing something?

John Wright , June 10, 2020 at 12:40 pm

You are not missing something.

Economic growth and human population growth have been disasters for much of the animal/plant world (insects, large mammals, forests, oceans).

Human focused economists seem to ignore this vitally important earth inhabiting non-human constituency in the quest for the, always assumed necessary, headline economic growth.

As we follow in the path of our already distressed animal/plant kingdom, achieving a "balanced" economy without a great deal of human distress seems unlikely to this reader .

[Jun 10, 2020] Coronavirus vaccine developers are chasing outbreaks before they disappear Washpost - Sic Semper Tyrannis

Jun 10, 2020 | turcopolier.typepad.com

"Coronavirus vaccine developers are chasing outbreaks before they disappear" Washpost

"The top teams rushing to develop coronavirus vaccines are alerting governments, health officials and shareholders that they may have a big problem : The outbreaks in their countries may be getting too small to quickly determine whether vaccines work

A leader of the Oxford University group, one of the furthest ahead with human trials, admits the reality is paradoxical, even "bizarre," but said the declining numbers of new infections this summer could be one of the big hurdles vaccine developers face in the global race to beat down the virus.

Even as new cases are growing worldwide, transmission rates are falling in Britain, China and many of the hardest-hit regions in the United States -- the three countries that have experimental vaccines ready to move into large-scale human testing in June, July and August." Washpost

---------------

Well, pilgrims it would seem that the Post staff does not see the irony in their own writing, or perhaps they do. There have been scattered evidences of rationality there lately. Even as Democrat governors and mayors across the country drag their feet on the re-opening of the American economy, infection rates are falling. In the Faucibirxist view of things everything depends on vaccine development (or herd immunity post holocaust). But, alas there just aren't enough new, vibrant infections to make development of the vaccines convenient. What will happen to the flow of government money to these projects if this phenomenon becomes general knowledge. Someone at the Post should be disciplined for this indiscretion. pl

https://www.washingtonpost.com/world/europe/coronavirus-vaccine-trials-astrazeneca-moderna/2020/06/09/48f28fea-a414-11ea-898e-b21b9a83f792_story.html


Fred , 10 June 2020 at 09:34 AM

"What will happen to the flow of government money to these projects if this phenomenon becomes general knowledge."

Well Fauci is almost 80 so I think he's set for life. I hear the left wants lots of redevelopment funds and jobs programs, with the attendant opportunities for graft that comes with them, for thier cities which we are all assured had neither rioting nor looting.

Jim , 10 June 2020 at 11:50 AM
Thank you Col. Lang for all the posts on novel coronavirus.

For shining light on this, this utter failure by the medical community and their various and sundry enablers in government and in business.

On these liars and charlatans and killers and criminals.

The video below is about an hour long. It is a nurse, who worked in NYC hospital, the alleged epi center of epi centers.

She basically says, without saying directly, but points to the fact that doctors were murdering patients there, it seems.

She paints a picture of doctors not as scientists but as zealots, as neo neanderthals, as craven monsters, who care not about life, the elderly, the sick, the least among us.

As Nurse Ratchets

Towards the end of video, she recounts her last day at this hospital, discussing a patient she had nursed for many days, and who was doing fine, making progress, . . . and how she was removed from his bed on direct orders, sent to the ER where she was not assigned, and 20 minutes later, the man she was caring for is dead.

These sorts of stories abound; this rage is not going away anytime soon. This is the rage, and what caused it, that our "lords and masters" who censor us and tell us black is white, and want to destroy our country. . . this is the rage they don't want to see expressed and exposed. Will they get their way?

http://edwardcurtin.com/the-undercover-epicenter-nurse-watch-weep-and-rage/


-30-

Laura Wilson , 10 June 2020 at 01:04 PM
Well...they can always test their vaccines in the USA. We seem not to be faring as well and can help out. (I believe this is a glass half-full moment.)
Walter Lang , 10 June 2020 at 01:27 PM
Laura Wilson

Still hysteric. if you are not over 65 and not in compromised health the disease is rarely fatal.

optimax , 10 June 2020 at 01:32 PM
Trump needs to stop the $600 a week federal bonus to the unemployed. My neighbor told me about how his daughter-in-law worked one day a week as a barmaid before the virus shut the bar down and made a little over a hundred a week. Oregon unemployment pays her 150 a week and with the added 600 she now makes over 7 times what she did working. How many protesters and rioters are just as flush getting paid to party in the street? Most i'd say. That makes these government funded protests a powerful voice and recruitment tool for the Democratic Party.

Ending the federal subsidy to the unemployed would reduce, if not stop, the demonstrations and mau-mauing of the country.

Fred , 10 June 2020 at 03:17 PM
optimax,

Absolutely. There were howls of protests before Minneapolis when Georgia, Florida and Texas started tellling people that if they recieved a recall to work notice from an employer and refused to go they would be considered a voluntary quit and no longer eligable for unemployment insurance payments. They'll howl again when they figure out this is all taxable income.

LA Sox Fan , 10 June 2020 at 03:21 PM
Take everything the WaPo claims with a grain of salt. There is no real worry over lower covid infections. What made Covid decrease was the lockdowns. Remove the lockdowns and covid infection rates will climb, as we are seeing in the already reopened states.

Then when fall rolls around, and people are stuck indoors again, rates will skyrocket. There will be plenty of test subjects for a vaccine.

rho , 10 June 2020 at 09:29 PM
With the spread rate of the coronavirus, any outbreak of the infection will peter out once the total immunity rate of the population approaches 65-70 percent.

In Bergamo (Italy), 57 percent a population sample have tested positive for coronavirus antibodies, which means that they must have had the infection before and are now most likely immune.

If you are a Karen, then don't listen to me, but take it from the German government's very own propaganda outlet, Deutsche Welle:

"Out of nearly 10,000 Bergamo residents who had their blood tested between April 23 and June 3, 57% had antibodies, indicating they had come into contact with the virus and developed an immune response.

Health authorities said the sample size was 'sufficiently broad' to be a reliable indicator of the presence of SARS-CoV-2 among Bergamo province's population."

https://www.dw.com/en/coronavirus-tests-show-half-of-people-in-italys-bergamo-have-antibodies/a-53739727

Nobody in Bergamo will need a coronavirus vaccine once its development is finished - whenever that may happen, if at all.

[Jun 10, 2020] World Bank is predicting that between 70-100m people will driven back below poverty line

Jun 10, 2020 | www.moonofalabama.org

vk , Jun 10 2020 21:30 utc | 34

Economic news:

World Bank is predicting that between 70-100m people will driven back below poverty line

WB's "poverty line" is just USD 1.90 per day. It was only USD 1.00 until some four years ago, and is outdated.

In reality, if you really take inflation into account, there are much more people living below the real poverty line in the capitalist world.

And no V-shaped recovery for the capitalist world either:

Returning to normal? Hardly, according to OECD projections

World Bank's global forecasts are out:

WB: 5.2 percent contraction in global GDP in 2020

I noticed there are a lot of people here that still have faith in capitalism. The problem is only with the demented variation found in the USA, they say; the European model is the way to go, they say...

