Feed on

Today’s show focuses on the recent decision by the European Central Bank to re-introduce QE and drive Europe’s more than $7 trillion in interest rates further into negative territory. Another $22b per month in QE and rate reduction to -0.5% when, over the past 5 yrs QE and negative rates have not stimulated the European economy. Reasons why QE and neg rates have little effect. How $17 trillion in negative rates worldwide is a growing problem and won’t stimulate the Euro economy. Lower rates as exchange rate currency/ trade move. Why Trump is now calling for US negative rates. Why central banks (including Fed) now secretly discussing new tools and tactics for the next recession, including ‘bail ins’ and calls are growing by high level capitalists for the Fed and central  banks to expand their authority into fiscal policy areas (as predicted in my 2017 book, ‘Central Bankers at the End of Their Ropes’). Consequences of such for US Constitution and fiction of ‘central bank independence’.  Rasmus discusses US deficit now officially projected to exceed $1 trillion a yr. The Democrat Party latest debate and opposition to Medicare for All. And what’s behind the recent ‘softening’ of US & China trade war (and why a deal may now be closer with ‘decoupling’ of technology issue). Rasmus introduces the show with brief outline of his forthcoming book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, October 2019, and shares its main themes. (Review of chapters coming in following weeks of this show).

 Dr. Rasmus explains why US stocks gyrate on every public announcement concerning US-China trade. Why US financial institutions and markets no longer focus on economic fundamentals. What’s behind the Trump plan to privatize the quasi-government mortgage companies, Fannie Mae and Freddie Mac. Why hedge funds and speculations will reap big windfalls and how the home buyer rates on 30 yr. mortgages will rise and pay the price. Rasmus observes the class politics behind the ‘hard Brexit’ vs. no Brexit factions in the UK. The show concludes with analysis of the latest US labor dept. jobs numbers and why the jobs ‘lagging indicator’ is now beginning to show the US drift to recession, following down the indicators for US manufacturing, housing & construction, and business equipment investment. (For more analysis in print version, check out the just posted articles on unemployment, jobs and wages on his blog, at www.jackrasmus.com).

What’s the condition of Labor this Labor Day 2019? The official Trump estimate of 3.1% increase in wages this past year is really between -0.8% and 1.1% according to independent bank and other research companies. 3.1% is unadjusted for inflation, is an ‘average’ skewed by big gains for professionals and managers, and refers to only full time workers—leaving out the 60m plus ‘contingent’ part time/temp/gig workers. Independent surveys by Bankrate, Payscale, McKinsey Research, and EPI paint a different picture: 60% of labor force say they got no pay increase at all last year. 45% say they are working 2nd and 3rd jobs to make ends meet. Rasmus debunks with data the Neoliberal lie that business-investor tax cuts create jobs. Trump’s tax cut correlated with big investment collapse. 1.1 million jobs not due to tax cuts last year. US Labor Dept. just announces adjustment of 500,000 fewer jobs last year than previously reported. Monthly job creation no different 2018 than 2017 after tax cuts.  Rasmus describes the continuing attack on unions, especially public sector. (Check out Dr. Rasmus’ blog for article on ‘Myths of Wages and Jobs Under Trump’ at jackrasmus.com)

Trump brags about the ‘Wall of Money’ coming into the US from abroad. But what it represents is a global economy deteriorating fast and offshore investors sending their money to US safe haven of Treasuries. How the ‘wall’ is driving up the $US, negating Trump’s tariffs, and negating any trade deal with China. Trump turns up the ‘blame game’ for economy weakening: tantrums against China’s new tariffs, the Fed’s Powell foot dragging on lowering interest rates, and Dems refusing to give more tax cuts to investors. Why Fed rate cuts won’t stimulate the economy. Why Trump’s new proposed tax cuts won’t either. Trump’s next desperate moves to manipulate currencies (US and China’s) that will intensify the emerging currency war. Other topics of the show: debunking Trump’s payroll tax cut idea, why US steel companies are laying off workers in Michigan, and what’s behind the Japan-So. Korea ‘pissing match’ (yup, it’s trade).

As more and more independent research arms of banks, big investors, and even economists are now predicting recession is coming (as I have been for the past year), what we hear increasingly from the Trump administration and its apologists is that ‘the US economy is strong and doing fine’. Or, other sources less optimistic are increasing saying recession is coming, ‘but it will be mild this time’. There’s no housing bubble (2007), or tech dotcom bust imminent (2000), or no junk bond crisis (1989), so the coming recession will be mild.  In today’s show we examine and discuss both themes—‘the US economy is strong’ and ‘the next recession will be mild, providing contrary evidence and arguments to both. New market sector candidates, contagion channels and transmission mechanisms for the next financial crisis are noted, the much weaker US and global economies as start points of recession are explained, and, how it is argued that monetary and fiscal policies will prove far less effective this time in trying to slow a contracting economy or stimulate recovery. A detailed explanation of what happened in Argentina earlier this past week, and its potential contagion, is addressed. (see my blog, jackrasmus.com, for an in depth analysis of Argentina’s financial asset implosion and what it means in the context of falling financial asset prices now globally).

