A review of three just released reports that indicate the US and global economy is in much worst shape than the hype flowing from political and business media sources. Today’s US jobs report showed a sharp reduction in the rate of private sector job growth in the US economy for the past three months, as labor force and wage growth continue to stagnate as well. Jack explains why the official data is even worse than reported. A second report by the World Trade Organization indicates global trade is retreating fast, growing much less than global GDP which is itself slowing fast. According to estimates, global trade may have even contracted in the first half of 2015. Jack explains how a global recession in trade and industrial production (manufacturing, mining, utility output) may have already begun, with global services eventually to follow. Conditions in Europe, Japan, China, and the ‘perfect storm’ accelerating in Emerging Markets from latin America to Asia to Africa are reviewed. Next week’s IMF report on the growing crisis in the global economy, centered on emerging markets and China, is previewed. In the context of these developments, Jack explains how his new, forthcoming book, ‘Systemic Fragility in the Global Economy’, by Clarity Press, due out in November provides a theoretical and empirical explanation of the conditions and where the economy is headed, and how the book is different fundamentally from analyses provided by both mainstream economists or Marxist economists.’
Jack reviews briefly the apparent flip-flop by Janet Yellen, chair of the US central bank, in her talk on September 24, as she shifted course from last week’s Fed meeting, and signaled that a US interest rate hike will almost certainly come in December. How the Fed is now caught between its emerging, contradictory role as central bank for the US as well as for the global economy. Jack challenges Yellen’s view that US prices, now at 0.5%, will eventually rise as oil prices reverse and increase again and as the labor market in the US improves—and explains why this is not likely to happen soon. In the second half of the show, big Pharmaceutical companies are the topic. Jack explains how Wall St. and shadow bankers increasingly run Pharma and have turned it into a speculative investing center where drug price manipulation and gouging is increasingly the norm causing astronomically price hikes for life-saving drugs, with the result of killing of countless more Americans denied unaffordable drugs. How Wall St. has turned the industry, from what should be a public good, into a $500 billion speculative profits center with 20% annual rates of return, into a prime source of mergers and acquisitions profits for banks, and into a major tax avoidance (thru global tax ‘inversions’) industry that gets $100 billion in government R&D subsidies. Jack reviews in detail the latest scandal to hit the press this past week, with Turing Corp.’s 5000% increase for a pill to treat toxoplasmosis that prevents infections in pregnancies, cancer, and AIDs patients. Similar price manipulations delivering ‘rentier’ profits by Rodelis Corp., Valeant Corp., Alexion and Gilead Corps are reviewed. How the disease of finance capital is spreading throughout the US economy as bankers and corporate America continue to ‘kill’ Americans in the name of excess profits.
Jack Rasmus discusses the US Federal Reserve’s decision to keep interest rates near zero and keep free money to banks and speculators flowing. Jack explains how free money from the FED keeps financial asset bubbles in stocks, junk bonds, forex, derivatives and the like going, and feeds ever growing profits from financial assets. Who were the forces and lobbyists behind the FED decision? What did they have to gain? How the FED decision will soon result in central banks in Japan and Europe expanding their own ‘QE’ programs further, intensifying global currency wars and slowing global trade. How global finance capital has become addicted to the free money from the FED and other central banks and is unable to wean themselves off of it. What it means for the coming next recession. In the second half of the show Jack reveals how cash on US, Europe and Japan corporate balance sheets still exceeds $7.3 trillion—after corporations have distributed to shareholders since 2009 more than $8 trillion in stock buybacks, dividend payouts, and private equity firm profit sharing distributions to partners. Jack explains how corporations in the three regions, north America, Europe and Japan, accumulated the $15.3 trillion—i.e. from free money, legislated tax cuts, and cuts to worker’s wages and benefits.