Well, this is Germany:

German exports fell 24% in April compared to March; -31% annualized (April 2019) - worst since 1950

Germany's industrial production slumped by 17.9 percent month-over-month in April 2020

As a bonus: Japan's machinery orders fell 52.8% in May (another record).

--//--

It's official: USA is - finally (after 12 years cooking the books and printing trillions of Dollars) - in a recession:

NBER: US economy is in recession and has been since February

Bonus news:

Here's the true graphic of the "V-shaped recovery" of the CNBC post some days ago - pay attention to the yellow circle!:

Stock markets rocketed back to all-time highs as the US reported that its unemployment rate had dropped to 13.3 percent in May 2020

[Jun 09, 2020] Galbraith 'Disillusion' Is America's One Big Growth Sector Right Now

Highly recommended!
Notable quotes:
"... Moreover, people do distinguish between needs and wants. Americans need to eat, but they mostly don't need to eat out. They don't need to travel. Restaurant owners and airlines therefore have two problems: they can't cover costs while their capacity is limited for public-health reasons, and demand would be down even if the coronavirus disappeared. This explains why many businesses are not reopening even though they legally can. Others are reopening, but fear they cannot hold out for long. And the many millions of workers in America's vast services sector are realizing that their jobs are simply not essential. ..."
"... America's economic plight is structural. It is not simply the consequence of Trump's incompetence or House Speaker Nancy Pelosi's poor political strategy. It reflects systemic changes over 50 years that have created an economy based on global demand for advanced goods, consumer demand for frills, and ever-growing household and business debts. This economy was in many ways prosperous, and it provided jobs and incomes to many millions. Yet it was a house of cards, and COVID-19 has blown it down. ..."
Jun 09, 2020 | www.zerohedge.com

In the 1960s, the US had a balanced economy that produced goods for both businesses and households, at all levels of technology, with a fairly small (and tightly regulated) financial sector. It produced largely for itself, importing mainly commodities.

Today, the US produces for the world, mainly advanced investment goods and services, in sectors such as aerospace, information technology, arms, oilfield services, and finance. And it imports far more consumer goods, such as clothing, electronics, cars, and car parts, than it did a half-century ago.

And whereas cars, televisions, and household appliances drove US consumer demand in the 1960s, a much larger share of domestic spending today goes (or went) to restaurants, bars, hotels, resorts, gyms, salons, coffee shops, and tattoo parlors, as well as college tuition and doctor's visits. Tens of millions of Americans work in these sectors.

Finally, American household spending in the 1960s was powered by rising wages and growing home equity. But wages have been largely stagnant since at least 2000, and spending increases since 2010 were powered by rising personal and corporate debts. House values are now stagnant at best, and will likely fall in the months ahead.

Mainstream economics pays little attention to such structural questions. Instead, it assumes that business investment responds mostly to the consumer, whose spending is dictated equally by income and desire. The distinction between "essential" and "superfluous" does not exist. Debt burdens are largely ignored.

But demand for many US-made capital goods now depends on global conditions. Orders for new aircraft will not recover while half of all existing planes are grounded. At current prices, the global oil industry is not drilling new wells. Even at home, though existing construction projects may be completed, plans for new office towers or retail outlets won't be launched soon. And as people commute less, cars will last longer, so demand for them (and gasoline) will suffer.

Faced with radical uncertainty, US consumers will save more and spend less. Even if the government replaces their lost incomes for a time, people know that stimulus is short term. What they do not know is when the next job offer – or layoff – will come along.

Moreover, people do distinguish between needs and wants. Americans need to eat, but they mostly don't need to eat out. They don't need to travel. Restaurant owners and airlines therefore have two problems: they can't cover costs while their capacity is limited for public-health reasons, and demand would be down even if the coronavirus disappeared. This explains why many businesses are not reopening even though they legally can. Others are reopening, but fear they cannot hold out for long. And the many millions of workers in America's vast services sector are realizing that their jobs are simply not essential.

Meanwhile, US household debts – rent, mortgage, and utility arrears, as well as interest on education and car loans – have continued to mount. True, stimulus checks have helped: defaults have so far been modest, and many landlords have been accommodating. But as people face long periods with lower incomes, they will continue to hoard funds to ensure that they can repay their fixed debts. As if all this were not enough, falling sales- and income-tax revenues are prompting US state and local governments to cut spending, compounding the loss of jobs and incomes.

America's economic plight is structural. It is not simply the consequence of Trump's incompetence or House Speaker Nancy Pelosi's poor political strategy. It reflects systemic changes over 50 years that have created an economy based on global demand for advanced goods, consumer demand for frills, and ever-growing household and business debts. This economy was in many ways prosperous, and it provided jobs and incomes to many millions. Yet it was a house of cards, and COVID-19 has blown it down.

"Reopen America" is therefore an economic and political fantasy. Incumbent politicians crave a cheery growth rebound, and the depth of the collapse makes possible some attractive short-term numbers. But taking them seriously will merely set the stage for a new round of disillusion. As nationwide protests against systemic racism and police brutality show, disillusion is America's one big growth sector right now.

[Jun 06, 2020] What I find amazing is that no side in the USA even blinked when the Congress authorized spending USD 10 trillion to keep the system afloat. It's like if this never happened, or like if it was a normal thing

Jun 06, 2020 | www.moonofalabama.org

vk , Jun 5 2020 20:02 utc | 20

What I find amazing is that no side in the USA even blinked when the Congress authorized spending USD 10 trillion to keep the system afloat. It's like if this never happened, or like if it was a normal thing.

This is money fetishism at its maximum level.

[Jun 04, 2020] I think the illusion the CDC. was the "world's premier health agency" comes from the fact that the USA has, by far, the largest and most powerful pharmaceutical sector in the world

CDC consist of overpaid idiots. On 20 January, the first confirmed case in South Korea was identified as a 35-year-old Chinese woman. The first South Korean national to be infected occurred three days later was a 55-year-old man who worked in Wuhan and returned for a checkup with flu symptoms. The two infection reports were publicly released on 24 January. [1] At this point team of CDC researchers should already be in South Korea. But nothing was done.
Jun 04, 2020 | www.moonofalabama.org
vk , Jun 3 2020 22:43 utc | 55
The C.D.C. waited 'its entire existence for this moment'. What went wrong?

Propaganda never stops:

The technology was old, the data poor, the bureaucracy slow, the guidance confusing, the administration not in agreement. The coronavirus shook the world's premier health agency , creating a loss of confidence and hampering the U.S. response to the crisis

"World's premier health agency"?

I think the illusion the C.D.C. was the "world's premier health agency" comes from the fact that the USA has, by far, the largest and most powerful pharmaceutical sector in the world (which Americans call "Big Pharma"). If you have the biggest pharma, you will have the most sheer volume of human trials and new drug patents. This, by osmosis, puts your country's C.D.C. at the forefront of most drug regulation - which the rest of the world's C.D.C.s will simply copy and paste for obvious reasons (i.e. they won't do the same work twice). That doesn't mean your C.D.C. is "the premier". For instance, it could simply be the most corrupt, the C.D.C. which is at the right place, the right time. An example for this is the USA's airplane equivalent to the C.D.C., which sold itself off to Boeing, resulting in the 737 MAX fiasco.

[Jun 04, 2020] The stock market is BOOMING! Truly a remarkable recovery. It's almost as if the travails of the last three months never happened.

