Feed on
Posts
Comments

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?

Listen Now:


On opposite ends of the world, two major financial instability events continue to emerge: China’s stock markets collapsing and Greece’s possible exit from the Eurozone. Both promise to produce significant contagion effects in the global economy, now already slowing. In the first half of the show, Jack reviews the latest Greek offer to the Troika delivered this past Thursday and compares it to prior Troika and Greek positions. The conclusion is Greece appears to have caved in to Troika concession demands in exchange for a ‘smoke and mirror’ restructuring of the Greek debt. If accepted, Jack argues, it will mean the Syriza government will eventually self-destruct—which has been the objective of the Troika from the very beginning. Traditional Euro social democracy (Greece’s proposals) is no longer acceptable to banker-investor governed Neoliberal Europe. Jack then takes a detailed look at the causes of the current freefall in China’s main stock markets and the possible consequences for China and the global economy. What’s behind the 150% rise in one year and now the collapse. Jack describes China’s latest emergency extreme measures being introduced to stem the fall, by injecting more de facto ‘QE’ money into the markets to stimulate stock buying again and introducing other extreme measures to stop stock selling.  Likely potential contagion effects on China’s other markets (housing, local government debt, industrial debt) and its real economy are considered.  Will China growth now slow further? What are consequences for the global financial system as contagion continues to spill over to other financial asset markets globally—stocks, bonds, commodities, currencies? Even more than Greece and the Eurozone, China’s markets collapse signal the global economy has moved one step further to another financial crisis event.

Listen Now:


Jack Rasmus explains the northern Europe Neoliberal origins of the current Greek Debt crisis, and why the Troika cannot and will not accept Greece’s proposals which would upset the Euro-wide Neoliberal consensus. Greece’s proposals represent a return to traditional, pre-Neoliberal, European social democracy—which has been replaced with a new Neoliberal regime Europe-wide since 2000 with the creation of the Euro currency. Jack explains if the Troika agreed to Greece’s quite reasonable proposals, it would open a ‘pandora’s box’ that would undermine the Euro neoliberal regime and the Euro elites’ strategy for economic growth based on exports stimulus via QE plus labor cost reduction.  Ironically, allowing a Greek exit may destabilize Greece and the Eurozone in the longer run as well. Jack reviews the growing centrifugal forces within Europe that are building toward an eventual Europe breakup down the road: the inability to engineer a sustained economic recovery, the long run contagion effects from the Greek debt crisis, the Ukraine and sanctions against Russia, the massive immigration inflows into Europe from failed states in the middle east and Africa caused by US policies that Europe has joined as well, the rise of parties on the left and right in Europe advocating exit from the Euro and the European customs union as well. Rasmus explains how Euro monetary policies—central to all Neoliberal policies—are failing in Europe as well as in Japan. The failure, along with financial bubbles now bursting in China and the continuing crisis of Greek debt, may lead to global investors everywhere ‘taking their money and running’, according to Jack, thus precipitating a new global financial crisis.  Jack concludes by predicting the IMF’s July 3 report suggests a way out for Greece: extending Greek debt from 20 to 40 years, reducing principal payments and interest, in exchange for Greece accepting the Troika’s demand for more concessions. Jack predicts Greeks will accept the trade off, perhaps even before the July 5 referendum which will then be called off.

Listen Now:


Jack Rasmus reports on the final positions of the Greek government and the Troika (IMF, ECB, EC) as they enter negotiations this weekend, June 27-28, before the expiration of the current debt payments on June 30 and a possible default on the debt.  Jack reviews the most recent positions of the Greeks, provided last week in a comprehensive 11page document, which was rejected by the Troika on June 24 in toto, the failed negotiations at the highest levels on June 25-26, and the two sides’ demands as last minute negotiations occur June 27-28.  The highly class nature of the negotiations are noted—with pensions (deferred wages), sales taxation (impacting workers more), Troika opposition to tax the rich, and Troika demand for full privatizations.  The Troika’s emerging ‘Plan B’ is described (i.e. push Greece to default and maneuver a regime change) vs. the missing Greek ‘Plan B’ (establish a parallel currency to the Euro) are contrasted.  The five major negotiating errors that the Greek government has committed since March are described.  The most likely scenario to the final deal on June 30 is outlined—based on extending the negotiations for months more, Troika paying itself for debt with funds it has been denying Greece, in exchange for more concessions still from Greece.’ (Listeners are encouraged to listen to the Alternative Visions shows of the two preceding weeks as background to the current show.

