Wednesday, March 11, 2020


Stocks Tank As W.H.O. Declares Coronavirus a Pandemic and Congress Resists Stimulus

NEW YORK, NY - AUGUST 1: Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) on August 1, 2019 in New York City. Following large gains earlier in the day, U.S. markets dropped sharply after an afternoon tweet by …
Drew Angerer/Getty Images
U.S. stocks careened lower Wednesday after global health authorities recognized coronavirus as a pandemic and Trump administration plans for economic stimulus met with resistance on Capitol Hill.
The Dow Jones Industrial Average lost 1,260 points, or 5%. The S&P 500 declined 4.6 percent, and the Nasdaq Composite dropped 4.4 percent. The domestically focused small-cap Russell 2000 index fell by 5.2 percent.
Stocks have been on a while ride. On Monday, the major indexes suffered their worst losses since the global financial crisis in 2008–only to regain about half those losses on Tuesday after President Donald Trump announced an economic stimulus package. Stocks opened sharply lower on Wednesday and dropped further following the announcement by the World Health Organization that the coronavirus outbreak can be considered a global pandemic.
The Trump administration’s economic stimulus package has run into resistance on Capitol Hill. Democratic leaders, including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, immediately announced their opposition to payroll tax cuts. On Wednesday, members of President Trump’s own party also signaled that they might not support the tax cut measure.
Senator Chuck Grassley, the Iowa Republican, reportedly said that immediate action on payroll tax holiday not needed–although he left open the possibility that it could be approved later. Grassley is the top Republican on the Senate Finance Committee.
“Let’s see a week, two weeks down the road if we get a feeling that we need to do something more dramatic,” Grassley said Wednesday.
Many investors worry that a delay of several weeks could mean any economic stimulus could come too late to keep the U.S. economy growing. Some economists think that we may already be in a recession.
“I wouldn’t be one bit surprised if when we look back at the data, it is decided … that the recession started in March,” Alan Blinder, a former Federal Reserve vice chairman, told CNBC’s “Squawk Alley.” 


"One of the premier institutions of big business, JP Morgan Chase, issued an internal report on the eve of the 10th anniversary of the 2008 crash, which warned that another “great liquidity crisis” was possible, and that a government bailout on the scale of that effected by Bush and Obama will produce social unrest, “in light of the potential impact of central bank actions in driving inequality between asset owners and labor."  

On the one hand, there is the belief in some quarters that still more money will be made available by the Fed and other central banks, ensuring that the financial elites can continue to rake in money hand over fist—whatever the impact of the coronavirus on the real economy and the lives of millions of people.

Another downward swing on Wall Street

Wall Street had another turbulent session yesterday with market indexes down by more than 3 percent after a surge on Wednesday, fuelled in large measure by the market’s appreciation of the victory of former US Vice-President Joe Biden in the Super Tuesday Democratic primary elections.
The market fall was accompanied by a further decline in bond market interest rates. The yield on the 10-year US Treasury bond fell to a new record low of 0.9 percent, while the yield on the 30-year Treasury bond dropped to 1.55 percent, also a record low.
The move of investors into bonds, sending their prices higher and their yields lower, is an indication that markets are not just expecting, but demanding a further interest rate cut by the Federal Reserve, following its emergency rate reduction of 0.5 percentage points on Tuesday.
The Dow finished down by 970 points yesterday, a fall of 3.6 percent, with the S&P 500 dropping 3.4 percent and the Nasdaq finishing lower by 3.1 percent. So far this week, the Dow has had two days in which it has risen by more than 1,000 points, a one-day drop of more than 800 points and yesterday’s fall of almost 1,000.
The immediate cause of the swings is the conflict between two opposed outlooks.
On the one hand, there is the belief in some quarters that still more money will be made available by the Fed and other central banks, ensuring that the financial elites can continue to rake in money hand over fist—whatever the impact of the coronavirus on the real economy and the lives of millions of people. On the other, some investors fear that the spread of the virus is going to lead to a major economic downturn in the US and around world.
The gyrations in global stock markets have also focused attention on underlying trends in the financial system that are creating the conditions for another crisis on the scale of 2008 or even larger.
A major article, entitled “The seeds of the next debt crisis,” by long-time financial journalist John Plender, published in the Financial Time s this week, brought together some of the most significant developments.
Plender began by noting that the shock the coronavirus has wrought on markets “coincides with a dangerous financial backdrop marked by spiralling global debt.”
The Institute of International Finance has calculated that the ratio of global debt to world gross domestic product has reached an all-time high of more than 332 percent, with total debt now at $235 trillion.
“The implication, if the virus continues to spread, is that any fragilities in the financial system have the potential to trigger a new debt crisis,” Plender wrote.
He noted that, despite lower interest rates, financial conditions have tightened for weaker corporate borrowers because their access to bond markets has become more difficult. This is because, as the fall in Treasury bond yields shows, major investors are seeking a safe haven.
This was signficant, Plender continued, because the debt build-up since 2008 has been concentrated in the non-bank corporate sector “where the current disruption to supply chains and reduced global growth imply lower earnings and greater difficulty in serving debt,” raising the “extraordinary possibility of a credit crunch in a world of ultra-low and negative interest rates.”
Plender drew attention to the dangerous implications of moves by the Fed and other central banks to make still more money available to financial markets. This “policy activism carries a longer-term risk of entrenching the dysfunctional monetary policy that contributed to the original financial crisis, as well as exacerbating the dangerous debt overhang that the global economy now faces.”

