Dr. Rasmus reviews the condition of the Europe and US economies, now rapidly slowing this past month, and recent announcements by central bank chairs, Powell and Draghi, to lower rates and inject more free money into the system. New bubble levels in stocks, bonds, gold, bitcoin responding. The question of reliability of stats for GDP (India) and US are revisited. Recent surveys by Bankrate and Payscale indicate significant rise in part time and 2nd jobs last year and that wages shrunk by -0.8%, not rose by 3.2%, this past year. (And have fallen by 9% since 2006). What’s behind Facebooks’ entry into the global payments market and shadow banking by its ‘Libra’ digital token. The regulatory reaction coming. Congress’s $983 billion spending bill. Why military spending is more than $1 trillion a year, and not just $733 billion for Pentagon. Latest on the Trump tax cuts for multinational corporations. How the F500 alone just saved $219b by repatriation of offshore profits. The show concludes with analysis of Fed chair, Powell’s, press conference this past week. (Next week: the G20 meeting and Trump-Xi on trade war continuing or not).
Dr. Rasmus challenges the mainstream economic theory that prices serve to stabilize the economy. How financial asset prices, oil prices, bonds, etc. are now driving price volatility that leads to more general economic instability and recessions. Prices for financial assets are the main driver of goods prices, wages (labor prices), interest rates (money prices), commodities, etc. How global oil deflation, now re-emerging after last year’s 40% decline, is a key factor in Trump neocons’ effort to provoke Iran and recent events in the strait of Hormuz. Rasmus concludes with latest figures on US deficit projections for 2019, now around $1.3 trillion, and US government and total debt trends and projections for government, corporate, farm, household, and related debt—now around $60 trillion and approaching $80 trillion by 2028. How deficits and debt do matter for the economy, when they cannot be financed (i.e. repaid) when prices slow or decline due to financial markets and recessions. (Next week: Europe as basketcase of the global capitalist economy).
New US job numbers show big decline to only 75,000 in May. Is the ‘Lagging’ indicator of jobs now catching up with rest of slowing US economy? What’s behind Trump’s threat of new tariffs on Mexico? (Not about trade but election 2020 and Trump raising money for his wall). Who pays? Consumers and workers. Why are global oil prices retreating again and the consequences? Dr. Rasmus takes a deep look at the Eurozone economy, now doomed to enter recession again soon. Japan also entering recession. China slowing, stocks declining, and bank defaults rising. Why central banks globally are rushing to lower interest rates in anticipation of US central bank, the Fed, about to do so as well. Will the current long term global bond rate bust spill over to US and other stock markets? The show concludes with comments about Democratic Party leaders’ in the House throwing in the towel to subpoena Barr, McGahn and others, as the US constitutional crisis continues to develop.
Dr. Rasmus reviews events of the past week by Trump and China that show increasing evidence the ‘trade war’ is now morphing into a more general ‘economic war’ after the breakdown of negotiations earlier this month. The measures beyond tariff actions taken up by the US are reviewed, including choking off money capital flows, sanctions on both US and China corporations, direct attacks on China companies expanding, US pressure on allies, going after academics participating in research with Chinese. Rasmus predicts Trump will eventually push for delisting of China corps from stock exchanges, force divestiture of US joint production with China, increase pressure on Australia, Brazil, other commodity producing countries to restrict sales to China, and even interdict shipments of Iranian and Venezuelan oil to China if need be. China’s counters to the US beyond just tariffs include slowing buying of US Treasuries now occurring, allowing its currency, Yuan, to devalue beyond 7 to the $1, mobilizing China consumers to stop buying US products, restrict export of ‘rare earth’ minerals to US producers, impose non-tariff barriers on US companies, stop buying US farm goods again, increase subsidies to China companies, step up buying of Iranian oil, exempt US companies from its 51% foreign ownership rule, etc. Trump and Neocons clearly plan to US China trade war as excuse to ramp up ‘economic nationalism’ theme in 2020 elections and blame China US slowing economy. The show concludes with commentary on 5 reports issued this past week: the Fed’s Household Survey showing 40% can’t afford $400 for emergencies; the Institute of Taxation report showing large profitable companies (Amazon, IBM, Chevron, Prudential, etc.) were written $80 billion in rebates in 2018; Mckinsey report showing Labor’s share of national income has now fallen to 56.7% from 65.4% (more than $1.3 trillion a year); and the Wall St. Journal reporting US capital spending rose only 3% in 1Q19 compared to 20% a year earlier, 1Q18, despite Trump’s multi-trillion dollar tax cuts given them.