Jun 04, 2020 | www.moonofalabama.org

snow_watcher , Jun 3 2020 20:13 utc | 36

The stock market is BOOMING! Truly a remarkable recovery. It's almost as if the travails of the last three months never happened. Everyone is happy and right back to where they were financially. The future is so bright we gotta wear shades. Celebration time, come on! DOW 35K by EOY2020!

The government is underwriting a booming stock market!

And no infrastructure related jobs program in sight even though it's been on the table for more than a decade. Apparently the US infrastructure is just fine thank you. But the MIC and intelligence community need more money.

The Democrats are complicit in this fiasco. Biden, LOL, weak.

As already noted by some commentators, the recent protests have almost as much to do with a rapidly collapsing economy with horrible prospects of recovery for millions of people, as with racism. There's a lot of resentment, unease and fear out there. Racism is only one trigger for the ongoing unrest. There's also an element of blowing off some steam after the COVID restrictions.

COVID is still a major issue BTW! But it seems as if the cost for herd immunity has now been factored in and rationalized away and people are going to accept the sacrifices of tens of thousands more dead and handicapped by after effects. Amazing how quickly COVID is becoming a non-issue. The administration has very effectively sidestepped the problem, aided and abetted by the media.

Any meager gains in employee pay and benefits eked out over the last 10 years as low unemployment ("Thank god for all the crappy jobs, I have three of them!") finally pressured some improvement, have been decimated. One step forward, ten back. Watch the Job Quality Index (JQI).

https://www.jobqualityindex.com/

Not only have millions lost their livelihoods but also their crappy healthcare insurance.

The wealth divide is exploding as billionaires are reaping huge government largesse, much of it tax free.

With millions of people remaining unemployed or under-employed over an extended period of time and as the government begins to remove financial aid for the poorest, as homelessness explodes, as people get sick and have no insurance, as personal debt balloons, etc. these recent protests might look like playground tiffs.

It's remarkable to me that the stock market, even if decoupled from the real economy, is this sanguine over future prospects.

Something seems very wrong with this picture. When the youngsters realize how much of their future has been mortgaged to prop all this up, watch out.

I also expect the very heavy militarized responses to civil unrest to continue and amplify. Protests will not be tolerated and a significant portion of the US citizenry will fully support the harsh crackdowns in the name of law and order. The retired 401K set for example. To be a protester will take guts and fortitude.

Well, at least we can look forward to the November election to fix all of this.

[Jun 04, 2020] The case of the USA is that its financialization process has been running for so long that its already existing infrastructure is crumbling

Jun 04, 2020 | www.moonofalabama.org

vk , Jun 3 2020 18:17 utc | 6

You cannot print money into infrastructure. That's money fetishism.

The Marshall Plan would be only USD 100 billion in today's values. It wasn't about the money: the Marshall Plan worked because, in 1946, the USA was the financial center of the world and had an excess industrial capacity large enough to rebuild a much smaller place (Western Europe). USDs flowed into Western Europe, which could only buy American goods and equipment - which the Americans had to sell. American resources then flowed to Western Europe, which in turn flowed back to the USA in USDs. That the USD was backed by gold at the time had nothing to do with this process, but it may have accelerated the universalization of the USD.

The USA (I'm here including all of its provinces: European Peninsula, Latin America, SE-Asia, India, Japan, South Korea, Taiwan, Hong Kong and Australia) is a capitalist society, which means it plans its economy according to the social profit rate. The social profit rate is determined by the national average of profit rates among all the individual capitals in said country. That means economy is always planned by the private, not the public, sector. The White House is impotent here.

Profit rate self-regulates based on the different degrees of organic composition of capital (OCC) of each country/region. To simplify, the tendency is this: value flows from the countries with lesser OCCs to countries with higher OCCs. Taking the European Union as an example, we have that Germany (the country with the higher OCC) will have large and chronic trade surpluses with the rest.

However, the higher the OCC, the lower is the profit rate. As OCC gets to a certain critical level, profit rates begin to plummet, and structural crisis of capitalism occur. In order to stop this process, "financialization" begins.

The case of the USA is that its financialization process has been running for so long that its already existing infrastructure is crumbling. However, the fact that it is crumbling is just the symptom, not the cause. The real cause is that the USA begun to financialize first because it reached an extremely high OCC first.

At first, the USA didn't rebuild its infrastructure simply because it is not profitable. Now, it doesn't do it for the simple fact it can't: with much pain, it managed to bring astronauts beck to the ISS; the infrastructural abyss is now at more than USD 1.1 trn and widening. By now it would have to import a lot of material and expertise from other countries if it really wanted to rebuild and update its infrastructure. Industry lost so much importance in the US economy that, last year, American industry fell to a record level (due to the trade war against China) and the US GDP actually rose - due to the financial sector and services sector compensating for the loss.

The most extreme case of a First World country turning into a mere financial hub is the UK: its trade deficit already is at a gargantuan -14%, and its budget only doesn't collapse because its huge financial hub in London covers that up to more than 7% (i.e. halves).


450.org , Jun 3 2020 18:41 utc | 10

Financial hub? Call it what it is. A laundromat for dirty money and ill-gotten gains. Problem is, or problem for those who aren't the extractive wealthy elite which is most of us, more and more money is dirty money and ill-gotten gains even if it is "made" legally. The most recent multi-trillion dollar handout, looting and pillaging actually, to the wealthy extractive elite as part of the so-called "stimulus package" was perfectly legal but dirty money and ill-gotten gains nonetheless.

The stock market is not only a depravity indicator and an indicator of wealth disparity, it's also a massive laundromat for legal and illegal ill-gotten gains. I would venture that at least 30% of the stock market is comprised of black market illegal money being laundered at any given time.

https://i.pinimg.com/originals/41/4d/c4/414dc453fd61072db52fe5064b1484ab.jpg

karlof1 , Jun 3 2020 19:09 utc | 13
Erelis @5--

FIRE is a term used my Michael Hudson and other likeminded political-economists. He uses it so often it's hard to provide the initial instance. However, Hudson did write two books about how the FIRE sector gained its dominance, Killing the Host & J is for Junk Economics . It this video interview from 2017 , Hudson explains to Max Keiser about the latter book and how it relates to the just completed election, which begins at the 12:45 mark. That website also links to all previous Keiser Reports where I hope to find the specific interview that discusses the FIRE sector. This one does too, but it's not the specific topic discussed. I guarantee you'll learn a lot from the 10.5 minute interview!

Red Ryder , Jun 3 2020 19:14 utc | 15

Petri Krohn wants redistribution of wealth. Let's look at the idea.

The opposing viewpoint says wealth is not a pie. Wealth comes from growth, innovation, creativity. It is many pies.

Of course, you can't bake your own pie without capital. So, how do we redistribute capital?

You can get it from the government via the banks, if they are 'ordered' to grant loans. They aren't. So, you can't get it from government or banks.

You can take it from the already wealthy. Taxes is the historic way to take wealth from the wealthy. But the tax schedule no longer takes significant amounts from the wealthy. And Congress is corrupted by the wealthy so that route is closed also. There will be no major new taxes on the wealthy.

How can we redistribute wealth, then?