The risks have been continuing to build since the late 1980s when central banks, above all the Fed, pursued an “asymmetric monetary policy” of supporting markets when they plunge but failing to dampen down the formation of bubbles, leading to “excessive risk taking” by banks
The quantitative easing policy pursued since the crisis was a continuation of the asymmetric approach and the resulting safety net under the banking system, Plender commented, is “unprecedented in scale and duration.”
The threat to the stability to the global financial system is not the same as the crisis in 2008, which had its origins in property and mortgage lending markets. Today, it is concentrated in loans to the corporate sector.
A recent report by the Organisation for Economic Co-operation and Development said that at the end of December last year the global stock of non-financial corporate bonds had reached an all-time high of $13.5 trillion, double the December 2008 level in real terms. The rise has been most marked in the US, where the Fed has estimated that corporate debt has risen from $3.3 trillion before the financial crisis to $6.5 trillion last year.
The rise in corporate debt has been accompanied by a decrease in its quality. There has been a disproportionate increase in the issuance of BBB bonds—the lowest investment grade rating one notch above junk status—that could be downgraded in the event of an economic downturn.
Plender wrote: “That would lead to big increases in borrowing costs because many investors are constrained by regulation or self-imposed restrictions from investing in non-investment grade bonds.”
In other words, any major downgrade, either as a result of financial market turbulence or recessionary trends, would have a cascading effect as major investors would be forced to sell into a falling market.
As Plender noted, the deterioration in debt quality is “particularly striking in the $1.3 trillion market for leveraged loans.” These are loans arranged by syndicates of banks to companies that are already heavily indebted or have weak credit ratings, and whose ratio of debt to assets or earnings is above industry norms. The issuance of such bonds hit a record high of $788 billion in 2017, with the US accounting for $564 billion of the total.
Another factor adding to the potential for a crisis is that much of this debt has not been used to finance new plant and equipment to increase production and sales revenue but to finance mergers and acquisitions, as well as share buybacks to boost stock market valuations—a process that provides very handsome rewards for corporate executives and major finance houses.
Plender warned that the huge accumulation of corporate debt “of increasingly poor quality” was “likely to exacerbate the next recession,” under conditions where the ultra-loose monetary policy had encouraged complacency. This, he added, “is a prerequisite of financial crises.”
While the dangers are most pronounced in the corporate sector, banks would not be immune and could not “escape the consequences of a wider collapse in markets in the event of a continued loss of investor confidence and or a rise in interest rates from today’s extraordinary low levels. Such an outcome would lead to increased defaults on banks’ loans together with a shrinkage in the value of collateral in the banking system.”
And such dangers would persist even if the coronavirus shock passes—and as yet there is no indication of that taking place—because the policies of the central banks have driven investors to search for yield “regardless of the dangers.”

