Dr. Rasmus discusses key events of this past and coming week for the global economy, with a focus on US dollar, US short and long term interest rate hikes underway, and rising global oil prices. How the US dollar’s current rise is leading to a US and global bond market rout. Jack next discusses the origins of the bond-interest rate-oil price shifts, provoked by the Trump election but ultimately as caused by the unwinding of the Federal Reserve central bank bubble created since 2010. The congruent rise in US bond rates, dollar and global oil prices have set in motion an intensifying crisis in emerging market economies in the form of currency collapse, capital flight, and deeper recessions. The dollar-bond rates-oil price shifts are also provoking instability in Europe, which, Jack predicts, will further intensify with Italian voter rejection of the Italian referendum vote December 4 and the Austrian national election vote that follows next week as well. Jack predicts a ‘No’ vote will mean a fall of the Italian government and will intensify that economy’s current Italian bank crisis in turn. Austria’s voting next week may also lead to Europe’s neo-Nazi Freedom Party’s control of government. Europe is on the edge of further economic and political instability.
‘Trump’s ‘faux’ populism from the right is replacing Obama’s ‘faux’ populism from the left. Rasmus discusses how Trump will govern on economic issues (tax cuts, trade, business deregulation) no different than past mainstream establishment politicians. But will govern more repressively and radically on social issues, especially immigration, law and order, environment, health care privatization (ACA and Medicare), and Education privatization. How Trump’s trade policy is still free trade by another name and his Infrastructure proposals will not boost jobs as promised. Rasmus argues Trump represents an attempt to forge a ‘Neoliberalism 2.0’, i.e. more intense economic support for corporations-investors amidst more reactionary social measures—to appeal to the establishment as well as his base. Examples of Trump’s retreat already, revealed by interviews this past week. Rasmus also reviews Trump cabinet appointments to date as well as those to soon come as indicators of how he’ll govern from two directions to placate his base and the Republican-business elites. Jack concludes with a review of the various measures by which the Republican-Capitalist elites will continue to pressure Trump on main neoliberal policies (taxes, trade, deregulation) to ensure they continue: his business conflicts, his foundation, his tax returns, charges of nepotism and alleged violations of law by him and his cabinet representatives. For Trump’s taming, watch especially appointments to Treasury, State, and Defense. NEXT WEEK: the upcoming Italian vote and the political unraveling of Europe in 2017.
Dr. Rasmus reviews the early effects of anticipated Trump policies, which are already significant: How the rising value of the US $dollar and long term interest rates, in expectation of Trump proposals for infrastructure fiscal spending, are already having major consequences for the US and global economies. Jack explains how the current rise in the dollar and long term rates ensure rising Fed short term rates, lower global oil prices, will result in a decline in US net exports and thus manufacturing production and jobs in the US. Why rising rates may negate Trump fiscal-infrastructure spending and job effects? How the rising dollar and US rates will have negative effects in Europe and Japan; will force China’s currency to devalue and accelerate a global currency war; and why Latin American other emerging markets economies destabilization will now intensify with more capital flight, currency collapse, inflation and recessions. Jack concludes with a discussion of Trump tax proposals to repatriate US multinational corporations’ $2.5 trillion offshore cash hoard by reducing their tax rate from 35% to 10%, explaining how that was tried with disastrous results already in 2005. How Trump tax proposals are a continuation of established Republican neoliberal tax policy since Reagan and will mean another $4.5$ trillion in corporate tax reduction—following Obama’s $6.1 trillion corporate-investor cuts 2009-2013 and GW Bush’s $3.4 trillion handouts in 2001-04.
Jack Rasmus discusses the economics behind why Trump won the election, and the economic legacies of the Obama regime behind why the white working class in the great lakes region—from Pennsylvania to Wisconsin—abandoned the Democrats and voted against the political elites and Clinton. Jack refers listeners to his shows earlier this year and predictions this would happen. (see also articles on his blog, jackrasmus.com). The no-college white working class vote was key, along with lower turnout for Clinton among Latinos, youth, and even African-Americans compared to 2008 and even 2012. The show then reviews the areas of economic consequences expected from a Trump election, including: booming stock markets, rising bond interest rates, big corporate tax cuts coming quickly, Infrastructure spending, more price gouging by pharmaceutical companies and health insurers, the early dismantling of Obamacare and Dodd-Frank bank regulation acts, likely repeal of alternative energy credits, restoration of the Keystone pipeline project, gutting of the EPA’s funding, suspension of proposed industrial plant emissions, refusal to implement the Paris climate accords, boosted production of gas fracking, pipelines, and coal production, an immediate Federal Reserve rate hike in December and more likely in 2017 now, renewed attacks on social security, surging government deficits and debt, general deregulation of business and across the board repeal of Obama executive orders and passage of anti-Latino immigration legislation. The consequences for the global economy are also considered, with focus on emergency markets currency collapse, capital flight and further recessions, rising US dollar and falling oil prices, China’s currency devaluation, Europe and Japan QE policies, and likely measures addressing free trade including NAFTA, TPP, and TTIP.
Dr. Rasmus interviews Jill Stein, Green Party presidential candidate, discussing the real issues of the presidential election and her Party’s positions and solutions to the deepening political and economic crisis in the USA. Topics addressed include Green party proposals for tax reform. Reversing job destroying NAFTA, TPP, and free trade treaties. What to do about escalating healthcare costs and prescription drug price gouging. How to eliminate student debt and provide free public college education. Solutions to the growing retirement crisis and how to fund doubling of social security benefits and Medicare for All. Who Jill would appoint to the Supreme Court and reverse Citizens United. Her proposals for immigration reform. And Green party positions on preventing US military confrontation with Russia in Syria, East Europe and with China in the south China seas, toward which the US continues to drift. How claims of ‘lesser evilism’ to vote Democrat to oppose Trump is a dead end and why voting a third party is the only way forward.
