Grim economic indicators at home and abroad
Both in America and in China, there’s grim economic news and, in both cases, I’m feeling pretty darn ambivalent about these reports. Both reports bode ill for the economy as a whole, but both are happening to entities that kind of asked for it.
At home, Target’s profits have dropped by 90% (that’s not a typo) in the last quarter. Here’s what The Daily Mail (hat tip: Conservative Treehouse) reports:
Target reported on Wednesday that its profits plunged nearly 90 percent last quarter after it was forced to slash prices to clear unwanted inventories of clothing, home goods and electronics.
In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as inflation cuts into spending on non-essential items.
On the one hand, this is terrible news. It means that ordinary Americans can no longer afford to buy even the well-priced, often discounted, goods that Target sells. It also means that one of America’s major retailers (and employers, with almost 2,000 stores and over 400,000 employees) may go belly up. This saddens me because I’ve always enjoyed shopping at Target, although, of late, that’s been a guilty pleasure.
The guilt part of the pleasure is why I’m ambivalent about Target’s possible downfall. Target is headquartered in Minneapolis, and its management has long reflected that city’s hard-left politics.
Image: Financial downturn (edited) by starline.
For years, it’s been one of the biggest retail promoters of all things gay. When my children were little, I wouldn’t even take them with me to the store in June. In 2016, in service to its LGBT supporters, Target announced that so-called transgender people could use the restroom aligned with their gender. The resulting boycott cost the chain $20 million. Target was also all-in on the George Floyd shakedown, donating $10 million to various “social justice” organizations.
In other words, this is a store that sides with leftists, which means that it helped foment a world in which Joe Biden could end up in the White House and Democrats in charge of Congress. Therefore, to my way of thinking, Target is kind of responsible for the recession, meaning it helped create this disastrous economic problem. Hence my ambivalence.
The news out of China is also bad:
Chinese developers have lost at least $90 billion in the last year, according to reporting from Bloomberg, as home prices have gone down for the last 11 months. Dozens of developers have defaulted on their debts, and many of them have stopped work on unfinished housing, which has sparked mass outrage and even protests as more than 80% of Chinese homebuyers take out mortgages and begin paying them down before their prospective home is completed.
This arrangement, which was once a source of easily accessible capital in a red-hot housing market, has left countless Chinese consumers holding the bag on half-finished homes that may never be fully constructed. Thousands of homebuyers are refusing to pay mortgages on unfinished properties in a mortgage boycott that has spread to nearly 100 cities and has affected over 320 development projects.
For a long time, the Chinese government encouraged people to put their excess wealth into real estate, so the real estate market makes up 30-50% of China’s consumer wealth. Evergrande, the biggest Chinese real estate developer, continuously hovers on the verge of bankruptcy. Estimates vary, but there seem to be over 60 million vacant properties in China.
Given China’s aggressive push to take over the world (the belt and road initiative, manmade islands in the South China Sea, corrupt trade practices, spying, etc.), it’s hard not to feel a bit, well, happy to learn that China is suffering economic woes. If nothing else, these problems may cause China’s aggression to slow, giving America some breathing space.
However, a broke, destabilized China is not a good thing. Even though China’s probably inflating its population numbers as it enters demographic free-fall in the wake of its one-child policy, it has around 1 billion people. It’s a bad thing if a country that big has a complete economic collapse—it’s bad for China, it’s bad for surrounding countries, and it’s bad for the world as a whole, especially for America, given the two nations’ economic interdependence.
We live in weird, worrisome times when it’s sometimes impossible to tell the good news from the bad.
This is nasty stuff, given that middle class and poor people already are paying a $5,520 annual premium for Bidenflation. Inflation is a hidden tax, of course, on the poor, but Biden is combining that with some nakedly obvious tax hikes on the poor, too, plus an army of IRS auditors. We all know who they audit the most. See the chart here.
So Biden lied about tax hikes on the little guy....
Joe Biden is still out assuring the skeptical public that his $739 billion spending bill on IRS tax auditors and green new deal boondoggles won't cost middle-class taxpayers a thing.