Warren: We Are Headed for Financial Crisis as Bad as 2008

  5 Mar 2020630
Thursday on MSNBC’s “The Rachel Maddow Show,” Sen. Elizabeth Warren (D-MA) predicted that coronavirus could cause a global financial crisis as large as 2008.
Maddow asked, “You rose to national prominence around the last global financial catastrophe, predicting it, crucially helping explain it while it was happening, and then trying to save us from its impact. This crisis we’re going through now and heading into now because of coronavirus is different. Is it reasonable to be worried this might be a financial disaster of a similar scale?”
Warren said, “Yes.”
She continued, “Understand it this way. Before coronavirus was on anybody’s radar screen, this economy was already showing the cracks. Lending defaults, loan defaults were up. Small businesses were failing and not able to help pay their — not able to service their debts. There were declines in manufacturing. You kind of can see shaky signs in the economy, problem number one. And number two, the Trump administration had spent the bail-out tools. So they’d done this ginormous tax break and ballooned the debt and done rate cuts to juice the economy. And the consequences of both of those had not been investment in the real economy. It had been to do things like stock buybacks that produced things for a handful of folks at the top and executives but didn’t actually create more goods and more services in the economy.”
She added, “So, OK, so you’ve got a kind of cracky economy, and you’ve got the tools spent down and along comes the coronavirus. And now you’re going to get hit again because it’s things like supply chains. The trucks that are stopped in China and just literally the stuff is just not coming over. So manufacturers here in the United States that need 147 parts to put something together to send it out, two of those parts come from China, you’re done. You need to the ingredients to be able to manufacture a drug, and two of those come from China, and you’re just done on this. So that starts twisting the economy. Then part two, you have an economy right now that is deeply interrelated. Five big banks in America now, and they’re not only here, they’re tied all around the world. So as soon as one of these businesses that can’t do its manufacturing or can’t produce its drugs because it has a supply chain problem, can’t make a loan payment, and you start stacking those up all of a sudden—those banks they’re in trouble themselves. More defaults on the loans. Now the banks start to get in trouble.”
She concluded, “There’s a third problem, an incompetent administration. An incompetent administration is like its own natural disaster. When you’ve got a president who engages in magical thinking and says, no, he decided there were only 15 cases, and they would all be gone by April. And whatever it is he decides, my gosh, it almost doesn’t matter what he decides. The point is he’s not listening to the scientists. He’s not listening to the experts on this. And then he picks Mike Pence as the person in the White House who’s really going to be in charge of this. He picked the one person who actually has experience with a health care crisis, and that was back in Indiana, and Mike Pence was in charge as governor as made it a whole lot worse. It’s like the worst of all connections here. So if we were doing our dead-level best and going at this smart, we’d be working on the coronavirus. We’d be working on the tests as you talked about at the top, the vaccines. We would set aside a big fund of money so that we now would let anybody take sick leave who is diagnosed so people can keep themselves inside and try to slow down the spread. There are a lot of steps we could be taking on. They’re not taking them on. They’re engaged in a magical thinking. But there’s also steps we could be taking on the economic front, and it’s not just a rate cut, it’s actually we need to be talking about stimulus now. And look, yeah, they did the tax cuts and ran the debt up, and that makes it a lot tougher for us to get stimulus through now. So all these pieces are related to each other, and none of them are good.”

Déjà Vu? Auto-Loan Delinquency Hits New Record High For, Um … Some Reason


Is this a failure of the labor market? Or is it a rerun on a smaller scale of the financial crash that created the Great Recession? According to the Federal Reserve of New York, a record number of Americans are three months or more behind on their car payments — even worse than during the crash in the previous decade:
A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis.

Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills.
That seems incongruous in an economy where growth has spread out across the spectrum. Job creation has picked up, wages have increased in real terms at the best rate since before the Great Recession, and the overhang of discouraged workers finally appears to be evaporating. Still, the New York Fed blames this on a lack of widespread impact from the economy:
 “The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post.
Maaaayyyyybeee, but there’s something else going on here too. In the same blog post, the NY Fed also notes that the delinquencies are mainly coming from subprime loans:
The flow into serious delinquency (that is, the share of balances that were current or in early delinquency that became 90+ days delinquent) in the fourth quarter of 2018 crept up to 2.4 percent, substantially above the low of 1.5 percent seen in 2012.
In the chart below, we disaggregate the delinquency rate by the borrower’s credit score at origination. The relative performance between each credit score group stands out immediately; but the increase in delinquency is most obvious among the loans of the two groups of lower-score borrowers, shown by the blue and red lines in the chart below. Borrowers with credit scores less than 620 saw their transitions into delinquency exceed 8 percent in the fourth quarter (annualized as a moving sum), a development that is surprising during a strong economy and labor market. Meanwhile, the delinquency transitions among those with the highest credit scores have remained stable and very low. In aggregate, the increasing share of prime loans has partially offset the deteriorating performance of the subprime sector.
That increase in the percentage of prime lending as a hedge against subprime risk has only happened recently. Over the last several years, subprime lending increased significantly, including in the auto-loan market. By 2013, subprime auto lending had increased 18.8%, while subprime auto-loan securities had grown 63.5%. Many of those loans carried high interest rates, sometimes as high as revolving credit-card rates. Did people expect to marry credit risks to high interest rates and not get defaults?
The Washington Post buries the scope of that risk towards the end of their article:
He noted that non-prime and subprime auto loans increased from 28 percent of the market in 2009 to 39 percent in 2015, a reminder of how aggressively lenders went after borrowers who were on the margin of being able to pay. More lenders are giving people six or seven years to repay now vs. four of five years in the past, according to Experian, another tactic to try to make loans look affordable that might not otherwise be.
That’s a more accurate look at the aggressive nature of subprime lenders, which also has echoes of the housing bubble and its 2008 collapse. The NY Fed blames this mainly on “auto finance reporters,” but this chart shows a more nuanced picture:
Half of all auto-finance reporter loans are subprime, which accounts for $75 billion in outstanding debt. However, 25% of all auto loans written by large institutions are also subprime — and that accounts for over $97 billion in outstanding debt. Those “too big to fail” institutions apparently didn’t learn any lessons, and neither did the investors who are buying securities based on subprime debt. And how much backstop are the auto finance reporters getting from the large banks?
The only potential good news is that auto-loan debt isn’t large enough to knock out financial institutions — on its own, anyway. Does anyone want to bet that subprime lending in the housing markets hasn’t followed along in the same manner, though?


