Quarterly earnings put major banks on path for record yearly profits
The world’s largest banks posted record third quarter earnings this past week, putting 2021 on track to be the most lucrative year in history for the financial world.
Bloomberg estimates that altogether the leading banks have taken in $170 billion over the last four quarters (starting with the fourth quarter of 2020). This is the most profitable four consecutive quarters for banks in history.
Leading the banks is JPMorgan Chase, which, during this time, made an estimated $131 million per day .
Goldman Sachs made a net third quarter profit of $5.4 billion. This surpassed estimates that it would take in $3.7 billion and was up from $3.4 billion last year. The investment bank has now recorded a profit of $17.7 billion for the first nine months of year, itself higher than any 12-month period in its history. The news sent Goldman shares 3.8 percent higher, having already gained 80 percent this year.
Profits are up at all the major American banks. Bank of America increased its profits by 64 percent, Citigroup by 48 percent, Morgan Stanley by 38 percent, and JPMorgan Chase by 24 percent.
In Europe, banks also performed well, while not as spectacularly as their US counterparts. UBS and Barclays both posted their highest quarterly profit in over a decade. Their profits over the past 12 months were $7.6 and $7.4 billion, respectfully. Deutsche Bank posted its highest profits in eight years.
The stock index for US banks has gone up 59 percent this past year, while for European banks it has risen by 56 percent.
An analyst for Oppenheimer, speaking to the Financial Times, described the quarter as “quite literally off the charts.”
The record earnings come as a historic strike wave begins in the US and global food and energy prices surge. Meanwhile, the pandemic continues to rage, with weekly global deaths of almost 50,000 people, according to Our World in Data .
The surge in bank profits is fundamentally bound up with the unprecedented pumping of money into the stock markets by all the major central banks. In particular, the US Federal Reserve is electronically “printing” $120 billion of new money every month and buying US-backed treasuries and corporate bonds from major banks—flooding these institutions with cash.
This massive loan of money, with no strings attached, allows the banks to gorge themselves on risky financial practices. By trickling down to other sections of capital, stimulating investments, the money encourages acquisitions, corporate mergers and IPOs (initial public offering—when a company goes public with its stock).
Much of the record profits that are being made by these banks comes from precisely this type of speculative activity. Specifically, banks charge large fees for handling mergers, acquisitions and IPOs. They charge fees for advising companies, finding sellers and buyers, executing the financial actions involved and raising capital during the process.
Mergers and acquisitions frequently mean job cuts, eliminating so-called “redundancies” in companies. In the most recent quarter, global merger activity rose to a record $1.52 trillion.
Last quarter, JPMorgan Chase tripled its fees to $1.23 billion, Bank of America increased its fees by 65 percent to $654 million, Morgan Stanley tripled its fees to $1.27 billion, and Goldman Sachs increased its fees by 31 percent, to $1.6 billion.
In a comment to the Financial Times, financier Chris Kotowski said, “[W]ith the Fed printing $120 billion of new money each and every month, every CEO in the world has lots of Monopoly money to play with. So M&A [Mergers and Acquisitions] and investment spending and capital raising will likely remain strong.”
Indeed, this “Monopoly money” is what is keeping capitalist financial markets afloat—markets built on top of a mountain of debt and speculation, liable to pop.
While the Federal Reserve has announced it may begin to draw back the asset purchasing program in November, it has repeatedly delayed this move for fear of sparking a sell-off on Wall Street.
As the banks make record profits, the bottom half of the US have, collectively, negative wealth. The entire bottom 90 percent of Americans, according to economists Emmanuel Saez and Gabriel Zucman, own only 26 percent of the country’s wealth. This leaves the top 10 percent with 74 percent of the wealth—a number that does not even include offshore accounts that fly under the radar!
Few banks expect their profit feast to last.
Morgan Stanley CEO James Gorman drew attention in comments last week to the effects of the Fed tapering its cash injections. He stated, “It’s good to be watchful … There’s certainly nothing that suggests there are any issues, but markets are bouncing a little bit. And over the next 18 months, we’ll see more of that as the Fed starts to move.”
JPMorgan Chase CEO Jamie Dimon said he thought that while the cash injections, or “quantitative easing,” as it is known, may be wound down, interest rates would likely remain at record lows for another year. This means inflation “might go higher than people think.” A further surge in the cost of goods, including food and energy, could, itself, lead to significant economic, social and political explosions.
The International Monetary Fund has urged central banks to be “very, very vigilant” about workers demanding higher wages in response to inflation. An IMF report warned that an increase in core prices due to inflation and higher wages could lead to a “spiral of doubt” in the economy that would endanger growth.
A Catch-22 faces the financial oligarchy. Either let the debt bubble balloon further, driven by easy money policies, or burst it through tightening, risking a financial collapse.
Neither option poses a solution. The former risks widespread inflation and devaluation of cash, only making the next financial crisis larger. The latter bursts the bubble that has already grown larger than 2008’s pile of debt.
In either case, the outcome will be the intensification of class struggle both in the United States and globally, as these interconnected, international economic processes reach their logical conclusion.