Jack Rasmus interviews Rand Wilson, a lead organizing for ‘Labor For Bernie Sanders’ campaign on the east coast. Rand describes the latest events to build union support for the Sanders campaign, currently being organized by the core 7500 public endorsers who comprise the ‘Labor for Bernie’ group. A conference call last week by the group included 26,000 supporters, according to Rand, who called in to listen to Sanders explain why he’s the best pro-labor candidate in the upcoming 2016 election. Already receiving significant support from white supporters nationwide in his round of speaking tours, Sanders may now be receiving notable support from at least certain segments of the unions, including Nurses, Postal, and Transport workers. Rand describes what’s going on currently in union circles to build support and endorsements for Sanders, how Sanders’ positions differ from Hillary Clinton’s, and how Sanders, unlike Clinton, refuses to take corporate money. Also unlike Clinton, Rand explains, Sanders wants to build a grass roots movement, a ‘political revolution’ in Sanders’ own words, from the bottom up. Jack raises the question whether this grass roots movement and ‘revolution’ is just a ‘Sanders election’ effort, or whether it is viewed by the ‘Labor for Bernie’ group and its organizers as the start of something longer term, beyond the upcoming Democratic party primaries, that intends to unify not only local unions but other single issue community based protest movements.”
Listeners interested in finding out more about the ‘Labor for Bernie’ organization and efforts, go to www.laborforbernie.org and to the Sanders website for his positions on workers rights atwww.berniesanders.com.
Rand Wilson is a member of SEIU 888 representing higher education workers, and has a long union activist history working for the Oil Chemical and Atomic Workers, SEIU, Teamsters, Jobs for Justice organizing, and the AFLCIO campaign to defend against the Bush attacks on Social Security in the previous decade.
Jack examines the big swing in the revised GDP figures for the 2nd quarter, and raises questions about the US Government’s ability to adjust for seasonality in the figures. How is it that every year for the past four years, the US economy (and GDP numbers) collapse to near zero or less in the winter and then surge above average in the spring-summer? Can it be just coincidence, occurring now four times? How reliable are GDP numbers, in the US and globally (China, India, Europe?). Jack then looks at the details of the recent revision, concluding that business inventories, net exports, and commercial building number swings have good reason to doubt the veracity or continuity of the numbers. In the second half of the show, the recent debt restructuring deals just concluded in Greece and Ukraine in recent weeks indicate a new kind of colonialism may be emerging in the periphery of Europe, where debt is used as the ‘product’ by the colonizers to extract wealth and an income stream from the ‘colony’ by means of financial asset transfer instead of direct low wage and low cost production of goods—as in the case of past forms of colonialism. Jack reviews in detail the recent Memorandum signed by Greece and the Troika, which not only reveals even more austerity but now a direct management of the Greek colony economy to ensure payments on the $400 billion plus debt continue to be made. Direct management is a new feature of the new ‘inside’ colonialism. Direct management is even more blatant in the case of the Ukraine deal, Jack explains, where former US and EU shadow bankers now run Ukraine’s economy on a day to day basis. Depressions will get worse in both countries and more debt restructurings are inevitable.
Dr. Jack Rasmus looks at today’s, and this past week’s, plunge in global stock markets from Shanghai to New York and beyond. What’s driving the rout, which recorded nearly 10% drop in stock values in just one week? Jack explains the causes behind the stock bubbles’ rise before this summer, focusing on China’s 120% bubble in 2014-15, now sharply contracting by 35%, and the bubble in US stocks that have risen 180% since 2010, and are now about to follow China’s stock contraction. Europe and other Asian markets are following the China-US connection in turn. Jack explains how the stock bubble in the US has been a consequence of the US central bank pumping $15-$20 in excess liquidity into the economy since 2009 via its zero rate and QE programs. In China, the shift to a monetary first policy in 2013 has caused excess liquidity on a similar scale. China’s real economy has been slowing since 2012. To offset the slowdown, China policy makers focused on stimulating stocks for various reasons: to quell other bubbles in housing and industrial debt, to shift toward more private sector driven growth, and to attract more foreign money capital. How China lost control of its stock bubble is explained, as well as the failed attempts since June to control the stock collapse and restimulate its real economy. Jack predicts the troubles in the global economy are about to get even worse in coming months.’
