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Richard Mellor / Global Economy: The end of QE
« Last post by Richard Mellor on Today at 06:01:04 AM »
Global Economy: The end of QE

by Michael Roberts

It?s an historic day in global central bank monetary policy since  the end of the Great Recession.  The US Federal Reserve Bank feels  sufficiently confident about the state of the US economy and, for that  matter the rest of the major economies, to announce that it has not only  ended quantitative easing (QE)  but that it is now going to reverse the  process into quantitative tightening.

QE was the policy of pumping money (by creating bank reserves) into  the financial sector by buying government and corporate bonds (and even  shares) in order to create enough cash in the banks to lend onto  households and companies and keep interest rates (the cost of borrowing)  to near zero (or even below in some countries).  QE was the key  monetary policy of the financial authorities in the major economies,  particularly in the light of little fiscal or government spending as a  second or alternative weapon.  Fiscal austerity was applied (with  varying degrees of success) while monetary policy was ?eased?.

But QE was really a failure.  It did not lead to a revival of  economic growth or business investment.  Growth of GDP per head and  investment in the major economies continue to languish well below  pre-crisis rates.  As I have argued in this blog, that is because profitability in capitalist sector remains below pre-crisis levels and well below the peaks of the late 1990s.

What QE did do was fuel a new speculative bubble in financial assets,  with stock and bond markets hitting ever new heights.  As a result, the  very rich who own most of these assets became much richer (and inequality of income and wealth has risen even further).  And the very large companies, the FANG (Facebook, Amazon, Netflix and Google) in the US, became flush with cash and doubled-up on borrowing even more at near zero rates so that they  could buy up their own shares and drive up the stock price, hand out big  dividends to shareholders and use funds to buy up even more companies.

But now eight years after QE was launched in the US, followed by the  Bank of Japan, the Bank of England and eventually the European Central  Bank, the US Fed is preparing to reverse the policy.  It has announced  that it will start selling off its huge stock of bonds ($4.5trn or 25%  of US GDP at the last count) over the next few years.  The sell-off will  be gradual and the Fed is cautious about the impact on the financial sector and the wider economy.  And it should be.

Financial markets won?t like it.  The drug of cheap (virtually  interest-free) money is being slowly withdrawn.  The plan is to avoid  ?cold turkey?, but even so the stock and bond markets are likely to sell  off as the supply of free money begins to fall back.  More important is  what will happen to the productive sectors of the US economy and, for  that matter, to the global economy, as this cheap money slowly declines.

The Fed sounds confident.  As Janet Yellen, the head of the Fed put it in the press conference yesterday: ?The  basic message here is US economic performance has been good; the labour  market has strengthened substantially.  The American people should feel  the steps we have taken to normalise monetary policy are ones we feel  are well justified given the very substantial progress we have seen in  the economy.?

This confidence is being increasingly backed up by the mainstream economic forecasters. 
For example, Gavyn Davies, former chief economist at Goldman Sachs and now columnist at the FT, reports that his Fulcrum ?nowcast? activity measures reveals the ?growth  rate in the world economy is being maintained at the firmest rate  recorded since the early days of the recovery in 2010. The growth rate  throughout 2017 has been well above trend for both the advanced and  emerging economies, and the acceleration has been more synchronised  among the major blocs than at any time since before the Great Financial  Crash.?  He has the advanced economies growing at 2.7% and the  world economy at 4.1%, with the US growth rate now around 3%.  This all  sounds good.

And yet the long-term forecasts of the Fed policy makers for economic  growth and inflation remain low.  Indeed, there are some important  caveats to this seeming confidence.  First, there is little sign of any  recovery in business investment.

Second, far from profits in the productive sectors racing ahead, overall non-financial corporate profits in the US are falling.

And equally important, as the recent Bank for International Settlements quarterly review has highlighted, corporate debt is very high and rising, while the  number of ?zombie? companies (those hardly able to meet their debt  payments) are at record levels (16% in the US).  At $8.6 trillion, US  corporate debt levels are 30% higher today than at their prior peak in  September 2008.  At  45.3%, the ratio of corporate debt to GDP is at historic highs, having  recently surpassed levels preceding the last two recessions.  That suggests that increased costs of debt servicing from rising interest rates driven by the Fed?s ?normalisation? policy could tip things over, unless profitability recovers for the wider corporate sector.

