Goldman
Sachs has said it expects that of the 22 million workers cut from payrolls in
the first wave of the pandemic almost a quarter will be permanently axed
Signs of emerging
crisis in economy and financial system
25 August 2020
As Wall Street continues to
surge to record highs—Apple has doubled its market capitalization from $1
trillion to $2 trillion in just two years and the S&P 500 index has surged
50 percent since the mid-March crash—there are clear indications of a crisis
building up both in the real economy and the financial system.
Last week, the Financial
Times reported that while the market was at a record high,
“corporate distress” in the US had never been worse with “large corporate
bankruptcy filings” running at a record pace and set to exceed levels reached
in the aftermath of the financial crisis of 2008.
As of August 17, a record 45
companies, each with assets of more than $1 billion, had filed for Chapter 11
bankruptcy, compared with 38 in the same period in 2009 and more than double
the figure of 19 in the comparable period last year.
It reported that in total
157 companies with assets of more than $50 million have filed for bankruptcy
with a lot more expected to follow.
Ben Schlafman, the chief
operating officer at New Generation Research, which tracks bankruptcy filings,
told the newspaper: “We are in the first innings of this bankruptcy cycle. It
will spread far across industries as we get deeper into the crisis.
“It pains me to say it, but
bankruptcy is a growth industry in America.”
The Labor Secretary in the
Clinton administration, Robert Reich, said cutting off the $600 per week
federal unemployment benefit will push tens of millions into poverty or close
to it.
“They won’t have the money
to buy billions of dollars worth of goods and services. As a result the entire
economy will suffer. Small businesses will continue to suffer the most because
they are already precarious.”
Goldman Sachs has said it
expects that of the 22 million workers cut from payrolls in the first wave of
the pandemic almost a quarter will be permanently axed. In a research note published on Friday and reported on
Bloomberg, Goldman Sachs economist Joseph Briggs said that while there was a
return to work from temporary layoffs, “other patterns suggest that rehiring
prospects for temporarily laid-off workers started to deteriorate in July” and
some 2 million workers could remain unemployed well into next year.
Reporting
on the situation in Britain, the Financial
Times said that accounting, law and investment banking firms
were “preparing for a fresh wave of distress in the autumn” when government
loan schemes to run out.
Leading insolvency barrister
Mark Phillips said: “There are a series of crises looming. The full wave of
insolvencies hasn’t even started yet.”
Financial and accounting
firms have been involved in efforts to aid companies in restructuring their
debt and raise capital to avoid a collapse.
“But the winding down of
state support schemes is expected to trigger a large number of insolvency
proceedings, as many of these companies run out of cash,” the FT said.
In the major industrial
centres of Europe there are fears that after what was described as bounce back
from the sharp economic contraction in the spring, the recovery is now starting
to slow.
There was a 22.5 percent
rise in industrial production across the euro zone in May and June, but this
was not enough to compensate for the 28 percent fall in the first two months of
the pandemic. Germany’s central bank has reported that euro zone manufacturers
are still only operating at 72 percent capacity in July compared to their
long-term average of 80 percent.
The car-making industry,
which forms a vital component of the German economy, has been hard hit, with
predictions that global car sales will fall to 69 million this year compared to
88 million in 2019. The head of Audi has said he does not expect the levels of
car production to return to their pre-crisis levels at least until 2022 or
2023.
But even these predictions
could be knocked awry in the face of what is clearly a resurgence of the
pandemic. In the US, it continues to rage out of control while in Europe there
are sharp rises in the number of infections due to the return to work drive of
governments amid the push to reopen schools.
Last Friday alone, Spain
reported 8000 new COVID-19 infections, with the infection rate rising across
the region. In Germany the Robert Koch Institute, the country’s main public
health organisation said infections had risen sharply in all of the country’s
16 regions in seven days, describing the situation as “alarming.”
Infections have surged again
in South Korea, one of the world’s major industrial and manufacturing centres
with an additional 397 cases reported on Sunday, the highest number since the beginning
of March.
“Cases are rising in 17
cities and provinces across the nation, and we are now at the verge of a
massive nationwide outbreak,” the head of the country’s Center for Disease
Control and Prevention, Jung Eun-kyeong, told a news briefing on Sunday.
Amid this wave of disease
and economic devastation, markets have continued to rise. But there are growing
fears that the conditions are building up for a major financial crisis. The
market rise has driven the surge in technology stocks, which form a large
component of the S&P 500 index and, above all, the supply of cheap money
from the Fed.