Jack Rasmus and guest, Eric Laursen, discuss the current condition of social security programs in the US today, on this month’s 80th anniversary of the passage of the social security law. A program which has immense popular support by Americans of all political persuasions is nonetheless still under attack, with plans by business and conservative forces to somehow privatize it and let Wall St. get their hands on the money to charge fees and interest. Jack explains how the privatization of defined benefit pension plans in the US since the 1980s and the ongoing privatization of health insurance have led to dual crises that will eventually explode in costs, loss of income, and great hardships. Social Security privatization would lead to the same. Jack and Eric discuss the different conditions of the various funds within social security—the retirement and disability funds, Medicare hospital and doctor coverage, and the prescription drug plan. Both explain how minor changes can ensure funding for all funds to the end of the century. Initiatives to expand social security to provide more benefits are also discussed.
Jack Rasmus follows up the previous show on the global economy with an assessment of financial instability that appears to be growing globally as well. Jack briefly discusses how excess debt and income decline and stagnation basically cause financial instability, and explains how the new 200,000 or so global finance capital elite continue to create financial asset bubbles worldwide and how those bubbles appear to be converging. Financial bubbles that appear most unstable include China’s stock markets (Shanghai and Schenzhen), but also global oil and commodity futures, emerging market equity and bond markets, US and global bond ETFs sold by mutual funds, the US and Euro corporate junk bond markets, tech stocks, Eurozone banks, and currency exchange markets that are becoming much more volatile. Also noted are potential serious secondary effects of a lack of liquidity in bond markets in general and effects on US repo markets in turn. The show concludes with a in-depth look at causes behind the current China stock market collapse which, Jack argues, has yet to run its full course and could destabilize financial markets worldwide in the near future. The role of China government policies in causing a runup of 120% in China stocks in just one year is explained, as well as government measures introduced since June 12 of this year to stop the stock slide.
To read the public and business press, it appears the US economy is about to accelerate, the Federal Reserve will soon raise interest rates, unemployment is at pre-recession lows, wages are about to rise, housing is recovering. Meanwhile, Europe is growing again now that the Greek crisis is resolved; China has stabilized its stock marke;, and the rest of the world is on a recovery path. But this public spin to the current US and global economic scene does not conform to reality. Jack Rasmus takes listeners on an ‘economic tour’ of the realities in the US and global real economy, where the US continues on a sub-par ‘stop go’ recovery, where China is really growing at 4-5% GDP, not the announced 7%, where China’s stock market collapse, begun in June, has only paused before another turn lower, where Europe QE is failing to generate a sustainable recovery and the ‘Greek Crisis’ is far from over, where Japan’s real economy has stalled (again for the fifth time since 2008), and where emerging markets from Indonesia to Brazil to Turkey are slowing and slipping into recessions. The global oil deflation is entering another decline, global commodities prices and sales are falling further, currency instability is rising, and money capital is flowing back to the US from everywhere, raising rates in the US and slowing economies elsewhere as the US dollar rises. (Next week: ‘Is the Global Economy Heading for Another Financial Crisis?
China’s two main stock markets, the Shanghai and the Shenzhen Exchanges, plunged more than 30% in recent weeks from their previous record highs of June 12. The Shanghai dropped 30%, and the tech-stock heavy Shenzhen by 37%. That’s the steepest stock decline in China since 1992. The markets briefly stabilized on July 9. But the question remains, will they continue their free fall again, as they had after several previous brief stabilization efforts since June 12? And what does it mean for China if they do? Or for the global economy in turn, given that China’s economy is at least as large as the USA’s and, by some measures, now larger? If the collapse resumes, does it signal the start of another global financial crisis? If the China stock market rout continues, it may likely spillover to China’s real economy and slow it still more than it has already. The contagion could spread to other financial markets in China—housing, local government debt, bonds and loans for industrial companies, all of which have recently continued to struggle with excess debt, speculation, and bubbles. The loss of $4 trillion in wealth so far will undoubtedly have an effect on consumer spending that