Jack steps back and discusses the three presidential debates in a broader context, focusing on what the debates reveal about what is coming in 2017: i.e. more aggressive US foreign policy action in Syria, against Russia, and in Southeast Asia (Philippines) soon after the election. More attacks on civil liberties by US political elites to silence alternative perspectives like Wikileaks and other media. More internecine conflict within the elite ranks of the two main political parties as they deal with rising popular rebellion against the ‘political class’, on both left and right. Republican and Democrat party elites ‘shoring up’ their rules to avoid Sanders-Trump type internal challenges re-occurring in 2020 and elite efforts to more tightly control their primary nomination processes and conventions. A growth of independent political parties as ‘rebellion against the political class’ moves outside the two party structure. Rising rent, healthcare, and inflation, and continuing wage stagnation for the bottom 90% of the workforce as US recession returns in late 2017. Growing disaffection of the millennials from the political system. (Next week: interview of Jill Stein of the Green Party and Gary Johnson of Libertarians).
Jack provides a brief overview of important developments in the global economy this past week, focusing on China. Renewed financial bubbles in real estate and rapidly slowing China exports that reflect a slowing global economy are discussed, as is the Asia region economy in general. The ‘canary in the Asian economy goldmine’, Singapore, recorded a -4.1% GDP contraction, as shipping sector indicators reveal a global economy and trade continuing to stagnate. Most of the show then focuses on the 2nd presidential debate of last week. Special attention is given to the comments by Clinton on the Russians—i.e. the declaration of alleged hacking of the Democratic party; the assertion that Russia is behind the recent Wikileaks revelations about Hillary’s ‘dual’ strategy (of saying one thing in closed meetings to business and bankers while another, sometimes opposite, to the general populace in her campaign); and her explicit statement in the debate the US should impose ‘no fly zones’ and commit US special forces to the conflict in Syria. Is the US sliding toward a direct confrontation with Russia in Syria? Does Hillary’s position represent the US war hawks’ re. Syria? Reading between the lines, the 2nd presidential debate appears to suggest so.
Dr. Rasmus explains why a Federal Reserve interest rate hike is coming very soon. Why central bank monetary policies in US, Europe and Japan have failed miserably to generate real economic growth since 2010, but were always focused on boosting stock, bond and other financial markets. Now, however, they no longer even stimulate financial assets but are increasingly causing financial instability in pension funds, insurance annuities, bank margins, retirees’ consumption, and will therefore soon be shelved. Anticipating the shift, central banks in Europe and Japan are adjusting their monetary policies in turn. The likely negative consequences of the US Fed rate shift globally are discussed. A new shift to fiscal infrastructure spending, business tax cuts, and abandonment of austerity fiscal policies are now on the agenda following the US election and in 2017 in Europe and beyond. The show concludes with analysis of the 1st presidential debate and why Trump, despite a disastrous debate performance may still win critical ‘swing states’ in November.
Dr. Jack Rasmus reviews recent developments in the growing instability in Germany’s largest bank, Deutsche Bank, and explains how it is a reflection of a deeper, ongoing crisis in the Euro banking system itself. Parallels of Deutsche Bank—the ‘Goldman-Sachs’ of Germany—with the 2008 crash of US Lehman Brothers investment bank are discussed, with Rasmus predicting the German central bank, Bundesbank, will eventually bail out Deutsche—unlike the US decision in 2008 to let Lehman go under. Also addressed: how Rasmus’ theoretical work published earlier this year, ‘Systemic Fragility in the Global Economy’, predicted the growing crisis in the Euro banking system, which is now expanding beyond Italy’s banks to Germany and beyond. How the Deutsche crisis is exacerbating in-fighting between the Bundesbank and the European Central Bank, the ECB, and attacks on ECB chair, Mario Draghi. The Deutsche-Euro bank crisis is a reflection of the growing awareness of the failure of the ECB and other central banks’ QE and negative rates policies—including the US Federal Reserve—to stimulate the real economy and only boost stock and other financial markets. Jack explains how the Deutsche affair is also a reflection of the failed structure of the Eurozone currency union itself. The show concludes with brief comments on Saudi Arabia/OPEC’s recent decision to cut oil supplies to raise global prices, how Japan is considering redefining its GDP in order to raise growth on paper, and on the phony debate on taxes during the recent 1st presidential debates this past week between Clinton and Trump. (For more on Jack’s analysis of the 1stpresidential debate, read his article at his blog, jackrasmus.com, or go to the PRN website articles archive).
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Today’s show examines and discusses the past week’s major decisions by the Federal Reserve and the Bank of Japan, and how they represent growing failure and desperation of central bank monetary policy globally. Bank of Japan promises to keep bond rates at zero for another ten years and to continue to inject money until inflation exceeds 2%. The Federal Reserve forecasts US growth rates through 2019 at a mere 1.9% GDP, but predicts unemployment rates will fall to 4.5% even as it raises interest rates (staring December) from 0.5% to 2.6%. Jack discusses how this contradiction makes no sense and why a US recession is on the agenda in 2017-18 that will blow all those Fed projections. Meanwhile, the Fed creates another fictitious ‘target’—by aligning nominal interest rates with an unknown ‘neutral rate’. Monetary policy is broken and central banks are desperately searching for cover.