"During the past year, the wealth of the world’s billionaires surged past $7 trillion and the top 1 percent now controls half of the world’s wealth."
Income inequality grows FOUR TIMES FASTER under Obama than Bush.
"In the sphere of world economy, any expectation of an upturn has given way to the reality of permanent crisis. In the United States, six years into the so-called economic “recovery,” real unemployment remains at near-record highs, wages are under attack, and health care and pensions for millions of Americans are being wiped out."
"The essential and intended consequence of government policy over the past seven years has been to vastly increase social inequality. During the past year, the wealth of the world’s billionaires surged past $7 trillion and the top 1 percent now controls half of the world’s wealth. In the US, the scale of social inequality—and therefore political inequality—is so great that one recent scientific study concluded that “the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt."
Survey finds a majority of Americans unable to pay for major unexpected expenses
Survey finds a majority of Americans unable to pay for major unexpected expenses
By Nick Barrickman
9 January 2016
9 January 2016
A new survey put out by the personal finance management site Bankrate.com on Wednesday found that more than half of Americans could not weather a sudden financial crisis without having to borrow money from friends and family or being forced to reduce the amount spent on other items such as dining out, paying cable or cell phone bills, or other basic features of a “middle class” lifestyle.
Ted Cruz, Jeff Sessions Blame Lax Immigration Enforcers for 113 Terror Suspects in US
What Have Seven Years of ‘Hope and Change’ Actually Done for Americans?
In his first State of the Union address in 2010, President Barack Obama made a promise to prioritize economic recovery. He implored Washington to “try something new.” He vowed to stop leaving Americans mired in “a mountain of debt,” and promised to pursue policies that would help “rein in” the federal debt.
BLOG: WHILE SARGENT CLAIMS OBAMA'S TWO TERMS BROUGH ECONOMIC FAILURE, THAT CERTAINLY HAS NOT BEEN THE CASE FOR OBOMB'S CRONY BANKSTERS, OR THE ONE PERCENT!
His final State of the Union is set to air tonight, and since his first address voters have been hoping that 7 years of promises of hope, change, and economic recovery were more than just empty rhetoric.
Unfortunately that is not the case. By just about every indicator, the president’s two terms have been an economic failure.
That mountain of debt he promised to rein in is now larger than it has ever been. The national debt was $10.6 trillion when Obama came into office in 2009. It now stands at $18.9 trillion—an astounding 80 percent increase in just seven years, the largest increase in history. Our government debt now eclipses the size of our economy.
By working with a broad coalition in Congress, Obama was able to shatter the post-sequester spending caps he signed into law in 2011—one of the only measures that has been successful at limiting spending in recent years. Federal spending is now on pace to hit $4 trillion annually by the end of the president’s term, a sum that comprises a fifth of the economy. Together with Congress, Obama has repeatedly raised the debt limit without making any spending reforms. The latest measure even suspended the limit until March 2017, effectively giving the Treasury a blank check to borrow until then.
The president has noted that even though debt and spending have skyrocketed, deficits are down to their lowest level since he took office.
This is true. But for this, you can mostly thank Congress for imposing the budget caps he has so vehemently opposed, as well as the taxpayers who restored revenues back to the historical average as the economy improved. And don’t be fooled by this temporary relief: the Congressional Budget Office estimates that on the nation’s current trajectory, deficits will return to trillion dollar levels within a decade.
This trajectory has been exacerbated by the president’s refusal to engage on his campaign promise of entitlement reform—an agenda he effectively opposed by championing Obamacare and Medicaid expansion.
This unprecedented government spending was fueled by some of the largest tax increases in history. During Obama’s tenure, he has hit Americans with billions in payroll, capital gains and dividends, earned income, and death tax increases. The tax increases in Obamacare alone are expected to total nearly $800 billion through 2022.
But that’s not all. This administration has issued more major regulations than any of its predecessors. In just six years, the Obama White House has implemented 184 major regulations, costing the economy at least $80 billion annually while skirting the legislative process in favor of executive fiat.
What has all this spending, taxing, regulating, and new debt brought us? The slowest recovery since the Great Depression. The $800 billion stimulus did not generate the “shovel-ready” jobs that the president promised. Worse, this massive spending increase—and the tax hikes and debt that came with it—ended up hampering the recovery.
And while unemployment has undoubtedly fallen—as it does in any recovery—fewer Americans are in the work force now than at any time since 1977. This helps explain why the government unemployment figures are as low as they are.
So where have the folks who have stopped working or looking for work gone? Many have fled the job market in favor of the callous arms of big government. Total means-tested welfare spending now stands at over $1 trillion annually—the highest ever even though the recession supposedly ended in 2010. Over 45 million people—one out of every seven Americans—receive food stamps, a remarkable 63 percent increase since the height of the recession in 2009.
More and more working age Americans continue to join the disability rolls and stay there. Five percent of working age Americans now rely on disability benefits instead of a job—the most ever and a significant jump from 4.6 percent in 2009. Obama’s promise to focus on a true middle class recovery has floundered in favor of building a state of perpetual dependency.
And remember those bank bailouts the president said he “hated”? He’s followed them up with a string of the government’s own bailouts. This past year, he signed off on a $70 billion taxpayer bailout for the highway trust fund, which until recently was exclusively funded by the users of our transportation system.
This came just a month after he advocated for a $150 billion bailout of the Disability Insurance program, “reallocating” funding from the Social Security retirement account that has far more unfunded obligations in the future. In both instances, these bailouts were far easier—and more politically expedient—than laboring towards real reforms.
Make no mistake: the overall result has been a continuation (indeed, an exacerbation) of business as usual in Washington: spending, regulating, and amassing more debt than ever before. The economy—and every American—is worse off for it.
What should be done? Change isn’t easy—but we need the next president to be one that will lead and work with Congress on these vital economic issues. They need to address the relentless growth of spending in order to begin to bring the nation’s debt into check. It’s a daunting task, but we must curtail the relentless growth of spending, taxes, regulations, and the national debt to ensure freedom and economic vitality for our posterity.
BLOG: WHILE SARGENT CLAIMS OBAMA'S TWO TERMS BROUGH ECONOMIC FAILURE, THAT CERTAINLY HAS NOT BEEN THE CASE FOR OBOMB'S CRONY BANKSTERS, OR THE ONE PERCENT!
