Tag Archives: financial crisis

The U.S. Economy In Two Words: Asymmetric Gains

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By Charles Hugh Smith

Source: Of Two Minds

The Status Quo is in trouble if the bottom 95% wake up to the asymmetric gains that are the only possible output of our hyper-financialized economy.

The core dynamic of the U.S. economy in this era is asymmetric gains: the gains in income, wealth and power are increasingly concentrated in the top slice of the economy and society, while the income, wealth and power of the majority stagnate or decline.

The Status Quo must paper over this widening gulf with threadbare narratives that no longer match reality: for example, we’re an ownership society. We sure are: the vast majority of the nation’s productive assets are owned by the top 5%.

The U.S. economy has changed, but the transformation is largely invisible to the average participant and conventional economist. The previous iteration of the economy expired in the 1970s, an era of stagflation (stagnant growth and rising inflation that eroded the purchasing power of most households), higher energy costs and increasing global competition, an era in which the “external costs” of industrial-scale pollution finally came home to roost and the early stages of digital technologies began impacting human labor.

Stocks and bonds were destroyed in the 1970s. Investing capital in industrial production no longer generated outsized profits.

The 1980s ushered in a New Economy based on financial magic: the outsized profits flowed to those with access to credit and the tools of financialization: buying assets with borrowed money, selling the assets off in the global marketplace and reaping enormous gains by producing no goods or services.

We now inhabit a hyper-financialized economy in which the only way to get ahead is to speculate. For the middle class, this means speculating in housing: if you hit the jackpot and your house soars in value, then leverage this new wealth into the cash needed to buy a second property–or extract the equity to fund a more luxe lifestyle.

Entrepreneurs seek to generate “value” only as a means of cashing out via an initial public offering or selling their company to a global corporation. The “value” sought now is the perception of value–the magic of future promise that boosts valuations into the millions, or better yet, billions.

How many entrepreneurs are looking forward to owning their company ten years hence? Very few, as “the long haul” has no value in a hyper-financialized economy. If you don’t cash out in six months, your Big Idea might be worthless, leapfrogged by some other Big Idea.

In a hyper-financialized economy, hype is the most valuable skill. Those who can raise $100 million in capital for a fancy juicer win, as do those who sell the Big Idea to global corporations desperate not to miss out on the Next Big Thing.

In a hyper-financialized economy, future income is pulled into the present and monetized to benefit the top dogs. We borrow from the future to fund the inefficiencies of today. It’s a great system, and the Status Quo has the answer to everything: the government can never go broke because all it has to do is print more money.

What a swell idea. Isn’t that what Venezuela has done for the past decade? And how did that work for them? If you think that destroying the purchasing power of “money” is a winner, then by all means, go on believing that the government can never go broke because all it has to do is print more money.

Here’s my favorite chart of asymmetric gains. The vast majority of the gains reaped since the 2008-09 Global Financial Meltdown have flowed to the top .1%. This is not a bug, it is a feature of hyper-financialization. Indeed, it is the only possible output of the current system.

Meanwhile, the bottom 95% live in an economy where wages go nowhere and costs are soaring. The financial media cheers when wages (supposedly) rise by 2%, but nobody dares measure the impact of rising costs in services such as healthcare and higher education.

The Status Quo is in trouble if the bottom 95% wake up to the asymmetric gains that are the only possible output of our hyper-financialized economy. Hype and propaganda are the key tools of the present era, as these are required to disconnect perception from reality. How long the disconnect will last is anyone’s guess, but when the two reconnect, all that is solid now will melt into thin air.

 

Why America is the World’s First Poor Rich Country

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Or, How American Collapse is Made of a New Kind of Poverty

By Umair Haque

Source: Eudaimonia

Consider the following statistics. The average American can’t scrape together $500 for an emergency. A third of Americans can’t afford food, shelter, and healthcare. Healthcare for a family now costs $28k — about half of median income, which is $60k.

By themselves, of course, statistics say little. But together these facts speak volumes. The story they are beginning to tell is this.

America, it seems, is becoming something like the world’s first poor rich country. And that is the elephant in the room we aren’t quite grasping. After all, authoritarianism and extremism don’t arise in prosperous societies — but in troubled ones, which are growing impoverished, like America is today. What do I mean by all that?

