Sunday, January 27, 2019

WILL WALL STREET'S BANKSTERS FINISH OFF AMERICA?

"The Federal Reserve is a key mechanism for perpetuating this whole filthy system, in which "Wall Street rules."


After Lehman's Collapse: A Decade of Delay



Now that the 2018 midterms are over, folks can address the elephant in the room. If one tuned into Fox Business midday on January 7, one heard legendary corporate raider Carl Icahn dilate on the dimensions of the pachyderm, which he pegged at $250 trillion. That’s the size of worldwide debt. But can that be right -- it’s more than eleven times the official U.S. federal government’s debt? And in case you didn’t notice, it is a quarter of one quadrillion bucks. Pretty soon we’ll be talking real money.
Icahn’s $250T quotation for worldwide debt came out last year. On September 13, Bloomberg ran “$250 Trillion in Debt: the World’s Post-Lehman Legacy” by Brian Chappatta, who draws off data from the Institute of International Finance’s July 9 “Global Debt Monitor,” (to read IIF reports, one must sign up). Chappatta wonders how the world’s central bankers can “even pretend to know how to reverse what they’ve done over the past decade”:
[Central banks] kept interest rates at or below zero for an extended period […] and used bond-buying programs to further suppress sovereign yields, punishing savers and promoting consumption and risk-taking. Global debt has ballooned over the past two decades: from $84 trillion at the turn of the century, to $173 trillion at the time of the 2008 financial crisis, to $250 trillion a decade after Lehman Brothers Holdings Inc.’s collapse.
Chappatta breaks global debt down into four categories: financial corporations, nonfinancial corporations, households, and governments. In every category, global nominal debt rose from 2008 to 2018, with the debt of governments hitting $67T. In the important debt-as-a-percentage-of-gross-domestic-product measurement, three of the categories rose while only financial corporations fell, “leaving their debt-to-GDP ratio as low as it has been in recent memory.” Global banks seem to be “healthier and more resilient to another shock.” After reporting on worldwide debt, Chappatta then looks at U.S. debt.
What’s interesting about debt in America is that as a percentage of GDP, households and financial corporations have sharply reduced their debt. It is only government in America that has seen a sharp debt-to-GDP uptick, and it was quoted at more than 100 percent of GDP. That’s rather higher than for all government debt worldwide.
Besides the massive racking up of debt over the last decade there’s something else that should concern us: the massive creation of new money. One of the ways money is created is when central banks engage in the “bond-buying programs” that Chappatta refers to. We call such programs “quantitative easing.” When the Federal Reserve buys assets, like treasuries and mortgage-backed securities, it needs money. So the Fed just creates the money ex nihilo.
Since the U.S. isn’t the only nation that has been busy buying bonds and creating money, one might wonder just how much money there is in the world. In June of 2017,HowMuch put out “Putting the World’s Money into Perspective,” which is a nice little graphic that puts the category “All Money” at $83.6T.
In November of 2017, MarketWatch ran “Here’s all the money in the world, in one chart” by Sue Chang, who in her short intro to the chart has some interesting things to say about global money, including cryptocurrencies. She writes of “narrow money” and “broad money” and pegs the latter at $90.4T, (or what Sen. Everett Dirksen would call “real money”.) If you want to examine Chang’s chart more closely, I’ve “excised” it here for your convenience; don’t miss the notes on the right margin. (Because its depth is 13,895 pixels, you might want to just save the chart to your computer rather than print it off.)
So, in addition to an historic run-up in debt, there’s been a monster amount of new money created. Chappatta calls it the “grandest central-bank experiment in history.” His use of “experiment” is apropos, as one wonders whether the world’s central bankers and their economists really know what they’ve been doing.
One ray of hope might just be President Trump’s choice of Jerome Powell as Chairman of the Federal Reserve, (Trump has such good instincts about people). One can get a sense of the man from his January talk with David Rubenstein at the Economic Club of Washington, D.C. (video and transcript). It’s refreshing that Mr. Powell disdains the “Fed speak” used by his predecessors.
Chappatta’s article is quite worth reading, and it’s not very long. The charts are user-friendly, although animated ones are a bit “creative.” The last section, “China Charges Forward,” is especially worthwhile.
This is the post-Lehman legacy. To pull the global economy back from the brink, governments borrowed heavily from the future. That either portends pain ahead, through austerity measures or tax increases, or it signals that central-bank meddling will become a permanent fixture of 21st century financial markets.
Given those alternatives, let’s try a little austerity. But austerity would entail spending cuts, and Congress has a poor history in that regard. In fact, since fiscal 2007, the year before the financial crisis, total federal spending has gone from $2.72T a year to more than $4T. While austere citizens deleverage and get their fiscal affairs in order, Congress shamefully borrows and spends like never before.
Congress’ solutions are to bail out, prop up, and do whatever it takes to avoid reforming what it has created. So they farm out their responsibilities to the Federal Reserve. Indeed, in the July 17, 2012 meeting of the Senate Banking Committee (go to the 53:50 point of this C-SPAN video), Chuck Schumer told Federal Reserve Chairman Ben Bernanke the following:
So given the political realities, Mr. Chairman, particularly in this election year, I'm afraid the Fed is the only game in town. And I would urge you to take whatever actions you think would be most helpful in supporting a stronger economic recovery… So get to work, Mr. Chairman. (Chuckles.)
So the Fed is “the only game in town” because there are only monetary solutions for the economy, right? There aren’t any fiscal solutions, as they would involve Congress, and Congress is busy running for re-election, right? Sounds like you’re abdicating your responsibilities, Chuck.
The last decade has been an exercise in delay. Congress has avoided doing the difficult and unpopular things that would help avoid future financial collapses. If Congress were serious about balancing the budget, then social programs would be on the chopping block, because that’s where the real money goes.
Jon N. Hall of ULTRACON OPINION is a programmer from Kansas City.