 Dr. Rasmus reviews events associated with the US-China trade war, from the Shanghai meeting of early August to today’s announcement by Trump that he expects no deal with China. Why China is not manipulating currency but the opposite. Why there’ll now be no further Trump tariff hikes. Why the trade war is really a war over nextgen technology between US and China and only part of a growing economic war between the two countries. Rasmus discusses global central banks’ now cutting rates in a ‘race to the bottom’ anticipating further Fed, ECB and BOJ rate cuts coming. The global manufacturing recession now as transmission mechanism to global recession. Europe’s growing economic problems: Recessions in Germany, Italy and UK now. Brexit will exacerbate. Italy will break EU fiscal rules after elections. Rasmus refocuses on the growing problems in India, soon the world’s 5thlargest economy: bank problems, looming defaults, currency decline. Modi’s current distraction from problems with nationalist offensive in Kashmir. (Check out Dr. Rasmus’ latest update on the US-China trade-tech war at jackrasmus.com blog).

Dr. Rasmus reviews the two major events of this past week: the Fed’s first rate cut since 2009 and Trump’s announcement of 10% more (maybe 25%) on remaining $300B of China imports to US. How the two announcements are related. The response of markets and investors to the Fed cut + the response of China to Trump’s latest trade tantrum. Why the Fed cut will have little to no effect on the real economy and investment and won’t stop the US economic slowdown. Why it also has had a negative effect on financial markets. Trump’s next moves vs. Powell and the Fed. The likely responses of China, as the US and China continue to slip from a tariff spat to a full blow economic war. No trade deal in 2019 but possible in 2020 as US and global economy slip toward recession. The bigger consequences: why fiscal and monetary policy were once tools used to stabilize the economy (per mainstream economics) but now have been neutralized after having been used since 2008 as means to redistribute income to corporations, investors and wealthy 1%.  What are consequences for next recession around the corner?

Dr. Rasmus reviews today’s preliminary 2nd Quarter US GDP stats compared to 1st Quarter’s.  Why Housing, manufacturing, investment are now all weakening & consumer spending increasingly dependent on credit. IMF’s latest global forecasts and why Draghi’s pre-announcement of Euro central bank returning in September to lower rates and more QE are doomed to fail. Brexit this fall, now a certainty, to push Europe into recession already approaching. IMF shows slowing economies in Middle East (0.6%-1% GDP), Latin America’s big three economies, So. Korea, Singapore, ANZ, with Japan slowing, and China growth more like 4% than its official 6.2%. Last 20 minutes of show analyzes Dem. Party leadership failures, revealed most recently with latest House testimony of Mueller. Chronic DP leader failures from Carter, Clinton, Obama, Hillary, now continuing under Pelosi-Shumer. Why Democracy in America is slipping away. Why Republican strategy from Gingrich (1994) to McConnell (2010-16) to Trump has been succeeding. Why 2020s America may look more like 1850s.

Dr. Rasmus reviews the imminent interest rate cuts coming next week by the US central bank, the Fed. Why it’s all about subsidizing financial markets, driving down the value of the US dollar, and protecting US multinational corporations’ offshore profits. Why other central banks are now following in step. The consequences in negative rates worldwide and their effect. How Fed policy is tied into Trump trade war with China. The latest on US-China trade negotiations and why no deal this year. Discussion shifts to the crisis created by US big pharma. Why 68,000 pharma caused deaths last year, 47,000 from prescribed opioids. Why Trump backed off from even tepid proposals last week. As deaths mount (a Vietnam War every year), big pharma continues to raise prices. Latest casualty: insulin and diabetics. How pharma raises prices. A proposed solution. Show concludes with brief comments on Amazon’s plan to pay for re-education of its warehouse workers and how Trump is proposing still more tax cuts for investors bypassing Congress.

Dr. Rasmus examines today’s US Jobs report and other reports suggesting US job creation may be mostly 2nd jobs, per Bankrate.com and Payscale.com surveys. How Labor’s share of income has declined -$1.5 trillion a year, while stock buybacks and dividend payouts have risen +$1.5 trillion. The crisis at Germany/Europe’s largest bank, Deutschebank, is discussed and its comparison to the 2008 crash of another investment bank, Lehman Brothers. Why Deutschebank’s current $45 trillion in derivatives contracts poses a major threat to contagion in the next crisis. The case of Europe’s weak banks, non-performing bank loans, and 65% in negative rates. The show concludes with discussion of last week’s Supreme Court decision to allow gerrymandering to continue, as the latest development undermining US democracy.  How the Republican party’s ‘red states’ strategy of recent decades successfully captured the Senate, Courts, & states legislatures. Why the US House of Representatives has not added more seats since 1913, per the US Constitution requirement, further advantaging conservatives in the House. Why Democrat party strategy has failed.

« Newer Posts - Older Posts »