His final State of the Union is set to air tonight, and since his first address voters have been hoping that 7 years of promises of hope, change, and economic recovery were more than just empty rhetoric.
Unfortunately that is not the case. By just about every indicator, the president’s two terms have been an economic failure.
That mountain of debt he promised to rein in is now larger than it has ever been. The national debt was $10.6 trillion when Obama came into office in 2009. It now stands at $18.9 trillion—an astounding 80 percent increase in just seven years, the largest increase in history. Our government debt now eclipses the size of our economy.
The national debt was $10.6 trillion when Obama came into office in 2009. It now stands at $18.9 trillion.Despite initially signaling that he was open to slowing discretionary spending—the portion of the budget controlled by annual appropriations bills—the president made ever more spending on discretionary programs a priority.
By working with a broad coalition in Congress, Obama was able to shatter the post-sequester spending caps he signed into law in 2011—one of the only measures that has been successful at limiting spending in recent years. Federal spending is now on pace to hit $4 trillion annually by the end of the president’s term, a sum that comprises a fifth of the economy. Together with Congress, Obama has repeatedly raised the debt limit without making any spending reforms. The latest measure even suspended the limit until March 2017, effectively giving the Treasury a blank check to borrow until then.
The president has noted that even though debt and spending have skyrocketed, deficits are down to their lowest level since he took office.
This is true. But for this, you can mostly thank Congress for imposing the budget caps he has so vehemently opposed, as well as the taxpayers who restored revenues back to the historical average as the economy improved. And don’t be fooled by this temporary relief: the Congressional Budget Office estimates that on the nation’s current trajectory, deficits will return to trillion dollar levels within a decade.
This trajectory has been exacerbated by the president’s refusal to engage on his campaign promise of entitlement reform—an agenda he effectively opposed by championing Obamacare and Medicaid expansion.
This unprecedented government spending was fueled by some of the largest tax increases in history. During Obama’s tenure, he has hit Americans with billions in payroll, capital gains and dividends, earned income, and death tax increases. The tax increases in Obamacare alone are expected to total nearly $800 billion through 2022.
But that’s not all. This administration has issued more major regulations than any of its predecessors. In just six years, the Obama White House has implemented 184 major regulations, costing the economy at least $80 billion annually while skirting the legislative process in favor of executive fiat.
What has all this spending, taxing, regulating, and new debt brought us? The slowest recovery since the Great Depression. The $800 billion stimulus did not generate the “shovel-ready” jobs that the president promised. Worse, this massive spending increase—and the tax hikes and debt that came with it—ended up hampering the recovery.
And while unemployment has undoubtedly fallen—as it does in any recovery—fewer Americans are in the work force now than at any time since 1977. This helps explain why the government unemployment figures are as low as they are.
So where have the folks who have stopped working or looking for work gone? Many have fled the job market in favor of the callous arms of big government. Total means-tested welfare spending now stands at over $1 trillion annually—the highest ever even though the recession supposedly ended in 2010. Over 45 million people—one out of every seven Americans—receive food stamps, a remarkable 63 percent increase since the height of the recession in 2009.
More and more working age Americans continue to join the disability rolls and stay there. Five percent of working age Americans now rely on disability benefits instead of a job—the most ever and a significant jump from 4.6 percent in 2009. Obama’s promise to focus on a true middle class recovery has floundered in favor of building a state of perpetual dependency.
And remember those bank bailouts the president said he “hated”? He’s followed them up with a string of the government’s own bailouts. This past year, he signed off on a $70 billion taxpayer bailout for the highway trust fund, which until recently was exclusively funded by the users of our transportation system.
This came just a month after he advocated for a $150 billion bailout of the Disability Insurance program, “reallocating” funding from the Social Security retirement account that has far more unfunded obligations in the future. In both instances, these bailouts were far easier—and more politically expedient—than laboring towards real reforms.
Make no mistake: the overall result has been a continuation (indeed, an exacerbation) of business as usual in Washington: spending, regulating, and amassing more debt than ever before. The economy—and every American—is worse off for it.
What should be done? Change isn’t easy—but we need the next president to be one that will lead and work with Congress on these vital economic issues. They need to address the relentless growth of spending in order to begin to bring the nation’s debt into check. It’s a daunting task, but we must curtail the relentless growth of spending, taxes, regulations, and the national debt to ensure freedom and economic vitality for our posterity.
The US in 2016: No money for social programs, cash to burn for the military
By Andre Damon
12 January 2016
The US Navy’s “goals and objectives” outline for 2016, released last week, does not mince words: the first goal listed in the second subhead reads: “Buy more ships.”And that is exactly what the world’s most powerful navy is doing. On Wednesday, the Defense Department announced it was moving forward with plans to replace its Ohio-class ballistic missile submarines, the most lethal killing machines in the history of mankind, with a completely new design beginning in 2021.
Each Ohio-class ballistic submarine is, by itself, the fifth most powerful military in the world. The Navy operates 14 of them. Each submarine carries 24 Trident II missiles, with each missile carrying eight warheads with a yield six times greater than the “little boy” bomb that killed over a hundred thousand people in the US bombing of Nagasaki, Japan, in 1945.
With an effective range of more than 7,456 miles, a single Ohio-class submarine in the waters outside of San Diego could obliterate 192 cities in western China, with a combined population of 400 million people, if the commander-in-chief were so inclined.
But the Ohio class is apparently in need of an upgrade, and the White House gave the Pentagon the go-ahead last Monday to send a “Request for Proposal” to the ship’s contractor, General Dynamics Electric Boat, approving funds for the building of a prototype. Each submarine, of which there will be 12, will cost an estimated $6-8 billion—not including research and development costs, the price of each submarine’s nearly 200 nuclear warheads, and associated operating costs—up from $2 billion for the Ohio class.
The day after the White House gave the go-ahead for replacing the Ohio-class submarines, the Center on Budget and Policy Priorities (CBPP) reported Monday that up to a million people will lose food stamp benefits in 2016.
Twenty-three states are expected this year to lift a moratorium on one of the harshest austerity measures imposed by the Clinton administration’s 1996 “welfare reform” program, which caps the amount of time many people are eligible for food stamps at three months. The time limits were halted during the recession, but under the pretense that there is “no money,” to pay for food stamps, states all over the country are re-imposing the time limits.