"The Federal Reserve is a key mechanism for perpetuating this whole filthy system, in which "Wall Street rules."


Wall Street rules

 
The Federal Reserve sent a clear message to Wall Street on Friday: It will not allow the longest bull market in American history to end. The message was received loud and clear, and the Dow rose by more than 700 points.
Hundreds of thousands of federal workers remain furloughed or forced to work without pay as the partial government shutdown enters its third week, but the US central bank is making clear that all of the resources of the state are at the disposal of the financial oligarchy.
Responding to Thursday’s market selloff following a dismal report from Apple and signs of a manufacturing slowdown in both China and the US, the Fed declared it was “listening” to the markets and would scrap its plans to raise interest rates.
Speaking at a conference in Atlanta, where he was flanked by his predecessors Ben Bernanke and Janet Yellen, both of whom had worked to reflate the stock market bubble after the 2008 financial crash, Chairman Jerome Powell signaled that the Fed would back off from its two projected rate increases for 2019.
“We’re listening sensitively to the messages markets are sending,” he said, adding that the central bank would be “patient” in imposing further rate increases. To underline the point, he declared, “If we ever came to the conclusion that any aspect of our plans” was causing a problem, “we wouldn’t hesitate to change it.”
This extraordinary pledge to Wall Street followed the 660 point plunge in the Dow Jones Industrial Average on Thursday, capping off the worst two-day start for a new trading year since the collapse of the dot.com bubble.
William McChesney Martin, the Fed chairman from 1951 to 1970, famously said that his job was “to take away the punch bowl just as the party gets going.” Now the task of the Fed chairman is to ply the wealthy revelers with tequila shots as soon as they start to sober up.
Powell’s remarks were particularly striking given that they followed the release Friday of the most upbeat jobs report in over a year, with figures, including the highest year-on-year wage growth since the 2008 crisis, universally lauded as “stellar.”
While US financial markets have endured the worst December since the Great Depression, amid mounting fears of a looming recession and a new financial crisis, analysts have been quick to point out that there are no “hard” signs of a recession in the United States.
Both the Dow and the S&P 500 indexes have fallen more than 15 percent from their recent highs, while the tech-heavy NASDAQ has entered bear market territory, usually defined as a drop of 20 percent from recent highs.
The markets, Powell admitted, are “well ahead of the data.” But it is the markets, not the “data,” that Powell is listening to.
Since World War II, bear markets have occurred, on average, every five-and-a-half years. But if the present trend continues, the Dow will reach 10 years without a bear market in March, despite the recent losses.
Now the Fed has stepped in effectively to pledge that it will allocate whatever resources are needed to ensure that no substantial market correction takes place. But this means only that when the correction does come, as it inevitably must, it will be all the more severe and the Fed will have all the less power to stop it.
From the standpoint of the history of the institution, the Fed’s current more or less explicit role as backstop for the stock market is a relatively new development. Founded in 1913, the Federal Reserve legally has had the “dual mandate” of ensuring both maximum employment and price stability since the late 1970s. Fed officials have traditionally denied being influenced in policy decisions by a desire to drive up the stock market.
Federal Reserve Chairman Paul Volcker, appointed by Democratic President Jimmy Carter in 1979, deliberately engineered an economic recession by driving the benchmark federal funds interest rate above 20 percent. His highly conscious aim, in the name of combating inflation, was to quash a wages movement of US workers by triggering plant closures and driving up unemployment.
The actions of the Fed under Volcker set the stage for a vast upward redistribution of wealth, facilitated on one hand by the trade unions’ suppression of the class struggle and on the other by a relentless and dizzying rise on the stock market.
Volcker’s recession, together with the Reagan administration’s crushing of the 1981 PATCO air traffic controllers’ strike, ushered in decades of mass layoffs, deindustrialization and wage and benefit concessions, leading labor’s share of total national income to fall year after year.
These were also decades of financial deregulation, leading to the savings and loan crisis of the late 1980s, the dot.com bubble of 1999-2000, and, worst of all, the 2008 financial crisis.
In each of these crises, the Federal Reserve carried out what became known as the “Greenspan put,” (later the “Bernanke put”)—an implicit guarantee to backstop the financial markets, prompting investors to take ever greater risks.
In 2008, this resulted in the most sweeping and systemic financial crisis since the Great Depression, prompting Fed Chairman Bernanke, New York Fed President Tim Geithner and Treasury Secretary Henry Paulson (the former CEO of Goldman Sachs) to orchestrate the largest bank bailout in human history.
Since that time, the Federal Reserve has carried out its most accommodative monetary policy ever, keeping interest rates at or near zero percent for six years. It supplemented this boondoggle for the financial elite with its multi-trillion-dollar “quantitative easing” money-printing program.
The effect can be seen in the ever more staggering wealth of the financial oligarchy, which has consistently enjoyed investment returns of between 10 and 20 percent every year since the financial crisis, even as the incomes of workers have stagnated or fallen.
American capitalist society is hooked on the toxic growth of social inequality created by the stock market bubble. This, in turn, fosters the political framework not just for the decadent lifestyles of the financial oligarchs, each of whom owns, on average, a half-dozen mansions around the world, a private jet and a super-yacht, but also for the broader periphery of the affluent upper-middle class, which provides the oligarchs with political legitimacy and support. These elite social layers determine American political life, from which the broad mass of working people is effectively excluded.
The Federal Reserve is a key mechanism for perpetuating this whole filthy system, in 
which “Wall Street rules.” But its services in behalf of the rich and the super-rich only compound the fundamental and insoluble contradictions of capitalism, plunging the system into ever deeper debt and ensuring that the next crisis will be that  much more violent and explosive.
In this intensifying crisis, the working class must assert its independent interests with the same determination and ruthlessness as evinced by the ruling class. It must answer the bourgeoisie’s social counterrevolution with the program of socialist revolution.