Three Ways to Avoid Death of Dollar – and America

Little remains of the vast edifice of family, community and faith relationships that once unified and anchored the American way of life. These things have not disappeared from the horizon. They are still important, but they have deteriorated. There is no more consensus about what they mean, and they no longer serve as anchors of certainty.
One final anchor remains that does unite Americans. This anchor survives despite everything. Now, even this seems targeted for destruction.
The Last Anchor That Unites Everyone
It seems almost irreverent to affirm, but this last anchor is the American dollar. Money is not supposed to be a social anchor. Other more immaterial things—moral, principles, social bonds—should play this role. However, today money bridges the seemingly unbridgeable chasms that polarize the nation in a way nothing else can.  
It is not just money. What unites Americans across the board is the dollar, which is accepted everywhere either in its physical or virtual form. No one questions its dominant role. As the world’s reserve currency, it keeps global trade running while everything else falls apart. When the other anchors fail, the dollar is always there to spend ways out of a crisis. 
Calling the dollar the last anchor does not mean that money should or does run everything. The dollar is much more than a simple unit of currency. It has immense symbolic importance since it is attached to notions of national sovereignty, power and the American way of life. The dollar sustains the myth of an America that will never fail. Thus, its fall is unimaginable to many Americans who cannot visualize the country without it.
A Culture of Intemperance
However, there is a darker side to the dollar. It facilitates the frenetic intemperance of a culture that rejects limits. People want everything instantly and effortlessly, and the dollar is ever-ready to supply the means to buy fleeting happiness. The government offers its dollar subsidies to keep people dependent and happy. So many others seem willing to sustain this frenzied lifestyle by contracting debt of all types—private, corporate and governmental.
And the dollar is the ideal instrument for this frenzy. It is stable, flexible and plentiful. What sustains the dollar is the world’s willingness to buy U.S. Treasury bonds as a stable investment. There seems to be no limit to the frenetic appetite for these debt dollars worldwide.
However, the dollar cannot solve the nation’s problems no matter how many trillions are thrown at them. Like any currency, the dollar is only as strong as the society that sustains it. With the decline of America’s institutions, it is inevitable that the dollar too will face a decline—perhaps radically and dramatically.
This dollar decline could happen in three different ways, especially in these erratic times.
The Post-2008 U.S. Is Unprepared for New Economic Crises
First, it can be destroyed by overconfidence. The grand myth holds that the dollar cannot be destroyed because it has never been destroyed before, despite several close calls.
There is no logic to this affirmation. All things temporal can be destroyed, especially if they are neglected. However, the argument does carry some weight in a culture that is run on emotions and feelings.
The fact is that the dollar is surviving on borrowed time. The 2008 crisis provoked world finance leaders to use every tool in their toolboxes to fix the crisis. Programs of zero or even negative interest, quantitative easing and other vehicles have all run their course with limited effects. Overconfident Americans need to take notice of dangers on the horizon.
Risks still abound in today’s global economy with trade wars and political tensions. Many economic observers say that should a major crisis hit the world economy, the financial systems could go down. And there are very few new tricks that can be employed to stem the grave damage since the root causes are not being addressed.
The mantra that the dollar is indestructible is hardly reassuring.
The Very Real Debt Threat
The second factor that could cause the dollar’s decline is debt in all its forms, especially American sovereign debt. When the world no longer wants to buy American debt, the crushing burden of high interest rates will have disastrous consequences for the nation.
The present governmental debt shows no sign of diminishing. People have gotten used to the idea of annual $800 billion deficits. It will be the new normal over the coming years as no Senator or U.S. Congressman wants to take things off their shopping lists or face the firestorm of public opprobrium for urging fiscal restraint.  
Also, corporate debt now stands at nearly $9 trillion. The quality of investment-grade bonds has deteriorated with many in or bordering on junk category. This debt could trigger defaults, bankruptcies, burst bubbles of immense proportions, all of which will weigh heavily on the dollar.
Similarly, personal debt has climbed back to pre-2008 crisis levels.
Indeed, ours is a world awash in debt of all sizes, types, and nations. As the world’s reserve currency, the dollar cannot escape the reverberations of a world financial crisis when major players default.
Sidelining the Dollar as the World’s Reserve Currency
The final threat is more deliberate and targeted. As the preferred unit of currency in commodity markets, the dollar is under direct attack today through a new European Union mechanism called a Special Purpose Vehicle (SPV).
Everyone knows that no currency (or even basket of currencies) can replace the dollar as the world’s reserve currency. However, the European Union, China, Russia and Iran are seeking to create a clearinghouse that will run circles around U.S. sanctions against the Islamic Republic of Iran. They are setting up a credit system that will allow the barter trading of commodities without the use of American dollars.
In this way, the dollar can come to be challenged and sidelined by many major countries in international trade, and potentially even losing its privileged status.
The Collapse of the Postwar Order
Any of these three ways can drag down the U.S. dollar from its post-World War II throne. This would be disastrous since it would hasten the collapse of the postwar order with no replacement save chaos and disorder. 
However, the greatest catastrophe would be for American society. The collapse of America’s last anchor will increase the fragmentation and polarization of the nation.  All these three ways are avoidable if America’s political leaders would apply themselves energetically and without further loss of time toward addressing the root causes of the threats the nation faces. It would involve the need for great restraint, sacrifice and new national priorities.
The real problem facing America today is much more a moral problem than an economic one.  Society needs anchors, especially moral anchors to unify the nation. When those anchors are gone, the nation is left rudderless in a sea of chaos.
John Horvat II is a scholar, researcher, educator, international speaker, and author of the book Return to Order: From a Frenzied Economy to an Organic Christian Soceity--Where We've Been, How We Go Here, and Where We Need to Go. He lives in Spring Grove, Pennsylvania, where he is the vice president of the American Society for the Defense of Tradition, Family and Property.