“The loss of this food assistance, which averages approximately $150 to $170 per person per month for this group, will cause serious hardship among many,” reported the organization. The CBPP notes, “USDA data show that the individuals likely to be cut off by the three-month limit have average monthly income of approximately 17 percent of the poverty line, and they typically qualify for no other income support.”
In announcing the food stamp cuts, Bill Clinton pledged to “spend the taxpayers’ money wisely and with discipline, that we can spend more money on the future.” If he had been telling the truth, he would have declared that he was proposing the cuts so that the Navy could “Buy more ships.”
After all, the money has to come from somewhere. And it’s easiest to take from those who are the least capable of defending themselves. In addition to the poor people who depend on food stamps to survive, working class children have been targeted.
The same day that the White House gave the go-ahead for the design of the new submarines, the CBPP released a report showing that funding for schools has been slashed in most states since 2008, and in 15 states by more than 10 percent. Arizona has cut education spending by 23.3 percent, Alabama by 21.4 percent, Idaho by 16.9 percent, and Georgia by 16.5 percent.
While there is, of course, no money for children and the poor, defense contractors are licking their chops over the expected uptick in global military spending resulting from the wars flaring out of control in the Middle East and the growing standoff in Eastern Europe and the Pacific.
Defense industry analyst Deloitte gleefully declared earlier this month that military spending is “poised for a rebound” as a result of “heightened tensions” around the world.
It notes, “2015 was a pivotal year that saw heightened tensions between China, its neighbors and the US over ‘island building’ in the South and East China Seas, and the related claims of sovereign ocean territory rights by China. In addition, Russia and the Ukraine are at odds related to Russia’s takeover of Crimea and their military actions in Eastern Ukraine,” while “The recent tragic bombings in Paris, Beirut, Mali, the Sinai Peninsula, and other places have emboldened nations to join in the fight against terrorism.”
The report notes that “improved profitability” will result from “renewed interest from buyers” in acquiring “armored ground vehicles, ground attack munitions, light air support aircraft” and “maritime patrol ships and aircraft,” as “the military operations tempo is likely to increase and more missions are executed.”
The global uptick in military spending coincides with a major new shopping spree by the United States, which spends as much money on its military as the next seven countries—China, Russia, Saudi Arabia, France, the UK, India and Germany—combined. The US expends $609.9 billion out of the $1.7 trillion spent worldwide by all countries each year on war.
But this figure is slated to surge as “Many large, mainly US [Department of Defense] programs representing billions of US dollars, are likely to start soon, enter the engineering manufacturing design phase, and reach low-rate or full-scale production over the next few years. These programs include Ohio Class Submarine replacement, F-35 fighter jet, KC-46A aerial refueling tanker, and Long Range Strike Bomber.”
Just one of these programs, the F-35 “Lightning II,” plagued with delays and cost-overruns, will cost $1.45 trillion over its lifecycle, more than twice the amount that state, federal, and local governments spend educating 50 million children each year.
Survey finds a majority of Americans unable to pay for major unexpected expenses
Survey finds a majority of Americans
unable to pay for major unexpected expenses
By Nick Barrickman
9 January 2016
9 January 2016
A
new survey put out by the personal finance management site Bankrate.com on
Wednesday found that more than half of Americans could not weather a sudden
financial crisis without having to borrow money from friends and family or
being forced to reduce the amount spent on other items such as dining out,
paying cable or cell phone bills, or other basic features of a “middle class”
lifestyle.
The
survey, conducted last month among a pool of
1,000 Americans in conjunction with Princeton Survey Research Associates International,
found that only 37 percent of those surveyed would be able to pay an emergency
expense of $1,000, such as an emergency room visit or the cost of repairing a
broken down vehicle, out of pocket.
Sixty-three
percent of those surveyed would not be able to cover such a sudden expense
without either cutting down on expenses elsewhere, borrowing or resorting to
credit. The survey found that nearly four in 10 Americans had suffered such a
financial setback in 2015.
“Without
an adequate rainy-day fund, we are all living on a very slippery financial
slope,” Gail Cunningham of the National Foundation for Credit Counseling told
Bankrate.com. “The unexpected, unplanned expense is going to rear its ugly head
and usually at the most inopportune time…Things as small as a flat tire or one
trip to the emergency room can wreck the budgets of those who do not have an
adequate amount in their savings account,” she said.
For
Americans making less than $30,000 per year, only 23 percent would be able to
cover such a sudden expense on their own. This was contrasted by nearly 60
percent of those making over $75,000 annually who could say the same. Nine
percent making $30,000 or below stated that they did not know how they would
cover such expenses, meaning that they were one expensive setback away from
personal financial ruin.
The
poll comes amid a slew of other reports detailing an immense drop in the living
standards of a significant section of the US population, a component of the
growth of social inequality more broadly.
Since
the 2008 financial collapse and the subsequent economic “recovery” in 2009, 95
percent of all wealth gains have gone to the top 1 percent in society. A report
released in November by the St. Louis Federal Reserve showed that Americans’
personal savings in 2015 were half of what the average was in the early 1980s.
A
US Federal Reserve report released in 2014 found that nearly six in 10
Americans had lost all or part of their savings due to the financial impact of
the 2008 economic crisis, while a 2015 study by GOBankingrates.com revealed
that the majority of Americans have less than $1,000 in savings to their name.
A report released the Pew Research firm last month revealed that the number of
middle-income homes as a portion of the population had largely vanished in the span of a few decades.
The
figures come as the US Federal Reserve has begun raising interest rates for
banks and other financial institutions, which will likely lead to further
difficulty for individuals who rely upon credit in order to finance their costs
of living.
The
expenses eating away at the typical individual’s savings read like essential
items for living in modern society. According to Bankrate.com, the largest
expense for one-third of all Americans outside of food and shelter consisted of
utilities such as water, electricity or phone service. For those over the age
of 50, one in five cited medical bills as their largest concerns outside of
food and shelter.
The lottery and social despair in
America
9 January 2015
This
mania, so generally condemned, has never been properly studied. No one has
realized that it is the opium of the poor. Did not the lottery, the mightiest
fairy in the world, work up magical hopes? The roll of the roulette wheel that
made the gamblers glimpse masses of gold and delights did not last longer than
a lightning flash; whereas the lottery spread the magnificent blaze of
lightning over five whole days. Where is the social force today that, for forty
sous, can make you happy for five days and bestow on you—at least in fancy—all
the delights that civilization holds?
