Alternative Visions

Alternative Visions - Explaining the US Economic Bailout

 In today’s show Dr. Rasmus unravels and explains the array of bailout measures being passed by Congress (3 Acts + 1 in the works) and the Federal Reserve Bank’s multiple programs to inject trillions of dollars into financial markets and non-financial businesses alike. How are the two bailouts—Congress and the Fed’s—integrated? How much of the trillions of loans, grants, tax cuts, subsidies, unemployment benefits, cash checks to households, etc. are actually getting into the economy and how much in bottlenecks. Is the magnitude of the bailout sufficient to prevent a great recession like 2008-09? What about the ‘composition’ (% spending, tax cuts, loans, grants, etc.)? Is it the right ‘mix’ to have an effect?  Will the Fed’s trillions of liquidity injection be enough to prevent business, local government and household defaults that can lead to a financial crash? Why are many economists, following Trump’s lead, saying the economy will recover rapidly in the second half of this year despite the record collapse of the economy in this quarter? How does 2020 compare so far with 2008-09? With 1929-33?

Alternative Visions -Shape Recovery Will Not Happen

Dr. Rasmus explains why a V-shape recovery from the current crisis will not happen, despite all the marketing spin by Trump, politicians and myopic economists. The show today addresses first the employment numbers reported by the Labor Dept. Rasmus explains those numbers don’t include the last two weeks of March and the 10m workers filing for unemployment benefits. The official unemployment rate of 4.4% reported is thus a gross understatement (and also useless since it always states job losses for only full time employed). Why aren’t those still working being rewarded for hazard work is the next theme of the show, based on Dr. Rasmus’ recently published ‘Covid-19 and the Forgotten Working Class’. The last half hour addresses the theme why a V shape recovery is not going to happen. Rasmus explains why uncertainty and negative expectations by business and households alike will mean more cash hoarding, savings instead of consumption, debt paydown, slow recovery of bank lending, decline in business and household demand for credit, global trade collapse, and business cost cutting carried forward—all mean a slow and tenuous recovery of business investment and consumer spending. Two additional ‘wildcards’ that could depress recovery still further as well might be politicians returning to austerity in 2021 to offset the massive deficits ($6.7T) and $30T (from $22T) national debt + the Fed’s possible failure to prevent a financial crash in coming months. (Check out Dr. Rasmus’ blog posts on the economy today at jackrasmus.com).

Alternative Visions - The Great Recession of 2020 (or worse) Has Arrived!

 Dr. Rasmus explains the dimensions and magnitude of the current contraction underway, including unemployment spiking at a faster and higher rate than in 2008 or 1929. GDP forecast contractions in 2Q20 will be more severe than the worse month in 1932. Rasmus proposes an ‘economic war mobilization’ that requires US government spending to rise from 21% of GDP today to 40%, as in 1942. That means a $4T increase in government spending, from current $4.4 trillion to $8.5T. His phase 1 proposed spending program, published earlier this week on the blog, jackrasmus.com, is reviewed and explained measure by measure. Current proposals in Congress are compared and critiqued as grossly deficient. Why $4T more spending will be needed to protect working class and middle class families and the millions of small businesses. How large corporations abused the economy by giving themselves >$1T/yr in stock buybacks and dividend payouts for 10 years, and should not be given government handouts but reorganized and  restructured. A further Phase 2 program is described.

Alternative Visions - Credit Crisis: The Next ‘Shoe to Drop’? + My Fiscal Stimulus Proposals