U.S. Congressman Says Many of His Colleagues Are 'Struggling' Financially

By Mark Jennings |

( -- Rep. Jared Huffman (D-Calif.) told on Wednesday that many of his colleagues in the House of Representatives are "struggling" financially. He made the observation in response to a question about whether members of Congress, who now earn $174,000 per year, deserve a pay raise.
“I’ll let the body and the public opinion and other factors decide whether we get a cost of living increase," he said, "but I do know a lot of my colleagues are struggling.” asked Huffman: “Congressman Huffman, at $174,000 members of Congress get paid a salary that is 370 percent of the median earnings of a full-time American worker. Do you think the Congress deserves a raise?”
Huffman responded: “I think no one goes into this line of work to get rich. A lot of my colleagues are struggling with the fact that we have housing costs both in home, at our home district, in some cases where real estate values are very high and housing costs are high. And then you have to also have housing here in D.C. So, I know a lot of members are struggling."
“I’ll let the body and the public opinion and other factors decide whether we get a cost of living increase," he said, "but I do know a lot of my colleagues are struggling.”
According to the Congressional Research Service (CRS), regular senators, representatives, delegates, and the resident commissioner from Puerto Rico are paid an annual salary of $174,000. 
"The only exceptions include the Speaker of the House (salary of $223,500) and the President pro tempore of the Senate and the majority and minority leaders in the House and Senate (salary of $193,400)," reported the CRS.  "These levels have remained unchanged since 2009."
According to the U.S. Census Bureau, the median annual earnings of a U.S. worker are $47,016. A salary of $174,000 is 3.7 times the median earnings of $47,016, or 370% higher. 

"One of the premier institutions of big business, JP Morgan Chase, issued an internal report on the eve of the 10th anniversary of the 2008 crash, which warned that another “great liquidity crisis” was possible, and that a government bailout on the scale of that effected by Bush and Obama will produce social unrest, “in light of the potential impact of central bank actions in driving inequality between asset owners and labor."  

“Our entire crony capitalist system, Democrat and Republican alike, has become a kleptocracy approaching par with third-world hell-holes.  This is the way a great country is raided by its elite.” ---- Karen McQuillan  THEAMERICAN


Despite a booming economy, many U.S. households are still just holding on


Many U.S. households find themselves in a fragile position financially, even in an economy with an unemployment rate near a 50-year low. (David Sacks / Getty Images)
Many U.S. households find themselves in a fragile position financially, even in an economy with an unemployment rate near a 50-year low, according to a Federal Reserve survey.
The Fed’s 2018 report on the economic well-being of households, published Thursday, indicated “most measures” of well-being and financial resilience “were similar to, or slightly better than, those in 2017.” The slight improvement coincided with a decline in the average unemployment rate to 3.9% last year, from 4.3% in 2017.
Despite the uptick, however, the results of the 2018 survey indicated that almost 40% of Americans would still struggle in the face of a $400 financial emergency. The statistic, which was a bit better than in the 2017 report, has become a favorite rejoinder to President Trump’s boasts about a strong economy from Democratic politicians, including 2020 presidential candidate Sen. Kamala Harris of California.
“Relatively small, unexpected expenses, such as a car repair or replacing a broken appliance, can be a hardship for many families without adequate savings,” the report said. “When faced with a hypothetical expense of $400, 61% of adults in 2018 say they would cover it, using cash, savings, or a credit card paid off at the next statement,” it added.
“Among the remaining 4 in 10 adults who would have more difficulty covering such an expense, the most common approaches include carrying a balance on credit cards and borrowing from friends or family,” according to the report.
Based on a survey of 11,000 people in October and November 2018, the report showed that a quarter of Americans don’t feel like they are doing "at least OK" financially. That number was higher for black and Latino Americans, at roughly one-third for both. For those making less than $40,000 a year, the share who felt they weren’t doing well was 44%.
“We continue to see the growing U.S. economy supporting most American families,” Fed Gov. Michelle Bowman said in a press release accompanying the report.
“At the same time, the survey does find differences across communities, with just over half of those living in rural areas describing their local economy as good or excellent compared to two-thirds of those living in cities,” Bowman said. “Across the country, many families continue to experience financial distress and struggle to save for retirement and unexpected expenses.”
Boesler writes for Bloomberg

"While America’s working and middle class have been subjected to compete for jobs against a constant flow of cheaper foreign workers — where more than 1.2 million mostly low-skilled immigrants are admitted to the country annually — the  billionaire class has experienced historic salary gains." Sen. Josh Hawley 

A new Gilded Age has emerged in America — a 21st century version.
The wealth of the top 1% of Americans has grown dramatically in the past four decades, squeezing both the middle class and the poor. This is in sharp contrast to Europe and Asia, where the wealth of the 1% has grown at a more constrained pace.


Josh Hawley: GOP Must Defend Middle Class Americans Against ‘Concentrated Corporate Power,’ Tech Billionaires

The Republican Party must defend America’s working and middle class against “concentrated corporate power” and the monopolization of entire sectors of the United States’ economy, Sen. Josh Hawley (R-MO) says.