Let’s begin with what I don’t mean. I don’t mean absolute poverty. Americans are not living on a few dollars a day, by and large, like people in, for example, Somalia or Bangladesh. America’s median income is still that of a rich country, around $50k, depending on how it’s counted. Nor do I really mean relative poverty — people living below median income. While that’s a growing problem in America, because the middle class is imploding, that is not really the true problem these numbers hint at, either.

America appears to be pioneering a new kind of poverty altogether. One for which we do not yet have a name. It is something like living at the knife’s edge, constantly being on the brink of ruin, one small step away from catastrophe and disaster, ever at the risk of falling through the cracks. It has two components — massive inflation for the basics of life, coupled with crushing, asymmetrical risk. I’ll come to what those mean shortly.

The average American has a relatively high income, that of a person in a nominally rich country. Only his income does not go very far. Most of it is eaten up by attempting to afford the basics of life. We’ve already seen how steep healthcare costs are. But then there is education. There is transport. There is interest and rent. There is media and communications. There is childcare and elderly care. All these things reduce the average American to constantly living right at the edge of ruin — one paycheck away from penury, one emergency away from losing it all.

But this isn’t true for America’s peers. In Europe, Canada, and even Australia, society invests in all these things — and the costs of basic necessities societies don’t provide are regulated. For example, I pay $50 dollars for broadband and TV in London — but $200 for the same thing in New York — yet in London, I get vastly more and better media for my money (even including, yes, American junk like Ancient Aliens). That’s regulation at work. And when basic goods like healthcare or elderly care or education are provided and managed at a social scale, that is when they are cheapest, and often of the best quality, too. Hence, healthcare costs far less in London, Paris, or Geneva — and life expectancy is longer, too.

So if you are earning $50k in America, it is a very different thing than earning $50k in France, Germany, or Sweden — in America, you must pay steeply for the basics of life, for basic necessities. Thus, incomes stretch much further in other countries, which enjoy a vastly higher quality of life, even though people there earn roughly the same amount, because they pay vastly less for basic necessities. Americans are rich, but only nominally — their money doesn’t buy nearly as much as their peers does, where it matters and counts most, for the basics of life.

What happens when societies don’t understand all the above? Well, a strange thing has happened to the American economy. While it’s true that things like TVs and Playstations have gotten cheaper, the costs of the basics of life have skyrocketed. All the things that really elevate people’s quality of life — healthcare, finance, education, transport, housing, and so on — have come to consume such a large share of the average household’s income that they have little left to save, invest, or spend on anything else. And what’s worse, while the basics of life have seen massive inflation, wages and incomes (not to mention savings and benefits and safety nets and opportunities) for most have stagnated. The result is an economy — and a society — that’s collapsing.

Yet all that is the straightforward effect of giving, for example, hedge funds control over drugs, or speculators control over housing, healthcare, and education — they will of course maximize profits, whereas investing in these things socially, or at least regulating them, minimizes real costs, and maximizes accessibility, affordability, and quality.

So the average American, who is left high and dry, must borrow, borrow, borrow, just to maintain a decent quality of life — because handing capitalism control of the basics of life has caused massive, skyrocketing inflation in necessities, while flatlining his income. Healthcare didn’t used to cost half of median income even a decade ago, after all — but now it does. So what happens when, in a decade or two, healthcare costs all of median income? How can an economy — let alone a society — function that way?

Well, what happens if the average American steps over the line? Misses a mortgage payment, gets ill and is unable to pay a few bills on time, can’t pay the costs of healthcare? Then they are punished severely and mercilessly. Their “credit rating” (note how banks and hedge funds don’t have them) is ruined. They can easily find themselves out on the street, without finance, without a second chance, without access to any kind of redress or support . And then they are rejected, shunned, and ostracized. They might not have an address anymore — so who will hire them? They are no longer a part of society — they have fallen through the cracks, and finding one’s way back is often next to impossible. Asymmetrical risk — corporations and lobbies and banks bear no risk at all, precisely because the average American bears them all now.

So Americans aren’t just absolutely or relatively poor, but poor in a new way entirely. First, the basics of life exploded in price, to the point that they are now unaffordable for many, maybe most, households. Second, Americans bear the risks of paying those unaffordable costs to an extreme degree, bearing the risks that institutions should, and so those risks are now ruinously high. A bank or hedge fund or corporation might go bankrupt, and liquidate its assets, and its owners stay rich — but if an American’s credit rating is ruined, loses his job, cannot pay his bills, or even if he declares bankruptcy, he falls through the cracks, hounded, embattled, institutionally black-marked. He finds himself outside society, with little way to get back in. Little wonder then that Americans work so much harder than anywhere else — they are always one step away from losing it all, from genuine ruin, but their peers in truly rich countries aren’t.

