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Dr. Rasmus provides a review of economies worldwide that are appearing to slow: Germany GDP contracts -.02%, Eurozone slows to 0.7% overall. Brexit and Italy may worsen. Japan’s GDP retreats -1.2%. China’s officially at 6.5% (actually closer to 5%). How the central banks and monetary systems now subsidize the capitalist economies. And the most recent decline in global oil prices. Rasmus expands upon his view of ‘what’s financial imperialism?’, previewing his forthcoming article on the topic. And comments on the continuing faction fight within the US trade negotiations team on the China-US trade war. The show concludes with a review of falling financial asset prices globally—oil futures, stock and bond markets, commodity and foreign exchange markets. Emerging defaults at Sears, GE, Europe and India. US government and nonfinancial debt escalation. And trouble spots in junik bonds, BBB corporate bonds and leveraged loans.

 

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Dr. Rasmus evaluates the results of the 2018 midterm elections last Tuesday and the Democratic Party’s ‘Suburbia Strategy’ which produced less than historic average gains in the House of Representatives and major strategic losses in the Senate. The consequences of the now 54 Republican majority in the Senate are discussed—including Trump’s attacks on Mueller and Dems backing off impeachment. Also discussed are the continued voter suppression during the election in key swing states like Florida, Ohio, Georgia, North Carolina, and how Republican governorships remain in firm control in these swing-voter suppression states. The ‘blue wave’ did not materialize, while the tide in the ‘red states’ continued to flow is the main ‘takeaway’ from the election and the picture is more polarization to come. Rasmus critiques the emerging ‘bipartisan lovefest’ between Trump and Pelosi, and the consequences of Democrat bipartisanship under Obama and why it is a trap for Democrats. Why the Democrat party strategy—i.e. suburbia targeting, Russia, and Trump personality—revealed in 2018 midterms, plus bipartisanship, will prove a failure for Dems in 2020 if continued. (For more details of the critique, read Dr. Rasmus’s latest article, ‘None Dare Call It Victory’, at his blog, jackrasmus.com, and other public blogs).

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As the midterms approach, Dr. Rasmus reflects on indicators of social decline in America that the media (Trump’s & mainstream) ignore: 60,000 opiod deaths, 45,000 suicides, and 33,000 gun killings now occurring every year; daily school shootings; how lies and fear increasingly permeate US life; decline in democracy indicators; escalating violence and inequality; constant wars abroad that never end; technology that is driving ‘mesmerizing individualism’, effects of social media and ‘screen time’ on kids, and the coming impact of AI, Amazon, and Uberization business models that will destroy 30% of jobs within the next decade. The US’s growing cultural fascination with zombies and dystopia in film and TV, misogyny in pop music, and decadence in dance; transformation of the two political parties into ‘Trumpublicans’ and ‘Lobbycrats’ and collapse of participation by those under 30.  Rasmus then discusses how liberal art (and politicians and the media) are failing even to address these trends of social decay in the current election cycle. Rasmus reviews Michael Moore’s documentary, ‘Fahrenheit 9-11’, the recent stage play, ‘Sweat’, and Robert Reich’s public lectures on the decline of civility in America—concluding how all three share a common characteristic of Liberal Art in the age of Trump. (Next week: The Meaning of the Midterm Elections).

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Dr. Rasmus reviews the current state of the global economy, discussing sectors where it’s slowing and growing financially more fragile. Quotes from JM Morgan, Forbes, Moody’s, Merrill Lynch surveys, IMF, and even other mainstream economists all predict a global recession coming 2020. Rasmus explains why it may be sooner, in late 2019. In Europe, the factors of Brexit, Italy, Euro banks weakness, ECB policy and US-Euro trade suggest a weakening further beyond a Euro slowdown already in progress. Emerging markets problems with currency decline, capital flight, and central bank rate hikes are not going away and portend spreading and deepening recessions. The IMF’s  EME bailout problem. A review of China and So. Korea efforts to re-stimulate their economies. China’s recent 6.5% GDP and problems with 30% stock market contraction underway as property and asset markets’ prices fall. China’s further problems with $6T in business debt, its trade dispute with US impact, slowing real investment as it crackdowns on shadow banks and speculators. China’s recent monetary stimulus and coming fiscal stimulus via tax cuts. Rasmus concludes with an early view of US GDP, being driven mostly by defense spending under Trump; how tax cuts aren’t ‘paying for themselves’; and a quick listing of weak sectors of US economy about to grow weaker. (Next week: ‘The Limits of Liberal Art in the Age of Trump’—plays, films, and celebrity lectures).