Today’s show focuses on the growing ‘dash for cash’ (aka liquidity crisis) underway by businesses and investors, as they anticipate falling revenues, profits, and cash needed to service (i.e. pay principal & interest charges) their $10T run up in corporate debt (bonds, loans, etc.) over the past decade. Rasmus explains how the $5T in junk bond & BBB corporate debt is especially at risk. Initial likely crisis in oil-energy junk bonds as global oil prices plummet into the $20-$30 range. How falling financial asset markets and prices are becoming synchronized globally, how the real (non-financial) global economy is falling into recession everywhere, and how the two sectors—financial markets and real economy—exacerbate each other’s downward trend. Credit crunch and crisis are the mechanism and nexus for transmitting the mutual downturns of financial & real sectors. Rasmus explains what’s going on in the credit markets and why the Fed is pumping $1.5T in just three days into just the Repo market in the US. A general liquidity crisis has emerged now.  Dr. Rasmus then reviews the measures proposed by Trump and the Democrats in the House. The show concludes with Dr. Rasmus reviewing his own just published fiscal stimulus measures (also available today on his blog, jackrasmus.com, and on the Counterpunch blog, and soon elsewhere). For a similar discussion, listen to Dr. Rasmus’s interview with Vermont ‘Equal Time Radio’ host, L. Traven, this past Wednesday at http://equaltimeradio.com/2020/financial-crash-underway-prelude-to-deep-recession.

Alternative Visions - Stock Markets in Freefall. Recession & Financial Crisis Coming?

 Dr. Rasmus comments on the continuing fall in financial markets and how that may prove a contagion channel to the real economy and recession. Why the Fed’s .5% rate drop earlier this week had no effect at all on the stock market implosion, continuing to this day. Worst since 2008. Why other financial asset markets (oil, commodities, currencies, etc.) are also contracting sharply. How financial asset deflation can translate into US junk bond, BBB bonds, leveraged loans, Repos, and derivatives financial problems. How the latter propagate then to the real economy via a credit crunch. Rasmus explains why monetary policy solutions are dead in the water. What’s coming possibly this weekend and next in fiscal (tax, spending) responses by US and other government. Rasmus reviews the 4 channels of coronavirus contagion to the real and financial economy (supply chains, demand, asset deflation, currency devaluations). The show concludes with an analysis of this week’s ‘Super Tuesday’ and the now more clearer evidence of Democrat Party leaders and financiers’ strategy to stopo Sanders. How this may lead to an irrevocable split in the Democratic Party and defeat of Biden should he become the nominee (now likely). For analysis of the primaries, read Dr. Rasmus’ just published print piece, “Super Tuesday and the Irrevocable Split in the Democratic Party’ on his blog, jackrasmus.com).

Alternative Visions - Global Stock Markets Crashing: What’s Next?

The big news of the past week is the collapse of global stock markets, now having fallen by nearly 15% and continuing. Dr. Rasmus explains why, and why such a fast rate of contraction—comparable to what happened in 2008-09. Also, an update on the various ‘channels’ by which the virus impacts stock and other financial markets, and in turn how both propagate by means of various channels to the ‘real’ US and global economy.  Discussion next examines the weak state of the US economy in fourth quarter 2019, driven by ‘weak’ indicators like inventory build up and faster fall in imports than in exports. Why business investment, manufacturing, commercial building are all falling, and why the household consumer spending picture is especially weak for the middle class and below. How the virus effect will depress the real US economy in coming weeks. A review of the rest of world economies’ markets and emerging recessions. Dr Rasmus concludes with a review of the lack of preparedness and reporting of actual virus cases in the US, especially in California. Why there are essentially no virus test kits now available. Will consumer panic buying in Hawaii soon spread to California and elsewhere?  The show concludes with a comment on the Democratic party primaries and the growing ‘get Sanders’ movement within the party leadership and money contributors. (For more on this check out Dr Rasmus’ recent published articles on the primaries on his blog, jackrasmus.com) Next week: the Super Tuesday primaries results analysis, with guests.

