Dr. Rasmus reviews the facts re. surging 2nd wave of virus infections and hospitalizations in the USA and discusses whether it will precipitate a further weakening of the US economy in the second half of 2020 as well. As World Bank chief economist, Carnmen Reinhart, has recently warned: it is important to distinguish between a ‘Rebound’ and a ‘Recovery’. Rasmus explains the reopening of the US economy the past 6 weeks has produced what looks like a ‘rebound’ for historic depths of contraction during the 1st wave of the virus, February-April, but that it is not a recovery. 39m still unemployed by moderate estimates, work hours down 15%, personal incomes up but being significantly unspent, the CARES Act stimulus either already spent by households or loans being hoarded by big corps. amount to no added real stimulus. Fed forecasts for US GDP for 2nd quarter at -30.5% to -41.9% mean a very deep hole for the US economy to try to crawl out of. Rasmus reviews the current late June state of the US economy: consumption, business investment, trade, and government spending that shows a slowing of the deep contraction but a continued contraction nonetheless. Conclusion: despite reopening the economy and a 5.5% GDP stimulus in March the US is not poised for an accelerating ‘recovery’ but a modest ‘rebound’ at best. And a 2nd wave increases probability of another economic relapse in late 2020 or early 2021 if no real fiscal stimulus comes soon.
Dr. Rasmus reviews the various ways the Cares Act and $2.7T Congress bailout since March has been ‘gamed’ by big business and investors. How big corps have taken the funds and not invested, or refused to take up the loans altogether. The same applies to the Federal Reserve’s $3.3T in loans to banks and investors via its QE and 11 ‘facilities’ to provide free money capital to banks and others. A second theme of the show is Dr. Rasmus explanation that the nearly $5T in Congress and Fed stimulus is not really a stimulus. And the near future appears a further lack of stimulus, amidst a further subsidization of businesses that aren’t really investing or growing the economy. Economic news of the past week is also reviewed re. retail sales, housing, manufacturing, etc.
Evidence grows that a 2nd covid-19 wave is now emerging in the US, focused in the south and southwest ‘red’ states. Pandemics always have 2nd waves (even 3rds). Second waves tend to be worse than first. Will this 2nd wave exceed the impact of the first on the coastal ‘blue’ states, now that widespread reopening of the US economy is underway, especially in the ‘red’ states? Dr. Rasmus discusses the transmission mechanisms and channels by which Covid-19 has been impacting the US economic contraction. Also, how causal forces independent of the virus have begun to take effect in the US economy now exacerbating the general economic crisis. How Covid-19 causes interact with independent economic dynamics to worsen the economic instability. Why the June ‘recovery’ is especially weak and tentative and why a further economic relapse is inevitable, sometime in the fall or right after the November US elections. What’s happening with the four major areas of the US economy: household consumption, business investment, exports, and government spending and why recent fiscal stimulus by Congress and monetary stimulus by the Federal Reserve are not working well. (check out Dr. Rasmus’s latest blog post, ‘The 2nd Wave & the US Recession’, at jackrasmus.com. Follow his daily updates on his twitter feed at @drjackrasmus).
Dr. Rasmus explains why the official U-3 unemployment figure of 13.3% is a gross misrepresentation of the unemployment rate. What’s wrong with the U-3. Plus the Labor Dept’s own admission that the 13.3% is distorted by the questions it has asked the jobless. Why the Labor Force participation Rate and Employment to Population ration show little improvement in the jobless situation. Why there is a brief phase of 2-3 months when the economy will not keep falling but level off and maybe recover 20% of the loss of the past few months, but why a W-Shape recovery longer term is on the agenda. Why most jobs won’t come back or return only slowly over the next 10 yrs. Dr. Rasmus concludes with some commentary on his latest blog publication, ‘Confronting Institutional Racism’, and why (and how) the demonstrations and protests need to expand and grow organizationally, in terms of alliances, and in its demands—or it will go the way of the ‘Occupy’ movement of 2011 and ‘yellow vests’ in France in recent years. (Check out the article ‘Confronting Institutional Racism’ on Dr. Rasmus’s blog, jackrasmus.com or on Counterpunch, Znet, or Global Research public blogs today)
Today’s show continues in more depth the discussion last week on the pending Heroes Act in Congress. Is it another mitigation bill, stimulus bill, or a growing subsidy for business bill. What are Republicans proposing to change the original House proposals in the bill? Senate Democrat responses in progress? What’s the true unemployment rate in the US today. Why has the $1.7T in corporate loans under the March ‘Cares Act’ not being taken up by big business? And why is only $95B of the Fed’s $1.7T liquidity provisions to banks being used so far? Is the bailout of households being converted to more subsidies for business? The show concludes with a discussion of how US financial imperialism works, and why Trump is now preparing to leverage it against China marking a new stage in the China-US economic war. Some commentary on Trump’s emerging 2020 election strategy: election fraud.
