Monday, March 23, 2020

TRUMP'S GOLDMAN SACHS INFESTED ADMINISTRATION VOWS MASSIVE SOCIALISM FOR WALL STREET - "We will far exceed Obama - Biden's Socialism and Bailouts for Wall Street crony banksters!

Fed Promises Unlimited QE, Corporate Bond Buying, Muni Buying, and Main Street Credit

Fed Chair Jerome Powell Addresses Rural Housing Conference In Washington DC (Mark Wilson / Getty)
Mark Wilson / Getty
3:03
The Federal Reserve said Monday it will purchase unlimited amounts of Treasuries and mortgage-backed securities and buy corporate bonds, municipal bonds, and asset-backed securities for the first time.
The Fed announced a major expansion of its programs to support the economy on Monday morning following several days of frantic moves by the central bank to expand its support for credit and money markets. Fiscal support for the economy, in the form of spending and lending programs from the federal government, stalled on Capitol Hill over the weekend.
The Federal Open Market Committee, the Fed’s monetary policymaking unit, said it would purchase Treasury and mortgage securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
The FOMC had previously said it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. The new announcement removes those caps and essentially means the Fed will purchase unlimited amounts of the bonds, a program some on Wall Street refer to “QE infinity.”
The Fed also said it was launching two new bond buying programs that would purchase bonds directly from corporations and from the secondary market where bonds already issued are trading. This would be the first time the Fed became a direct purchaser of bonds issued by the corporate sector. The new programs are known as the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) for outstanding corporate bonds.
The Fed said its purchases of agency-backed mortgages would be expanded to include commercial mortgages, another move aimed at bolstering the corporate sector.
A third new program, the Term Asset-Backed Securities Loan Facility (TALF), will enable the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration, and certain other assets.
To help cities and states squeeze by the coronavirus, the Fed said it would expand its Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes and bank certificates of deposit. It is also expanding its Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities and reducing pricing.
In an even more radical move, the Fede said i9t expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium-sized businesses. The details of that program have yet to be announced but it is likely to involve the Fed buying small business loans made by banks.

No corporate bailouts! Direct financial resources to the working people, not the capitalist elite!