 

 

 

the depression is already here for most of us below the super-rich!


Trump and the GOP created a fake economic boom on our collective credit card: The equivalent of maxing out your credit cards and saying look how good I'm doing right now.

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Trump criticized Dimon in 2013 for supposedly contributing to the country’s economic downturn. “I’m not Jamie Dimon, who pays $13 billion to settle a case and then pays $11 billion to settle a case and who I think is the worst banker in the United States,” he told reporters.
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"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."  
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"Overall, the reaction to the decision points to the underlying fragility of financial markets, which have become a house of cards as a result of the massive inflows of money from the Fed and other central banks, and are now extremely susceptible to even a small tightening in financial conditions."

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"It is significant that what the Financial Times described as a “tsunami of money”—estimated to reach $1 trillion for the year—has failed to prevent what could be the worst year for stock markets since the global financial crisis."
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"A decade ago, as the financial crisis raged, America’s banks were in ruins. Lehman Brothers, the storied 158-year-old investment house, collapsed into bankruptcy in mid-September 2008. Six months earlier, Bear Stearns, its competitor, had required a government-engineered rescue to avert the same outcome. By October, two of the nation’s largest commercial banks, Citigroup and Bank of America, needed their own government-tailored bailouts to escape failure. Smaller but still-sizable banks, such as Washington Mutual and IndyMac, died."
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The GOP said the "Tax Cuts and Jobs Act" would reduce deficits and supercharge the economy (and stocks and wages). The White House says things are working as planned, but one year on--the numbers mostly suggest otherwise. 



Decade after financial crisis JPMorgan predicts next one’s coming soon


Published time: 13 Sep, 2018 14:00

© Ole Spata / Global Look Press
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With the 10th anniversary approaching of the catalyst for the last major global stock market crash – the Lehman Brothers’ collapse – strategists from JPMorgan are predicting the next financial crisis to strike in 2020.
Wall Street’s largest investment bank analyzed the causes of the crash and measures taken by governments and central banks across the world to stop the crisis in 2008, and found that the economy remains propped up by those extraordinary steps.
According to the bank’s analysis, the next crisis will probably be less painful, however, diminished financial market liquidity since the 2008 implosion is a “wildcard” that’s tough to game out.

“The main attribute of the next crisis will be severe liquidity disruptions resulting from these market developments since the last crisis,” the reports says.
Changes to central bank policy are seen by JPMorgan analysts as a risk to stocks, which by one measure have been in the longest bull market in history since the bottom of the crisis.
JPMorgan’s Marko Kolanovic has previously concluded that the big shift away from actively managed investing has escalated the danger of market disruptions.
“The shift from active to passive asset management, and specifically the decline of active value investors, reduces the ability of the market to prevent and recover from large drawdowns,” said JPMorgan’s Joyce Chang and Jan Loeys.

