Wall Street Investment Banks Shatter Expectations While American Workers Suffer with Biden Inflation
Report: Biden’s Campaign Benefited from Record Amount of ‘Dark Money’
President Joe Biden’s successful 2020 White House bid benefited from an extensive record-breaking amount of “dark money,” according to a new report.
Bloomberg News noted earlier this week that outside political groups—not officially associated with Biden’s campaign, but working to support his chances at victory—spent and raised more than $145 million from anonymous donors.
“That amount of dark money dwarfs the $28.4 million spent on behalf of his rival, former President Donald Trump,” Bloomberg reported. “And it tops the previous record of $113 million in anonymous donations backing Republican presidential nominee Mitt Romney in 2012.”
The money, while significant, was only a fraction of the $1.5 billion spent on Biden’s behalf this last cycle. The president, himself, raised more than $1 billion through his own campaign committee, according to the Center for Responsive Politics.
A further $578 million was raised by Super PACs and other political groups. This figure includes the $145 million in “dark money” that was raised by political non-profits that are not required by law to disclose their donors.
Generally, such non-profits either raise the money and spend it themselves or transfer it to larger Super PACs working on a candidate’s behalf. Although Super PACs are not allowed to coordinate directly with the campaigns of specific candidates, there is no limit to how much they can raise on that candidate’s behalf, provided they disclose every donor. Political non-profits, however, often act as a shield since they too can raise unlimited amounts of money without having to disclose their donors.
During the 2020 election cycle, such practices heavily benefited Democrats. The Center for Responsive Politics notes that more than $326 million in “dark money” was spent to aid Democrats this last cycle. Meanwhile, only $148 million was used to support Republican groups.
Democrats, including Biden, accepted the help from “dark money” groups, even as they argued in favor of tighter regulations on campaign spending. Biden, in particular, unveiled a proposal last year that specifically called for an “end [to] dark money groups.”
While Biden was championing that idea, though, “dark money” groups were mobilizing to see him elected president. As Breitbart News reported in October 2020, a super PAC backed by Silicon Valley donors and boosted by “dark money” spent substantially to run attack ads against Trump in the final weeks of the White House contest.
Fed chair Jerome Powell has again reassured financial markets that, despite the significant rise in US inflation, the central bank is not going to pull back its ultra-loose monetary policies that have seen Wall Street reach record highs.
THE BANKSTER REGIME OF LAWYER BARACK OBAMA, LAWYER JOE BIDEN AND LAWYER ERIC HOLDER
World’s largest asset management firm was “front and center” of Fed’s Wall Street bailout
The close collaboration between the US Treasury, the Federal Reserve and the multi-billion dollar asset management firm Blackrock in devising the March 2020 rescue operation for Wall Street has been revealed in an article published in the New York Times yesterday.
According to the article, Larry Fink, the CEO of Blackrock, the world’s biggest asset management firm, was “in frequent touch” with US Treasury Secretary Steven Mnuchin and Fed chair Jerome Powell “in the days before and after many of the Fed’s emergency programs were announced in late March.”
The extent of the collaboration is revealed in new emails obtain by the newspaper together with information that has been previously made public.
In one newly obtained email, Fink refers to planning for the rescue measures as “the project” that he and the Fed were “working on together.”
As the article notes, “America’s top economic officials were in constant contact with a Wall Street executive whose firm stood to benefit financially from the rescue,” showing “how intertwined Blackrock has become with the federal government.”
Blackrock’s close collaboration with the Fed and Treasury came at a crucial point in the development of a crisis in financial markets which began with the onset of the pandemic in March and fears in corporate circles over the response in the working class amid walkouts by workers insisting that safety measures be out in place.
The Fed responded to the initial turbulence in the markets by cutting interest rates. But these measures proved to be insufficient and the potential for a major meltdown in the markets emerged in the week ending March 20 when the $21 trillion US Treasury bond market—the bedrock of the US and global financial system—froze.
Instead of providing a “safe haven” for investors it moved to the centre of the crisis as Treasuries were sold off and no buyers could be found as the sell-off extended to all areas of the financial system.
Faced with a disaster when the markets re-opened, Mnuchin, Powell and Fink were engaged in a series of discussions over the weekend of March 21–22 to devise a rescue package. According to the Times report, Mnuchin spoke to Fink five times over the two days, more than anyone else, other than Powell with whom he spoke nine times.
One of the most significant features of the rescue measures announced on Monday March 23 was the decision by the Fed, for the first time ever, to buy corporate bonds which, as the Times noted, “were becoming nearly impossible to sell as investors sprinted to convert their holdings to cash.”
Blackrock had already closely collaborated with the Fed developing its response to the 2008 financial crisis was thereby set to play a key role in the March intervention.
The article pointed out that, while Blackrock signed a non-disclosure agreement on March 22 restricting officials from sharing information about the upcoming measures, the way in which the rescue package was devised “mattered to Blackrock.”
The decision of the Fed to buy corporate bonds and provide an underpinning for the market was significant and involved two key areas of Blackrock’s operations. One of the ways it makes profit is by managing money for clients charging a preset fee. But assets under management were contracting as investors went for cash and its business model was under threat.