Rasmus discusses events since the collapse of US-China trade deal a week ago. Who reneged on the deal? China or US? China & Trump responses of past week. (read jackrasmus.com blog piece: ‘US-China Trade War: Hiatus or Busted Deal?’)Review of Trump’s latest ‘job killer’ immigration proposals and US economy continuing softening per latest data on retail sales-industrial production collapse in April. Second half of today’s show addresses the Mueller Report and growing signs of Constitutional Crisis in the US. What the ‘Frontline’ TV show last week revealed re. ‘collusion’. Reading the Mueller Report re. ‘obstruction’. (p. 277- of Washington Post publication of Report). Rasmus compares the Nixon impeachment with the current foot-dragging and refusal by Pelosi-Shumer to impeach Trump. What’s different today from 1970s re. impeachment?: divided country, radical right media power, stacked Supreme Court now in favor of Trump, Trump’s personality vs. Nixon’s, the decay of both political parties, and repeated strategic and tactic errors by Dem party leadership. Why Mueller failed to indict Trump on collusion while showing overwhelming evidence of same. How Trump is outmaneuvering Dem leadership again.
In the introduction, Dr. Rasmus provides final comments on the reliability of US stats (jobs, GDP, wages) affecting part time, discouraged workers, temp jobs, multiple job holders, labor force drop out, disability and census workers, as well as the main data points of full time and u-3 unemployed. (see jackrasmus.com blog for print version of the discussion). The remainder of today’s show focuses on ‘What’s really behind the US-China trade war’ standoff? Is it temporary or will it descend into a deeper trade conflict? Rasmus offers background on the origins of the Trump trade war with China since August 2017, and its evolution through 2018 up to the present break off of negotiations this week. Why (and how) the US negotiators ‘moved the goalposts’ in the past week and threw new demands at the Chinese as they were preparing to come to the US this past week to finalize a deal. Trump’s claim ‘they renegotiated the agreement’ this past week is his cover for the US actually doing the renegotiation, moving the goal posts with new demands as the Chinese team prepared to come to the US. The question is raised: do the neocons driving US trade negotiations (and US foreign policy in general from Korea to Venezuela to Iran to Europe) really want a deal? Or are they intent on sabotaging one? What will other business factions (bankers, multinational corporations, farm sector) in the US negotiations now do? Rasmus concludes the show with a brief discussion of why the term, ‘Neoliberalism’, as used by many critics of US policy since Reagan falls short of the full meaning. A broader term must include economic restructuring, a new economic policy mix, political institutional change, and ideological legitimization. Neoliberalism as really the intensification of domestic economic class war plus intensification of inter-capitalist global competition.
Dr. Rasmus dissects the latest jobs numbers released today showing 263,000 new jobs created and a 3.6% unemployment rate. Looking behind the assumptions and comparing both jobs surveys—the Current Establishment Survey (CES) & Current Population Survey(CPS)—a different picture of the US labor market appears. First, the 263,000 new jobs indicated by the CES includes 155,000 part time jobs from the CPS, which aren’t included in the 3.6% unemployment rate (called the U-3) that considers only full time jobs. Second, Rasmus notes that the CPS shows full time employment actually falling by 200,000 in each of the last two months (Table A-9). So part time jobs are behind the 263,000 while full time jobs are declining? Moreover, preparing for the 2020 census has raised government jobs last month by 112,000 after declining all last year. Rasmus explains these and other contradictions between CES and CPS suggest the labor market is not as strong as the ‘selective’, heavily reported stats of 3.6% and 263,000 suggest. In the second half the show discusses economic events of the past week involving infrastructure spending, the Fed v. Trump and global central banks, financial imperialism and failed coup in Venezuela, and growing currency problems again in Argentina and emerging markets. The show concludes with Rasmus’s analysis of the Mueller-Barr ‘affair’ and how it reflects the US drift toward a Constitutional Crisis.