Dr. Rasmus explains the latest Congressional bill to try to stimulate the US economy, called the Heroes Act, passed a week ago. What are the elements? Will they continue to ‘mitigate’ the virus impact on the economy or actually stimulate recovery? Why is McConnell in the Senate, Republicans, and Trump opposed and blocking it? What are their arguments and are they accurate? Rasmus provides a background analysis of the four previous ‘mitigation’ bills, the central CARES ACT passed in April in particular. Why are the large corporations not taking up the $500B in loans, why is the Main St. provision for medium sized corps not even implemented yet? Why and how the small business PPP provision being ‘gamed’ by larger companies? Problems with a primary monetary stimulus strategy that is the CARES ACT.
Today’s show invites former Sanders’ grass roots organizers, Nick Brana (senior staff member of Sanders’ 2016 campaign) and Jerry Perez (current field director for Sanders’ Our Revolution grass roots organization in Los Angeles) , to discuss the emerging formation of an independent political party in the wake of Sanders’ capitulation, who abruptly dropped out of the Democrat party primary race and endorsed Joe Biden. Rasmus briefly explains the dimensions of the ‘triple crisis’ today: the economic crisis now deepening; the health (virus) crisis accelerating the economic decline that began late 2019; and the political crisis about to intensify even further between the two wings of the corporate party of America—aka Trumpublicans and Democrats. Rasmus reviews the dimensions of the emerging political crisis and the recent trajectory of the Sanders campaign and its collapse. Guests Nick Brana and Jerry Perez discuss what’s happening now with the growing movement to form an independent political party. Brana’s ‘Peoples Party’ with 70,000 members throughout the US and Perez’s LA Our Revolution group and other interested OR groups current considering and discussing going independent. What’s happening at the grass roots with regard to independent party formation. (For more information, go to http://peoplesparty.org and to http://ourrevolutionLA.com )
Today’s show addresses and debunks the current jobs statistics just released today by the US Labor Dept. The official announced 14.7% unemployment rate and 23m jobs lost (20m in April) are dissected to reveal the true scope of those without work. Why the 14.7% only represents full time workers’ job loss and excludes millions more part time, temp, contract, gig jobs now 60m out of a 164m labor force. Rasmus explains even Govt stats show 22.4% unemployment rate when part time, ‘missing labor force and other categories are included. Rasmus further explains why the 22.4% is under-reporting as well, when the 8m who have dropped out of the labor force are included. How we get 33.5m having filed for unemployment benefits but report only 23m jobless. Why govt stats exclude many sheltering at home, without jobs, as not unemployed. Why the economy’s ordered ‘reopening’ will lower the official 14.7% unemployed, but only temporarily and why jobless numbers will rise again as a second infection wave hits the economy, and economic conditions developing, converge by year end. Rasmus explains it will take 5-7 yrs to just recover lost jobs, under best of conditions. Why the economic recovery will be ‘W Shape’, not V-Shape, and follow Rasmus’ past predictions of the trajectory of an ‘Epic’ Recession. (check out the blog, jackrasmus.com, this weekend for Dr. Rasmus’s explanation of a ‘W-Shape’ recovery, and his previous rejection of ‘V-Shape’.)
the US central bank, the Federal Reserve (Fed), is in the process of throwing trillions of dollars at the economy, most to businesses and corporations, in an historic effort to bail out the banks and now non-bank businesses as well (for the first time). The objective is to head off and prevent the deep and rapid contraction of the US economy from spawning a wave of defaults and bankruptcies among non-bank businesses that will soon fail to ‘service’ their massive accumulated debt loads run up since 2010. Broad sectors of US business heavily laden with corporate debt—corporate junk bonds, junk loans, and related debt amounting to several trillions $ in the US alone—are on the verge of failing to make principal & interest payments on that massive debt. The Fed is feeding them free money to continue to do so. As well as pumping up bank balance sheets to provide a cushion for the defaults and bankruptcies and avoid a banking-financial system crash in the event of defaults when they come. Rasmus explains how the capitalist drive to return workers to their jobs now gaining momentum is also about business revenue restoration to avoid defaults. Industries most prone to defaults: travel, oil and energy, retail, entertainment will be the leading edge. Rasmus explains the magnitude and composition of the Fed’s $9T commitment to ‘pre-bail out’ the banks and business, and how the US working class will be required to pay the bill—a present on this May Day to workers.
Dr. Rasmus begins today’s show describing the latest Congressional bailout package of $484B just passed, expanding the prior $2.3T ‘Cares Act’ bailout just a few weeks ago. How much is direct money and how much is loans funneled through the Fed and private banks. Why It won’t be enough and what’s in the next bailout package already being debated for May. Jobless numbers now at 26m, going to 40m by end of May. The ways in which big corporations are gaming the bailouts and getting free money they don’t need, while workers, homeowners, renters, and small businesses are starving for funds due to Trump administration mismanagement. Why business interests & Trump are so desperate to force everyone back to work prematurely, almost ensuring a second and potentially worse wave of infections. Rasmus explains the bailout in general is designed to go through the Fed and the private banks, as it was in 2008-09, and why this will mean a very slow recovery under the best of assumptions. Why the Fed’s multi-trillion dollar money injections may yet fail to prevent a financial crisis and an even worse economic crisis. (check out Dr. Rasmus’s blog, jackrasmus.com, for weekly up to date posts on the virus economy and join his twitter feed, @drjackrasmus, for daily commentaries)