Balzac,
La Rabouilleuse, 1842
The
jackpot in the US Powerball lottery has hit $800 million, since there were no
winners in Wednesday’s drawing. In the current round, which began on December
2, over 431 million tickets have been sold, a figure substantially larger than
America’s population.
Go
into any corner store in America and you will see workers of every age and race
waiting in line to buy lottery tickets. With the current round, the lines are
longer than ever. Americans spend over $70 billion on lottery tickets each
year. In West Virginia, America’s second-poorest state, the average person
spent $658.46 on lottery tickets last year.
Powerball
players pick six random numbers when they purchase their tickets, with a
certain percentage of sales going to the jackpot. If no winning ticket is sold,
the jackpot rolls over to the next round.
The
totals for the Mega Millions and Powerball national lotteries have been growing
every year. This year’s jackpot has eclipsed 2012’s record of $656.5 million,
the $390 million payout in 2007 and the $363 million prize in 2000. The
jackpots have grown in direct proportion to ticket sales.
State-run
gambling programs such as Powerball have been promoted by Democrats and
Republicans alike as a solution to state budget shortfalls, even as the
politicians slash taxes on corporations and wealthy individuals and gut social
programs. From the standpoint of government revenue, lotteries and casinos are
nothing more than a back-door regressive tax, soaking up money from the poor in
proportion to the growth of social misery.
The
boom in lotteries is global. Lottery sales grew 9.9 percent worldwide in 2014,
after growing 4.9 percent in 2013.
Psychology
Professor Kate Sweeny has noted that lottery sales grow when people feel a lack
of control over their lives, particularly over their economic condition. “That
feeling of self-control is very important to psychological well-being,” Sweeny
says.
There
is ample reason for American workers to feel they have no control over their
lives. According a recent survey by Bankrate.com, more than half of Americans
do not have enough cash to cover an unexpected expense of $500 or more—roughly
the price of four name-brand tires.
Some
62 percent of Americans have savings of less than $1,000, and 21 percent do not
have any savings at all. Most Americans are one medical emergency or one spell
of unemployment from financial ruin.
For
all the talk about “economic recovery” by the White House, the real financial
state of most American households is far worse than before the 2008 financial
crisis and recession. As of 2013, Americans were almost 40 percent poorer than
they were in 2007, according to a recent survey by the Pew Research Center.
While a large portion of the decline in household wealth is attributable to the
collapse of the housing bubble, falling wages and chronic mass unemployment
have played major roles.
The
yearly income of a typical US household dropped by a massive 12 percent, or
$6,400, in the six years between 2007 and 2013, according to the Federal
Reserve’s latest survey of consumer finances. A large share of this decline has
taken place during the so-called recovery presided over by the Obama
administration.
In
addition to becoming poorer, America has become much more economically
polarized. According to a separate Pew survey, for the first time in more than
four decades “middle-income households” no longer constitute the majority of
American society. Instead, the majority of households are either low- or
high-income. Pew called its findings “a demographic shift that could signal a
tipping point” in American society.
“Is
the lottery the new American dream?” asked USA Today, commenting on this
month’s Powerball jackpot. The observation is truer than the authors intended.
For American workers, achieving the “American Dream” of a stable job and one’s
own home is becoming increasingly unrealizable.
Following
more than 10 million foreclosures during the financial crisis, America’s home
ownership rate has hit the lowest level in two decades, and for young
households, the rate of home ownership is the lowest it has been since the
1960s.
For
the tens of millions of America’s poor, and the more than 100 million on the
threshold of poverty, the dream of winning the lottery has replaced the
“American Dream” of living a decent life. A lottery ticket is a chance to
escape to a fantasy world where money is not a constant, nagging worry, where
one is not insulted and bullied at a low-wage job by bosses whose pay is
matched only by their incompetence. The lottery is, as Balzac aptly described
it, the “opium of the poor.”
Using
the same phrase to describe religion, Marx noted that the “illusory happiness
of the people” provided by the solace of religion is, in fact, a silent protest
and distorted “demand for their real happiness.” It is the intolerable social
conditions that compel masses of people to seek consolation in a lottery ticket
that will propel them into revolutionary struggles.
Andre
Damon
The indicators of a deepening crisis in production sent
shock waves through the financial markets because they portend the looming
collapse of a vast speculative house of cards built up since the 2008 Wall
Street crash, which sits atop a real economy that has never recovered from the
Great Recession. The dirty secret of the so-called “recovery” is that it has
been dominated by an expansion of the types of parasitic and quasi-criminal
activities that triggered the financial crisis and depression in the first
place.
Never
have the rich increased their wealth so quickly as in America since the
financial crash
of
2008. But side by side with the amassing of previously
unthinkable private fortunes,
the
infrastructure of America is crumbling, education, health care and other social
services
are starved of funding, and the living standards of the vast majority of the
population,
the working people who produce the wealth, are declining.
The New Year stock
sell-off
5 January 2016
The
first trading day of 2016 quickly turned into a global financial debacle, with
stock markets all over the world plummeting after the Chinese government shut
down its major exchanges to prevent a full-scale crash.
The
sell-off confirmed the year-end expressions of foreboding by bourgeois
commentators over the prospects for world capitalism in the new year. Whether
Monday’s market rout is the beginning of an implosion of unsustainable
financial bubbles or an anticipatory financial heart attack remains to be seen.
One thing is certain, however. It
is a symptom of profound and insoluble contradictions that have only
intensified since the Wall Street crash more than seven years ago.
The
collapse on Chinese markets, with the Shanghai Composite Index closing with a
loss of 6.9 percent, was triggered by new data showing that Chinese
manufacturing activity fell in December from the already depressed level of the
previous month. The December decline marked the tenth consecutive monthly
contraction.
The
report confirmed that the slowdown in China to its lowest growth rate in a
quarter century was likely to worsen in 2016. Given the immense role of the
world’s second-largest economy and central manufacturing hub as a magnet for
imports, including oil and other industrial commodities as well as manufactured
goods, the indication of stagnation spread fears of a further fall in commodity
prices and a deepening crisis of commodity-exporting nations from Brazil and
Russia to Australia and Canada.