Blackrock is also a major player in the short-term debt markets which were coming “under intense stress” as investors moved their holdings to cash.
Electronic Traded Funds (ETFs), which track market indexes but which trade like a stock, were also severely impacted.
In the words of the Times article: “Corporate bonds were difficult to trade and near impossible to issue in mid-March 2020. Prices on some high-grade corporate ETFs, including one of Blackrock’s, were out of whack relative to the value of the underlying assets.”
As Gregg Gelenzis, associate director for economic policy at the Center for American Progress told the Times: “This was the first time that ETFs came under stress in a really systemic way.”
In the rescue package the Fed committed itself to buying already existing debt as well as new bonds and also decided it would purchase ETFs with the result that the “bond market and fund recovery was nearly instant.”
As the Times article notes, while practically all of Wall Street benefited from the Fed’s intervention, and other financial firms were “consulted” apart from Blackrock “no other company was as front and center.”
The closeness of the relationship between Blackrock and the financial and economic arms of the state, the US Treasury and the Fed, were highlighted in a comment by William Birdthistle, of the Chicago-Kent College of Law and the author of a book on funds, cited in the article.
He said Blackrock was “about as close to a government arm as you can be, without being the Federal Reserve.”
The Fed makes every effort to cover up that relationship in order to try to preserve the fiction that it is not beholden to Wall Street and operates as an independent public authority concerned above all with the state of the economy and the welfare of the population.
The Times article recalled a news conference in July 2020 in which Powell was asked about the discussions with Fink.
“I can’t recall exactly what those conversations were,” he said, “but they would have been about what he is seeing in the market and things like that.
He said there were not “very many” conversations and that the Blackrock chief was “typically trying to make sure that we are getting good service from the company he founded the leads.”
Powell’s claim that, in the midst of the most significant crisis since the meltdown of 2008—with a potential to go even further, as the freeze in the Treasury market showed—he could not recall those conversations simply does not pass muster.
The value of every crisis, it has been rightly said, is that it reveals the real relations that are obscured and covered over in “normal” times.
And that is the case here. The economic arms of the capitalist state are not some independent authority but function every day in the interests of the corporate and financial oligarchy, servicing its needs and interests above all else.
Despite inflation, Fed will not pull back on present monetary policies
Fed chair Jerome Powell has again reassured financial markets that, despite the significant rise in US inflation, the central bank is not going to pull back its ultra-loose monetary policies that have seen Wall Street reach record highs.
Powell’s assurances came in his testimony to the House Financial Services Committee yesterday in the wake of inflation data which showed that prices had jumped at an annual rate of 5.4 percent in the year to June. The rise of 0.9 percent for last month was the highest since 2008.
Powell insisted that, while inflation had “increased notably” and the price rises were higher and more persistent than the Fed had anticipated, the rises were “transitory” and inflation would begin to decline.
However, he said, the Fed was prepared to “adjust monetary policy as appropriate if we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal.”
In the face of comments from House representatives that price rises were becoming entrenched, Powell called on lawmakers to have “faith” in the Fed’s judgment that it was riskier to tighten monetary too early than too late.
“We really do believe and virtually all forecasters do believe that these things will come down of their own accord as the economy re-opens—it would be a mistake to act prematurely.”
There is always as element of shadow boxing on the issue of inflation. The central concern is not prices rises as such, but whether inflation is going to lead to an upsurge in the wages struggles of the working class.
This issue was touched on by David Scott, a Democrat representative from Georgia, who said a return to a more stable inflation rate would be advantageous. He pointed out that “wage increases will not keep pace” and price rises would create real hardship for low-income households as well as people on fixed incomes and retirees.
As Powell was giving his testimony, the Fed’s own Beige Book, an anecdotal survey of economic conditions, reported that inflationary pressures were increasing.
It stated that while some respondents “felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months.”
Powell said the Fed policy of keeping interest rates at virtually zero and financial asset purchases at $120 billion a month—an amount of more than $1.4 trillion a year—would continue and the goal of “substantial further progress” in the economy was “still a ways off.”
The commitment brought a favourable response on Wall Street. Both the S&P 500 index and the Dow were up for the day, while the NASDAQ fell slightly. The yield on the benchmark 10-year Treasury bond fell, indicating the belief in financial markets that the Fed is not about to start “tapering” its asset purchases in the immediate future.
The Fed’s policies are pouring billions of dollars into the coffers of the banks as they take advantage of ultra-cheap money to fund financial market deals. Goldman Sachs reported that its total revenues for the second quarter were $15.4 billion, an increase of 16 percent from a year ago and well above forecasts by analysts of $12.4 billion.
The chief factor in Goldman’s revenue rise was its asset management business where its private equity investments are located. Revenues for this division were $5.1 billion, up 144 percent from a year ago, compared to forecasts of $2.8 billion. Goldman reported that it had generated record quarterly net revenues from its private equity investments.
Both Goldman and JP Morgan reported a sharp rise in fees from advising on corporate acquisitions and initial public offerings during the second quarter. JP Morgan announced record investment banking fees of $3.6 billion. Goldman’s revenue from fees was also $3.6 billion, only marginally below the record high of $3.7 billion in the first quarter.
