Thursday, August 1, 2019

AMERICA DRIFTS TOWARDS DEPRESSION


Warning Signs: Manufacturing Growth Slows Again and Construction Spending Falls

Workers at the Hollywood Bed Frame Company attend an event to mark the company's upcoming expansion which will double the manufacturer's workforce, adding 100 new local jobs, at the company's factory in Commerce, California, seven miles (11 km) southeast from downtown Los Angeles, April 14, 2017. Hollywood Bed Frame says …
ROBYN BECK/AFP/Getty Images
1:38

The growth of the United States manufacturing sector slowed in July and construction spending fell for the second consecutive month, according to reports issued Thursday.

The Institute for Supply Management said its index of national manufacturing activity fell to 51.2 in July, down from 51.7 in June. While still indicating expansion, the July reading was below Wall Street’s expectations for a slight improvement from June’s sluggish figure. This is the fourth consecutive monthly decline.
U.S. construction spending fell 1.3% during the month of June, the Commerce Department reported Thursday. This decline also defied expectations for improvement.
Taken together, the reports bolster the case for the Fed’s rate cut this week. They may fuel calls for the Fed to go even further.
“Respondents expressed less concern about U.S.-China trade turbulence, but trade remains a significant issue. More respondents noted supply chain adjustments as a result of moving manufacturing from China,” said Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
It was not all bad news in the ISM figures. New orders improved in the month while both producer and customer inventories contracted, possibly pointing to better growth later this year. But orders for export fell, highlighting the drag that global sluggishness is having on the U.S. economy.