One indication of the effect
of the intervention by the Fed, which has pumped around $3 trillion into the
financial system, is the lowering of the yield on US Treasury bonds as a result
of the central bank’s purchases of government debt.
The yield on the 10-year
Treasury bond, a benchmark for both US and global financial markets, is now
around 0.6 percent, a full percentage point below its level in February. With
the yield on government debt now bringing a negative return when inflation is
taken into account, this has fuelled a turn to the stock market, gold and
corporate debt. This search for a positive return has sparked what has been
termed an “everything rally.”
But the rise of the market
rests on very shaky foundations as evidenced last week when the minutes of the
Fed’s July meeting were published, sending a tremor through Wall Street.
Contrary to many
expectations in the market, they showed that the Fed had still not determined
into “forward guidance” policy, that is, firm guarantees that there will be no
tightening of monetary policy into the indefinite future, including a
commitment to purchase bonds to set a cap on bond yields.
With the US government to
issue more bonds to finance its debt, this measure is regarded in some quarters
as necessary to insure that the increased supply of bonds does not lead to a
fall in their price and a consequent rise in interest rates.
Commenting on the massive
disconnect between the underlying economy and the stock market, an article in
Bloomberg noted that “any number of looming threats could bring the historic
rally in US equities to a screeching halt.” They
could include conflict over the re-opening of schools, the November election,
the conflicts with China or the effects of US monetary policy.
Then there is the issue of
the massive increase in corporate debt—more than $1.6 trillion over the past
few months. Such is the extent of the debt mountain that Bloomberg reported
that an analysis conducted by its intelligence unit revealed that the average
below investment-grade firm (or junk-rated company) had debt levels relative to
earnings so high in the middle of the year that they would have triggered
warnings from bank regulators had they occurred a few years ago.
However, it noted,
regulators had dropped those warnings which a few years ago had applied only to
a few but which today “could apply to many more.”
Gold has also been part of
the “everything rally”—a rise sparked by the search for profit as its price
reaches record heights and underlying uncertainty about the stability of the
global monetary system as trillions of dollars are created at the press of a
computer button by central banks.
While it has been on the
rise, the gold price is highly volatile and so sudden downward movement is
another factor that could trigger a collapse of the global financial house of
cards.
BIDEN WAS
SELECTED BY BANKSTER-OWNED OBAMA BECAUSE OF HIS LONG HISTORY OF SERVING THE
BANKSTERS!
Biden
backed brutal bankruptcy bill in 2005
By Chris Talgo
In 1999,
then-Sen. Joe Biden (D-DE) declared, “I’m not the senator
from MBNA.” Apparently, Biden felt it was necessary to clarify that he did not
exclusively represent credit card giant MBNA because his constituents were
thoroughly confused, based on his track record of being a shill for credit card
companies located in the First State.
Then,
six years later, Biden inserted his foot directly into his mouth (again) when
he championed the notorious (and ill-named) Bankruptcy Abuse Prevention and
Consumer Protection Act (BAPCPA). A more appropriate name could have been the
Act to Protect Credit Card Companies and Shaft Students and Workers.
In
short, BAPCPA was a terrible bill that favored credit card companies, big
banks, and millionaires over working-class borrowers. It also is solely
responsible for the fact that student loan debt is totally impossible to
dismiss -- even after one has declared bankruptcy.
Wait
a minute, I thought Joe Biden was the consummate defender and advocate of the
working class and oppressed. Far from it. In reality,Biden’s political career of more than four decades was predicated
upon protecting the interests of credit card companies.
And
he and his son, Hunter, were compensated handsomely for doing so. According to
a 2019 GQ article titled “How Biden
Helped Strip Bankruptcy Protection From Millions Just Before a Recession” --
“one of the biggest credit card companies in Delaware, MBNA, hired Joe Biden's
son Hunter in 1996. Even after Hunter became a federal lobbyist in 2001, he
stayed on at MBNA as a consultant at a fee of $100,000 per year, meaning he was
pulling in a six-figure salary at the same time his father was pushing for the
industry's top priorities.” Can you say, quid pro quo, Joe?
As
if the backroom deals and “you scratch my back, and I’ll scratch yours”
shenanigans that Biden blatantly engaged in before, during, and after BAPCPA
was passed were not bad enough, the bill wrought untold damage among the very
people Biden constantly claims to protect.