Simplest way is Development Zones with no taxes for a 5-10 years. Investors will pour money in from around the world. New businesses can be started, innovation can be nourished and people can prosper.

Use the system to expand the base of participation and do it in the zones of poverty and redevelopment where the poor and disadvantaged are.

China does this. It works. Other nations do it. They call them FTZ (free trade zones). Russia has some.

Trump was going to do this with his original Infrastructure program. The Dems stopped it. Won't allow any progress.

But, this is the way to go. You raise people out of poverty, your increase their options and income, you grow their region, and lots of new pies are baked.

/div> @Red Ryder , Jun 3 2020 19:14 utc | 15
@Red Ryder | Jun 3 2020 19:14 utc | 15
Trisha , Jun 3 2020 19:56 utc | 30

And who, exactly, is going to do the hard labor required of these infrastructure projects?

Certainly none of the horribly obese Americans I see waddling around, nor many of the young folks stuck with their snouts into soma social media. Most of the youngsters I know have zero clue about working with tools, doing a job right, working hard for not much pay, etc. Males of color living in ghettos while their baby-mommas live off welfare? Hardly.

And where are people going to get the training needed? The Polytechnic Science trade school in the city I grew up in - San Francisco - was torn down long ago. Few in the trades can afford to live in San Francisco any more, even if they could get a job.

Maybe folks like my father who wielded a shovel building roads during the WPA and hated it so much he joined the Army. In other words, hardworking immigrants, or first generation born of immigrants with little education (my dad).

dh-mtl , Jun 3 2020 22:10 utc | 51
Posted by: Red Ryder | Jun 3 2020 19:14 utc | 15 says: 'How can we redistribute wealth, then?'

An economy's wealth is what it produces. The U.S. produces a lot less then it consumes, so it is in debt, and half of its population is poor.

The financial elites, who run the U.S. have gotten wealthy, not by producing something of value, but by strip mining the financial assets of the rest of the population.

If you want to produce wealth, and distribute it properly:

1. Get rid of the U.S.$ as the world's reserve currency. This will allow U.S.$ to be radically devalued.

2. With a devalued dollar, the U.S. will be forced into domestic production (i.e. real wealth creation). Good paying jobs, producing real things, is a very effective way of properly distributing wealth.

3. Carry out a massive infrastructure program to rebuild the U.S.' worn-out infrastructure. The infrastructure itselr, as well as the good paying jobs associated with creating it, is an effective way to distribute wealth.

4. Provide basic health-care and education (including university) to all. This is again a very effective way of distributing wealth, while at the same time supplying a work force capable of carrying out high value added jobs necessary for a goods producing economy.

5. Break-up or regulate the cartels. Profit margins and executive salaries have radically expanded in recent years. This is a sign of lack of competition. Wherever there is inadequate competition the economic actors need to be regulated or broken up. Lower prices, resulting from a normalization of profits and exagerated salary disparities, is another excellent way to distribute wealth.

6. Reduce military expenditures. Most of the military expenditures, beyond what is really needed for defense, are nothing but waste, and at the same time a transfer of wealth from the masses to the military industrial complex.

7. Pay for government sponsored health-care, education and infrastructure with a significant increase in taxes on the wealthy.

8. The massive devaluation of the dollar, combined with infrastructure spending and re-industrialization will no doubt cause significant inflation, at least in the short term. Inflation will reduce both the value of financial assets and debt, again representing a redistribution of wealth from the elites to the indebted masses.


Using the GINI index as a gauge ( https://www.census.gov/library/visualizations/2015/demo/gini-index-of-money-income-and-equivalence-adjusted-income--1967.html), Income inequality increased substantially over the past 40 years, from a GINI coefficient of 0.36, moderate, to 0.46, extreme. This change happened as a result of deliberate economic policies designed to enable the transfer of wealth from the masses to the elites. To reverse this mal-distribution of wealth, the policies that led to this need to be reversed as well.

And don't expect the Democrats to do it. They are fully in the pocket of the 'Globalists' who have been the principle beneficiaries of this massive transfer of wealth since 1980.

vk , Jun 3 2020 22:17 utc | 53
@ Posted by: Winni Puu | Jun 3 2020 21:33 utc | 47

The problem with large infrastructure projects is that they do not only get old through physical degeneration, but also through moral degeneration (i.e. they get outdated).

The USA had USD 1.1 trn in old infrastructure (mainly from the 50s-60s) which need repair. However, if the USG spends those USD 1.1 trn, the American people will just be getting what existed before - there's no technological advantage here. So, while the USA spends USD 1.1 trn on 50s technology, China will be spending the same on state-of-the-art, therefore getting a military advantage (because better infrastructure attracts more wealth, both in the form of foreign investment and in the form of rising productivity of labor).

Also, when you do this large-scale technological leap, it just can't be any kind of innovation: it has to be a revolutionary technology, which both greatly increases labor productivity and is future proof (i.e. can last at least 50 years, ideally at least 100 years).

So, this is not just your average bean-counting. When a given national government is so far behind in infrastructure, it has a though decision to make: fix what already exists (with minor and gradual improvements) or do you go all-in with a revolutionary technology to try to do a "great leap"? And that's just the technocratic side of the problem - in capitalism you have the factor that it is the social profit rate that decides what's built and what isn't, by how much and when.

Baron , Jun 3 2020 22:31 utc | 54
The boss of Amazon Jeff Bezos is 65 this year, is worth over a trillion dollars, assuming he lives up the age of 90, converts the assets into cash, does absolutely nothing except spending the money, he has $3 655 347 to run through each hour 24/7 for the rest of his life. If one assumes he has to sleep, eat, go to the bathroom which cuts the number of spending hours (say) by half, he must go through over seven million dollars each and every hour until he drops dead.

This is obscene, it exceeds his needs by such a margin that one cannot but wonder at the sanity of a society that cannot be bothered to address it. This is not to call for income to be distributed equitably, that would destroy the only mechanism that past evidence shows is the driving force for improving living standards for all, but for such distribution to be sane, nothing more nothing else, sanity should inform the creation of laws governing income distribution on every society, including the Republic's. Any such sane arrangements should include the distribution of both income and accumulated wealth, the major disparity in today's society isn't only in income distribution, but even more so in wealth ownership.


[Jun 04, 2020] Where Are the Job Programs It Needs

Jun 04, 2020 | www.moonofalabama.org

The U.S. has a service economy. Some 70% of its gross domestic product is generated by personal consumption. The emergency measures taken to slow down the covid-19 pandemic decreased consumption by a huge margin. The GDPNow model by the Federal Reserve Bank of Atlanta shows the slump :

The growth rate of real gross domestic product (GDP) is a key indicator of economic activity, but the official estimate is released with a delay. Our GDPNow forecasting model provides a "nowcast" of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the U.S. Bureau of Economic Analysis.
...
Latest estimate: -52.8 percent -- June 1, 2020

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -52.8 percent on June 1, down from -51.2 percent on May 29.


Source: GDPnow via The Big Picture - bigger

The GDPnow model gives a snapshot of GDP on any given day. It is not the GDP for the year, which will be down much less, but just a moment in time.

With the lockdowns loosening the GDP will certainly increase again. But a haircut missed due to the lockdown will not result in a desire to get two haircuts. The meals not eaten in a restaurant during the last two month will not be made up by additional meals eaten after the reopening. The losses are for real.