As the BIS summed it up, ?Even accounting for the large cash  balances outstanding, leverage conditions in the United States are the  highest since the beginning of the millennium and similar to those of  the early 1990s, when corporate debt ratios reflected the legacy of the  leveraged buyout boom of the late 1980s.  Taken together, this suggests  that, in the event of a slowdown or an upward adjustment in interest  rates, high debt service payments and default risk could pose challenges  to corporates, and thereby create headwinds for GDP growth.?

And this is just at a time when the US Fed has decided to hike its  short-term policy interest rate and cut back on the lifeline of cheap  money to the banks.  As I have pointed out before, during the Great Depression of the 1930s, the Fed did something similar in 1937,  reversing its policy of cheap credit when it thought the depression was  over.  That led to a new slump in production in 1938 that only the  second world war ended.  The risk of repeat remains.
Source: Global Economy: The end of QE
Congress? Gargantuan New Military Spending Bill Forks Over Unprecedented Sums to Israel and Ukraine


Hundreds of millions for Israeli missiles and Ukrainian troops? medical care, at U.S. taxpayers? expense.

Buried deep in the text of the mammoth National Defense Authorization Act (NDAA) is a gargantuan money dump into the Israeli defense industry, with $705 million specifically earmarked for ?US-Israel missile defense cooperation.? The funding represents a full 1/100th of the whopping $700 billion military spending package, and a staggering $558 million increase from what President Donald Trump had originally requested.

The American Israel Public Affairs Committee, the main arm of the pro-Israel lobby in Washington, reacted with elation at news of the funding, hailing it as a powerful shot in the arm for the Israeli arms industry. AIPAC singled out the bipartisan leadership of senators John McCain and Jack Reed for praise, thanking the duo for the record level of American taxpayer support for Israeli missile systems and research and development.

Approved by the Senate with almost total bipartisan consensus, the NDAA represents an $80 billion surge in military spending, $26 billion more than Trump originally requested. The bill puts funding for the military at parity with the spending levels of the George W. Bush era, when the so-called war on terror was at its height. Only four Senate Democrats voted against the bill.

As reporter Alex Emmons noted, the colossal increase in military funding could have financed Sen. Bernie Sanders? proposal for free public college for all Americans, with $33 billion to spare for additional social programs. But in Washington, funneling billions into the pockets of contractors like Lockheed Martin and Raytheon takes precedence over nice things like a functional education system. 

Alongside funding for Israel, the NDAA budgeted unprecedented funding for supposedly defensive weapons for the Ukrainian military, which has been locked in a destabilizing conflict with Russian-backed separatists since a U.S.-backed coup toppled its democratically elected government in 2014. 1.4 million Ukrainians have been internally displaced by the conflict, and with new weapons on the battlefield, many more are likely to be forced to flee their homes.

The $500 million earmarked for Ukrainian military will also cover the treatment of its soldiers in American hospitals, including ?transportation, lodging, meals, and other appropriate non-medical support in connection with such treatment.?

While Trump sets massive sums of American taxpayer dollars aside to provide Ukrainian troops with first-class medical care, his administration has proposed cutting some $800 billion from Medicaid and other healthcare programs servicing poor and working-class Americans. If the $500 million reserved for Ukraine?s military were restored to the budget, it would cover almost all of the cuts Trump has proposed to the National Heart, Lung and Blood Institute, which conducts critical research on heart and lung disease.  

Providing new, U.S.-made weapons to the Ukrainian military has been a key priority for Kurt Volker, whose role at the State Department is supposed to entail ending the conflict in Ukraine. Besides serving as Trump?s man in Kiev, Volker is a neoconservative operative currently listed as the executive director of the McCain Institute for International Affairs. His organization is a faux humanitarian initiative launched by John McCain, the senator who was the driving force behind this year?s NDAA. The McCain Institute is funded by a collection of oligarchs, repressive governments like the Kingdom of Saudi Arabia, and the BGR group, whose designated lobbyist, Ed Rogers, is a lobbyist for Raytheon, an arms contractor that is certain to reap a massive windfall profit from the NDAA.