Japan’s
Nikkei 225 index fell by more than 3 percent. Germany, a major exporter to
China, suffered a 4.3 percent decline on its DAX stock index. The other major
European indexes fell by more than 2 percent, and the EURO STOXX 50 index
declined by 3.14 percent.
The
global market sell-off was compounded by negative economic data from the US.
The Institute for Supply Management reported that its index of factory activity
fell to 48.2 in December from 48.6 in November. Any reading below 50 denotes
contraction. The figure for December was the weakest since June 2009 and marked
the first time since the 2008 crash that the US manufacturing sector had
suffered two consecutive monthly contractions.
At the same time, the Commerce Department
reported that US construction spending fell 0.4 percent in November. The dismal
data prompted economists to lower their fourth-quarter 2015 projections for US
economic growth to as low as a 1.1 percent annual rate. The figures confirmed
that the US, previously cited as the “bright spot” in a world economy dominated
by stagnation and slump, is itself in an industrial recession.
The
US indexes fell sharply, with the Dow ending the day down nearly 1.6 percent,
the S&P 500 down 1.53 percent, and the Nasdaq 2 percent lower.
The indicators of a deepening crisis in production sent
shock waves through the financial markets because they portend the looming
collapse of a vast speculative house of cards built up since the 2008 Wall
Street crash, which sits atop a real economy that has never recovered from the
Great Recession. The dirty secret of the so-called “recovery” is that it has
been dominated by an expansion of the types of parasitic and quasi-criminal
activities that triggered the financial crisis and depression in the first
place.
The
US and world central banks and all of the major governments responded to the
breakdown of capitalism in 2008 by transferring trillions of dollars in public
assets to the bankers and hedge fund billionaires, no strings attached. They
were free to do with the blood money as they saw fit. Even the feeble and token
proposals to rein in CEO pay at bailed-out corporations were blocked by the
financial moguls and their bribed politicians.
Untold
trillions were pumped into the financial markets to engineer a record rise in
stock prices for the benefit of the rich and the super-rich, whose fortunes
doubled in the aftermath of the 2008 crash.
At
the same time, governments launched brutal attacks on the working class to make
it pay for the bankrupting of the state. These attacks—austerity, wage cutting,
mass layoffs—bolstered the profit margins of the corporations and further
enriched the top 10 percent, and especially the top 1 percent and top 0.1
percent.
The
corporations used their massive cash hoards not to expand production or create
decent-paying jobs, but to find new avenues for speculation, plowing money into
the so-called emerging market economies, the booming energy sector, and
high-yield, high-risk junk bonds. While 2015 was a year of rising poverty and
desperation for the masses, it was a record year for job-destroying and
socially destructive activities such as mergers and acquisitions, stock
buybacks and dividend increases.
The
McKinsey Global Institute last year published a report that gives some idea of
the colossal growth of debt in the world economy—a measure of the increase in
financial speculation and swindling. It noted that global debt has grown by $57
trillion since 2007, raising the ratio of debt to the world’s gross domestic
product by 17 percentage points. China’s total debt has quadrupled, rising from
$7 trillion to $28 trillion by mid-2014.
In
an article published on January 1, the Wall Street Journal noted that in
2015 “the American corporate landscape was dominated by activist investors,
buybacks, currencies and deals”—in other words, by speculation. Meanwhile, the
real economy is being starved of productive investment. Capital spending by
members of the S&P 500 index fell in the second and third quarters of last
year compared to 2014, the first time there have been two consecutive quarterly
declines since 2010.
The
final weeks of 2015 saw mounting signs that the underlying stagnation and slump
in the real economy—marked by plummeting oil and commodity prices, declining
global trade and dismal or negative growth rates—is beginning to undermine the
mountain of speculative debt. The prices of energy-related junk bonds began to
fall sharply, and mutual funds that speculate in them suffered a rush of
redemption orders, prompting two such funds to refuse to honor redemption requests
from investors.
The
social and class significance of the further explosion of financial parasitism
is indicated in statistics that document the massive redistribution of wealth
from the working class to the bourgeoisie that has taken place.
The
chief economist of the World Bank published an article on January 1 pointing to
a “remarkable statistical trend” in high and middle-income countries. The
article noted: “Total labour income as a percentage of GDP is declining across
the board and at rates rarely witnessed. From 1995 to 2015, labour income
dropped from 61 percent to 57 percent of GDP in the US; from 66 percent to 54
percent in Australia; from 61 percent to 55 percent in Canada; from 77 percent
to 60 percent in Japan; and from 43 percent to 34 percent in Turkey.”
Under
conditions of widening wars in the Middle East and military buildups in Europe
and Asia, accompanied by police-state measures imposed internally in country
after country on the pretext of fighting terrorism, the underlying economic
uncertainty as the new year begins intensifies great power tensions and drives
the ruling elites further along the road to war and dictatorship.
At
the same time, a major contributor to the sense of foreboding and fear of
shocks that predominates in ruling class circles as the new year begins,
reflected in the volatility on financial markets, is the sense that the coming
year will see a growth of working-class opposition and struggle. The year just
ended was marked by the initial signs of a new period of class struggle, with
strikes and protests multiplying from Europe to China to Latin America and the
United States.
In
the US, the resistance of autoworkers to the imposition of new pro-company
contracts by the auto bosses and the United Auto Workers union, and the turn of
thousands of autoworkers to the World Socialist Web Site and the WSWS
Autoworker Newsletter for information and political leadership, herald the
reemergence of the most powerful detachment of the international working class
into mass struggle.
Barry
Grey
China Crash:
$28 Trillion Debt Load Forces Credit Crunch
DEATH OF THE AMERICAN
MIDDLE-CLASS
This government-driven, crony-capitalist economy defined by job scarcity and wage stagnation is the reason college graduates are burdened by $1.3 trillion debt, living with parents, can’t afford to marry or buy homes, and working as waitresses and bartenders. Job scarcity and low wages are the reasons we’re becoming a nation of renters rather than homeowners. They are the reasons that 51 percent of workers earn less than $30,000 a year. They are the reasons for the demise of the middle class and the burgeoning welfare rolls, the modern-day equivalent of slavery.
Never have the rich increased their wealth so
quickly as in America since the financial crash
of 2008. But side by side with the amassing
of previously unthinkable private fortunes,
the infrastructure of America is crumbling,
education, health care and other social
services are starved of funding, and the living
standards of the vast majority of the
population, the working people who produce
the wealth, are declining.