The bank estimates that actively managed accounts make up only about one-third of equity assets under management, with active single-name trading responsible for just 10 percent or so of trading volume.
JPMorgan referred to its hypothetical scenario as the “great liquidity crisis,” claiming that the timing of when it could occur “will largely be determined by the pace of central bank normalization, business cycle dynamics, and various idiosyncratic events such as escalation of trade war waged by the current US administration.”
For more stories on economy & finance visit RT's business section

World’s top 5 ‘most evil’ corporations


Published time: 3 Mar, 2018 05:55Edited time: 3 Mar, 2018 13:04
Jeff Bezos, founder and chief executive officer of Amazon, poses as he stands atop a supply truck during a photo opportunity at the premises of a shopping mall in the southern Indian city of Bangalore © Abhishek N. Chinnappa / Reuters


Most companies become successful thanks to their stellar reputations. But not always. RT Business scraped the bottom of the barrel to find the most hated companies trending on the internet.


Monsanto

The company that needs no introduction, creator of DDT and Agent Orange, Monsanto is one the world’s largest pesticide and GMO seed manufacturers. It is known for being the first company to genetically modify a seed to make it resistant to pesticides and herbicides. Monsanto’s herbicides have been blamed for killing millions of crop acres, while its chemicals were added to blacklists of products causing cancer and many other health problems.

EU to approve ‘marriage made in hell’ between #Bayer & #Monsanto https://on.rt.com/903s 
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Apple

Once the darling of Microsoft-hating gadget lovers, Apple more recently has been accused of mistreating or underpaying their employees, hiding money offshore, and not paying taxes. It has also been accused of violating health or environmental legislation, and misusing its position where they have a monopoly in the market. And, oh yes, deliberately slowing older iPhones and overcharging for its products to boot.

'No consent': #Apple sued for deliberately slowing down older iPhones https://on.rt.com/8ven 

Apple sued for deliberately slowing down older iPhones — RT Business News


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Nestle

The world's largest food and beverage company Nestle says it is committed to enhancing quality of life and contributing to a healthier future. However, it has been dragged through numerous scandals involving slave labor. The multinational is one of the most boycotted corporations in the world, as violations of labor rights have been reported at its factories in different countries.
Nestlé admits possibility of slave labor in its coffee #supplychain http://hubs.ly/H02j9Hs0 
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Philip Morris

The products of the American multinational cigarette and tobacco manufacturing company are sold in over 180 countries outside the United States. Philip Morris owns Marlboro, one of the world's biggest brands. Back in 1999, Philip Morris courted officials of the Czech Republic by explaining how smoking would in fact help their economy, due to the reduced healthcare costs from its citizens dying early.

McDonald's

American fast-food company McDonald's was founded in 1940. The company serves more customers each day than the entire population of Great Britain, but has a long history of terrible labor practices. It has been constantly under fire for serving unhealthy junk food, which contributes health problems. Researchers have found that McDonald’s burgers cannot decompose on their own.

McDonald’s becomes weed users’ highest-ranking fast food joint. https://on.rt.com/8ofp 

McDonald’s becomes weed users’ highest-ranking fast food joint — RT US News


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Notable mentions of corporations not quite evil enough to make the top list:

Goldman Sachs TRUMP CRONIESJPMorgan Chase OBAMA CRONIES
ExxonMobil
Halliburton
British American Tobacco
Dow Chemical
DuPont
Bayer
Microsoft
Google
Facebook
Amazon
Walmart
For more stories on economy & finance visit RT's business section

 