Dr. Rasmus provides his analysis of US GDP estimates for 1st quarter 2019 out today. 1st quarter GDP is over-estimated, he argues, due to boost in due to an excessive, one time boost in business inventory accumulation and decline in US imports, both of which are temporary events that will reverse soon in subsequent quarters. The real base of the US economy—i.e. business investment in structures, housing and equipment and household consumption (together 80% of GDP) show stagnation at best: Consumption grew only 1.2% annual rate in 1st quarter (with durables down -5.3%) and business investment slowed to only 2.7% (after hundreds of billions $ of Trump tax cuts for business a year ago). Rasmus predicts investment and consumption will continue to lag in 2019, while inventories and trade effects will dissipate quickly. Global economic developments are discussed in what’s behind rising oil prices and the re-emergence of currency instability, especially in Argentina and Latin America. The show concludes with Dr. Rasmus providing an overview of his forthcoming book, ‘The Scourge of Neoliberalism’, and why most contemporary accounts of Neoliberalism offer only a partial explanation of what it’s about and miss understanding Neoliberalism at capitalist restructuring, ideological justification, and political institutional change. (Next week: An excerpt from the book on Neoliberalism under Obama and now Trump).
Two of the most wealthy and notable big capitalists, Ray Dalio of Bridgewater Associates (world’s largest hedge fund) and Jamie Dimon, CEO of largest US commercial bank, JP Morgan Chase, recently warned publicly that growing income inequality was driving political instability and could make the next recession or financial crisis very much worse than 2008-09. Dalio’s recent essays on LinkedIn and Dimon’s latest 50p letter to shareholders both raise the spectre of serious problems on the horizon. But as Dr. Rasmus explains, their solutions don’t even come close to addressing the problem of continued acceleration of income inequality. Rasmus explains the differences between wage inequality, income inequality, and wealth inequality and the separate ‘drivers’ of each. How wage inequality is worse than reported, and how it contributes to income inequality. How forces accelerating capital incomes, however, are the major determinant of income inequality: capital gains escalation, executive pay, and a neoliberal tax system that allows the 1% to keep more of the capital gains is what now drives the income inequality more than wage compression and inequality. How income drives wealth inequality (that in turn drives income inequality). Rasmus critiques the Dalio-Dimon proposals as obfuscations to real solutions to the inequality problem, and offers alternatives to the wage-income-wealth inequality trend. (Next week: a preview of Dr. Rasmus’ next forthcoming book, ‘The Scourge of Neoliberalism: US Policy from Reagan to Trump’, Clarity Press, 2019).
As Federal tax deadlines near on April 15 it’s becoming increasingly clear the middle class is paying more, not less, under the Trump 2018 tax cuts. Of the roughly 170 million tax households, news is now appearing that tens of thousands fewer are not getting refunds this year and 80% say they’re paying more, per polls. Rasmus explains in detail how the Trump tax cuts provided $4.5 trillion in total tax cuts over the next decade—offset by $1.5 trillion in middle class tax hikes (and making phony estimates of another $1.5 trillion in tax revenues from economic growth due to tax cuts). Rasmus describes how multinational corporations will get $2.1 trillion in tax cuts over the decade and how US corporations, non-corporate businesses, and the wealthiest 1% households and investors will enjoy another $2-2.4$ trillion by reducing the corporate rate from 35% to 21%, by eliminating the corporate AMT, by radically reducing the personal income AMT, by providing a flat 20% deduction for non-corporate businesses, by lowering personal income tax rates and brackets for the wealthy, by exempting most of the Estate tax, and by ending limits on itemized deductions for the rich while adding child care and private school deductions for them. How the middle class will pay another $1.5 trillion over the decade is also described, including ending the personal exemption, by changing personal income tax brackets for the middle class, and by eliminating or reducing middle class itemized deductions. In the bigger picture, it amounts to increasing subsidization of capital incomes—to be paid for by the earned wage incomes of the middle class.