Notwithstanding Powell’s firm adherence to the Fed’s present course, the issue is certain to be the subject of discussion, if not opposition, at the next meeting of its policy making body on July 27 –28. Some Fed officials have already indicated their support for a windback of asset purchases, possibly starting with the mortgage-backed securities.
The fear is that if the Fed continues with the present program and inflation “runs hot,” it will have to severely clamp down in the future, possibly leading to a collapse of the financial bubble its policies have created.
The same issues have emerged within the European Central Bank following the decision earlier this month to tolerate a temporary increase in inflation above its target rate of 2 percent.
The overturn of the target of “close to, but below, 2 percent” enables the ECB to maintain interest rates at historic lows for longer and allows for the continued flow of money into the financial system via its asset purchases.
This certain to bring opposition from northern European members of the ECB’s governing council, led by Germany. They have expressed the view that the ECB’s “crisis” measures, introduced at the start of the pandemic, should start to be wound back because the crisis has passed.
In an interview with the Financial Times last weekend, ECB president Christine Lagarde forecast that differences would be raised at the next meeting of the governing council later this month.
“I’m not under the illusion that every six weeks [at monetary policy meetings] we will have unanimous consent and universal acceptance because there will be some variations, some slightly different positioning. And that is fine.”
But Lagarde made clear she was not in favour of winding back the ECB’s measures even as inflation starts to show signs of rising in Europe. She said monetary policy had to be “especially forceful and persistent” when interest rates were at their lower limit as they are at present. She said “forceful” and “persistent” were “key words” that policy makers should not “undermine or underestimate.”
The issues are the same as in the US. Such is the dependence on the flow of money from the central bank, the fear is that any reduction could set off a financial crisis. In 2011, in the wake of the global financial crisis, the ECB raised rates. That decision is regarded as having contributed to the sovereign debt crisis of 2012 which only ended when the then ECB president Mario Draghi said the central bank would do “whatever it takes” to defend the euro.
Concerns continue to be voiced about where the present policies of the major central banks will end.
Commenting in the Financial Times earlier this week, analyst Mohamed El-Erian repeated his previous warnings that the longer the Fed continued its asset purchases “the more likely it will be forced into slamming the policy brakes on at some point.” This is under conditions where speculative excesses would have built up further and more unsustainable debt would have been incurred.
The critical question for the economy and the markets in the US and elsewhere, he wrote, was whether there is still “a possibility of an orderly exit from what has been a remarkably long period of uber-loose monetary policies?”
Citigroup, Wells Fargo, and Bank of America Report Profit Surge as Biden’s Inflation Crushes American Workers
Citigroup, Wells Fargo, Bank of America, and investment firm BlackRock reported increased earnings Wednesday, while everyday consumer goods prices have increased due to President Joe Biden’s inflation.
Bank of America earnings per share soared 111 percent to 78 cents, and Wells Fargo earnings surged 247 percent to 97 cents a share, as Citigroup earnings per share are set to increase 298 percent to $1.99.
Also increasing their profits, BlackRock, whose principle is a supporter of mitigating the theory of “climate change,” recorded earnings, adjusted for non-recurring costs, at $10.03 per share, along with a stock price increase of 26 percent since Biden assumed office.
In more good news for the Wall Street elites, JPMorgan Chase posted on Tuesday “second-quarter earnings of $11.9 billion, or $3.78 per share, which exceeded the $3.21 estimate of analysts surveyed by Refinitiv.”
Goldman Sachs additionally reported second-quarter earnings Tuesday “of $15.02 per share, topping analysts’ expectation of $10.24 earnings per share,” CNBC explained. “The bank posted its second-best ever quarterly investment banking revenue as a rush of IPOs hit Wall Street last quarter.”
The reaping of large profits by big banks and the Wall Street firms comes as consumer goods prices are increasing due to inflation.
But despite Biden’s claims, “No one is talking about this great, great, you know [inflation],” Federal Reserve Chair Jerome Powell said Wednesday that inflation “will likely remain elevated in coming months” before acknowledging “that price gains have been larger and more persistent than many” Democrats predicted, the Associated Press reported.
Breitbart News reported Wednesday the Producer Price Index rose 7.3 percent in June from 12 months earlier, the largest demand since 12-month data was first introduced in 2010. In comparison to May, the index rose one percent. On average during the pre-pandemic Trump administration, the index rose by around 0.2 percent per month.
The rising index translates to specific price increases for items, such as used cars (29 percent), strawberries (26 percent), blueberries (15 percent), Baguette (11 percent), furniture (9 percent), olives (6 percent), takeout/fast food (6 percent), tampons (5 percent), flowers/plants (5 percent), dog treats (4 percent), rose wine (3 percent), computers (2 percent), craft beer (2 percent), milk (1.6 percent), and bread (1.3 percent).
Meanwhile, big tech is censoring content that connects Biden’s economic polices with Biden’s inflation, presumably because increased prices for the American worker exposes the Democrat Party’s chances of retaining the House and the Senate in the 2022 midterms.
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