Federal Reserve cuts rates, but Wall Street demands more


The decision by the US Federal Reserve to lower the federal funds rate by 0.25 percentage points—the first reduction since the financial crisis of 2008—and indications that more is to come mark an unprecedented turn in monetary policy.
Together with signals from the European Central Bank that it will shortly resume monetary stimulus and the ongoing commitment by the Bank of Japan earlier this week to keep interest rates at rock bottom, it makes clear that the pumping of ultra-cheap money into the financial system by central banks for the benefit of the financial oligarchy has become the “new normal.”
However, Wall Street considers the actions taken so far as insufficient and it will intensify pressure for even more measures to boost stock prices. This was seen in the hostile market reaction to Fed chair Powell’s statement that the rate cut was a “mid-cycle adjustment” and “not the beginning of a long series of rate cuts.”
The S&P 500 finished 1.1 percent down for the day, after falling by as much as 1.6 percent during Powell’s news conference on the decision, and the Dow dropped by 1.2 percent.
The Fed has insisted it is “data dependent” in making its decisions. In a situation where the US unemployment rate is at a 50-year low and the economy is growing at more than 2 percent, that would point to rates remaining on hold. Accordingly, Powell cited global factors as the basis of the decision.
The statement issued by the Federal Open Market Committee pointed to “uncertainties” in the global economy and trade tensions, together with “muted inflation” in the US as the justification for a rate cut. This was an attempt to steer a course between the demands of the financial markets for a major boost while maintaining the fiction the Fed acts independently.
The global economy is certainly slowing, with the euro zone recording a downturn, above all in its key economy, Germany, where business confidence has been characterised as being in “free fall.” But cuts in rates and other stimulus measures, in the US and Europe, will do nothing to halt this decline. Rather, they will simply place money in the hands of the financial elites while the “restructuring” of key industries, such as auto, continues, leading to the destruction of thousands of jobs.
Throughout his press conference, Powell insisted that the latest decision was in continuity with the Fed’s actions throughout this year. However, those actions have not been taken “independently,” but have been a response to the diktats of the financial markets.
When the Fed poured trillions of dollars into financial markets after the 2008 crash to rescue the very finance houses whose speculation had led to the crisis, it maintained this was a temporary measure and there would be a return to more normal policy. But so addicted is the entire financial system, and the world economy as a whole, to the supply of cheap funds that this has become impossible.
In 2018, the Fed initiated a series of gradual interest rate rises and indicated it would continue to do so in 2019 as part of a return to a more “normal” monetary policy. The markets responded in December with the biggest fall for that month since 1931 in the midst of the Great Depression.
Powell immediately signalled he understood the message sent by the markets and, in a major speech in January, indicated that planned rises for 2019 were off the agenda. The Fed did not immediately move to cut rates, but gave notice of its intentions.
The market reaction in December was accompanied by a barrage against the Fed, spearheaded by US President Trump, demanding interest rate cuts and even a resumption of quantitative easing, which has continued throughout this year.
Functioning as the mouthpiece for the parasitic and semi-criminal financial circles from which he emerged, Trump has claimed the Dow would be 10,000 points higher but for the policies of the Fed. More recently, he has denounced its interest rate policies as pushing up the value of the dollar, thereby disadvantaging US in international markets—a clear move to initiate a currency war against US rivals on top of the trade war.
In an editorial published on the eve of the decision, the Wall Street Journalnoted Powell’s claim that that Fed was “data dependent,” but said that “to us it looks more like the central bank is dependent on no particular data at all. This contributes to the suspicion in markets that the Fed is really trying to accommodate Mr Trump’s public demands for rate cuts.”
But the reasons for the Fed’s turn go deeper than accommodation to Trump. They are rooted in the profound changes in the very foundations of the American economy and the mode of profit accumulation over the past three decades—the institutionalisation of mechanisms to siphon an ever increasing portion of wealth produced by the labour of the working class into the hands of the financial oligarchy.
In the heyday of the post-war capitalist boom, profit accumulation took place through the expansion of industrial production. Capital investment led to increased employment and rising wages, as profits rose. The Fed acted as the regulator of this process—reducing interest rates when this was needed to induce further investment and ensure economic expansion and raising them when it considered increased wages and inflation were impinging on corporate profitability.
In that period, finance capital played a secondary role in the US economy. It was dominated by industrial giants, with profits in the financial sector accounting for around 10 percent of total corporate profits.
But with the ending of the post-war boom in the mid-1970s, the US economy began a vast transformation. From the handmaiden to industry, finance capital assumed an ever-more dominant role. Falling profits rates in industrial production meant that profit accumulation increasingly took place via financial means.
The result was that by the early 2000s, in the lead-up to the 2008 crash, finance accounted for 40 percent of all US corporate profits.
The financial sector suffered a major downturn in the crisis with its share of profits plunging. This led to the bailout operation, initiated in the last days of the Bush administration and continued and deepened under Obama, and the establishment of the so-called “unconventional” monetary policies of the Fed.
Moreover, acting on the maxim “never let a crisis go to waste,” the Obama presidency initiated a major restructuring of class relations. Starting with the restructuring of the auto industry, the government, working in collaboration with the trade unions, set about to destroy what remained of the conditions that had been obtained in the period of the post-war boom.
The outcome has been the development of two-tier wage systems, the spread of temporary and part-time employment—a major component of the expansion of employment—the emergence of the so-called “gig economy” and the institution of more intense forms of exploitation, such as those developed by Amazon.
The significance of the Fed’s decision to cut rates is that the supply of ultra-cheap money to boost the stock market and financial speculation is to be made permanent.
But it would be a major error to think that this program is simply confined to what is designated as finance capital. Financialisation of the US economy is now all pervasive. Nominally non-financial corporations—whose boards are dominated by banks, hedge funds and investment houses—now operate on the basis that their task is to maximise shareholder value as measured on the stock market.
In other words, the speculation and parasitism that started in finance now has the entire economy in its grip.
There are two decisive political and economic conclusions that flow from this situation.
The first is that in seeking to defend and advance its interests—whether it be on wages or social conditions—the working class is engaged in a struggle not simply with individual employers and authorities, but with the entire economic, political and financial apparatus of the capitalist state.
Therefore, those struggles, in whatever form they initially emerge, must be consciously advanced on the basis of a political program aimed at the conquest of power in order to overturn the domination of the ruling financial oligarchy and reconstruct the economy on socialist foundations.
The second conclusion is that this perspective is not consigned to some indefinite future. It is an immediate and practical necessity. This is because the endless supply of cheap money, through the press of a computer button, is threatening a financial catastrophe on a scale far exceeding the devastation of the 2008 crash.
As a recent Wall Street Journal article noted, the “larger story” in the return to monetary stimulus is that it “may produce a crisis of confidence in fiat currencies, including the US dollar.”
It pointed out that since August 1971, when US President Nixon removed the gold backing from the dollar, the US and other major economies have had unlimited supplies of money “unanchored to any physical commodity.”
This has given rise to the belief that the money supply can be expanded indefinitely. But such a process undermines the role of money as a store of value and can lead to a crisis of confidence in fiat currencies.
There are already clear warning signs of another financial disaster. At present some $13.74 trillion worth of government and corporate bonds are bringing negative yields, meaning that if they were held to maturity the owner would suffer a loss. Such a situation has never before existed in economic history.
It is not possible to predict when a massive new financial crisis will erupt. But that the conditions for such an event are maturing there can be no doubt.
What the Fed’s action makes clear is that, like the 2008 crash, the entire brunt of the looming crisis will be placed on the working class. The Federal Reserve will do everything in its power to protect the wealth of the financial oligarchy at their expense.
The working class must articulate its own independent program and policy, in the form of the struggle for the socialist transformation of society.