In an interview on The Realignment podcast, Hawley said that “long gone are the days where” American workers can depend on big business to look out for their needs and the needs of their communities.
Instead, Hawley explained that increasing “concentrated corporate power” of whole sectors of the American economy — specifically among Silicon Valley’s giant tech conglomerates — is at the expense of working and middle class Americans.
“One of the things Republicans need to recover today is a defense of an open, free-market, of a fair healthy competing market and the length between that and Democratic citizenship,” Hawley said, and continued:
At the end of the day, we are trying to support and sustain here a great democracy. We’re not trying to make a select group of people rich. They’ve already done that. The tech billionaires are already billionaires, they don’t need any more help from government. I’m not interested in trying to help them further. I’m interested in trying to help sustain the great middle of this country that makes our democracy run and that’s the most important challenge of this day.
“You have these businesses who for years now have said ‘Well, we’re based in the United States, but we’re not actually an American company, we’re a global company,'” Hawley said. “And you know, what has driven profits for some of our biggest multinational corporations? It’s been … moving jobs overseas where it’s cheaper … moving your profits out of this country so you don’t have to pay any taxes.”
“I think that we have here at the same time that our economy has become more concentrated, we have bigger and bigger corporations that control more and more of our key sectors, those same corporations see themselves as less and less American and frankly they are less committed to American workers and American communities,” Hawley continued. “That’s turned out to be a problem which is one of the reasons we need to restore good, healthy, robust competition in this country that’s going to push up wages, that’s going to bring jobs back to the middle parts of this country, and most importantly, to the middle and working class of this country.”
While multinational corporations monopolize industries, Hawley said the GOP must defend working and middle class Americans and that big business interests should not come before the needs of American communities:
A free market is one where you can enter it, where there are new ideas, and also by the way, where people can start a small family business, you shouldn’t have to be gigantic in order to succeed in this country. Most people don’t want to start a tech company. [Americans] maybe want to work in their family’s business, which may be some corner shop in a small town … they want to be able to make a living and then give that to their kids or give their kids an option to do that. [Emphasis added]
The problem with corporate concentration is that it tends to kill all of that. The worst thing about corporate concentration is that it inevitably believes to a partnership with big government. Big business and big government always get together, always. And that is exactly what has happened now with the tech sector, for instance, and arguably many other sectors where you have this alliance between big government and big business … whatever you call it, it’s a problem and it’s something we need to address. [Emphasis added]
Hawley blasted the free trade-at-all-costs doctrine that has dominated the Republican and Democrat Party establishments for decades, crediting the globalist economic model with hollowing “out entire industries, entire supply chains” and sending them to China, among other countries.
“The thing is in this country is that not only do we not make very much stuff anymore, we don’t even make the machines that make the stuff,” Hawley said. “The entire supply chain up and down has gone overseas, and a lot of it to China, and this is a result of policies over some decades now.”
As Breitbart News reported, Hawley detailed in the interview how Republicans like former President George H.W. Bush’s ‘New World Order’ agenda and Democrats have helped to create a corporatist economy that disproportionately benefits the nation’s richest executives and donor class.
The billionaire class, the top 0.01 percent of earners, has enjoyed more than 15 times as much wage growth as the bottom 90 percent since 1979. That economy has been reinforced with federal rules that largely benefits the wealthiest of wealthiest earners. A study released last month revealed that the richest Americans are, in fact, paying a lower tax rate than all other Americans.
John Binder is a reporter for Breitbart News. Follow him on Twitter at @JxhnBinder

Economists: America’s Elite Pay Lower Tax Rate Than All Other Americans

The wealthiest Americans are paying a lower tax rate than all other Americans, groundbreaking analysis from a pair of economists reveals.

For the first time on record, the wealthiest 400 Americans in 2018 paid a lower tax rate than all of the income groups in the United States, research highlighted by the New York Times from University of California, Berkeley, economists Emmanuel Saez and Gabriel Zucman finds.
The analysis concludes that the country’s top economic elite are paying lower federal, state, and local tax rates than the nation’s working and middle class. Overall, these top 400 wealthy Americans paid just a 23 percent tax rate, which the Times‘ op-ed columnist David Leonhardt notes is a combined tax payment of “less than one-quarter of their total income.”
This 23 percent tax rate for the rich means their rate has been slashed by 47 percentage points since 1950 when their tax rate was 70 percent.