With the end of the lockdown half of the 40 million currently unemployed will likely soon be back to work. The jobs of the other 20 million will not come back for a long time. The travel and hospitality sectors will be most effected. People who do not make money can not spend any.

The unemployed and the economy will not be impressed by Trump's current fake 'law and order' show or by his pandering to Evangelicals.

If Trump is as smart as he claims to be he will ask Congress for a huge amount of money to be spend on infrastructure programs over the next three years. That money should be shared for projects on the national, state and local level. There are plenty of bridges, roads and rails that need repairs or replacements.

But Trump isn't as smart as he claims and the people around him, as well as Trump himself, are from the FIRE economy - the F inance, Insurance, and Real Estate sectors. Such people do not value the real economy where real stuff is made and used.

The stock market, on which Trump is fixated, has long ceased to be a reflection of the real economy. Propping it up again and again, as the Fed and the Treasury do, may well enrich Trump's friends, but it does nothing for the voters he needs to get reelected.

Does he not understand that?

And why, by the way, ain't the Democrats out in front demanding that more be done to create new jobs? They seem to have totally vanished from the scene.

Posted by b on June 3, 2020 at 17:35 UTC | Permalink


David Park , Jun 3 2020 17:50 utc | 1

"And why, by the way, ain't the Democrats out in front demanding that more be done to create new jobs?"

Don't say ain't or your mother will faint.
Your father will fall in a bucket of paint.
Your sister will cry. Your brother will die.
Your dog will call the FBI.

Nathan Mulcahy , Jun 3 2020 17:52 utc | 2
"And why, by the way, ain't the Democrats out in front demanding that more be done to create new jobs? "

Because the Dems are NOT an opposition party. The entire mess we are in, is a bipartisan project accomplished over several decades. Although Trump is in the limelight right now, he is actually a symptom of a much larger underlying disease, caused by both parties.

karlof1 , Jun 3 2020 17:59 utc | 3
Trump's behavior reveals his beliefs/values. His actions are what need to be watched, not the manifold gibberish he tweets & utters.
450.org , Jun 3 2020 17:59 utc | 4
I don't think the Dems want to win. Nobody wants the next four years. Hell, nobody wants the next eight years or twelve or sixteen. Except the criminally insane autocrats.

Not that I think the Dems in control of the executive and legislative branches would change the course of events. The collapse is in full swing. It's a steam roller at this point. A freight train. An avalanche. There's no more blood to squeeze from the rocks. Game over. Except it and manage the decline as humanely and constructively and equitably as possible or else let chaos reign and lead which is an existential gambit for sure but one the extractive elites appear to have chosen.

Erelis , Jun 3 2020 18:16 utc | 5
The individual states need to realize they are on their own. Trump and Congressional gopers and dems have abandoned them in favor of working full time for FIRE (very new and revealing term for me) and various other elite interests. Each state will need to form various alliances with other states to develop proverbial out of the box solutions including developing independent import and trade agreements with China and the EU among others.
vk , Jun 3 2020 18:17 utc | 6
You cannot print money into infrastructure. That's money fetishism.

The Marshall Plan would be only USD 100 billion in today's values. It wasn't about the money: the Marshall Plan worked because, in 1946, the USA was the financial center of the world and had an excess industrial capacity large enough to rebuild a much smaller place (Western Europe). USDs flowed into Western Europe, which could only buy American goods and equipment - which the Americans had to sell. American resources then flowed to Western Europe, which in turn flowed back to the USA in USDs. That the USD was backed by gold at the time had nothing to do with this process, but it may have accelerated the universalization of the USD.

The USA (I'm here including all of its provinces: European Peninsula, Latin America, SE-Asia, India, Japan, South Korea, Taiwan, Hong Kong and Australia) is a capitalist society, which means it plans its economy according to the social profit rate. The social profit rate is determined by the national average of profit rates among all the individual capitals in said country. That means economy is always planned by the private, not the public, sector. The White House is impotent here.

Profit rate self-regulates based on the different degrees of organic composition of capital (OCC) of each country/region. To simplify, the tendency is this: value flows from the countries with lesser OCCs to countries with higher OCCs. Taking the European Union as an example, we have that Germany (the country with the higher OCC) will have large and chronic trade surpluses with the rest.

However, the higher the OCC, the lower is the profit rate. As OCC gets to a certain critical level, profit rates begin to plummet, and structural crisis of capitalism occur. In order to stop this process, "financialization" begins.

The case of the USA is that its financialization process has been running for so long that its already existing infrastructure is crumbling. However, the fact that it is crumbling is just the symptom, not the cause. The real cause is that the USA begun to financialize first because it reached an extremely high OCC first.

At first, the USA didn't rebuild its infrastructure simply because it is not profitable. Now, it doesn't do it for the simple fact it can't: with much pain, it managed to bring astronauts beck to the ISS; the infrastructural abyss is now at more than USD 1.1 trn and widening. By now it would have to import a lot of material and expertise from other countries if it really wanted to rebuild and update its infrastructure. Industry lost so much importance in the US economy that, last year, American industry fell to a record level (due to the trade war against China) and the US GDP actually rose - due to the financial sector and services sector compensating for the loss.

The most extreme case of a First World country turning into a mere financial hub is the UK: its trade deficit already is at a gargantuan -14%, and its budget only doesn't collapse because its huge financial hub in London covers that up to more than 7% (i.e. halves).

Caliman , Jun 3 2020 18:26 utc | 7
While I agree with spending on infrastructure projects like we did during the great depression and more, it should be noted that this is not going to save the service economy. Very few people actually work in construction and allied trades directly. So while in normal times, this kind of spending would be a huge shot in the arm because these folks would then spend in the service economy, coronafear will reduce the effect considerably.

We have destroyed our economy and reduced our civil liberties, perhaps irrevocably, for a virus that kills less than 1% of the population and almost all of whose victims are the elderly and ill, usually both. As recently as a hundred years ago, humanity used to be faced with diseases like smallpox, various plagues, and assorted bacteriological diseases that would routinely kill 30-70% of the population ... and we kept on. What has happened to us?

Petri Krohn , Jun 3 2020 18:27 utc | 8
IT IS NOT ABOUT RACISM

What is the aim of " Revolution 2020 ?" Is this all just part of Hillary's presidential campaign? Or Michelle Obama's?

Star Tribune of Minneapolis is asking for Michelle Obama to stand for Vice President / President in Waiting:

A democracy in crisis needs Michelle Obama

If she joined the ticket as former Vice President Joe Biden's running mate, our broken land might mend.

We collectively must implore a reluctant Michelle Obama to make herself available to join Joe Biden's ticket as the Democratic Party's vice presidential nominee. Let me explain why.

On top of a global pandemic, our cities now are facing massive unrest, violence and destruction, and threats to the social order, arising from yet another series of horrific killings of unarmed African-American men and women by the police -- and all built upon decades of racial injustice and inequality.

No, it is not about racism. Electing a Black president will not save America. The real issue is the economic system. America needs a major redistribution of wealth.