Fed Cuts Interest Rates for First Time Since 2008

Trump attacks US Fed, demands rate cut
AFP NICHOLAS KAMM
3:13


The Federal Reserve on Wednesday cut its benchmark interest rate for the first time since 2008, moving in a direction urged by President Donald Trump for over a year.

Fed officials voted eight to two Wednesday on the cut, which will bring the federal funds rate to a range between 2.0% and 2.25%, a quarter of a percentage point below the range set in December 2018. The Fed also said it would cease its balance sheet reduction immediately, two months earlier than it had signaled earlier.
“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate,” the Fed said in a statement released at the conclusion of its two-day meeting.
Fed Chairman Jerome Powell roiled the stock market when he described the rate cut a “mid-cycle adjustment” at a news conference following the announcement. He also said that Wednesday’s cuts should not be viewed as “the beginning of a long series of rate cuts.”
Many investors read those remarks as a signal that the Fed might not cut rates as much as expected later this year. Some said it appeared to be at a signal that the Fed’s stance was “one and done,” meaning the central bank would not cut later this year. Financial markets had been pricing in at least one or two more cuts this year. The Dow Jones Industrial Average fell by as much as 478 points.
Later in the press conference, however, Powell seemed to reverse course and indicated that he was not ruling out further cuts. Stocks bounced back a bit but remained lower than before the news conference.
The central bank’s stance has changed rapidly over the course of 2019. At the end of the year, the Fed raised rates a quarter of a point, the fourth hike of the year, and described the stance of monetary policy as one supporting gradual rate increases. Investors viewed this as too aggressive and worried that Fed policy appeared to be on autopilot, blind to recession risks from sluggish growth around the world. Stocks tanked, inflation expectations plummeted, and credit markets appeared to be seizing up.
In February, seeking to reassure financial markets, the Fed held rates steady and began describing its approach as “patient.” In March, it even further, all-but promising not to raise rates this year. Last month, the Fed held rates steady but signaled it would cut rates in the near future.
Since then, Fed officials have said they are worried that sluggish global growth and trade tensions are holding back business investment. They are also worried that inflationary pressures have become weaker this year despite very low unemployment.
Inflation has not hit the Fed’s target of 2 percent on an annual basis since 2012. Fed officials are worried that persistently low inflation will hurt the credibility of the target and lead consumes and businesses to permanently lower their expectations for further inflation. Fed officials believe that expectations of inflation are an important driver of economic growth, investment, and actual inflation.
Although there are many signs that the U.S. economy remains strong, economic growth has fallen this year. Unemployment is very low but it is often a lagging indicator, remaining low until after the economy has sunk into a recession. Fed officials may want to cut rates to pre-empt a more serious downturn that would require deeper cuts to their interest rate target.
Two Fed officials dissented from the cut, preferring to hold the target at the level set in December.





GM Begins Closing 78-Year-Old Michigan Plant, Laying Off 335 American Workers

WARREN, MI - FEBRUARY 22: A General Motors Warren Transmission Operations sign is shown at the plant where United Auto Workers members held a prayer vigil on February 22, 2019 in Warren, Michigan. Almost 300 people are being laid off at the plant as a result of GM's decision to …
Bill Pugliano/Getty Images
4:10

Multinational automaker General Motors (GM) has started closure of its Warren, Michigan, transmission plant, which has been up and running for 78 years, resulting in the immediate layoff of about 335 American workers.

