Dr. Jack Rasmus summarizes his just published book this month, ‘Looting Greece: A New Financial Imperialism Emerges’, Clarity Press, Sept. 2016, explaining how debt and credit are becoming new and even more efficient and generalized means by which the more powerful capitalist countries are beginning to extract and transfer wealth from the smaller and more vulnerable. Jack describes the various techniques and means by which financial measures are used to extract surplus. Greece is a case example of the new imperialism taking shape increasingly globally. ‘Looting Greece’ is a sequel to Dr. Rasmus’s January 2016 publication, ‘Systemic Fragility in the Global Economy’, which described how the shift to financial investing is slowing down the global economy, and how a new global finance capital elite is increasingly dominating national economies and slowing growth. In the last half of the show, Rasmus reviews the major economic events of the past week, including today’s US job numbers, recent US manufacturing data, the US central bank meeting—and why the Fed will raise interest rates for certain before year end and the impact that will have on a shift to fiscal spending in 2017 andthe US economy’s coming recession in 2017-18 as well as on emerging markets, China and US corporate profits. The show concludes with a commentary on recent IMF and BIS reports on the global economy.
Jack takes a detailed look at the strategic and tactical errors of the Syriza party and Greek government in 2015 that led to its eventual capitulation to the Troika, resulting in continued austerity and economic depression in Greece. Among the errors noted are Syriza’s naïve reliance on the support from social democratic allies in Europe that did not exist or abandoned it, Syriza’s repeated unilateral concessions to the Troika without any concessions in turn, its allowing the ECB to slowly shut down Greece’s banking system and its refusal to nationalize its banks to remove them from ECB control, Syriza’s agreement to extend the prior debt terms and continue making debt payments to the Troika while the Troika denied Greece loans and payments it was due, amateur bargaining tactics by Syriza negotiators, Syriza’s refusal to leverage potential support from Russia, China, threaten to leave NATO, or to demand concessions from the Troika in exchange for Greece assistance controlling refugee flows into Europe, Syriza continued signals it would not Grexit or form an alternate parallel currency, Syriza’s poorly worded referendum vote in July, and its leaders’ rejection of the results of the vote. (For more detailed analysis of the Greek debt events from 1999 through May 2016, see Jack Rasmus, ‘Looting Greece: An Emerging New Financial Imperialism’, Clarity Press, September 2016.) See also the article by Rasmus on Greece posted on the PRN website and at Jack’s blog, jackrasmus.com.
Dr. Rasmus discusses the first of a two part series on the nature of Greek debt crises, and how they are the consequence of Euro neoliberalism, dominance of the Eurozone’s ‘Troika’ (European Commission, European Central Bank, IMF) by German bankers, allies and politicians, and the continuing insolvency of European private banks. Citing recent studies that show 95% of Greece’s debt payment to the Troika since 2010 have gone to European bankers, Rasmus argues the recycling of debt and interest payments represents an emerging new form of financial imperialism that is built into the Eurozone’s very structure since 1999. The deeper analysis is available in Dr. Rasmus’s new book, to be released in September, ‘Looting Greece: An Emerging New Financial Imperialism’, by Clarity Press. Rasmus discusses the origins of the 2010, 2012, 2015 (and April 2016 mini) debt crises in Greece, and concludes with the Greek Syriza party’s main strategic error. Next week, Part 2: ‘Why Syriza’s strategy (and tactics) failed and why the Troika’s prevailed’—plus more on the new financial imperialism taking form in the Eurozone periphery and its prospects globally elsewhere.
Jack reviews the current condition of Japan’s economy, after 8 years of virtual perpetual recession despite record QE central bank injections, negative interest rates, and talk of helicopter money. The Central Bank of Japan as harbinger of global capitalist central banks policy direction and innovation. How central banks-bank of japan free money policies are not only no longer working, but are now having contrary negative effects on the global economy. Japan’s history of monetary policy first, plus austerity, since 1991 has doomed it to perpetual recessions—8 since 1991 and 5 since 2008. Japan as innovator of QE and negative rate policies. The results in creating trillions of non-performing bank loans (NPLs) and more than $13 trillion in negative bond rates since 2014 are reviewed. Growing NPLs and negative rates as indicators of failing capitalist monetary policies as investment slows, productivity declines, wages stagnate and real consumption falters worldwide. Why global economies are about to shift in 2017 to more fiscal infrastructure spending—but will do so ‘too little and too late’ to prevent recessions in 2017.
Jack Rasmus explains why all economic indicators for the US economy are ‘flashing red’ except for consumer spending, driven mostly by surging household debt again in credit cards, mortgages, auto loans and student loans. Meanwhile, 7 years of continued low interest rates created by the Federal Reserve (and other central banks) are creating a crisis in pensions, insurance, and sectors …
Jack examines in detail Trump’s acceptance speech and its non-traditional Republican themes criticizing Free Trade, US national debt, NAFTA, China, offshoring, taxes, military spending-NATO, and related topics. Trade issues are paramount but represent pandering to working class discontent over the loss of jobs, wage income decline, and chronic US economic insecurity since 2000. Trump’s specific proposals for trade are dissected, including his claims to ‘tear up’ NAFTA, impose 35%-45% tariffs on Mexico and China, stop China currency manipulation, offshoring, anti-immigration wall, etc.—all of which represent pandering to working class discontent. Trumponomics = ‘Law and Order First’ economic recovery plan. How Trump is cleverly targeting disaffected working class voters in key swing states of Pennsylvania, Ohio, Michigan, Wisconsin, Virginia, North Carolina, and Florida as key to an electoral victory in November. Jack predicts the election outcome will depend on who, Trump or Clinton, is able to turn in those states the white working class, un- and under-employed 20-something youth, Hispanic, and independents voting blocs in those key states. Who has the bigger base, and who (Trump or Hillary) can turn out more of that base in these key states will determine the outcome. Trump has the advantage currently in turnout, Jack concludes as Hispanics and disaffected youth may sit home during the election. Trump could win. Much will depend on the TV debates.