Mark2 , Jun 3 2020 18:30 utc | 9
Does he not understand that ? Yes he does, all to well. Becouse they planned it that way, when they deliberately released the corona virus germ warfare weapon!
As I wrote here 3 months ago 'they won't need so many strawberry pickers becouse ther won't be so many to eat strawberry's! Think about it. Agend 21. Starts 2020.

The democrats are all part of this genocide.

How long has it taken to recruit train and equip the storm troopers on the streets of America right now.
America will regret what it voted for /wished for.

450.org , Jun 3 2020 18:41 utc | 10
Financial hub? Call it what it is. A laundromat for dirty money and ill-gotten gains. Problem is, or problem for those who aren't the extractive wealthy elite which is most of us, more and more money is dirty money and ill-gotten gains even if it is "made" legally. The most recent multi-trillion dollar handout, looting and pillaging actually, to the wealthy extractive elite as part of the so-called "stimulus package" was perfectly legal but dirty money and ill-gotten gains nonetheless.

The stock market is not only a depravity indicator and an indicator of wealth disparity, it's also a massive laundromat for legal and illegal ill-gotten gains. I would venture that at least 30% of the stock market is comprised of black market illegal money being laundered at any given time.

https://i.pinimg.com/originals/41/4d/c4/414dc453fd61072db52fe5064b1484ab.jpg

Skeletor , Jun 3 2020 18:45 utc | 11
If Trump is as smart as he claims to be he will...

He doesn't need to be smart per se.

He just needs to be **smarter** than Joe Biden.

Just like he was smarter than Hillary + all the legacy media in 2016 to such an extent that to deny they had been outsmarted... #Russiagate was born lol

The irony is that Biden is a lowlife who inflames hatred and reinforces divisions while holding up a moral shield. He has always chosen expedient lies over the truth to get elected. Support for him shows a desperate hate of Trump.

Good luck to all and sundry.

Exhilarating times!!!

Kadath , Jun 3 2020 18:47 utc | 12
The Soviet Union collapsed because the Soviet Economic-Political Elite discovered that they could make more money and have more power by breaking the Union apart to devour the public utilities. The US Economic-Political elite have now made a similar decision. But whereas the Soviet Union had hard assets that could be privatised for profit, the US has public expenses that will be eliminated in order to free up resources for more financialization. The US elite will break apart the US as a nation state in order to harvest public pension funds, social security will be privatised and public debt will explode as the government (through the Federal Reserve) will guarantee stock market prices - get ready for DOW 50,000 in the next 5 years and a 40 trillion national debt, also get ready for collapse of the US as a functioning state the day after that.
karlof1 , Jun 3 2020 19:09 utc | 13
Erelis @5--

FIRE is a term used my Michael Hudson and other likeminded political-economists. He uses it so often it's hard to provide the initial instance. However, Hudson did write two books about how the FIRE sector gained its dominance, Killing the Host & J is for Junk Economics . It this video interview from 2017 , Hudson explains to Max Keiser about the latter book and how it relates to the just completed election, which begins at the 12:45 mark. That website also links to all previous Keiser Reports where I hope to find the specific interview that discusses the FIRE sector. This one does too, but it's not the specific topic discussed. I guarantee you'll learn a lot from the 10.5 minute interview!

jayc , Jun 3 2020 19:09 utc | 14
There is some evidence that "cooler heads" are exerting a "veto" influence on the Trump admin, but who exactly they are is not apparent. But so far this year the US was on the brink of a) attacking Iran with Air Force and missiles. b) dropping nuclear option on China through withdrawal of HK privileges, sanctioning CPC officials, and cancelling thousands of student visas. and c) ordering the military into the streets to "dominate" the protesters. All of these events seemed a sure thing until they suddenly didn't in fact occur.

I expect some kind of "unity ticket" will be offered to the American people for November and some degree of mild reforms initiated to help the vast majority get by.

Progressive Democrats had their best opportunity since the 1960s handed to them in the wake of Trumps's election, and most of them effectively squandered it by allowing their energy to be diverted into the Russiagate/impeachment nothing-burger box.

Red Ryder , Jun 3 2020 19:14 utc | 15
Petri Krohn wants redistribution of wealth. Let's look at the idea.

The opposing viewpoint says wealth is not a pie. Wealth comes from growth, innovation, creativity. It is many pies.

Of course, you can't bake your own pie without capital. So, how do we redistribute capital?

You can get it from the government via the banks, if they are 'ordered' to grant loans. They aren't. So, you can't get it from government or banks.

You can take it from the already wealthy. Taxes is the historic way to take wealth from the wealthy. But the tax schedule no longer takes significant amounts from the wealthy. And Congress is corrupted by the wealthy so that route is closed also. There will be no major new taxes on the wealthy.

How can we redistribute wealth, then?

Simplest way is Development Zones with no taxes for a 5-10 years. Investors will pour money in from around the world. New businesses can be started, innovation can be nourished and people can prosper.

Use the system to expand the base of participation and do it in the zones of poverty and redevelopment where the poor and disadvantaged are.

China does this. It works. Other nations do it. They call them FTZ (free trade zones). Russia has some.

Trump was going to do this with his original Infrastructure program. The Dems stopped it. Won't allow any progress.

But, this is the way to go. You raise people out of poverty, your increase their options and income, you grow their region, and lots of new pies are baked.

JC , Jun 3 2020 19:14 utc | 16
I love America. Revolution of our times five demands not one less. The chicken comes home to riots.
JC , Jun 3 2020 19:14 utc | 17
I love America. Revolution of our times five demands not one less. The chicken comes home to riots.
karlof1 , Jun 3 2020 19:21 utc | 18
Kadath @12--

The 1% made their decision to milk all the wealth long before the USSR's implosion. The regeneration of the Rentier Class began in Europe after the 1848 Revolutions and took hold of power during the latter half of the Victorian Age of the British Empire. Hudson explains how the erasure of Classical Economists from college curricula began after WW1 and connects it to the privatization of the Treasury via the Fed in 1913. The demise of Simon Patten and his school of thought was replaced by what became known as the Chicago School. Its first attempt to gain all the wealth was destroyed by the Ponzi Scheme it engineered during the 1920s. Forced underground from 1929-1945, it emerged from WW2 very strong since its manipulation of the university educational system still held, and the Cold War was contrived in part to make the Chicago School THE paramount economic thought center with Harvard as a close second. There's more to the story, but that'll suffice for now.

Christian J Chuba , Jun 3 2020 19:21 utc | 19
'V' Shaped Recovery already underway

At least this is what the brave people on FOX are saying. The ones who feel very secure in their jobs. Just a few weeks ago the talking points were ... 'Democrats are traitors because they are scared that the economic boom is going to start just before the election'.

Consumer driven economy cannot rebound w/terrorized consumers

These people really believe that all you need is another capital gains tax cut and everything will go back to normal. Don't any of these people think about the permanent trauma on the rest of us? Sure, once Fauci gives us the call clear, I'm taking the last of my savings and going to Disneyland and going to go to restaurants. Heck no. I'm terrified. Consumers even the most profligate ones are going to permanently change their behavior. BTW if you are really cynical, many will become more cautious and some just might break down and become drug addicts. I don't see a happy medium here.

No 'V' shaped recovery today.