BLOG:
BLOG:
NO PRESIDENT IN HISTORY HAS TAKEN MORE DIRTY
BANKSTER MONEY THAN BARACK OBAMA WHO PROMISED THAT HIS CRONIES WOULD NEVER BE
"PUNISHED".
IF FACT, THEIR LOOTING ONLY RATCHETED UP AFTER
THE 2008 BAILOUT.
OBAMA'S CRONY BANKSTERS ARE NOW HEAVILY
INVESTED IN HILLARY CLINTON. BILLARY AND HILLARY HAVE SUCKED UP A VAST FORTUNE
IN "SPEECH" BRIBES FROM THE BANKSTERS THAT OWN OBAMA!
The calamity was further deepened by the use of hundreds of
billions of dollars in taxpayer money to bail out the biggest Wall Street
firms. For millions of people in the US and around the world, the 2008 collapse
was a social tragedy from which there has been no meaningful recovery. Yet, as The
Big Short points out, the bankers and speculators––who ought to be sitting
in prison––are richer and more powerful today than ever.
The Big Short: The criminality of Wall Street and the crash of 2008
By Joanne Laurier
31 December 2015
31 December 2015
Directed
by Adam McKay; screenplay by McKay and Charles Randolph, based on the book by
Michael Lewis
Adam
McKay’s new film The Big Short is a hard-hitting comedy-drama about the
historic collapse of the US housing bubble in 2008.
Based on Michael Lewis’s book, The Big
Short: Inside The
Doomsday Machine (2010), the film offers a picture of rampant
criminality on the part of the financial
establishment and its
government co-conspirators who, while
systematically looting the
American economy, created a financial
disaster.
The calamity was further deepened by the use of hundreds of
billions of dollars in taxpayer money to bail out the biggest Wall Street
firms. For millions of people in the US and around the world, the 2008 collapse
was a social tragedy from which there has been no meaningful recovery. Yet, as The
Big Short points out, the bankers and speculators––who ought to be sitting
in prison––are richer and more powerful today than ever.
McKay’s
The Big Short centers on a number of Wall Street “outliers” who, despite
the efforts of the banks, government regulators and media lackeys, uncover the
truth about the explosive market for bonds based on subprime mortgages: that
the latter are “junk” and a rotten foundation for an economic boom.
The
film takes the form of a series of vignettes involving these figures, a number
of whose paths cross at critical moments.
Bankers,
The Big Short’s narrator (Ryan Gosling) explains at the outset, were
once perceived as staid and conservative. Now, as the trade in mortgage-backed
securities mushrooms and a vast housing bubble develops, they have gone “from
the country club to the strip club,” a function of the degree of parasitism and
degeneracy in the system.
Christian
Bale plays the real-life San Jose, California neurosurgeon-turned-money manager
Michael Burry, who sports a glass eye and has a penchant for heavy metal. With
a manic focus, he spends the end of 2004 and early 2005 scanning hundreds of
home loans that are packaged into mortgage bonds, eventually discovering an
alarming pattern. As opposed to the prevailing wisdom that “the housing market
is rock solid,” Burry comes to believe it is a flimsy house of cards.
Burry
approaches Goldman Sachs, seeking to purchase hundreds of millions of dollars
in credit default swaps (a form of insurance against a loan default or other
credit event) that amount to a bet against the housing market. His hedge fund’s
owners and investors are apoplectic, but the eccentric, anti-social Burry is
convinced that patience is the key as he waits for the bottom to drop out and
his assumptions to pay off. (According to Lewis’s book, Burry explained, “I’m
not making a bet against a bond, I’m making a bet against a system.”)
He
admonishes his skeptics: “[Federal Reserve Chairman] Alan Greenspan assures us
that home prices are not prone to bubbles––or major deflations––on any national
scale. This is ridiculous, of course…. In 1933, during the fourth year of the
Great Depression, the United States found itself in the midst of a housing
crisis that put housing starts at 10 percent of the level of 1925. Roughly half
of all mortgage debt was in default. During the 1930s, housing prices collapsed
nationwide by roughly 80 percent.”
Jared
“Chicken Little” Vennett (Gosling, playing a fictionalized Greg Lippman), a
Deutsche Bank subprime mortgage bond manager, gets wind of Burry’s astonishing
gamble. Vennett, slick, sleazy and smart, crunches the numbers and sees a
potential gold mine.
Vennett
solicits financial backing from Wall Street-bashing Mark Baum (Steve Carell,
based on Steve Eisman), head of FrontPoint Partners, a unit of Morgan Stanley.
Vennett explains the certainty of a housing catastrophe. The irascible Baum,
who continues to suffer from his brother’s suicide, is chronically appalled by
the banks’ shenanigans.
To
investigate Vennett’s claims, Baum sends his colleagues to a subdivision in
Florida, where they discover homes in foreclosure, delinquent mortgages that
were purchased in the name of family pets, and a stripper who owns several
properties—all with adjustable rate mortgages (ARMs)—and was told that
continuous refinancing would always work in her favor. In one abandoned south
Florida home, an alligator has taken over the swimming pool. One of Baum’s
associates says, “It’s like Chernobyl.”
Baum
also talks to cocky young mortgage brokers who inform him, with a laugh, that
they have made millions selling subprime mortgages to poor people and
immigrants. He subsequently meets with a Standard & Poor’s representative
(Melissa Leo), who tells Baum she has to rate all the banks’ financial vehicles
at AAA (the top rate) to keep their business.
Another
of The Big Shor t’s plot strands involves young, inexperienced money
managers, Jamie Shipley (Finn Wittrock) and Charlie Geller (John Magaro), who
parlay $110,000 of their own money into a $30 million fund. Also seeing the
writing on the wall for the housing market, they enlist the help of retired
guru/trader and drop-out Ben Rickert (Brad Pitt, based on Ben Hockett), whose
connections help them secure an agreement enabling them to work directly with
the banks.
The
filmmakers intersperse the narrative with comic interludes featuring what they
call “celebrity explainers,” brought in to help make the complicated
terminology comprehensible. In the movie’s production notes, director McKay
elaborates: “Bankers do everything they can to make these transactions seem
really complicated, so we came up with the idea of having celebrities pop up on
the screen throughout the movie and explain things directly to the audience.”