Listen Now:


Dr. Jack Rasmus provides an update on Greek debt negotiations since last week’s Alternative Visions show and discussion on the origins of the Greek debt.  Updates include Troika scenarios outlined at its June 12 meeting in Bratislava, the IMF walkout after, the failed meetings that occurred in Brussels over the weekend of June 13-14, and Greece’s proposals of June 15 rejected again by the Troika. Also discussed are the sabotage of the Greek government negotiators by their own Greek Central Bank, which on June 17 publicly declared Greece should sign the Troika’s latest package; Greek prime minister, Tsipras’, warmly welcomed visit to Russia on the same day; and the failed meeting of June 18 of Euro finance ministers in Luxemburg at which it was expected Greece would concede to the Troika’s position but didn’t. Jack notes the growing statements by German and IMF representatives that a managed default and Greek exit is preferable to continuing Greece’s unresolvable debt crisis.  Were Greece to agree to the Troika’s position, and generate a $2-$3 billion a year surplus (by cutting spending and raising sales taxes) that it would take Greece 150 years to pay off the Troika debt. Greece cannot pay and cannot ‘grow out of’ the crisis, Rasmus argues. Rumors continue to grow that Greece may rearrange its cabinet, replacing hardliners with more amenable cabinet members should it agree to more Troika cuts in exchange for some debt restructuring.  The political and economic risks for both sides of continuing negotiations and of default are noted. Default is quite possible, Rasmus notes, but the most likely 60-40 scenario is some kind of more concessions by Greece for some kind of debt restructuring over the next 90 days, as the current extension is extended yet again.

Listen Now:


Jack Rasmus discusses the latest events of the past week in the Greek debt negotiations, with the IMF ‘walking out’ of negotiations and both sides, the Troika and Greece appearing to issue ultimatums as to what is unacceptable.  Three choices remain as negotiations come down to a June 30 deadline: either Greece defaults (fails to make payments due on June 30 to the IMF when the current extension of the debt agreement expires; the Troika (IMF, ECB, European Commission (finance ministers) continue to insist on a ‘take it or leave it’ position, or both parties—Greece and Troika—agree to extend both the agreement and debt payments due for another 30-60 days and continue negotiating.  Jack explains how the latter is most likely, but may not happen nonetheless. Consequences of a default for Greece, the Eurozone markets, and the global economy and banking system are considered. In the second half of the show, Jack explains in detail how Greek debt rose to its current $300 billion, unsustainable levels. The explanation is to be found in the US ‘twin deficits’ (trade and budget) policies introduced successfully by US capitalists and government in the early 1980s to resurrect the US economy and solidify its global hegemony once again after the crises of the 1970s.  Twin deficits were a key element of US neoliberal policies that have worked since 1980 to ensure US dominance.  With the creation of the Euro in 1999, northern European bankers and governments attempted to create a similar arrangement within the Eurozone. It worked until the 2008-09 crash, the second European recession of 2012, and the chronic slow growth ever since in Europe.  Greek (and Euro periphery) debt rose ever higher with each event, to its unsustainable levels today. Why the Euro ‘twin deficits’ neoliberal strategy failed. 

Listen Now:


Jack Rasmus invites seasoned political activists, Steve Early and Alan Benjamin, to discuss the strategic significance, pro and con, of Bernie Sanders’ recent announcement of his candidacy for US President and run in the Democratic Party primaries against Hillary Clinton. Both Steve and Alan go back to working with Sanders on campaigns in the 1970s when Sanders entered politics, and then spent 40 years in union and local progressive politics in Richmond and San Francisco, Calif. Steve and Alan take slightly different positions in offering qualified support to Sanders’ just announced presidential run. Commentaries by Steve, Alan, and Jack range from applauding Sanders for raising desperately needed new ideas re. income inequality, taxing the rich, minimum wage, money in politics, free trade, college tuition and debt. In supporting Sanders more directly,  Steve critiques the failed history of independent challenges from outside the Democratic party, from Jesse Jackson to Ralph Nader and the Green party. Alan provides a more qualified approval of Sanders’ ideas and issues he’s raising, but argues Sanders’ declared support for the eventual Democratic Party candidate (most likely Hillary) is a political dead end for working and middle classes, as recent history also shows. Jack argues independent candidacies—whether within the left wing of the Democratic Party or just outside it (Sanders strategy) have not changed anything for decades, as conditions have actually gotten worse as Democrats increasingly support Republican-Corporate positions on free trade, destruction of unions, attacks on public workers, money in politics, business tax cuts, etc.  All agree change must come from below, in real independent grass roots movements. Jack raises the question, if ‘inside and outside’ Democratic Party strategies have both failed, why haven’t grass roots movements come together to discuss new strategies and form new ‘bottom up’ challenges to the status quo.’