 

Alternative Visions - Global Economic Contagion Channels: From China to Rest of World

 Dr. Rasmus provides an update on latest developments of past week on the Coronavirus and its growing impact on China’s economy, and the contagion channels to the rest of the global economy. Media and business ‘consensus’ that effect and recovery will be ‘V-shape’ in China is now collapsing. Ditto that the economic effects will be largely contained to China itself. Multiple sources of evidence emerging the virus is spreading faster, and outside China now. Five channels of economic contagion are discussed: trade/supply chain channel; currency channel; commodities and commodity futures channel, financial asset market channel, consumption channel (tourism & luxury goods). Why Japan (and So. Korea) economy is most fragile and susceptible to China contagion. Other Asian economies at risK: Honk Kong, Singapore, Thailand, Australia. (Why no reporting coming from Taiwan?). Goldman Sachs, IMF, S&P forecasts. Review of Japan’s current recession underway and deepening due to sales tax hike, Trump trade war, China-Japan supply chain & tourism impacts. Why monetary and fiscal stimulus won’t work. The show concludes with brief analysis of the recent Democrat party candidates debate and why the ‘traditional middle’ of the party is collapsing in favor of Sanders & Bloomberg.

Alternative Visions - Economic Contagion Channels + Trump’s Budget

Today’s show focuses on describing the channels of economic contagion from the China virus, both within China and from China to the rest of the global economy. Recent reports of the coronavirus infection/death rates rising again. Why comparison with SARS virus is inaccurate. Why investors and markets are trying to downplay the actual data. Broken supply chains, exports/imports decline, oil and commodities demand futures & deliveries, China’s currency devaluation channel, global shipping and cruise-airlines impacts, financial asset markets contagion—all likely to worsen in coming months. Review of estimates of impact on China GDP. Second half of show discussion on Trump’s proposed latest budget & why Social Security-Medicare-Medicaid will be main target after the November election. How Democrat party leaders are escalating their attacks on Sanders. Their strategy to select Bloomberg on the second ballot at the party convention. Why Buttigieg and Klobuchar are getting big money & Why Biden is toast already and Warren will withdraw after super Tuesday.

Alternative Visions - Trump’s State of the Union speech: ‘Red Meat’ to the Political Base

Today’s show focuses on dissecting the content and meaning of Trump’s State of the Union (SOTU) speech earlier this week. Not really a normal SOTU speech, but a classic ‘agitation’ speech designed to roil and mobilize his political base for the upcoming election.  Little was said about where the country may be headed economically or socially in his final year of his first term—as is typical in past SOTU speeches. A lot said about the ‘enemy’ (immigrants) and its ‘coddlers’ (Democrats, California) and Trump’s vision to intensify his appeal to hate and fear in the run up to the November election. Rasmus outlines the 6 features of an agitational speech, and how Trump’s SOTU fills the definition. What Trump did not say about trade, taxes, family leave, social security, space force costs, foreign policy failures or plans. How Latinos are the criminal-enemy. His plans to attack Sanctuary Cities (and California), and expand gun rights, school prayer, private school education, drug prices, etc.  Trump’s new racism appeal: split the minority vote by appealing to blacks and attacking other minorities. Trump lies about the US economy (GDP, jobs, wages, incomes), healthcare insurance, family leave, pre-existing conditions, ISIS defeat, challengers to US economic empire, and phony Israel-Palestine peace plan. The SOTU as his launch to attack Democrats in 2020.

Alternative Visions - Impeachment & Coronavirus’ Economic Contagion

Dr. Rasmus provides his reflections on the Senate trial of Trump and the further crisis and decline of Democracy in America that it represents. How James Madison’s worst fears and warnings are being played out before our eyes historically in the (T)rump trial underway.  How the outcome now will embolden Trump to engage in similar behavior and move further to ‘govern’ by bypassing Congress. The trial as the expansion of the Imperial presidency in domestic as well as foreign policy. How current events are very much like 1856 America. The potential impacts of the Coronavirus on the China, Asia and global economies are reviewed. The imminent big impact on stock and other financial markets. How consumer spending in the US has begun to slow appreciably since November already, and business investment and manufacturing continues to contract. The virus may be the factor yet to push the US economy into recession.  Rasmus discusses the weaknesses of Trump’s China trade deal and the just signed NAFTA 2.0.  Why Brexit plus virus now entering Europe will mean a ‘double’ hit to the Europe economy on both sides of the channel.