Raytheon also stands to benefit handsomely from the funding earmarked in the bill for Israeli missile systems. It has partnered with the state-backed Israeli arms firm Rafael, to produce the Iron Dome System, which has been deployed primarily to deter homemade rocket fire from the Gaza Strip, the besieged Palestinian coastal enclave.

The initial 2014 announcement of a $149 million contract for Raytheon to produce the Tamir missiles launched by Iron Dome batteries was hailed as ?big news for owners of Raytheon stock.? If the NDAA passes in anything close to its current form, arms industry stockholders could see their stock skyrocket to previously unimaginable heights.

A week before the NDAA vote, AIPAC announced it had sent 50 members of Congress from both parties on an all-expenses-paid junket to Israel. These lawmakers will soon vote on the House version of the titanic military spending bill. Having just returned from a lavish propaganda tour, they are unlikely to whittle it down at the expense of their generous foreign host.


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Source: Congress? Gargantuan New Military Spending Bill Forks Over Unprecedented Sums to Israel and Ukraine
Centre for Research on Globalisation / How the US Military Defeated ?Trump?s Insurgency?
« Last post by Centre for Research on Globalisation on Today at 06:01:00 AM »
How the US Military Defeated ?Trump?s Insurgency?

Trump was seen as a presidential candidate who would possibly move towards a less interventionist foreign policy. That hope is gone. The insurgency that brought Trump to the top was defeated by a counter-insurgency campaign waged by the U.S. military.

Source: How the US Military Defeated ?Trump?s Insurgency?
Centre for Research on Globalisation / Selected Articles: Trump and Netanyahu Are on the Loose
« Last post by Centre for Research on Globalisation on Today at 06:01:00 AM »
Selected Articles: Trump and Netanyahu Are on the Loose

Global Research strives for peace, and we have but one mandate: to share timely, independent and vital information to readers across the globe. We act as a global platform to let the voices of dissent, protest, and expert witnesses and

Source: Selected Articles: Trump and Netanyahu Are on the Loose
Centre for Research on Globalisation / ?Voices from Syria?: Syria?s War for Humanity
« Last post by Centre for Research on Globalisation on Today at 06:01:00 AM »
?Voices from Syria?: Syria?s War for Humanity

Global Research Publishers brings you ?Voices from Syria?, an important new book by Mark Taliano. The book is available for order on our online store.

Click HERE to order.

Mark Taliano is an author and independent investigative reporter

Source: ?Voices from Syria?: Syria?s War for Humanity
Richard Mellor / Houston, Racism, Climate Change and Class Unity
« Last post by Richard Mellor on Yesterday at 06:00:18 PM »
Houston, Racism, Climate Change and Class Unity

Here's what a working class woman in Houston had to say:

?This has been bad but it?s not going to get better, it?ll only get worse. We all talk about how close we are to the refineries but for us there is no hope, we will die with this poisonous air ? I?ve been around for a few years and no one has listened to us. We are just the little people.?

I didn't watch the video of the five former presidents telling US workers to send money for victims of the Hurricanes.  The horrendous consequences that will follow due to pollution, disease and the destruction made worse by the conscious placing of profit ahead of human safety and the environment by politicians legislators and the corporate bosses is what they are covering up.

The former presidents, all smiling and laughing together, joined through Twitterland by the Predator in Chief Trump, don't put a face on those responsible for the disaster being worse that it should be because they too are responsible. They cannot blame the system because they defend the system, it is "their" system and no ruling class commits class suicide. They must convince us we are all in this together, they afraid things could get out of hand. And when we see we can rely on ourselves our neighbors to help us in these times then we might go too far, recognize that we can govern society too. This is why the five presidents, united in their aims, spoke to the nation at the NFL game.  Bush lives in Texas. Does he know about this you think:

"Last year the National Association of Home Builders boasted of its  prowess at stopping codes for 2018 that it didn?t like. ?Only 6 percent  of the proposals that NAHB opposed made it through the committee  hearings intact,? the association wrote on its blog. The homebuilders  demonstrated their power again this year, when President Donald Trump  reversed an Obama initiative restricting federally funded building  projects in flood plains. ?This is a huge victory for NAHB and its members,? the association blogged."
Liars and con men: All having a good time.

None of these presidents made announcements at nationally televised sports venues telling us we're all one and should unite against measures like those above and that we have to confront the forces promoting them. Of course not, they never opposed them themselves. They are they forces at the national level. Now they want us to pay.