Ten years since the collapse of Lehman Brothers

15 September 2018
Ten years ago on this day, the global capitalist system entered its most far-reaching and devastating crisis since the Great Depression of the 1930s. A decade later none of the contradictions which produced the financial crisis has been alleviated, much less overcome. Moreover, the very policies carried out to prevent a total meltdown of the financial system, involving the outlay of trillions of dollars by the US Federal Reserve and other major central banks, have only created the conditions for an even bigger disaster.
The immediate trigger for the onset of the crisis was the decision by US financial authorities not to bail out the 158-year-old investment bank Lehman Brothers and prevent its bankruptcy. There is considerable evidence to suggest that this was a deliberate decision by the Federal Reserve to create the necessary conditions for what they knew would have to be a massive bailout, not just of a series of banks but the entire financial system.
The previous March, the Fed had organised a $30 billion rescue of Bear Stearns when it was taken over by JP Morgan. But as the Fed’s own minutes from that time make clear the Bear Stearns crisis was just the tip of a huge financial iceberg. The Fed noted that “given the fragile conditions of the financial markets at the time” and the “expected contagion” that would result from its demise it was necessary to organise a bailout. As Fed chairman Ben Bernanke later testified, a sudden failure would have led to a “chaotic unwinding” of positions in financial markets. The bailout of Bear Stearns was not a solution but a holding operation to try to buy time and prepare for what was coming.
While the demise of Lehman was the initial trigger, the most significant event was the impending bankruptcy, revealed just two days later, of the American insurance firm AIG, which was at the centre of a system of complex financial products running into trillions of dollars.
Due to the interconnections of the global financial system, the crisis rapidly extended to financial markets around the world, above all across the Atlantic to Europe where the banks had been major investors in the arcane financial instruments that had been developed around the US sub-prime home mortgage market, the collapse of which provided the immediate trigger for the crisis.
The value of every crisis, it has been rightly said, is that it reveals and starkly lays bare the underlying socio-economic and political relations that are concealed in “normal” times. The collapse of 2008 is no exception.
In the twenty years and more preceding the crisis, particularly in the aftermath of the liquidation of the Soviet Union in 1991, the bourgeoisie and its ideologists had proclaimed not only the superiority of the capitalist “free market” but that it was the only possible socio-economic form of organisation. Basing themselves on the false identification of the Stalinist regime with socialism, they maintained that its liquidation signified that Marxism was forever dead and buried. In particular, Marx’s analysis of the fundamental and irresolvable contradictions of the capitalist mode of production had proved to be false. According to the central foundation for what passed for theoretical analysis, the so-called “efficient markets hypothesis,” a financial meltdown was impossible because with the development of advanced technologies all information had been priced into decision making and so a financial collapse was impossible.
Rarely have the nostrums of the bourgeoisie and its ideologists been so graphically exposed.
Two days after the crisis erupted, President George W. Bush declared “this sucker’s going down.” Later, the high priest of capitalism and its “free market,” the now bewildered former head of the US Federal Reserve Alan Greenspan, testified to the US Congress that he had been completely confounded because markets had failed to behave according to his “model” and its assumptions.
The crisis also exposed in full glare another of the central myths of the capitalist order—that the state is somehow a neutral or independent organisation committed to regulating social and economic affairs in the interests of society as a whole.
It confirmed another central tenet of Marxism, expounded more than 170 years ago, that “the executive of the modern state is but a committee for managing the common affairs of the bourgeoisie.”
This was exemplified in the naked class response to the financial meltdown. The plans, already developed by the Fed and other authorities to cover the losses of the financial elite, whose speculative and in many cases outright criminal activities had sparked the crisis, were put into operation.
In the lead-up to the presidential election of November 4, Wall Street swung its support behind Obama—with the media promoting him as the candidate of “hope” and “change you can believe in”—over McCain. The Democrats had committed themselves to the bailout, securing the passage of the $700 billion TARP asset-purchasing program through Congress. This massive increase in the national debt of the United States was authorised with virtually no debate.
Of course, a new political fiction was immediately advanced. It was necessary to bail out Wall Street first, the public was told, in order to assist Main Street. However, this lie was rapidly exposed. The crisis was the starting point for a massive assault on the working class. While bankers and financial speculators continued to receive their bonuses, millions of American families lost their homes. Tens of millions were made unemployed.
In the following year, the rescue operation organised by the Obama administration of Chrysler and General Motors, with the active and full collaboration of the United Auto Workers union, resulted in the development of new forms of exploitation, above all through the two-tier wages system, paving the way for even more brutal systems such as those pioneered by Amazon.
This was the other side of a Wall Street bailout—a massive restructuring of class relations in line with the edict of Obama’s one-time chief of staff Rahm Emanuel to “never let a serious crisis go to waste” because it provides “an opportunity to do things you think you could not do before.”
The same class response was in evidence elsewhere. After the initial effects of the crisis had been overcome, the European bourgeoisie initiated an austerity drive forcing up youth unemployment to record levels. In Britain workers have endured a sustained decline in real wages not seen in more than a century.
The most egregious expression of this class logic has been seen in Greece with the imposition of poverty levels last seen in the Great Depression of the 1930s. The numerous bailout operations were never aimed at “rescuing” the Greek economy and its population but directed to extracting the resources to repay the major banks and financial institutions.
The crisis revealed the real nature of bourgeois democracy. The euro zone and the European Union were exposed as nothing more than a mechanism for the dictatorship of European finance capital. As one of the chief enforcers of its diktats, the former German finance minister Wolfgang Schäuble, declared, in the face of popular opposition, “elections cannot be allowed to change economic policy.”
As the working class in every country confronts stagnant and declining wages, falling living standards, the scrapping of secure employment and attacks on social services, leading to mounting health and other problems, innumerable reports and data chart the development of a global system in which wealth is siphoned up the income scale.
According to the latest Wealth-X World Ultra Wealth Report some 255,810 “ultra-high net worth” individuals, with a minimum of $30 million in wealth, now collectively own $31.5 trillion, more than the bottom 80 percent of the world’s population—comprising 5.6 billion people. Overall the wealth of this cohort increased by 16.3 percent in 2016–17, rising by 13.1 percent in North America, 13.5 percent in Europe and 26.7 percent in Asia.