Yesterday, he signed off on his badly misnamed "Inflation Reduction Act," and made sure he added these statements:
Biden signs $739 billion tax and spending bill in to law pic.twitter.com/UfNy5c7dDO
— Media Research Center (@theMRC) August 16, 2022
After all, he gave his "word as a Biden," on that, insisting he's "never broken his word."
But sure enough, there were not just 87,000 IRS auditors in that bill to target small businesses and collect more, there also were bona fide tax hikes in the monstrosity he just signed off on.
Here's the latest from the nonpartisan Congressional Budget Office, as reported by the New York Post:
The Inflation Reduction Act sent to President Biden’s desk will end up forcing working-class Americans to pay billions of dollars in new taxes, according to the nonpartisan Congressional Budget Office.
An analysis by the CBO estimates those earning less than $400,000 — the group on which Biden promised not to raise taxes — will pay an estimated $20 billion more in taxes over the next decade as a result of the Democrat-pushed $740 billion package, which also sets aside $80 billion to hire 87,000 IRS agents.
CBO wasn't the only one pointing to the tax hikes on the little guy -- and it's a very little guy indeed who's going to pay through the nose on those taxes, people making as little as $30,000 a year.
Fox News' @BretBaier: "Multiple now nonpartisan experts say [the Biden Tax Hikes] would raise taxes on NEARLY ALL Americans." pic.twitter.com/hP5ofZXYtO
— RNC Research (@RNCResearch) August 16, 2022
According to Akash Chougule, writing in RealClearPolitics:
Congress’ nonpartisan Joint Committee on Taxation says it will raise taxes on every income bracket above $30,000 per year. President Biden has repeatedly pledged he would not raise taxes on any family making less than $400,000, but the committee found that the middle class and low earners will face the steepest tax hikes under the proposal.
This is nasty stuff, given that middle class and poor people already are paying a $5,520 annual premium for Bidenflation. Inflation is a hidden tax, of course, on the poor, but Biden is combining that with some nakedly obvious tax hikes on the poor, too, plus an army of IRS auditors. We all know who they audit the most. See the chart here.
Up until now, many Democrats, including Joe Manchin and other hypocrites who voted for the bill, as well as President Obama, had said in the past that tax hikes during inflation, or a recession, are the one thing you don't do. Well, they did.
And that raises questions as to what cynical game might be going on here as the middle class gets it from all directions from Biden. They all know that raising taxes during a recession is a no-no, yet they did it anyway, and Biden's claims otherwise have been exposed as lies.
The tax hike, by the way, comes as as revenues brought in by the IRS have been at record highs. According to The Balance, a website about federal spending, COVID hasn't damped what the Feds have been drawing in from taxes.
In 2021, U.S. tax revenue was an estimated $3.86 trillion, up from 2020's estimated $3.71 trillion, and significantly higher than 2019's actual $3.46 trillion.
It's not like the federal government is lacking for incoming money.
So the tax hikes are strange stuff, not just because it's a recession, and you don't hike taxes during a recession, but because it's so closely linked with the Bidenflation that is plaguing the country.
Two cynical scenarios could be at work here.
One, perhaps they know they can't print money forever, but remain determined to spend like Hugo Chavez.
So instead of relying on interest rate hikes from the Federal Reserve to break inflation, which is what most people are looking for, and which they know the Fed is reluctant to do, fearing that they will trigger a recession, their plan is to hike taxes on the little guy to take cash out of the system, and thus damp inflation. The responsible way to kill off inflation is to cut back on federal spending and all the money printing it requires, but they can't bring themselves to do that. So, instead of the, cutting back, they make the little guy pay more.
Conversely, as inflation goes up with federal money-printing in the 'spend' part of the bill, the cynical plan is to inflate away their own federally accumulated debt, meaning, they won't have to pay back what they borrowed for the value of what they borrowed. That certainly would make inflation a fine thing for them as big spenders, so they have no intention of stopping inflation with any cutting back. They effectively could pay back the cost of the gold they borrowed in toilet paper money, and keep the cash flowing for themselves through higher taxes. It would be great stuff for them, but would end much spending at all for the little guy, who'd be converting his earnings to higher taxes plus losing the rest to inflation.
Bottom line here is that they do have some kind of plan here to keep inflation high and raise taxes too, because despite what they know about raising taxes during an inflationary recession, they went and raised them anyway.