Sipping
champagne in a bubble bath, actress Margot Robbie discusses mortgage-backed
securities, while chef Anthony Bourdain compares a “toxic financial asset” to a
seafood stew. (McKay recruited Bourdain after reading the latter’s
recommendation that no one should “order seafood stew because it’s where cooks
put all the crap they couldn’t sell.”
The
director goes on, “I thought, ‘Oh my God that’s a perfect metaphor for a
collateralized debt obligation, where the banks bundle a bunch of bad mortgages
and sell it as a triple-A rated financial product.’”)
Economist
Dr. Richard Thaler and actress Selena Gomez take part in a casino sequence to
demonstrate how synthetic Credit Default Obligations (CDOs)––essentially groups
of bad mortgages bundled together to hide the real likelihood of default––are
the means of arranging numerous layers of speculation. Says McKay: “It was investors
making those kinds of side bets on mortgage-backed securities through CDOs that
drove the whole world economy to where it was poised to crash.”
The
film’s tipping point comes when Vennett convinces Baum to attend the American
Securities Forum in Las Vegas, an event whose out of control goings-on prove to
the latter that the housing market is a gigantic Ponzi scheme.
The
vindication of the nay-sayers is delayed when the housing market begins to
collapse, but the value of the CDOs remains steady. Only then do the
protagonists realize that the banks are concealing the toxicity of their
holdings on a massive scale.
As
the meltdown approaches, the mood of The Big Short markedly darkens.
Baum starts to believe the “party’s over” and that “the world economy will
collapse.” He is convinced the bankers “are crooks and should be in jail.”
This
is effectively highlighted by a scene where Baum debates a representative of
Bear Stearns. The latter sings the praises of the housing market even as the
firm’s stock price falls off the cliff.
The
Big Short’s approach to the run-up to one of
the greatest financial crises in history, despite its comic-absurdist mode, is
a serious one. The filmmakers do their best to bring this crisis and its human
dimensions to life.
The
film touches upon the systemic and far-reaching character of the 2008 crash.
McKay and his collaborators are obviously appalled by its outcome and
consequences, and even invent an alternative scenario in which the bankers
responsible for the crash are jailed and the banks become regulated. They point
the finger at not only those who issued the mortgages, but those who sliced and
diced them into rotten products and the credit agencies that gave them top
ratings. They conclude that the financial establishment made super profits
through the immiseration of the population. The various actors, as clearly
demonstrated by their performances, were fully committed to the project.
Of
course, dramatizing something as complex as the 2008 financial collapse is an
immense undertaking, involving a mass of historical and social questions. The
Big Short’s makers have chosen one means of treating it. This film is
clearly not the final word. While McKay and the others involved obviously feel
sympathy for those devastated by the crisis, the mass of the population is
largely absent. Their attitude to capitalism is a critical one, but they are
not opponents of the profit system.
However,
at a time when most filmmakers seem obsessed with gender, sexuality and race
(and themselves), McKay and the others have chosen to treat—and treat
trenchantly—one of the critical events in recent times. Genuine credit is due
them.
"During the past year, the wealth of the
world’s billionaires surged past $7 trillion and the top 1 percent now controls
half of the world’s wealth."
Income inequality grows FOUR TIMES FASTER
under Obama than Bush.
"In the sphere of world economy, any
expectation of an upturn has given way to the reality of permanent crisis. In
the United States, six years into the so-called economic “recovery,” real
unemployment remains at near-record highs, wages are under attack, and health
care and pensions for millions of Americans are being wiped out."
"The essential and intended consequence
of government policy over the past seven years has been to vastly increase
social inequality. During the past year,
the wealth of the world’s billionaires surged past $7 trillion and the top 1
percent now controls half of the world’s wealth. In the US, the scale of social inequality—and therefore political
inequality—is so great that one recent scientific study concluded that “the
preferences of the vast majority of Americans appear to have essentially no
impact on which policies the government does or doesn’t adopt."
On the threshold of the New Year
31 December 2015
As
the year 2015 ends, a general mood of fear and foreboding predominates in
ruling circles. It is hard to find a trace of optimism. Commentators in the
bourgeois media look back on the past year and recognize that it has been a
year of deepening crisis. They look forward to 2016 with apprehension. The
general sense in government offices and corporate boardrooms is that the coming
year will be one of deep shocks, with unexpected consequences.
The
Financial Times’ Gideon Rachman gives expression to this pervasive
feeling in his end-of-the-year assessment published on Tuesday. “In 2015, a
sense of unease and foreboding seemed to settle on all the world’s power
centers,” he writes. “All the big players seem uncertain—even fearful.” China
“feels much less stable.” In Europe, the mood is “bleak.” In the US, public
sentiment is “sour.”
Significantly,
Rachman singles out as the “biggest common factor” in the world situation “a
bubbling anti-elite sentiment, combining anxiety about inequality and rage
about corruption that is visible in countries as different as France, Brazil,
China and the US.” This observation reflects a growing recognition within the
corporate media that the coming period will be one of immense social upheavals.
Rachman’s
comment and others like it that have appeared in recent days confirm the
assessment made by the World Socialist Web Site during the first week of
2015. The intervals between the eruption of major geopolitical, economic and
social crises have “become so short that they can hardly be described as
intervals,” we wrote. Crises “appear not as isolated ‘episodes,’ but as more or
less permanent features of contemporary reality. The pattern of perpetual
crisis that characterized 2014—an essential indicator of the advanced state of
global capitalist disequilibrium—will continue with even greater intensity in
2015.”
In defending its rule, the ruling class seeks
to cover over the reality of capitalism beneath a mass of lies and hypocrisy.
War is cloaked in the language of freedom and democracy; antisocial domestic
policy is portrayed as the pursuit of equality and freedom. But—and this is
characteristic of a period of crisis—more and more, the essential nature of
capitalism—a system of exploitation, inequality, war and repression—comes into
alignment with the everyday experiences of broad masses of people. Illusions
are dispelled; the essence appears.
In the sphere of world economy, any
expectation of an upturn has given way to the reality of permanent crisis. In
the United States, six years into the so-called economic “recovery,” real
unemployment remains at near-record highs, wages are under attack, and health
care and pensions for millions of Americans are being wiped out.
Europe is growing at less than 2 percent a year, and large parts of the
European economy—including Greece, the target of brutal austerity measures
demanded by the European banks—are in deep recession. China, presented as a
possible engine of world economic growth, is slowing sharply. Brazil and much
of Latin America are in deep slump. Russia is in recession.