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Dr. Rasmus invites guests, Nick Brana and Alan Benjamin, to discuss the growing demand for a 3rd, independent political party, now supported by 67% of Americans according to a recent Gallup Poll. Nick Brana is the former national coordinator for the Bernie Sanders 2016 campaign’s liaison to the Democratic Party, formerly the electoral manager for the post-2016 ‘Our Revolution’ movement behind Sanders, and a prior director of Democrat campaigns for governor (McAuliff) and Kerry. Alan Benjamin is a former delegate to the San Francisco central labor council, AFLCIO, a union member and long time activist in Latino politics in California. Both guests are now active in the ‘movement for a People’s Party, a coalition of labor, community and progressive activists with 50,000 signed supporters. Dr. Rasmus asks Brana how the Democrats stopped Bernie Sanders, what’s going on inside the Democratic Party today on the eve of the 2018 midterm elections, and why he has broken with the Democrats in favor of a new party. Rasmus explains how the two parties—Democrat and Republican—have morphed into parties controlled increasingly by the radical right (Trump’s Republican) and corporate lobbyists (Democrats), why Democrats can’t stop Trump, how they’ve become inept and ineffective, and why the ‘blue wave’ in the midterms being predicted by the media may not materialize. Alan Benjamin describes discussions and shifts underway today at the grass roots level in both Unions and Latino movements. Together the three discuss: Is the US at a critical political juncture? Can an organizational alternative be formed in time to stop the shift to the right and proto-fascist politics in the US? Can progressives get beyond single issue politics? Why can’t Democrats stop Trump? (For more information, listeners should check out: http://ForaPeoplesParty.orglaborcommunitycampaign@gmail.com, or http://socialistorganizer.com for more information and activities).

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Today’s show focuses on the past week’s turmoil and decline in US and global stocks (Japan, EME, China, Europe), as Fed rate hikes and the ‘wall of money’ tsunami provided to investors by the Fed and Congress since 2008 now begins to recede. Dr. Rasmus explains why US stock and financial markets accelerated to record levels between 2009-2018 (i.e. Fed $5T plus QE free money, 6  years of near zero interest rates, $1T year in corporate bond issuance, another $1T a year in corporate stock buybacks and dividend payouts, a tripling of corporate profits, $15T in tax cuts for businesses and investors from Bush to Trump—have all converged driving up stock prices. Now investors realize, except for Trump tax cut subsidy to profits (20% this year), all the other ‘drivers’ of stock prices will decline in 2019 and after. Rasmus explains further how structural changes in stock markets (ETFs, passive investing, dark pools, algo trading, etc.) have exacerbated the US stock run-up, but will now accelerate the stock declines as well. Other related discussion in the show focuses on the IMF bailouts of Argentina, Pakistan and IMF’s coming funding crisis, Italy’s new government’s break from EU austerity rules, and latest developments in Trump’s US-China trade war.

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 With the US Fed rate hikes accelerating, and US and global bond selloff accelerating this past week, Dr. Rasmus looks at signs of growing financial instability in the US and abroad. Bond interest rates accelerating and more Fed rate hikes coming. The impact intensifying again on emerging market economies. Stock markets and recessions deepening. Italian bonds and banks (+ Euro, Greek, Turkey, India banks). Signs of corporate default problems rising (India’s IL&FS, GE, Deutsche bank, etc.). US hedge funds closing shop. Junk bond ‘zombie’ companies’ problems rolling over debt as rates rise. Pension funds. Corporate ETFs, Argentina and IMF, US deficits and debt (including $900 billion in interest on US debt prediction by CBO). Global financial asset prices beginning to turn and decline. Rasmus next discusses the phony trade agreements with Mexico and Canada. The coming intensifying trade war with China. The mysterious China ‘microchip’ affair (the new ‘yellow cake’?) as pretext for conflict with China. And while preoccupied with Kavanaugh affair, US NATO ambassador threatens to send US missiles to ‘take out’ Russian missile bases, while US threatens to attack Russian air bases in Syria. (For more on topics, go to jackrasmus.com blog).