The full significance of the bailouts of the financial system and the subsequent provision of trillions of dollars is clear. It has brought about the institutionalisation of a process, developing over the preceding decades, where the financial system, with the stock market at its centre, functions as a mechanism for the transfer of wealth to the heights of society.
In its analysis of the financial crisis, the World Socialist Web Site insisted from the outset that this was not a conjunctural development, from which there would be a “recovery,” but a breakdown of the entire capitalist mode of production.
That analysis has been completely confirmed. While a total financial meltdown was prevented, the diseases of the profit system that gave rise to the crisis have not been overcome. Rather, they have metastasised and mutated into new and even more malignant forms.
The actions of the US Federal Reserve and other major central banks in pumping trillions of dollars into the financial system in order to “rescue” it, and to enable the continuation of the very forms of speculation that led to the crisis, have only created the conditions for a new disaster in which the central banks themselves will be directly involved.
This fact of economic and financial life can even be seen in the comments by bourgeois analysts and pundits on the occasion of the upcoming anniversary. While they generally maintain that the financial system has been “strengthened” since 2008—a completely worthless assertion given that it was held to be strong in the lead up to the crash and any warnings of growing risks were dismissed as “Luddite” by such luminaries as former US Treasury Secretary Lawrence Summers—no one dares to proclaim that the underlying problems have been resolved.
Rather, taking heed from the warning of JP Morgan chief Jamie Dimon that while the trigger for the next crisis will not be the same as the last but “there will be another crisis”, they nervously scan the horizon for signs of where it might strike.
Some analysts point to the rise in global debt, which is now running at 217 percent of gross domestic product, an increase of 40 percentage points since 2007, contrary to all expectations that, since debt was a major cause of the 2008 crisis, some deleveraging would have occurred.
Others single out the mounting problems in so-called emerging markets facing repayments on dollar-denominated loans, a source of speculation when interest rates were at record lows but which now present major refinancing problems as interest rates have started to rise.
The seemingly unstoppable rise of stock markets, fuelled by the provision of ultra-cheap money by the Fed and other central banks, is also an issue of concern. The increased use of passive investment funds tied to global indexes via computer trading systems tends to reinforce downswings as has been seen in a series of “flash crashes” such as that of last February when Wall Street fell by as much as 1,600 points in intraday trading.
The greatest source of anxiety, although it is not mentioned so much publicly, is the resurgence of the working class and the push for increased wages. To the extent it is discussed publicly, this fear, manifested in stock market falls generated by news of relatively small wage increases, is generally couched in terms of “political tensions” caused by increased social inequality.
A further expression of the ongoing and deepening breakdown of the capitalist order is the disintegration of all the geo-political structures and relationships that have constituted the framework within which the movements of capitalist economy and finance have flowed throughout the post-war period.
In the wake of the 2008 crisis, the leaders of the G20 gathered in April 2009, in the midst of a collapse in world trade taking place at a faster rate than in 1930. They pledged to never again go down the road of the protectionist tariff policies that had played such a disastrous role in the Great Depression and had worked to create the conditions for the outbreak of World War II, just ten years after the Wall Street crash of October 1929.
That commitment lies in tatters as the Trump administration, seeking to counter the economic decline of the US so graphically revealed in the 2008 collapse, embarks on ever widening trade war measures.
The principal target, at least to this point, is China. But the Trump administration has designated the European Union as an economic “foe,” and has already implemented trade war measures against it, with more in the pipeline.
The G7, the grouping of major capitalist powers set up in the wake of the world recession of 1974–75 and the end of the post-war boom to try to regulate the affairs of world capitalism, exists in name only following the acrimonious split at its meeting last June with the US decision to impose tariffs against its nominal “strategic allies.”
World war has not yet broken out. But there are innumerable flashpoints—in the Middle East, in Eastern Europe, in North East Asia and in the South China Sea to cite just some examples—where a conflict could erupt between nuclear-armed powers. The impetus for a new global conflagration is the drive by US imperialism to counter its economic decline by asserting its dominance over the Eurasian landmass at the expense of its enemies and allies alike.
It is of enormous significance that the civil war that has erupted in the American state apparatus between the state and military-intelligence apparatus, whose mouthpiece is the Democratic Party, and the Trump administration is over how this objective should be accomplished; that is, whether the American drive should be directed in the first instance against Russia or China. At the same time, all the major powers are boosting their military budgets in preparation for the escalation of military conflicts.
The political system in every country is beset by deep crisis. The very rapidity of the crisis is accentuating the contradictions between the objective dangers and the level of class consciousness. The chief obstacle to achieving the necessary alignment of working class consciousness with the objective reality of capitalist crisis on a world scale remains the reactionary political role of the old bureaucratised labour and trade union organisations, abetted by the various pseudo-left tendencies, in suppressing the class struggle. But the conditions are developing for these shackles to be broken.
In the founding program of the Fourth International, Leon Trotsky wrote: “The orientation of the mass is determined first by the objective conditions of decaying capitalism, and second, by the treacherous policies of the old workers’ organisations. Of these factors, the first, of course, is the decisive one: the laws of history are stronger than the bureaucratic apparatus.”
That perspective is now being confirmed in the resurgence of the class struggle internationally, above all in the centre of world capitalism, the United States.
Conscious of their profound weakness in the face of such a movement, and fully aware of its revolutionary implications, the ruling classes in every country have been developing ever-more authoritarian forms of rule.
Their greatest fear is the development of political consciousness, that is, the understanding in wider sections of the working class, and above all the youth, of its real situation, that its enemy is the entire capitalist system. Above all, the ruling elites fear the development of a revolutionary socialist movement, based on the principles and program of the Fourth International. This is why the World Socialist Web Site is the central target of internet censorship. It is also the reason for the escalation of attacks by the German coalition government on the Sozialistische Gleichheitspartei, the German section of the International Committee of the Fourth International (ICFI).
But the efforts to suppress the work of the International Committee will fail. The renewal of class struggle will provide new forces for the development of the working of the ICFI throughout the world.
The meltdown of 2008 demonstrated above all that the working class confronts a global crisis. The crisis can therefore be resolved only on a global scale through the unification of the working class across national borders and barriers on the basis of an international socialist program for the reconstruction of society to meet human need and not profit.
Nick Beams