As the new week begins, the number of people infected by the COVID-19 virus is rising exponentially in the United States. New York City, which is now the epicenter of the pandemic, is threatened with a breakdown of its healthcare system and a tragic rise in the number of deaths. Given the absence of mass testing to determine the locations of infected people, it is all but certain that the social disaster now unfolding in New York, California and Washington state will spread rapidly in the coming days and weeks throughout the country.
As the pandemic spreads, the economic impact is acquiring dimensions that are without precedent in the history of the United States. As people are being instructed to “shelter in place” and practice “social distancing,” the economy is shutting down. Small- and medium-size businesses, especially in the retail and service industries, are without customers and being forced to close their doors. The need to halt all nonessential production means that the number of unemployed will rapidly reach levels that will equal and possibly exceed those of the Great Depression of the 1930s.
Large sections of the working class and middle class are threatened with the loss of their income and the ability to put food on their tables and cover their weekly and monthly expenses. In a country where tens of millions have little or no savings and live from paycheck to paycheck, the pandemic is a social catastrophe even for those who are not infected by the virus.
Emergency funding to fully cover the lost wages and salaries of all working class and middle class families must be the urgent and unconditional priority of the economic response to the pandemic. Mortgage and rent payments, car loans, medical expenses, insurance premiums, and tuition and student debt must be suspended for the duration of the health crisis.
At the same time, small- and medium-size businesses must receive financial support so that they can avoid bankruptcy and reopen their enterprises as soon as medical conditions permit.
Money must also be made available to guarantee the survival of educational, cultural and other socially essential institutions.
This program, which prioritizes the needs and interests of the working class, is diametrically opposed to the multitrillion-dollar “fiscal stimulus” that is being worked out in closed-door negotiations between the Trump administration, congressional leaders and corporate executives.
While deceitful and cynical lip service is being paid to protecting workers, the only purpose of the negotiations in Washington is to protect the wealth and profits of the superrich corporate-financial oligarchs. On a scale even greater than the bailout of 2008-09, the titans of Wall Street and the corporate boardrooms are demanding that the government place limitless sums at their disposal.
Up to this point, the federal government has spent less than $10 billion on emergency disaster relief related to the pandemic. And yet the US Treasury has purchased some $600 billion in securities in recent weeks, meaning it has spent 60 times more money propping up the banks than on addressing the healthcare crisis.
On top of the more than $2 trillion that has already been pledged to backstop the values of financial assets held by major banks, Congress is debating an additional $2 trillion bailout package.
The vast majority of that proposal consists in various handouts to business in the form of a payroll tax holiday and loans, including measures specifically targeting the airline and other industries. Less than $50 billion of the bill funds emergency measures to combat the pandemic. Just one company, Boeing, is demanding a bailout larger than every public health measure contained in the bill.
While the Republicans and Democrats haggle over details of the bailout, they agree that 1) massive sums of money must be funneled through the major corporations; 2) that no measures be taken that limit or threaten the wealth of the executives and large investors; and 3) that the interests of the capitalist profit system and private property will remain unmolested and unchallenged. The banks and large corporations will not only continue to rule. These institutions and their executives and large shareholders are to emerge from the crisis richer and more powerful than ever.
The New York Times declared in an editorial published yesterday, “The only practical way to limit mass unemployment, and to preserve previously viable companies, is for the government to pump money into the private sector.”
The last time this was done, in the response to the 2008 crash, the outcome was a bonanza for the superrich and affluent holders of financial assets. The wealth of the 400 richest people in America soared from $1.27 trillion in 2009 to $2.96 trillion in 2019.
Amazon CEO Jeff Bezos had a net worth of $6.8 billion in 2009, and by 2018 it was $160 billion. Warren Buffett had a net worth of $37 billion in 2009, which grew to $90 billion last year. Facebook CEO Mark Zuckerberg was worth just $2 billion in 2009, but he saw his wealth grow 40-fold, hitting $85 billion in 2019. And Tesla CEO Elon Musk has had his wealth rise even faster, doubling from $20 billion in May of 2019 to $45 billion earlier this year.
In 2019, US companies spent $798 billion buying back their own stock, a figure exceeding even what was spent before the 2008 financial crisis.
Share buybacks were one of the principal means employed by corporate executives to enrich themselves. As the Harvard Business Review explained:
The 465 companies in the S&P 500 Index in January 2019 that were publicly listed between 2009 and 2018 spent, over that decade, $4.3 trillion on buybacks, equal to 52% of net income, and another $3.3 trillion on dividends, an additional 39% of net income. In 2018 alone, even with after-tax profits at record levels because of the Republican tax cuts, buybacks by S&P 500 companies reached an astounding 68% of net income, with dividends absorbing another 41%.
Why have U.S. companies done these massive buybacks? With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers—investment bankers and hedge-fund managers as well as senior corporate executives—at the expense of employees, as well as continuing shareholders.
The ugly reality of capitalist financial practices and the grotesque plundering of corporate assets refute the lying phrase that is intoned whenever reference is made to the needs of the working class: “There is no money!”
The problem is not an absence of money, but the control of society’s productive forces by the capitalist class.
The Socialist Equality Party emphatically rejects the bailout of the corporations. We demand that the banks and monopolistic corporations, controlling assets valued in the tens and hundreds of billions of dollars, be transformed into publicly owned and democratically controlled organizations. The investments of small- and medium-sized shareholders, many of whom have invested their savings for retirement, will be fully protected.
The executives who during the past decade plundered these corporations in the interests of personal enrichment should be legally compelled to pay restitution.
This crisis, like the 2008 crash, has exposed the myth of capitalist individualism. It has made clear that the banks and corporations cannot survive without massive state support.
In raising these demands, the Socialist Equality Party does not for a moment believe that the Trump administration, or, for that matter, one led by the Democrats, will take any measures that undermine the interests of the corporate-financial oligarchy.
That is why the program advanced by the Socialist Equality Party can be realized only through the industrial and political mobilization of the working class on the basis of a socialist program. All workers who recognize the need for this program should join the SEP.
The global pandemic has triggered a wave of socialist sentiment and militancy in significant sections of the working class. Last week, wildcat strikes forced the shutdown of the auto industry, and workers throughout the country have refused to work in unsafe conditions. These struggles, together with others around the world, are the objective foundation for a resolution to the crisis on a socialist basis, which would mean the investment of trillions of dollars to fight the pandemic and preserve human life through the expansion of the public health infrastructure.
If the capitalist class is unopposed in its efforts to make the working class bear the weight of the crisis, it will be at the cost of millions of lives. Mankind has reached a point where the most basic function of society–the preservation of human life–is incompatible with capitalism.

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