Last year, GM CEO Mary Barra announced the automaker would stop production at four of its U.S. plants, including Detroit-Hamtramck and Warren Transmission in Michigan, Lordstown Assembly in Ohio, and Baltimore Operations in Maryland.
Already, the Lordstown Assembly plant closure has resulted in the immediate layoff of about 1,500 American workers, while another 8,000 workers in supporting jobs in the community are expected to be laid off as well. GM, though, is still hoping to sell the plant to another manufacturer.
This week, GM is beginning to shutter its Warren Transmission plant, a 78-year-old economic institution of the local community and region that currently provides work for about 335 American workers. Aside from the immediate layoffs, closure of the Warren plant — as well as the Detroit-Hamtramck plant — are expected to lay off 16,000 Americans in the state who work in supporting industries.

United Auto Workers members hold a prayer vigil at the Warren Transmission Operations Plant on February 22, 2019, in Warren, Michigan. Almost 300 people are being laid off at the plant as a result of GM’s decision to idle the Warren facility. (Bill Pugliano/Getty Images)
A number of Americans who worked their last day at the plant reminisced to the Los Angeles Times about their loyalty to GM, the disbelief that they are out of work, and the livelihood that working for the automaker once afforded them:
“It was a little somber. It was a little bittersweet when the last transmission rolled out,” said Jack Arnold, 49, who has worked on the assembly line for more than two decades. [Emphasis added]
“Getting a job at GM 23 years ago, for me, it was like winning the lottery,” he said“I was trying to start a family. It kept my now ex-wife at home to raise the children. I was able to buy a house. We went to Disney World — all of that.” [Emphasis added]
“I’m too emotional,” said a 67-year-old woman who has worked for the company for four decades. She was among a group of women who prayed on the factory floor Friday morning. Others crowded around the last transmission to roll off the line — bound for a 2019 Chevrolet Impala — and signed it. [Emphasis added]
Earlier this year, Barra — who has continued to earn a nearly $22 million annual salary — laid off about 1,300 Americans at GM’s Warren Technical Center as part of a broader layoff, leaving about 4,000 workers without jobs. GM executives said so far about 60 of the Warren plant workers have been transferred to other jobs at the company.
While laying off thousands of Americans, GM is set to expand in China and South Koreaand is now the top automaker in Mexico where the corporation employs about 16,000 workers and keeps open four plants.
By 2023, GM executives have said they will produce 20 new electric vehicles, the vast majority of which are set to be made in China. Likewise, the 2021 Chevy Trailblazer is set to be made in South Korea and imported to the U.S. by 2020. The 2020 Buick Encore GX, too, is to be made in South Korea and imported to the U.S. for American consumers.
Experts have called on Trump to implement a 25 percent auto tariff to protect American autoworker jobs and the U.S. auto industry from Chinese domination. Likewise, Sen. Bernie Sanders (I-VT), vying for the Democrat nomination for president, has told Trump to immediately ban GM from receiving federal contracts for its outsourcing, offshoring, and mass layoff scheme.
American manufacturing is vital to the U.S. economy, as every one manufacturing job supports an additional 7.4 American jobs in other industries. Decades of free trade, with deals like the North American Free Trade Agreement (NAFTA), have eliminated nearly five million manufacturing jobs from the American economy and resulted in the closure of about 50,000 manufacturing plants.
John Binder is a reporter for Breitbart News. Follow him on Twitter at @JxhnBinder