BLOG: OBAMA'S CRONY BANKSTERS HAVE BEEN BUSY
BEAVERS SINCE THE LAST MELTDOWN THEY CAUSED!
Meanwhile, the easy-money policy of the world’s central
banks has produced a new wave of speculative investment, centered in junk bonds
and other forms of debt, which is beginning to unravel in a process that
parallels the crisis in subprime mortgages prior to 2008.
The essential and intended consequence of
government policy over the past seven years has been to vastly increase social
inequality. During the past year, the wealth of the world’s billionaires surged
past $7 trillion and the top 1 percent now controls half of the world’s wealth.
In the US, the scale of social inequality—and therefore political inequality—is
so great that one recent scientific study concluded that “the preferences of
the vast majority of Americans appear to have essentially no impact on which
policies the government does or doesn’t adopt.”
Joseph
Kishore
THE GLOBAL ECONOMY
PAYS THE ULTIMATE PRICE FOR THE LOOTING OF OBAMA - CLINTONS' CRONY BANKSTERS!
"The federal government encourages the
massive illegal and legal immigration that plays a huge role in job scarcity
and income suppression for American workers. To paraphrase Milton Friedman, a
viable economy cannot exist with open borders and unrestricted immigration. An
oversupply of workers willing to work for less pay, the outsourcing of jobs,
and visa-immigrant hiring allow companies to replace American workers with
immigrants for reduced labor and benefit costs."
"This government-driven, crony-capitalist
economy defined by job scarcity and wage stagnation is the reason college
graduates are burdened by $1.3 trillion debt, living with parents, can’t afford to marry
or buy homes, and working as waitresses and bartenders. Job scarcity and
low wages are the reasons we’re becoming a nation of renters rather than
homeowners. They are the reasons that 51 percent of workers earn less than
$30,000 a year. They are the reasons for the demise of the middle class and the
burgeoning welfare rolls, the modern-day equivalent of slavery."
"On the economic front there are two
sources of this mounting disquiet: First, the fact that despite the pouring of
trillions of dollars into the global financial system by the world’s major
central banks, recessionary tendencies are gathering momentum. Second, that, in
Rachman’s words, “there is… a widespread fear that, after years of unorthodox
monetary policy, another financial or economic crisis might be building."
“As a result, the share of wealth held by the
richest 0.1 percent of the population grew from 17 percent in 2007 to 22
percent in 2012, while the wealth of the 400 richest families in the US has
doubled since 2008.”
A New Year’s sense of foreboding
over the global economy
30 December 2015
Since
the eruption of the global financial crisis seven years ago, it has been
commonplace for bourgeois commentators to end each year with predictions of
better economic times ahead. Not so this time.
Financial
Times columnist Gideon Rachman summed up the prevailing mood in a
comment this week. “In 2015,” he wrote, “a sense of unease and foreboding
seemed to settle on all the world’s major power centres. From Beijing to
Washington, Berlin to Brasilia, Moscow to Tokyo—governments, media and citizens
were jumpy and embattled.”
On the economic front there are two sources of
this mounting disquiet: First, the fact that despite the pouring of trillions
of dollars into the global financial system by the world’s major central banks,
recessionary tendencies are gathering momentum. Second, that, in Rachman’s
words, “there is… a widespread fear that, after years of unorthodox monetary
policy, another financial or economic crisis might be building.”
The
predominant economic development in 2015 has been the deepening trend towards
global recession. At its meeting in October, the International Monetary Fund
forecast the lowest rate of global economic growth since the immediate
aftermath of the financial crisis and warned that it could further downwardly
revise its estimates.
The
myth, assiduously promoted for a number of years, that China and the emerging
market economies would provide a new foundation for global capitalism was
finally buried this year, as China experienced its lowest growth levels since
the early 1990s. Rather than provide a new base for expansion, the mounting
problems in the Chinese economy, exemplified by the Chinese stock market crash
over the summer and the devaluation of the renminbi, are negatively impacting
the rest of the world, with major economic and political consequences.
The
“left” turn in Latin American politics has come to an end as the boom fuelled
by exports to Chinese markets has given way to recession. Brazil, once seen as
a source of economic expansion, along with the other members of the BRICS group
of countries
, has been plunged into recession. Its economy contracted 4.5 percent in the
last quarter in the biggest downturn since the 1930s Depression. This
contraction has intensified its financial problems. November’s figures for the
increase in Brazil’s public debt were the third highest on record.The effects of slower growth in China are extending to the advanced capitalist economies. Canada, which is highly dependent on exports to China, has, with the announcement that the economy contracted in October, experienced negative or stagnant growth in seven of the first ten months of the year.
Falling iron ore export revenue, the result of the Chinese slowdown, is causing major fiscal problems for the Australian federal government as well as the states. In its latest budget update, the Turnbull government announced that it expected to lose another $7 billion in revenue over the next four years as compared to estimates made just last May, largely as a result of falling ore prices. These are now below $40 per tonne, compared to $180 per tonne four years ago. The once boom state of Western Australia has announced its biggest income fall since the Great Depression due to lost revenue from the mining industry.
For some time the US was touted as a bright spot in the world economy. To the extent that this is still the case, it only underscores the dismal situation everywhere else. US wages remain stagnant, economic growth remains well below levels achieved in all previous post-war recoveries, and industrial output is falling, with warnings that the sector has entered a recession.
The euro zone has yet to recover the levels of output reached before the beginning of the financial crisis, with no signs of any revival of investment.
One of the most prominent indicators of the onset of global recession is the precipitous fall in the prices of all industrial commodities. The Bloomberg Commodity index of 22 raw materials has fallen to its lowest level since the financial crisis.
While the plunge in the price of oil—down from its levels of around $100 per barrel in the middle of last year to just $36—has attracted the most attention, it is only the most prominent expression of a general tendency. Iron prices continue to fall, accompanied by precipitous declines in other metals associated with basic industry.
At the beginning of this year, the price of nickel, which is used in the manufacture of stainless steel, was expected to rise by 22 percent. It has fallen by more than 40 percent, a bigger decline than the collapse suffered by oil. Likewise, the price of zinc, which was predicted to rise by 16 percent, has dropped by 28 percent.
When the oil price began to fall, the view was advanced that this could be
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