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Dr. Rasmus analyzes in depth the past week’s further trade tariffs announced by Trump against China ($200b) and China’s response in kind ($60b). Big  retreats in both cases in terms of tariff rates and composition (tariff exemptions)  show that real trade war not yet begun but getting closer. US investors and stock markets agree, and surge. Trump objective in latest moves: bring China back to bargaining table before US elections. Trump reduces tariff rate, from prior 25% to 10%; China also reduces, from 25% to 10% and 5%. Plus both sides exempt key products: US cuts 300 from prior list, including Apple, tech and car industries; China exempts or reduces rate on US agriculture and consumer goods (toys) for upcoming holidays. Some interesting facts re. China imports to US: 90% of $529 billion from US and foreign corporations’ and foreign-Chinese joint ventures producing in China and importing to US. (Apple and mobile phones = $40billion of the $529b. All US tech corps= $90 billion. US car makers and minerals tens of billions more).  Updates on Turkey, Argentina and other emerging markets, and financial markets that are growing more fragile. Global weak spots: Emerging markets, Italy, China stocks, and, in 2019 the UK if ‘hard Brexit’, now appearing more likely. Rasmus describes the ‘wall of money’ now driving US stock markets to historical highs, including $1.5 trillion in 2018 stock buybacks and dividend payouts.

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This week Trump invited China to return to talk about trade, as he again threatened $200 billion more tariff implementation (and raised prospect of another $267 billion). The show discusses what’s behind the invitation to China. Growing pressure from big business and bankers to Trump imposing more tariffs and precipitating a true trade war with China. Is Trump’s move just to reduce the heat from business? Is he preparing the g round for actual further tariff implementation? Was the invitation made by Mnuchin, not Trump, who is now firmly behind the military-industrial-intelligence faction on China trade (Lighthizer-Navarro-Bolton). The show then discusses Turkey’s recent hike in interest rates to 24% and the growing crisis among emerging market economies as currencies continue to collapse. How contagion occurs across currencies, stock markets, bond markets. Rasmus revisits the Lehman Brothers collapse of Sept. 15, 2008 and the role of Treasury Secretary, Henry Paulson, in engineering the collapse to benefit his corporate alma mater, Goldman Sachs, that made billions off collecting CDS contracts it wrote betting Lehman would collapse. How bankers ‘eat their own’—and in 2008 with the help of the US government Fed and Treasury. What’s different 2018. Will there be a Trump ‘October Surprise’ general trade deal announced?

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Lehman Brothers 2008 Crash & Emerging Markets 2018 Crises Compared

Dr. Rasmus explains the financial crash of 2008, from the collapse of Bear Stearns investment bank to the Lehman Brothers collapse of September that set off the general financial crisis. Are we seeing something similar beginning in Emerging Market Economies like Argentina, Turkey, So. Africa, Brazil, Indonesia, India perhaps?  Rasmus explains the 2008 crisis was not simply a subprime mortgage crash, but was a contagion across credit markets enabled by financial derivatives securities created at the time.  How contagion was propagated and accelerated across financial markets and institutions in 2008 is explained; How a similar contagion effect may be emerging across economies like Argentina, Turkey and others in 2018. Rasmus explains contagion channels: currency to currency; currency to stock markets; stocks to stocks; stock to bond markets and how contagion processes work is poorly understood by mainstream economists today. Why understanding financial crises must distinguish between fundamental, enabling, and precipitating causes. How the Fed and the US Treasury politics also played a key role in allowing the 2008 crisis in bailing out Bear Stearns in March and then allowing Lehman to collapse in September. Who benefited from the 2008 bail out.

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