It sounds like big, big, big plans for expanding the federal government -- until there are no taxpayers left with money to pay. And all they need to do to get away with it is lie about it.
Let's see if that makes it past 2022.
“Protect and enrich.” This is a perfect encapsulation of the Clinton Foundation and the Obama book and television deals. Then there is the Biden family corruption, followed closely behind by similar abuses of power and office by the Warren and Sanders families, as Peter Schweizer described in his recent book “Profiles in Corruption.” These names just scratch the surface of government corruption.
Gutfeld: Forgive us if we actually care about Biden's corruption and collusion
https://www.youtube.com/watch?v=roy4xyo1Aok
VIDEO
Ralph Nader: Biden's First Year Proves He Is Still a "Corporate Socialist" Beholden to Big Business
https://www.youtube.com/watch?v=2jTIUtjkDss&t=28s
Hauser also didn’t like the prevalence of Big Law talent on the Department of Justice team, which signaled to him that the Biden administration could go soft on corporate malefactors. Alexander Nazaryan
There is nothing unexpected about the emerging right-wing, pro-war, pro-Wall Street composition of the incoming Biden administration. Biden himself spent decades in Washington as a corrupt bag-man for wealthy interests in the state of Delaware, the legal headquarters of hundreds of thousands of corporations that take advantage of its business-friendly laws.
Consumer Warning Sent to Governors: BlackRock Is ‘Crushing America from Within’
Consumers’ Research, an organization dedicated to educating American consumers, warned that BlackRock is “crushing America from within,” releasing a nationally televised advertisement, issuing a consumer warning, and notifying 12 governors of the dangers posed by the firm.
Consumers’ Research’s campaign includes a television advertisement blasting BlackRock and CEO Larry Fink, asserting that they contributed to soaring gas and housing prices, explaining that “BlackRock owned companies are snatching up houses, crippling families.”
The ad also exposes a pertinent connection between the multinational and the Biden administration, noting that “BlackRock’s former ESG czar Brian Deese is Biden’s economic advisor.”
Consumers’ Research also published a consumer warning that accuses BlackRock of “crushing America from within.” The consumer warning states that BlackRock, which manages nearly $10 trillion, “uses its clout to push a radical agenda in coordination with other financiers through a network of international organizations.”
It goes on to state that the firm, led by CEO and Chairman Larry Fink, adversely impacts the American economy and possibly even violates their fiduciary duty by furthering an ideological agenda and “putting your retirement at risk in the name of progressive politics.”
The consumer warning explains that BlackRock utilizes a “progressive coercion vehicle known as ESG, or Environmental, Social, and Governance, which applies highly subjective and ambiguous criteria to measure how closely companies are falling in line with the radical progressive agenda.”
The seven page document notes that the multinational firm has advanced a climate agenda that has resulted in “higher energy costs, inflation, weakened energy infrastructure, the dismantling of fossil fuel companies, loss of (primarily blue-collar) jobs, and weaker national security.”
It also points out that BlackRock has led an effort to get leftist activist investors on the board of Exxon in order to divest from multiple projects, allowing Chinese gas companies to fill in the gap. Meanwhile, BlackRock has invested in PetroChina, despite allegations that the company uses forced labor, land confiscation, arrest, and intimidation.
The consumer warning points out that CEO Larry Fink said during a panel with the New York Times that “behaviors are going to have to change … You have to force behaviors, and at BlackRock, we are forcing behaviors.”
Consumers’ Research continued to document a list of BlackRock’s abuses before issuing guidance to consumers. The organization called on consumers to ensure that they are not using BlackRock’s services, such as the iShares fund brand, when they invest.
Consumers’ Research also suggested that employees contact their human resources department to inquire if their retirement funds are managed by BlackRock and that those with state or municipal pensions “contact state officials to find out if any portion of their pension fund is managed by BlackRock.”
Executive director of Consumers’ Research Will Hild contended in a statement that BlackRock and liberal elites like Fink are “using money that doesn’t belong to them to push an extreme agenda with no regard for American families who are paying the price not only now, but through their pension funds which are being weaponized to the detriment of their potential profits.”
He added that BlackRock’s ideologically motivated investing is “leading to higher costs everywhere from gas pumps and groceries to rent prices and housing costs.”