Layoffs mount as slump in world auto industry deepens

The global downturn in the auto industry is continuing with warnings of further massive job losses ahead as sales continue to slump in key markets and companies are seeking to put aside cash to carry out research and development of electric and self-driving vehicles. The escalating trade tensions between the US and China are putting additional pressure on automakers.
The global character of the attack on jobs exposes the reactionary nationalism promoted by the unions and big-business politicians around the world including the US Trump administration. The threat to jobs is not a product of the trade policies of this or that country but the failure of the capitalist system itself, which is hurtling toward another major economic downturn.
Workers at the Suzuki Powertrain plant carried out a sympathy strike in October 2011 to support the workers at Maruti Suzuki's Manesar car assembly plant.
This week, a leading industry figure in India warned that the continuing sales slump in India could lead to as many 1 million jobs cuts in the auto components sector out of a total employment of around 5 million in the country.
According to Ram Venkataramani, president of the Automotive Components Manufacturers Association of India, passenger car sales in India fell 18.4 percent in the first quarter of 2019 and sales in June were at the lowest level in 18 years. The auto sector accounts for almost half of all manufacturing in India and the downturn in auto is a major reason for slowing growth in that country. About 35 million jobs are dependent directly or indirectly on auto production.
China, the world’s largest auto market, is continuing to see a sales decline, with new vehicle sales down 14 percent year over year in the first half of 2019. General Motors’ first-quarter sales fell 10 percent and Volkswagen 6 percent. The slump has erased 220,000 jobs, about five percent of the total, in the Chinese auto industry since July 2018.
The decline is having a serious impact on many automakers, with some expected to pull out of China altogether in the not too distant future. Ford auto plants in China, for example, were only running at 11 percent of capacity the first six months of 2019. Profits from sales in China account for a significant percentage of the pre-tax income for many major global car companies, including Audi (over 40 percent), Volkswagen (38 percent) and General Motors (23 percent).
Last week Japanese-based Nissan announced the elimination of 12,500 jobs worldwide, including 6,400 in Japan, the US, Britain, Mexico, Spain, India and Indonesia by March 2020. Another 6,100 will be cut in fiscal 2021 and 2022.
The slump in Asia parallels a downturn in auto sales in North America, with a Bank of America/Merrill Lynch analyst warning that sales could fall 30 percent by 2022. Ford, General Motors and Fiat Chrysler have all announced layoffs in the United States and Canada in 2019. In addition, about 2,420 of the Nissan cuts will hit plants in the US and Mexico. Earlier this year Nissan cut 381 jobs at its Canton, Mississippi factory when it eliminated a production shift.
This week GM closed its 78-year-old transmission plant in Warren, Michigan with the loss of 200 jobs. The plant, which as recently as 2006 employed 1,200, is one of five in North America the company has slated for closure by early 2020 at a total cost of 14,000 production and white-collar jobs. GM previously shuttered its Lordstown, Ohio assembly plant and is threatening to close two other assembly plants in Detroit-Hamtramck and Oshawa, Ontario.
Fiat Chrysler eliminated a shift earlier this year at its Belvidere, Illinois assembly plant and has scheduled the layoff of the third shift at its Windsor, Ontario assembly plant with the loss of 1,500 jobs.
Earlier this month, Ford in Canada announced it will lay off 200 workers at its Oakville, Ontario plant in September with the threat of further potential job reductions to come. The announcement follows a jobs bloodbath by Ford, including the elimination of 12,000 production jobs across Europe and 7,000 white-collar jobs in North America, 10 percent of its global salaried workforce.
Opel announced last week another 1,100 job cuts in Rüsselsheim, Eisenach and Kaiserslautern. In June, Ford effectively ended production in Russia, finalizing the closure of three factories.
The attack on jobs is being fueled by the incessant demands of investors for ever-higher rates of return in the midst of tightening market conditions. This requires squeezing ever-more production out of workers, rationalizations and the destruction of labor protections won over decades of bitter struggle.
A malignant feature of this has been the exponential growth of contract and casual labor, workers who are little more than pariahs, paid lower wages with few if any rights. Nowhere is this more evident than India, where contract workers comprise 70-80 percent of the automotive workforce, according to industry spokesman MS Unnikrishnan. The fight against contract labor was the major issue in the struggle of Maruti Suzuki workers at Manesar plant that led to the frame-up on bogus murder charges of the 13 leaders of the newly organized Maruti Suzuki Workers Union.
Terrified by the growing militancy of autoworkers, in June the Tamil Nadu state government invoked India's "essential services" legislation to effectively banstrikes in the auto parts sector.
In the US the use of part-time and contract workers has emerged as a major issue in the ongoing contract talks between the United Auto Workers and the Detroit-based automakers. There is powerful sentiment among rank-and-file autoworkers to convert part-time and contract workers into full-time employees with full pay and benefits while GM wants half its workforce to be temps.
A further assault on jobs and working conditions is anticipated with the increasing use of electric and driverless vehicles, which require fewer mechanical parts than gas or diesel trucks and cars. As one market analyst told investor website S&P Global, “(A)s demand for components related to internal combustion engines decrease, legacy suppliers will be forced to compete on a cost basis in a market of decreasing size to an increasing degree (even more than now) and this will drive benefits to scale players, which will force suppliers to merge over time.”
He noted that in his process “significant financial resources will be required and large and well-capitalized suppliers will have an inherent competitive advantage, again, likely forcing mergers and consolidation over time.” This has been reflected in a series of mergers and partnerships, including the recent alliance between Ford and Volkswagen on the development of autonomous vehicles and electric cars.
Mass Assembly at the Matamoros plaza during wildcat strikes in Mexico earlier this year [Credit: Esteban Martínez]
The assault on the conditions of the working class, which is not confined to auto, is meeting growing resistance. This was expressed by the recent strike of Faurecia auto parts workers in Saline, Michigan and growing struggles internationally, including a general strike earlier this month in Ecuador, mass protests in Algeria, Hong Kong and the US territory of Puerto Rico. Earlier this year a rebellion by 70,000 auto parts workers in Matamoros, Mexico cut off the supply of critical parts to US and Canadian auto factories.
Autoworkers around the world confront the same attack on their jobs, living standards and working conditions. That is why they need a global strategy to unite and coordinate the struggles of autoworkers across national boundaries.
The United Auto Workers, Unifor in Canada, IG Metall in Germany and all other unions are based on the reactionary and outmoded program of nationalism. Far from resisting the attack on jobs and living standards, the UAW and other unions are surrendering further conditions based on the bogus claim that if workers submit to the demands of their “own” capitalist exploiters this will save their jobs by undercutting workers in other countries.
Job cuts are not the result of unfair trade or foreign competition but of capitalism. As Karl Marx said in the “industrial war of capitalists among themselves” the “battles in it are won less by recruiting than by discharging the army of workers. The generals (the capitalists) vie with one another as to who can discharge the greatest number of industrial soldiers.”
In place of the corrupt, bureaucratic unions, workers must organize democratically elected and controlled factory and workplace committees to mobilize a fightback against the auto bosses. These committees would not start with the profit demands of corporate management but the needs of workers to secure jobs, decent wages and a safe and healthy workplace.
The fight to defend jobs poses the necessity of a reorganization of society. Against the right of corporations to close factories and devastate communities, workers must advance the social right to a job and decent standard of living. This is a political struggle, posing the need for the development of a political movement of the working class to unite workers globally in the fight for international socialism.