According
to Adam J. Levitin, professor of law at
Georgetown University, BAPCPA “was perhaps the most anti-middle class piece of
legislation in the past century.” And, as Levitin writes, “Biden used his clout
to push for the law’s passage and to defeat amendments to shield servicemembers,
women, and children from its harsh treatment. When votes were taken,
‘Middle-Class Joe’ was no friend to the middle class.” It sure seems that Biden
abandoned his Lunchbox Joe persona when it came to voting in favor of BAPCPA,
not to mention that he strongly supported amendments that made the bill even
more hostile to the middle class!
And
adding insult to injury, Biden also voted against several amendments that were
specifically meant to help several “underprivileged” groups. As Levitin
writes, “He voted against three amendments to ease
bankruptcy requirements for consumers whose financial troubles stem from
medical expenses. He voted against an amendment
that would have helped seniors keep their homes. He voted against
exempting servicemembers and widows of servicemembers killed in action from the law’s
eligibility restrictions. He voted against an amendment to
exempt women whose financial troubles stemmed from deadbeat husbands’ failure
to pay child support or alimony. And Biden even voted against an amendment
that would have ensured that children of debtors could still be given birthday
and Christmas presents. Biden also voted against allowing
debtors to pay their union dues during bankruptcy, potentially imperiling
their employment and ability to achieve financial rehabilitation.” Could
Biden’s voting record on this bill get any worse? Actually, yes.
Not
only did Biden strongly oppose BAPCPA amendments aimed to help “disadvantaged”
groups, he voted for two giant loopholes that effectively allowed millionaires
to shield their assets from collectors after they filed for bankruptcy. What a
joke, Joe.
As
a senator, Biden vigorously voted for several similar bills. In short, based on
his voting record, Joe Biden is not (and never was) a champion of disadvantaged
Americans, unless you consider multi-billion-dollar credit card corporations
and millionaires “disadvantaged.”
Chris Talgo (ctalgo@heartland.org) is an editor at The Heartland Institute.
WE KNOW WHAT OBAMA-HOLDER-BIDEN DID FOR THEIR CRONY
BANKSTERS! THEIR CRIME TIDAL WAVE IS NOT OVER AND NONE HAVE GONE TO PRISON!
As a senator, Biden vigorously voted for
several similar bills. In short, based on his voting record, Joe Biden is not
(and never was) a champion of disadvantaged Americans, unless you consider
multi-billion-dollar credit card corporations and millionaires “disadvantaged.”
This year, it’s Mr. Biden. Financial industry
cash flowing to Mr. Biden and outside groups supporting him shows him
dramatically out-raising the president, with $44 million compared with Mr.
Trump’s $9 million.
"The reference to what
“Trump’s done” is a fraud, since the both the Democrats
and Republicans endorsed, on a nearly unanimous basis, the multi-trillion
dollar bailout of Wall Street in March."
"Biden reassured Wall Street and the billionaires, “I’m not looking to
punish anyone.”
I’ve also fallen
toward a consultant theory of change — or like, a process theory of change. So
a lot of people on the left would say that the Hillary Clinton campaign largely
ignored economic issues, and doubled down on social issues, because of the
neoliberal ideology of the people who worked for her, and the fact that
campaigning on progressive economic policy would threaten the material
interests of her donors.
Democrats
nominate Biden in inane display of political reaction
21 August
2020
The Democratic National
Convention concluded Thursday night with the formal acceptance of the party’s
presidential nomination by former Vice President Joe Biden, after a final
two-hour session that was full of empty clichés, inane rhetoric and nauseating
insincerity.
The atmosphere Thursday was
more of a religious revival than a political event. There was incessant
emphasis on the personal moral superiority of Biden compared to Trump,
accompanied by increasingly maudlin testimonials to Biden’s alleged deep concern
for children, the downtrodden, and virtually anyone who crossed his path. One
former White House official referred to Biden’s “empathy skills,” a phrase
which recalls the old wisecrack: “Sincerity—if you can fake that, you’ve got it
made.”
The sheer contempt for the
intelligence of the
population and the viewing
audience was
summed up in Biden’s
acceptance speech. His
speechwriters appeared to
have been trying
to cram every possible
trite phrase into a
single 20-minute address.