Consumers’ Research recently created a site called AboutBlackRock, which calls the multinational the “architect of woke capitalism” and features their consumer warnings.
In addition to their consumer warning, Consumers’ Research also sent a letter to the governors of Texas, Montana, Utah, Colorado, South Carolina, Idaho, Alaska, Louisiana, Oklahoma, Arizona, Nevada, and Wyoming notifying them of the consumer warning.
The letter notes that these states are “experiencing inflation in the top quintile nationally,” going on to explain that firms like BlackRock are “using your state’s investment dollars against its interests. They are leveraging the voting power of the shares they’ve purchased for clients to hamper American production and competitiveness.”
The letter continued, remarking that “As a result, gas prices are surging, the cost of purchasing or renting homes is near record levels, and common grocery store goods are up more than 10 percent in the last year. This is largely due to firms like BlackRock pushing policies that are politically driven with no regard for the impact to the citizens of your state.”
Meanwhile, BlackRock CEO Larry Fink blamed inflation on the rise of nationalism, immigration restriction, and “a belief that we have to focus on communities that have been devastated by globalization” in an interview with Bloomberg.
“The net effect of their hypocrisy is to place corporations in your state at a significant disadvantage when competing globally for capital and customers. BlackRock’s actions undermine national security,” the letter reads. It even noted that the multinational firm has invested in corporations that “develop equipment for the Chinese military.”
Consumers’ Research previously documented BlackRock’s connection to the Chinese Communist Party.
The letter from Consumers’ Research follows a decision from 19 different attorney generals to send a letter to BlackRock CEO Larry Fink pertaining to the firm’s “reliance on Environmental, Social, and Governance investment criteria rather than shareholder profits in managing state pension funds,” which has been called “potentially illegal.”
Meanwhile, executive director of Consumers’ Research Will Hild said in a statement that “Fink’s ESG façade is one of the biggest rackets the world has seen.”
Spencer Lindquist is a reporter for Breitbart News. Follow him on Twitter @SpencerLndqst and reach out at slindquist@breitbart.com
Wall Street rises as economic and financial problems mount
If one were to take the movement of stock prices on Wall Street as a guide, then the problems for the financial system and the broader economy arising from inflation and interest rate hikes by the US Fed and other central banks are on the wane.
Since its low point in mid-June, the interest-rate-sensitive, tech-heavy NASDAQ index has risen by more than 20 percent. Over the same period the broad-based S&P 500 index has risen by 17 percent while remaining down by 10 percent for the year. The Dow is also up from its June lows.
The rise in the market has been driven by the belief that inflation is starting to come down—official figures for July saw no increase, bringing the US annual rate of inflation down from 9.1 percent to 8.5 percent—and the Fed will start to ease off on its rate increases after two consecutive hikes of 75 basis points each.
The view is that if this does take place, then the orgy of profit-making based on cheap money will be able to resume.
But looking beyond Wall Street, it becomes clear that, far from being alleviated, problems in the financial system and the global economy are growing.
In the first instance, the Fed may pull back on the interest rate hikes at its meeting in September—the expectation is that there will be a rise of 50 basis points rather than 75. However, Fed officials have made it clear the central bank is far from finished in its drive to ensure that a wages movement by the working class in response to price hikes is suppressed.
The Fed’s program is part of an international strategy by the world’s central banks to drive down the living standards and social conditions of the working class in the name of “fighting inflation.” At this point, this social counter-revolution is most sharply expressed in the UK where the Bank of England has lifted interest rates with the aim of driving the economy into a recession to counter wage demands.
In an interview with the Financial Times last week, Mary Daly, president of the San Francisco Fed, indicated that 0.75 percentage point rise was not off the table in September, while her “baseline” was a 0.5 percentage point increase.
While there was some “good news” in the monthly data, inflation “remains far too high and not near our price stability goal.” It was too early to declare victory over inflation, she said, and “we’re not near done yet.”
Minneapolis Fed president Neel Kashkari has said he still anticipated the Fed would need to rate its base rate by another 1.5 percentage points by next year, lifting it to around 4.4 percent.