$2,198,468,000,000: Federal Spending Hit 10-Year High Through March; Taxes Hit 5-Year Low

By Terence P. Jeffrey | April 10, 2019 | 5:09 PM EDT
(Getty Images/Ron Sachs-Pool)
(CNSNews.com) - The federal government spent $2,198,468,000,000 in the first six months of fiscal 2019 (October through March), which is the most it has spent in the first six months of any fiscal year in the last decade, according to the Monthly Treasury Statements.
The last time the government spent more in the October-through-March period was in fiscal 2009, when it spent $2,326,360,180,000 in constant March 2019 dollars.
Fiscal 2009 was the fiscal year that began with President George W. Bush signing a $700-billion law to bailout the banking industry in October 2008 and then saw President Barack Obama sign a $787-billion stimulus law in February 2009.
At the same time that the Treasury was spending the most it has spent in ten years, it was also taking in less in tax revenue than it has in the past five years.
In the October-through-March period, the Treasury collected $1,507,293,000,000 in total taxes. The last time it collected less than that in the first six months of any fiscal year was fiscal 2014, when it collected $1,420,897,880,000 in constant March 2019 dollars.
The difference in the federal taxes taken in and the spending going out resulted in a federal deficit of $691,174,000,000 for the first six months of the fiscal year.
During those six months, the Department of Health and Human Services spent the most money of any federal agency with outlays of $583.491 billion. The Social Security Administration was second, spending $540.426 billion. The Department of Defense was third, spending $325.518 billion. Interest on Treasury securities was third, coming in at $259.687 for the six-month period.
Both individual and corporation income taxes were down in the first six months of this fiscal year compared to last year. In the first six months of fiscal 2018, the Treasury collected $736,274,000,000 in individual income taxes (in constant March 2019 dollars). In the first six months of this fiscal year, it collected $723,828,000,000.
In the first six months of fiscal 2018, the Treasury collected $80,071,070,000 in corporation income taxes (in constant March 2019 dollars). In the first six months of this fiscal year, it collected $67,987,000,000.
(Historical budget numbers in this story were adjusted to March 2019 dollars using the Bureau of Labor Statistics inflation calculator.)
(Table 3 from the Monthly Treasury Statement, seen below, summarizing federal receipts and outlaws for the past month and for the fiscal year to date and compares it to the previous fiscal year.)

 

 

 

 

 

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.
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.
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. 


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