 

 

 

Who Can We Blame For The Great Recession?


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This year marks the tenth anniversary of the “Great Recession” and the media are trying to determine if we have learned anything from it. The Queen visited the London School of Economics after the “Great Recession” to ask her chief economists why they hadn’t seen this disaster coming. They told her they would get back to her with an answer.  Later, they wrote her a letter saying that the best economic theory asserts that recessions are random events and they had successfully predicted that no one can predict recessions.  
Still, George Packer, a staff writer at the New Yorker magazine since 2003, thinks he knows more than the LSE academics. He wrote the following in the August 27 print issue:
"It was caused by reckless lending practices, Wall Street greed, outright fraud, lax government oversight in the George W. Bush years, and deregulation of the financial sector in the Bill Clinton years. The deepest source, going back decades, was rising inequality. In good times and bad, no matter which party held power, the squeezed middle class sank ever further into debt...
"In February, 2009, with the economy losing seven hundred thousand jobs a month, Congress passed a stimulus bill—a nearly trillion-dollar package of tax cuts, aid to states, and infrastructure spending, considered essential by economists of every persuasion—with the support of just three Republican senators and not a single Republican member of the House."
Typically, journalists will defer to an expert on matters in which they aren’t trained, which is most subjects. But Packer didn’t bother to ask an economist as the Queen did. Had he done so, he would have received the same answer from mainstream economists – recessions are random events and can’t be predicted. If economists knew the causes of recessions they could predict them when they see the causes present. 
So where did Packer get his “causes” for the latest recession? In the classic movie Casablanca, the corrupt and lazy policeman Renault is “shocked” to find gambling going on at Rick’s place and orders the others to round up the “usual suspects.” That’s what Packer does. People have blamed greedy businessmen and bankers for crises for centuries. Since the rise of socialism they added capitalism and the politicians who support it. The only new suspect in the socialist line up is inequality, even though inequality has varied little since 1900 and is near its record low since then.
Had Packer consulted the University of Chicago Booth School of Business, he wouldn’t have received much help. Keep in mind that mainstream economists think recessions are random events. After the storm subsides, they can identify likely contributors for the latest disaster, but those differ with each recession. Recently Chicago Booth queried experts for the top contributing factors of the latest recession. The top answer was flawed regulations, followed by underestimating risk and mortgage fraud. 
The “flawed regulations” excuse assumes that bitter bureaucrats who write the regulations are wiser than the actual bankers and ignores the fact that banking is one of the most regulated industries. One analyst described the recent recession as the perfect storm of regulations so massive no one group could understand them all and many of them working against other regulations. 
Blaming “underestimated risk” is good Monday morning quarterbacking. Everyone has 20/20 hindsight, or 50/50 as quarterback Cam Newton said. The same economists don’t explain why banks that took similar risks didn’t fail or why what seems risky now didn’t seem so risky in 2007. As for fraud, the amount was negligible and is always there; why did it contribute to a recession this time? Sadly, the correct answer to what caused the Great Recession– “Loose monetary policy” – came in next to last among Chicago Booth’s experts. 
Perspective is vital. A magnifying glass can make a lady bug look terrifying. Let’s pull back and put the latest recession in a broader context. There have been 47 recessions/depressions since the birth of the nation. Before the Great Depression economists called crises “depressions” and since then they are “recessions.” They’re the same thing; economists thought “recession” was less scary. 
Recessions before the Great Depression were mild compared to it. It took the Federal Reserve and the US government working together trying to “rescue” us to plunge the country into history’s worst economic disaster. Journalists like Packer have convinced people that the Great Recession of 2008 was second only to the Great Depression, but if we combine the recessions of 1981 and 1982, separated only by a technicality and six months, that recession would have been worse. The Fed did not reduce interest rates after that recession because it was still battling the inflation it has caused in the 1970s, yet the economy bounced back and recovery lasted almost a decade. 
I want to drive home the fact that the three worst recessions in our history assaulted us after the creation of the Federal Reserve in 1913. 
The best explanation of the causes of recessions, because it enjoys the greatest empirical support, is the Austrian business-cycle theory, or ABCT. Ludwig von Mises and Friedrich Hayek are most famous for refining and expounding it, but the English economists of the Manchester school were the first to write about it. They discovered that expansions of the money supply through low interest rates motivated businesses to borrow and invest at a rapid rate. That launches an unsustainable boom because businesses are trying to deploy more capital goods than exist. Banks raise rates to rein in galloping inflation and the boom turns to dust. 
Banks don’t control interest rates today as they did in the past. That’s the Federal Reserve’s job. The Fed generally reduces interest rates or expands the money supply through “quantitative easing,” or buying bonds from banks, in order to force an economy in the ditch to climb out. The recovery from the Great Recession remained on its feet for so long because the Fed’s policy of paying interest on reserves at banks soaked up much of the new money it created out of thin air. Also, much of the money went overseas to buy imports or as investments. 
The lesson – don’t ask medical advice from your plumber or economics from a journalist. And if you ask an economist, make sure he follows the Austrian school. 
NO PRESIDENT IN HISTORY SUCKED IN MORE BRIBES FROM CRIMINAL BANKSTERS THAN BARACK OBAMA!
“Records show that four out of Obama's top 