In an interview last week, St Louis Fed president James Bullard, regarded as one of the more hawkish members of the Fed’s governing body, pointed to the essential driving force of the rate increases. “We’ve got a long ways to go on the labour market,” he said.
Bullard was pointing to what is regarded as a “tight” labour market, saying there would need to be tangible and widespread evidence of disinflation occurring “before we can be really confident.” That evidence will be indications that even the limited wage increases, below the inflation rate, which workers have so far been able to secure, have ceased.
As prices in basic items continue to rise—grocery items, for example, are up by more than 13 percent—are clear signs of recessionary trends. US gross domestic product has been negative for each of the past two quarters, a situation sometimes described as a “technical recession” with indications the contraction is continuing.
On Monday, a New York Federal Reserve survey of manufacturers registered minus 31.3 for August compared to 11 the previous month. The forecast was for a reading of 5 and the slump in the so-called Empire State gauge was the second largest monthly fall on record.
Recession signs are also flashing in financial markets as so-called yield curve inversion—a situation in which the interest rate on short-term government debt is above that on 10-year Treasury bonds—persists. Over the past 50 years, this inversion, which is contrary to the normal situation, has been a reliable indicator of recession.
There are also clear warning signs of a marked slowdown in the world’s second largest economy, China.
On Monday, the People’s Bank of China (PBoC) unexpectedly cut its medium-term lending rate by 10 basis points in a bid to boost the economy amid signs of slowing consumer demand, lower industrial demand and a worsening housing and real estate market.
In the second quarter, the economy narrowly avoided a contraction, expanding by only 0.4 percent, and the problems appear to be worsening.
July data show that retail sales rose by only 2.7 percent for the year, compared to forecasts of a 5 percent rise, while industrial production was up by 3.8 percent, compared to the forecast of a 4.6 percent increase.
Chinese financial authorities have been reluctant to ease financial conditions because of concerns over rising debt. But Julian Evans-Pritchard, senior China economist with Capital Economics, told the FT that the PBoC seemed to have decided that it faced a more pressing problem.
“The latest data show lacklustre economic momentum in July and a slowdown in credit growth, which has been less responsive to policy easing than during previous economic downturns,” he said.
Real estate and housing, which account for more than a quarter of the Chinese economy when flow-on effects are considered, are at the centre of the slide in economic growth. This threatens to render the official target of 5.5 percent growth for this year—itself the lowest target in more than three decades—a dead letter.
Data released on Monday show that new home prices recorded their steepest year-on-year decline in more than six years in July.
In comments to the Wall Street Journal last week, Logan Wright, the director at Rhodium Group, a New York research firm that closely follows China, said: “We’ve never seen a property market slowdown of this size and severity.” There was little financial authorities could do to turn it around, he added.
There are significant financial effects. More than 30 property developers have now joined the real estate giant Evergrande in defaulting on their international debts.
The issue of debt defaults is by no means confined to China. The rise in interest rates internationally has created the conditions where a number of less developed countries will be unable to pay back loans.
Sri Lanka is already in this situation and others, including Kenya, Egypt, Bangladesh, and Pakistan, could follow. According to Leland Goss, general counsel at the International Capital Markets Association, borrowing in emerging markets, even before COVID hit, grew from $3.3 trillion, a quarter of economic output, to $5.6 trillion, around one third, in a decade.
Goss told the FT the prospect of “possibly systemic debt crisis” was real. “Creditors with exposures to not one, or a few, but many sovereign borrowers could have large aggregate exposures” with “potential systemic implications” if they were large financial institutions, he said.
A report issued at the end of last month revealed that emerging markets are already being hit by withdrawals of money. The Institute of International Finance reported that outflows from emerging markets in July were $10.5 billion, taking the total to $38 billion over the past five months—the longest period of outflows since records began in 2005.
The gyrations on Wall Street are driven by the shortest of short-term considerations. Interest rate rises by the Fed may ease somewhat and so the market goes up. But the longer-term implications of the rises so far have yet to take full effect. They will begin to impact when debt, taken out when interest rates were near zero, must be refinanced.
According to the rating agency Fitch, defaults on high-yield US debt could double this year to 1 percent and also double in Europe to 1.5 percent. Other estimates put the rate even higher, as much as 4 percent per year.