 

Steve Early is a retired, long time CWA union organizer and staff rep, who has been active in local Richmond, Calif., political organizing and fights against Chevron oil. He is author of the recent book, ‘Save Our Unions’, by Monthly Review Press.

 

Alan Benjamin, is a delegate to the San Francisco Central Labor Council, a member of OPEIU, editor of The Organizer progressive socialist newspaper, and a member of the executive committee of the Labor Fightback Network in the US.

Listen Now:


In the first half hour of the show, Jack Rasmus takes on the professional economics forecasting establishment  and their continual missed prognostications about the condition and direction of the US economy. Reviewing the most recent US economic data for March and April, revisions of US first quarter 2015 GDP estimates in late May show the US economy performed worse in the January-March period than the 0.2% GDP initial estimated growth rate. Jack discusses how new data on business inventories, trade, and retail sales will show a -0.5% or even worse in first quarter US GDP.  Data for March and April already show a continuing soft trend, with US retail sales flat, and sales of autos and big ticket items collapsing. Contrary to economists’ past predictions, gasoline price declines of the previous six months have had little positive economic effect. What forecasters blamed on ‘bad weather’ in the winter they now explain as a ‘bad habit’ of continuing not to spend in the spring. Jack rejects both ‘bad weather’ and ‘bad habit’ arguments as just ‘bad forecasting’.  The second half of the show addresses the growing likelihood that Britain will exit the European Union, now that Cameron and the Tories have just won a major re-election in Britain. What are the party and corporate interests within Britain in favor of ‘Brexit’? The likely responses of other Euro countries?  Jack predicts a UK exit vote in 2016, sooner rather than the official later 2017 planned referendum announced by Cameron and the Tories.  Also discussed are the likelihood of a Greek exit from the Eurozone. Jack predicts Greece will have to go through agreeing to a bad deal imposed on them this summer by the Troika of northern European bankers and elites, avoiding a default at great social cost to the Greek people, before Grexit is on the agenda. As the Greek economy slips back into depression in 2015-16, Grexit will grow as the only remaining alternative to end its depression. To prepare, Jack suggests Greece launch a second, parallel currency (New Drachma?) in the interim, and then pay Euro debt with an inflated new currency, offering the Troika to ‘take it or leave it’.

Listen Now:


Jack Rasmus updates last week’s show on the decline in US GDP with new data for trade, productivity and jobs, and reviews events of the global economy in Europe, China and elsewhere including the Euro and global bond market sell off of the past week.  A preview of his new book, ‘Systemic Fragility in the Global Economy’ due later this summer, is offered, describing the 9 key trends in the global economy today that represent the ‘dead cat bounce’ recovery: slowing real investment, drift toward deflation, explosion of central bank liquidity and credit, rising global corporate debt, the shift to speculative financial asset investing, the restructuring of financial and labor markets in the 21st century, and why central bank monetary policy and government fiscal policies are failing to generate a sustained real recovery of the global economy. How it is all resulting in rising global income inequality in turn.

Listen Now:


Dr. Jack Rasmus analyzes US 1st Quarter GDP numbers, where US economic growth flattened out to a mere 0.2%--the fourth such collapse in the US economy in as many years.  Is it due to the weather, as some argue? Is there something wrong with US statistics, showing four collapses since 2009 all occurring in the winter? Or are there real economic explanations for why the US economy periodically surges in the summer then stalls out in the winter, as it has since 2011? Will this winter 2015’s stall be followed by another ‘temporary surge’ in growth this summer?  Jack looks beneath the numbers for real explanations for the US economy’s continuing ‘stop-go’ trajectory, identifying patters of one-off, temporary factors that typically have occurred in the 3rd quarter (July-September), only to dissipate in the winter quarters, in turn leading to an over-correction and decline in US GDP and growth repeatedly.  It’s not the weather. It may be outmoded statistical methods by the US government. But it certainly is due to temporary events that don’t result in a sustained economy recovery, Jack argues.  Government pre-election spending, restoration of defense spending, business inventory buildups, the global oil glut and US oil shale boom & bust, the US dollar decline and surge effects on US manufacturing-exports, diversion of US business investment into financial assets and offshore markets better account for the US stop-go trajectory, Jack argues. What’s missing is steady wage and income growth for 90% of US households and real job creating investment by business in the US.

Listen Now:


- Older Posts »

Quantcast