five contributors are employees of financial 

industry giants - Goldman Sachs ($571,330), 

UBS AG ($364,806), JPMorgan Chase 

($362,207) and Citigroup ($358,054).”


OBAMA and HIS BANKS: THEIR PROFITS, CRIMES and LOOTING SOAR
This was not because of difficulties in securing indictments or convictions. On the contrary, Attorney General Eric Holder told a Senate committee in March of 2013 that the Obama administration chose not to prosecute the big banks or their CEOs because to do so might “have a negative impact on the national economy.”

 

BANKSTERS’ RENT BOY FORMER ATTORNEY GEN ERIC HOLDER POSES WITH HITLER PRAISING LEADER OF RACIST, HOMOPHOBIC, ANTI-SEMITIC HATE MONGER LOUIS Farrakhan.
“Attorney General Eric Holder's tenure was a low point even within the disgraceful scandal-ridden Obama years.” DANIEL GREENFIELD / FRONTPAGE MAG
Why the swamp has little to fear


The midterm elections will either halt or hasten the current soft coup whose aim is to overthrow a legally elected President now being conducted by the swamp.   And if the history of Washington, D.C. corruption is any indication of what will happen after the midterms, the swamp will survive regardless of its coup's success or failure.  But the efforts to expose the treasonous plot will fade away into the dustbin of political history after being seen as just another waste of time and taxpayer money.  The seemingly endless parade of corruption scandals and mind-numbing criminal activity will go on unabated and continue to escalate to unimaginable heights because of an inescapable fact of human nature. 
In a Forbes 2015 article entitled "The Big Bank Bailout," author Mike Collins mentions several ways to prevent another housing bubble crisis from destroying the world economy when he writes, "But perhaps the best solution is to make the CEOs and top managers of the banks criminally liable for breaking these rules so that they fear going to jail.  These people are not afraid to do it again so if you can’t put some real fear in their heads, they will do it again."
What Collins has honed in on is accountability and punishment, the very things lacking in today's dealings with the swamp.  Just as the major banking institutions will soon, if not already, re-enter into risky, corrupt, and illegal lending practices because there was not a "smidgen" of accountability for the trillions of dollars they lost in the housing bubble catastrophe, so too will the past and presently unknown criminals within the IRS, FBI, and DOJ continue to thumb their noses at the law.
What the American people have been subjected to over the past 18 months since President Trump took office is a series of crimes that have been painstakingly unearthed but little else.  "Earth-shattering," "bombshell," and "constitutional crisis" are just some of the words and phrases used by media outlets to describe the newest update regarding the many ongoing investigations.  These words are meant to shock the audience but no longer have the impact they once did because of their overuse and because of the likely lack of any substantive outcome.  What Americans have seen are trials without consequences, clear proof of guilt with no punishment.  Draining the swamp without any repercussions to the swamp creatures inside is like going on a diet but eating the same foods.  
Americans witnessed no accountability regarding exhaustive investigations into the deadly circumstances surrounding the swamp's gun-walking campaign named Fast and Furious, a program where U.S. Border Patrol agent Brian Terry and hundreds of innocent Mexican citizens were killed with guns the government sold to criminals.  The swamp continued on its power mission and attempted the deceitful confiscation of America's health care with Obamacare, whose real aim was a redistribution of the nation's wealth.  After little pushback and the passage of Obamacare,  Americans witnessed Benghazi in 2012, and when nothing was accomplished over the investigations of that tragedy, the swamp trampled on the rights of conservatives in what became known as the IRS scandal of 2013.  Nothing was done about that.  And on and on, with the swamp committing one bigger and bolder crime after the next with impunity. 
So we have arrived at the doorstep of the Russian collusion investigation farce by first traveling through the swamp of unsolved crimes perpetrated inside the Obama administration.  With the passage of time, swamp-dwellers like Eric Holder and Lois Lerner, knee-deep in the mud with congressional contempt charges, continue to be financially enriched and will slowly be forgotten, while more recognizable swamp royalty like Hillary Clinton get to run for president. 
Until Americans see guilty members within the United States government wearing orange jumpsuits and serving time, the investigations and congressional hearings are mere sideshow spectacles to appease the masses.


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