[Jun 02, 2020] During Coronavirus epidemic, the US has shown itself incompetent and dysfunctional. That threatens the USA status a world hegemon and as the center of neoliberal empire

Notable quotes:
"... The western response to the Coronavirus spoke loudly: The U.S. and Europe have appeared powerful because they projected the illusion of competence; of being able to act effectively; of being strategic in their actions. On Coronavirus, the U.S. has shown itself incompetent, dysfunctional, and indifferent to human affliction. ..."
Jun 02, 2020 | www.strategic-culture.org

The western response to the Coronavirus spoke loudly: The U.S. and Europe have appeared powerful because they projected the illusion of competence; of being able to act effectively; of being strategic in their actions. On Coronavirus, the U.S. has shown itself incompetent, dysfunctional, and indifferent to human affliction.

Trump is fighting an existential war: on the one hand, the coming Election is not merely the most important in the U.S.' history. It will be existential. No more is Blue/Red a contrived theatre for the electorate – this is deadly serious.

For an important segment of the population (no longer the majority), to lose in this coming election would signify their ejection from power and politics, and their substitution by a culturally different class of Americans, with different cosmopolitan and diversity values. It is the tipping point – two irreconcilable visions of American life believe that they can continue only if they own the whole order, and the other side be utterly crushed.

And on the other hand, Trump sees the U.S. fighting a similarly existential war, albeit at a global plane. He is fighting a hidden 'war' to retain America's present dominance over global money (the dollar) – the source of its true power. For Americans to lose this parallel competition to the EU's and China's multilateral values of global co-operation and financial governance, would imply Americans' (i.e. white Anglo Saxon's) ejection from control over the global financial system, and (again) their substitution by a quite different vision (i.e. a Soros-Gates-Pelosi vision), advocating the 'progressive' values of ecological and financial, global governance.

Again – two irreconcilable visions of the global order, with each party believing that it must own the whole order to survive.

Hence Trump's full-spectrum disruption of China (and the whole multilateral ideology) to maintain dollar hegemony. Europe, on one side, exemplifies the shift towards a transnational regulatory and monetary super-state. And China , on the other, is not only Europe's willing partner, but the only power capable of sitting atop this globalist ambition, giving it the (required) financial weight and substance. This constitutes the existential threat to the U.S.' exceptional control of the global financial system – and therefore over global political power.

A sovereignty-ist Russia may not be as drawn to this cosmopolitan vision as China, but really it has little choice. Because, as President Putin repeatedly points out, the dollar constitutes the toxic problem plaguing the world trading system. And in this, Russia cannot stand aloof. The dollar is the problem for the Middle East too, with its noxious corollaries of oil, currency, trade and sanctions wars. The region will not long be able to sit on the fence, keeping distant from this struggle for the global financial order.

The Middle East, as deference to the U.S. illusion of power wanes, has as little choice as has Russia: It will be pushed to view the U.S. as its past, and to 'Look East' for its future.

And Israel will cease to be the pivot around which the Middle East revolves.

[Jun 02, 2020] We re In The Thick Of It Now – What Happens Next

Riots are not a political movement and they will dissipate soon. Leaving just strengthened the national-security state. That's what will happen next.
Notable quotes:
"... If the combination of peaceful protesting, looting and violence witnessed across American cities over the past few days completely caught you off guard, you're likely to come to the worst possible conclusion about what to do next. The knee-jerk response I'm already seeing from many is to crush the dissent by all means necessary, but that's exactly how you give the imperial state and oligarchy more power. Power it will never relinquish. ..."
"... On the one hand, you can't pillage the public so blatantly and consistently for decades while telling them voting will change things and not expect violence once people realize it doesn't. On the other hand, street violence plays perfectly into the hands of those who would take the current moment and use it to advocate for a further loss of civil liberties, more internal militarization, and the emergence of an overt domestic police state that's been itching to fully manifest since 9/11. ..."
Jun 02, 2020 | www.zerohedge.com

Authored by Mike Krieger via Liberty Blitzkrieg blog,

It's with an extremely heavy heart that I sit down to write today's post.

Although widespread civil unrest was easy to predict, it doesn't make the situation any less sad and dangerous. We're in the thick of it now, and how we respond will likely determine the direction of the country for decades to come.

If the combination of peaceful protesting, looting and violence witnessed across American cities over the past few days completely caught you off guard, you're likely to come to the worst possible conclusion about what to do next. The knee-jerk response I'm already seeing from many is to crush the dissent by all means necessary, but that's exactly how you give the imperial state and oligarchy more power. Power it will never relinquish.

What's happening in America right now is what happens in a failed state.

The U.S. is a failed state. Now the imperial national security state is going to flex at home like never before.

I spent the last decade of my life trying to spread the word to avoid this, but here we are.

-- Michael Krieger (@LibertyBlitz) May 31, 2020

I don't think people understand the significance of the President declaring "Antifa" a "terrorist organization". The Patriot Act and provisions of the NDAA of 2012 make this frightening. Because Antifa is informal it puts all protestors in danger--like declaring them un-citizens.

-- Bret Weinstein (@BretWeinstein) June 1, 2020

GOP @SenTomCotton : "If local politicians will not do their most basic job to protect our citizens, let's see how these anarchists respond when the 101st Airborne is on the other side of the street." pic.twitter.com/NyojLoOEAT

-- The American Independent (@AmerIndependent) June 1, 2020

The pressure cooker situation that erupted over the weekend has been building for five decades, but really accelerated over the past twenty years. After every crisis of the 21st century there's been this "do whatever it takes mentality," which resulted in more wealth and power for the national security state and oligarchy, and less resources, opportunities and civil liberties for the many. If anything, it's surprising it took so long to get here, partly a testament to how skilled a salesman for the power structure Obama was.

Your election was a chance to create real change, but instead you chose to protect bankers while looting the economy on behalf of oligarchs.

You and Trump aren't much different when it comes to the big structural problems, you were just better at selling oligarchy and empire. https://t.co/QuSQNApeLY

-- Michael Krieger (@LibertyBlitz) June 1, 2020

The covid-19 pandemic, related societal lockdown and another round of in your face economic looting by Congress and the Federal Reserve merely served as an accelerant, and the only thing missing was some sort of catalyst combined with warmer weather. Now that the eruption has occurred, I hope cooler heads can prevail on all sides.

On the one hand, you can't pillage the public so blatantly and consistently for decades while telling them voting will change things and not expect violence once people realize it doesn't. On the other hand, street violence plays perfectly into the hands of those who would take the current moment and use it to advocate for a further loss of civil liberties, more internal militarization, and the emergence of an overt domestic police state that's been itching to fully manifest since 9/11.

It's my view we need to take the current moment and admit the unrest is a symptom of a deeply entrenched and corrupt bipartisan imperial oligarchy that cares only about its own wealth and power. If people of goodwill across the ideological spectrum don't take a step back and point out who the real looters are, nothing's going to improve and we'll put another bandaid on a systemic cancer as we continue our longstanding march toward less freedom and more authoritarianism

... ... ...