He ran through a laundry
list of promises, from climate change to racism to student debt, none of which
the Democratic Party has the slightest intention of actually carrying out. Only two phrases had real meaning.
Biden reassured Wall Street
and the billionaires, “I’m not looking to punish anyone.” This sent a message to the financial aristocracy that, while the
candidate was compelled to make demagogic attacks on the wealthy for electoral
purposes, these would have no lasting consequences. “Nothing will change” for the super-rich, he told a Wall Street
fundraiser last year, and that pledge he will keep.
And the
former vice president denounced Trump for being too soft on Russia, threatening
to hold Vladimir Putin accountable for allegedly paying bounties to Taliban
fighters who attacked American troops in Afghanistan. This phony story is just
the latest fabrication by the New
York Times in its four-year-long campaign to provoke a US war
with Russia.
The tone
for the convention’s final day was set by the report Thursday afternoon that a
group of 73 former national security officials from four Republican
administrations were endorsing Biden and denouncing Trump in an open letter to
be published in the Wall
Street Journal. The list includes an array of militarists and
police-state operatives who are responsible for the death of millions of people
in Latin America, Africa, the Middle East and Central Asia.
Among the most prominent and
most deserving of prosecution for war crimes endorsing Biden are:
·
John Negroponte, with a bloody
record from the contra terrorist war against Nicaragua to the occupation of
Iraq in the 2000s;
·
Colin Powell, chairman of the
Joint Chiefs of Staff during the 1991 Persian Gulf War, and secretary of state
during the 2003 Iraq War, in which he played a central role in justifying a war
based on lies;
·
Michael Hayden, former director
of the National Security Agency and later CIA director, who oversaw CIA torture
programs and domestic spying;
·
Robert Blackwill, deputy director
of the National Security Council with responsibility for Iraq war policy in
2003–2004;
·
Michael Leiter, director of the
National Counterterrorism Center under the younger Bush; and
·
William Webster, director of the
FBI under Reagan and of the CIA under the elder Bush.
The support of these former
leaders of the military-intelligence apparatus only underscores the real
character of the conflict between the Democratic and Republican parties, the
twin political instruments of the American ruling elite.
The Democrats oppose Trump, not
because of his tax cuts for billionaires or his attacks on democratic rights
and the rights of immigrants and refugees, but rather because of differences
over foreign policy related to the Middle East and particularly Russia. An
incoming Biden administration would immediately adopt an even more provocative
and aggressive anti-Russian policy.
This was underscored in one
segment after another of the final day’s program leading up to Biden’s
acceptance speech, with military veterans and Republicans brought forward to
speak in video segments. The most strident pro-war message came from Senator
Tammy Duckworth, who denounced Trump as the “coward in chief” for his alleged
capitulation to Putin over the bounties.
As for
domestic policy, Biden’s closest political associate, his Senate chief-of-staff
Ted Kaufman, who heads the transition team preparing for a future Biden
administration, told the Wall
Street Journal Wednesday that the rising federal budget
deficit would make ambitious spending programs impossible. “When we get in, the
pantry is going to be bare,” Kaufman said. “When you see what Trump’s done to
the deficit… forget about COVID-19, all the deficits that he built with the
incredible tax cuts. So we’re going to be limited.”
The reference to what
“Trump’s done” is a
fraud, since the both the
Democrats and
Republicans endorsed, on a
nearly unanimous
basis, the multi-trillion
dollar bailout of Wall
Street in March. The coronavirus pandemic—which, as a
result of the policies of
the ruling class, has produced a social and
economic catastrophe for the
American population—has been
utilized by the ruling elite
as an opportunity to loot the public
treasury. And it is the
working class that will be forced to pay.
Despite claims by Bernie
Sanders that Biden could become the most progressive president since Franklin
Roosevelt, the real policy orientation of a future Biden administration was
signaled by the appearance of billionaire Michael Bloomberg, who gave the last
speech before Biden himself was introduced, pouring scorn on Trump as a poor
businessman and incompetent manager. It is the billionaires and the
military-intelligence apparatus, not political charlatans like Sanders, who
will call the shots if the Democrats win the White House.
Next week will put the
ultra-right ravings of the Republican Party and the Trump White House on
display. The Democratic Party masquerades as the friend of the workers while
doing the bidding of the corporate elite; the Republican Party, under Trump’s
direction, is working to develop a fascist movement. Both parties are the
enemies of the working class, which must develop and build an independent
revolutionary alternative.