There is potential at times like these for anger among the millions of ordinary working people to manifest itself through a united movement in opposition to the class oppression that is felt every day in one way or another, housing, work, health care education basic social needs.

As I mention in the video  there are faces to the guilty in the case of Texas, the heads of an organization that has bribed cajoled and done whatever they could to ensure that no curbs, no regulation was placed on the right of capitalists to go anywhere, do whatever they want build whatever they want  unhindered, free from regulations, unions, anything that curbs their rapacious appetites for profit.

Here's a few more posts about this that we had up on here lately:
Houston Catastrophe Market Driven. But Let's Not Talk About That.

Harvey-Texas-Louisiana: Capitalism's Addiction to Profit is to Blame! 

Harvey - The Trade Unions must Act. The Arsonists Must Pay.

Source: Houston, Racism, Climate Change and Class Unity
Natalie Portman's New Documentary About Farmed Animals Gets Standing Ovation at Telluride (Video)


Portman gave up meat, dairy and eggs after reading the bestseller on which the film was based.


Eating Animals, a new documentary narrated and produced by Academy Award-winner Natalie Portman, made its world premiere recently at the Telluride Film Festival.

The film, based on the New York Times-bestselling book of the same name by Jonathan Safran Foer, aims to educate viewers about the horrors of animal agriculture by going undercover at factory farms and slaughterhouses and exposing the truth. In 2009, Portman reported ditching meat, dairy and eggs after reading Foer?s book.

Her film received a standing ovation. A vegan reception followed the screening.

The film?s director, Christopher Quinn, told Deadline:

It was a real eye-opener to actually see what farming was, which was people wanting to run from you, not wanting you to see the system that was in place, including these vertically integrated structures. They know deep in their core it is not right, but I actually think there is a lot of hope in that, the fact that they still know a guy with a camera shouldn?t be coming around here because it is wrong.

Watch the trailer for Eating Animals:

Watch Jonathan Safran Foer discuss his book, Eating Animals:

Mercy For Animals has conducted over 60 undercover investigations at factory farms and slaughterhouses, uncovering unspeakable cruelties, such as extreme confinement and barbaric mutilations.

Watch this recent MFA undercover video from a Hormel supplier that shows workers mutilating piglets without pain relief and leaving sick and injured pigs to suffer without veterinary care:



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Source: Natalie Portman's New Documentary About Farmed Animals Gets Standing Ovation at Telluride (Video)
Centre for Research on Globalisation / Fact Checking Benjamin Netanyahu?s General Assembly Speech
« Last post by Centre for Research on Globalisation on Yesterday at 06:00:13 PM »
Fact Checking Benjamin Netanyahu?s General Assembly Speech

Yesterday, Israeli leader Benjamin Netanyahu spoke before the United Nations in a speech that served as a kind of appendix to Donald Trump?s controversial, bellicose declaration that was delivered hours earlier.

Both speeches predictably focused on Iran and both …

Source: Fact Checking Benjamin Netanyahu?s General Assembly Speech
Centre for Research on Globalisation / Amidst Universal Opposition to KRG Referendum, Israel Stands by Kurds
« Last post by Centre for Research on Globalisation on Yesterday at 06:00:13 PM »
Amidst Universal Opposition to KRG Referendum, Israel Stands by Kurds

With the September 25th scheduled Kurdish Referendum in Iraq less than a week away, nations worldwide including; the US, UK, France, UN, Iran, and Iraq have expressed their objection and dissent and are calling for its suspension.

All except for …

Source: Amidst Universal Opposition to KRG Referendum, Israel Stands by Kurds
Centre for Research on Globalisation / The UN, Trump and Netanyahu: When Did Democracy, Justice and Equality Just Disappear?
« Last post by Centre for Research on Globalisation on Yesterday at 06:00:13 PM »
The UN, Trump and Netanyahu: When Did Democracy, Justice and Equality Just Disappear?

The United States of America is the world’s greatest super-state with the largest economy and global GDP. It possesses the most powerful military machine in history backed by the largest arsenal of nuclear weapons in existence.

Its ‘sidekick’ in the

Source: The UN, Trump and Netanyahu: When Did Democracy, Justice and Equality Just Disappear?
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