[May 31, 2020] Our Grim Future by Pepe Escobar

A pretty silly rant, but some point might worth your attention...
Notable quotes:
"... I don't believe Marxist Social/Communism is the answer, as it has proven to always fail, as it is at complete odds with human nature. It drains creativity and productivity because they aren't rewarded ..."
"... Protests and Maidan open up fabulous opportunities for protest leaders. Chocolate oligarch Poroshenko became president. The little-known leader of the party faction in the parliament, Yatsenyuk, became prime minister. ..."
May 31, 2020 | www.zerohedge.com

Meanwhile, what is going to happen to assorted fascisms? Eric Hobsbawm showed us in Age of Extremes how the key to the fascist right was always mass mobilization: "Fascists were the revolutionaries of the counter-revolution".

We may be heading further than mere, crude neofascism. Call it Hybrid Neofascism. Their political stars bow to global market imperatives while switching political competition to the cultural arena.

That's what true "illiberalism" is all about: the mix between neoliberalism – unrestricted capital mobility, Central Bank diktats – and political authoritarianism. Here's where we find Trump, Modi and Bolsonaro.

...Even if neoliberalism was dead, and it's not, the world is still encumbered with its corpse – to paraphrase Nietzsche a propos of God.

And even as a triple catastrophe – sanitary, social and climatic – is now unequivocal, the ruling matrix – starring the Masters of the Universe managing the financial casino – won't stop resisting any drive towards change.

... Realpolitik once again points to a post-Lockdown turbo-capitalist framework, where the illiberalism of the 1% – with fascistic elements – and naked turbo-financialization are boosted by reinforced exploitation of an exhausted and now largely unemployed workforce.

Post-Lockdown turbo-capitalism is once again reasserting itself after four decades of Thatcherization, or – to be polite – hardcore neoliberalism. Progressive forces still don't have the ammunition to revert the logic of extremely high profits for the ruling classes – EU governance included – and for large global corporations as well.


-- ALIEN -- , 2 minutes ago

Allowing the continued uncontrolled exploitation of planetary resources will lead to global ecosystem collapse, killing most humans.

Cheap Chinese Crap , 10 minutes ago

Good God, it 's like this guy is giving a seminar in technocratic buzzword salad recognition.

"It takes someone of Marx's caliber to build a full-fledged, 21st century eco-socialist ideology, and capable of long-term, sustained mobilization. Aux armes, citoyens."

Aux armes, indeed. But not to erect an oligarchy of self-appointed experts to rule us with an iron hand. I rather prefer the idea of pulling them off their comfy, government-compensated sinecures and dragging them down into the mud with everyone else.

Anyone who thinks they are better qualified to run your life than you yourself is an enemy of the Enlightenment. Away with them all.

Leguran , 1 hour ago

Something worthwhile to note is missing among Pepe's carnage....

What has happened is that every imaginable organized group from doctors to pilots to lawyers, to farmers, to pharma companies, etc. has carved out a special slice of the economy especially for themselves.

In Feudal times rivers could not be navigated because cockroach lords would charge fees to use the rivers. That is exactly the same arrangement today but instead of using force of arms, laws are used. Our economy is choking on all these impediments.

mtumba , 2 hours ago

I agree that we need a revolution, and that the .01% globalist "elites" have proven to be not only craven, arrogant and greedy - but also stupid beyond redemption.

But I don't believe Marxist Social/Communism is the answer, as it has proven to always fail, as it is at complete odds with human nature. It drains creativity and productivity because they aren't rewarded, and it rewards laziness and inertia, because the absolute minimum of effort results in the barest level needed to survive, which - oddly - is enough for many.

I think it would be great to give actual capitalism a try, with extremely limited govt - a govt that ONLY provides for the common defense and enforcement of contract laws and protection against crimes of violence and property theft. NOT crony-capitalism that takes command over the resources of a nation's klepotcratic govt by the .01% richest and their sycophantic bottom feeder lawyers, lobbyists, corrupt politicians and other enablers.

Snout the First , 3 hours ago

That was sure a lot of words, needlessly making something simple difficult. Here's what it all boils down to:

PKKA , 3 hours ago

Protests and Maidan open up fabulous opportunities for protest leaders. Chocolate oligarch Poroshenko became president. The little-known leader of the party faction in the parliament, Yatsenyuk, became prime minister.

You know that on the project of an epic wall between Ukraine and Russia, Yatsenyuk stole $ 1 billion but did not build a wall. A moron with a certificate from a psycho hospital Andrei Parubiy became the speaker of parliament. You did not know that Parubiy had a certificate of moronity from a psycho hospital? Now you know. Boxer Vitali Klitschko became mayor of Kiev. Vitaly pronounces the words in syllables and wrinkles his forehead for a long time before expressing a thought. You can even physically hear the creak of gears as they spin and creak in Klitschko's head. Do you know what rabble passed in the Ukrainian parliament? Bandits, crooks, nazis, morons, thieves and idiots! So the protests open up fabulous career opportunities and enrichment!

play_arrow
Phillyguy , 4 hours ago

The American public has a front row seat, watching US economic decline. This process has been ongoing since the mid 1970's, as corporate profits slumped. In response the ruling elite enacted a series of Neo-liberal economic policies- multiple tax cuts for the wealthy, attacks on the poor and labor, job outsourcing, financial de-regulation, lack of spending on public and private infrastructure and spending $ trillions of taxpayer money on the Pentagon and strategic debacles in Afghanistan (longest war in US history), Iraq, Libya, Syria and Yemen. In total, these policies have been a disaster for the average American family.

The ruling elite are well aware of American economic decline, accelerated by the Coronavirus pandemic. Fascism comes to the fore when capitalism breaks down, and under extreme conditions, the ruling elite use fascism as an ideological rationale to harness state power- Legislature and police, to maintain class structure and wealth distribution. Western capitalism is incapable of reversing its economic decline and as a result, we are seeing fascism reemerging in the US, EU and Brazil. Donald Trump is the face of American fascism. Michael Parenti provides an excellent historical analysis of fascism. See: Michael Parenti- Functions of Fascism (Real History) 1 of 4 Jan 27, 2008; Link: www.youtube.com/watch?v=n0Bc4KJx2Ao

Vigilante , 4 hours ago

How come 'fascist' Trump is being attacked 24/7 by the Deep State though?

They should be on his side if your assertions are correct

Fascism resides mostly on the Left end of the spectrum...and 'Woke' capital is throwing its lot with the 'progressives' these days

bshirley1968 , 4 hours ago

It's your perception he is being attacked. Dude, wake up.

The best the deep state has to run against Trump is Joe Biden? They are that stupid? They are that weak? If they are that stupid and weak, how can they be a conceivable, real threat.

You are being played. You imagine there are good guys that you can trust......and that is why you are being played.

HomeOfTheHypocrite , 3 hours ago

The ruling class is currently divided between those who are ready to prepare fascism and those who want to continue on with neoliberalism. Trump represents one faction of the ruling class. His political opponents in the Deep State represent another. None of them have any genuine concern for the fate of the American worker. Trump, if judged by his actions and not his words, is nothing but a charlatan who mouths populist phrases while appointing billionaire aristocrats to political positions and lavishing investment bankers with trillions of tax dollars.

CatInTheHat , 2 hours ago

This is the problem with both sides cult followers: the insanity behind the idea that these elite somehow have their hands tied behind their backs as they ALL move is toward fascism.

The 2 party system is a ONE party right wing fascist one. Trump is merely a figure head. People listen to what a politician says and NOT what he does behind their