A centerpiece of Trump’s campaign, that is gaining support for him among white working class voters in key swing states like Pennsylvania and Ohio, is his attack on free trade treaties from NAFTA to TPP. Today’s show examines the conditions behind the current stagnation of global trade the past 18 months, growing wage stagnation and income inequality in the US, and increasing US voters’ associating of their loss of quality jobs and declining wages with free trade. Dr. Rasmus briefly reviews policies in China, Japan, Europe, and the slowing of world trade. How US economic elites—from the Business Roundtable and others— are becoming terrified of Trump’s successful manipulation of voter discontent with free trade. The elements of Trump’s position on trade are discussed, including ‘tearing up’ treaties, imposing tariffs on Mexico and China, charges of China as currency manipulator, tax policy incentives encouraging job offshoring, and US visa policies. Jack critiques Trump’s positions and concludes that Trump—like Obama before and Hillary now—is simply pandering to the discontent and will reverse his promises on trade if elected. Pandering to the trade issue, however, may just provide Trump enough votes to win key states’ electoral majorities.
Jack Rasmus takes an in-depth look at crashing financial assets in UK property funds and growing insolvent Italian banking system. Are these early signs of post-Brexit emerging financial instability? UK property funds are refusing investors their cash, Italian government is planning more ‘bail ins’ of depositors money to bail out its banks, now $400 billion in the red, UK and Euro currencies are falling, and financial asset prices are under growing pressure everywhere in Europe. Will (and how) might it spill over to the US economy? How political instability in Europe from ‘Brexit’ and spreading ‘Euroscepticism’ are being accelerated by growing financial and economic instability in the UK and Europe. Jack concludes with another take and critique of just released US jobs reports, showing how the two US jobs reports show dramatic different picture, how private job creation is being offset by public job losses, and why it’s impossible that involuntary part time jobs declined last month by 587,000. US jobs stats are increasingly unreliable, he concludes.
As Jack Rasmus predicted last week, the initial scenario for the Brexit vote is not an immediately global financial crash. The threat is more intermediate than short term. The analogy is not Brexit as a ‘Lehman Brothers’ event, the US bank collapse that ushered in the financial crash of 2008-09, but more similar to a ‘Bear Sterns’ event, the US bank that collapsed in the US early in 2008. Brexit is a warning shot fired across the bow of the global capitalist economy, not the precipitating event for another crash. Jack explains how global investors are waiting to see what happens next before dropping the other shoe. Jack reviews the likely intermediate effects of Brexit on global markets—currencies, bond rates, stocks, real investment, deflation, productivity, bank lending, consumption, and GDP. The relative effects of Brexit on economic regions are also covered: the UK, EU, US, China, EMEs. Recession in the UK will occur first, Jack explains. Europe will stagnate further. Japan’s recession will deepen, the US will enter recession in 2017 soon after the elections. China eventually will have to devaluate its currency with severe global consequences—i.e. the effects of Brexit on financial markets and real economies is just beginning. Political instability in the UK, in both conservative and labor parties is reviewed, with splits deepening in both. What Brexit also means for growing political instability for France, Spain, Netherlands, and Italy; how Brexit is penetrating the US election campaigns, as US elites and corporate push back on both candidates. Jack warns the weak spots of global capital today are Italy’s banks and Japan, where the most likely next ‘Bear Stearns’ event will emerge. Longer term, the UK currency and London as global financial center are finished as global players.
Jack discusses the consequences and likely developments from the historic vote yesterday for the UK to leave the European Union. The deep origins of the Brexit vote are first discussed, including rising discontent with neoliberal policies of free trade by working classes, small businesses, and local producers everywhere, the overlay of fiscal austerity policies compressing incomes, and the almost total reliance in advanced economies on central bank monetary policies that boost financial asset incomes and corporate profits (and capital gains of investors and the rich) since 2009. How UK prime minister Cameron struck a ‘Faustian’ bargain in 2015 to win the election and now had to repay the ‘devil’ with the Brexit vote he thought he could control, but did not. The consequences of the vote for UK politics in the near term, and for forces—political and economic—behind the potential break up of the EU itself. Political party realignments underway everywhere, including EU and US. Implications for US November elections. Jack concludes with an assessment and economic predictions for the UK and EU economies, for currency volatility worldwide, stock and bond markets, real estate prices, and global commodity prices. Impact on the US dollar, interest rates, FED policies, and US recession for 2017. Severe results for emerging markets, especially Latin America (markets, capital flight, recessions) and for China’s Yuan eventual currency devaluation.