MEXICO WILL ELECT ALL FUTURE AMERICAN PRESIDENTS
A Facebook post in November 2018 stated that 449,000 Californians turned down jury duty claiming they were not citizens. The post went on to say that these non-citizens were on the voter registration list, reasoning that prospective jurors are often culled from voter registration lists.
Last week's most overlooked news was Alexandria Ocasio-Cortez revealing herself as a champion of the "Reconquista" war against Europeans. The Mexican Reconquista movement is an openly admitted effort by Hispanic activists to take "back" California (Southern especially), New Mexico, Arizona, and Texas through immigration and activism. This is one of several driving forces behind allowing illegal immigration.
Republicans block vote on Democrats’ voting reform bill
Senate Republicans blocked a vote on the Democratic Party-sponsored “Freedom to Vote Act” on Wednesday. The motion to move the bill to a floor debate was defeated by a margin of 51 to 49, with Democratic Senate Majority Leader Chuck Schumer voting “no,” a maneuver designed to allow the bill to be brought back for a vote later this year.
As expected, no Republicans voted for the measure, which required 60 votes to end the filibuster.
The defeat of the “Freedom to Vote Act” marks the third time congressional Democrats have failed to pass a voting rights reform bill this year.
The bill was doomed to fail. Senate Republicans have remained resolute in blocking a vote on all Democratic voting bills. This Republican resistance in Congress comes at the same time that Republican-controlled state legislatures around the country are passing laws making it more difficult for Americans to vote, and in some cases strengthening the authority of the state government to impose partisan control over local voting procedures.
The latest legislative defeat is a striking exposure of the political bankruptcy of the Democratic Party. Faced with the biggest assault on voting rights since Jim Crow, the Democrats have refused to mount any serious attempt to defend the most basic of democratic rights.
The “Freedom to Vote Act” itself is a pared-back version of the “For the People Act,” the Democrats’ more expansive voting reform bill, which was defeated twice over the summer. Senate Democrats and the Biden administration have made no serious effort to amend or eliminate the filibuster, thereby allowing the Democrats to pass legislation to protect the right to vote by a simple majority. As on virtually all policy issues, they have bowed to right-wing Senator Joe Manchin of West Virginia, who vehemently defends the filibuster.
In fact, Manchin is carrying out in full the logic of the endless appeals of Biden and the Democratic leadership for “unity” and “bipartisanship” with their Republican “colleagues,” the vast majority of whom continue to support Donald Trump, promote the lie of a “stolen election” and oppose any investigation of the attempted coup of January 6.
The feckless and duplicitous stance of the Democratic Party has only encouraged the Republicans to intensify their attack on voting rights at the state and local level.
At the same time, the Democratic leadership has capitulated to the demands of Manchin that any voting rights bill be designed to appeal to Republican lawmakers. The resulting “Freedom to Vote Act” removed many provisions that were included in the earlier bill regarding campaign finance and electoral redistricting. It also caved in to the Republicans on the enactment of state voter ID measures, which are designed to block working-class and minority voters from going to the polls.
Despite Manchin’s claims that he could win 10 Republican votes for the “Freedom to Vote Act,” not a single Republican voted to end the filibuster and bring the measure up for a floor vote.
After Wednesday’s vote, Schumer said, “Let there be no mistake, Senate Republicans blocking debate today is an implicit endorsement of the horrid new voter suppression and election subversion laws pushed in conservative states across the country.” As though the increasingly fascistic Republican Party is susceptible to moral appeals!
Nor is there anything “implicit” about congressional Republican support for the assault on voting rights.
Schumer continued: “This is supposed to be the world’s greatest deliberative body, where we debate, forge compromise, amend and pass legislation to help the American people. That is the legacy of this great chamber. The Senate needs to be restored to its rightful status as the world’s greatest deliberative body.”
Known as the “senator from Wall Street,” Schumer dispensed these bromides to a gang of politicians on the take from various corporate interests, of whom Mark Twain famously wrote: “It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.”
In attempting to court Republican support for voting reform, the Democratic Party demonstrates that it has nothing to offer to the defense of democratic rights. Throughout the year, the Democrats have sought to channel opposition to restrictions on voting behind phony corporate campaigns, ineffectual political stunts and appeals for electoral support in 2022.
Schumer concluded by announcing that he planned to bring a different voting rights bill, the “John Lewis Voting Rights Advancement Act,” to the floor as soon as next week. That bill seeks to restore the enforcement powers of the federal government that were stripped from the 1965 Voting Rights Act by the US Supreme Court in 2013.
This is yet one more empty gesture that will meet with the same fate as the Democrats’ previous voting rights bills.
It is a fact that the Obama administration made no serious effort to move legislation through Congress restoring the enforcement powers. The absence of any genuine commitment within the Democratic Party—or the ruling class as a whole—to the defense of democratic rights was definitively demonstrated in 2000, when the Democrats and their presidential candidate Al Gore accepted without a fight the theft of the presidential election through the decision of the Supreme Court to halt the vote recount in Florida and hand the White House to George W. Bush, the loser in the national popular vote.
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