Marx probably would have called this immiseration. Neo-Marxist theorists call it precarity. And while there’s truth in both those ideas and perspectives, I think they miss three vital points.

We don’t see America as a poor country, but we should begin to. Americans live fairly abysmal lives — short, lonely, unhappy, full of work and stress and despair, compared to their peers. That is because they cannot afford better ones — predatory capitalism coupled with total economic mismanagement of social investments has made the basics of life ruinously unaffordable. In this way, it’s effectively a poor country — yes, there’s a tiny number of ultra-rich, but they are outliers now, off the map of the normal. Because it’s not just any kind of poverty, yesterday’s poverty, or even poverty as we are used to thinking about it.

America is pioneering a new kind of poverty. The kind of poverty that’s developed in America isn’t just bizarre and gruesome — it’s novel and unseen. It isn’t something that we understand well, economists, intellectuals, thinkers, because we have no good framework to think about it. It’s not absolute poverty like Somalia, and it’s not just relative poverty, like in gilded banana republics. It’s a uniquely American creation. It’s extreme capitalism meets Social Darwinism by way of rugged self-reliance crossed with puritanical cruelty.

The kind of poverty America’s pioneering today isn’t absolute, or even relative , but something more like perfectly tuned poverty, strategic poverty, basic poverty— nominally well-off people whose money doesn’t go far enough to make them actually live well, constantly living at the edge of ruin, and thus forced to choke down their bitter anger and serve the very systems which oppress and subjugate with more and more indignity and fear and servility by the year.

America’s still an innovator today. Unfortunately, what it’s innovating now is a new kind of poverty. Yet poverty is poverty. What happens in societies where poverty is growing? Authoritarianism rises, as people lose faith in democracy, which can’t seem to offer them working social contracts. Authoritarian soon enough becomes fascism — “this country, this land, its harvest — it is only for the true volk!”, the cry goes up, when there is not enough to go around. And the rest of the dark and grim story of the fall into the abyss you should know well enough by now. It ends in words we do not say.

Still, history, laughing, has told this tale to us many times. And it is telling it to tomorrow, again, in the tale of American collapse.

USA in a Debt Trap Death Spiral

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By F. William Engdahl

Source: New Eastern Outlook

The US economy and its financial structures have never recovered from the great financial meltdown of 2008 despite the passage of ten years. Little discussion has been given to the fact that the Republican Congress last year abandoned the process of mandatory budget cuts or automatic sequestration that had been voted in a feeble attempt to rein in the dramatic rise in US government debt. That was merely an added factor in what soon will be recognized as a classic debt trap. What is now looming over not just the US economy but also the global financial system is a crisis that could spell the end of the post-1944 dollar system.

First some basic background. When President Nixon, on advice of Paul Volcker, then at US Treasury, announced on August 15, 1971 the unilateral end of the Bretton Woods gold-dollar system, to replace it with a floating dollar, Washington economists and Wall Street bankers realized that the unique role of the US dollar as leading reserve currency held by all central banks and the currency for world commodity and other trade, especially oil, gave them something that appeared to be a gift from monetary heaven.

So long as the world needed US dollars, Washington could run government deficits without end. Foreign central banks, especially the Bank of Japan in the 1980’s and since the turn of the century, the Peoples’ Bank of China, would have little choice but to reinvest their surplus trade dollar earnings in interest-bearing AAA-rated US Treasury securities. This perverse dollar system allowed Washington to finance its wars in faraway places like Afghanistan or Iraq with other peoples’ money. During the Administration of George W. Bush, when Washington’s annual budget deficit exceeded annually one trillion dollars, Vice President Dick Cheney cynically quipped, “debt doesn’t matter; Reagan proved that.” Up to a point that appeared so. Now we are getting dangerously near to that “point” where debt does matter.

Federal Debt Rise

There are generally speaking three major divisions of debt measured in the US economy: Federal debt of Washington, corporate debt and private household debt. Today, owing in large part to ten years of historic low interest rates following the largest financial crisis in history–the 2007-2008 sub-prime crisis that became a global systemic crisis after September 2008–all three sectors have borrowed as if there was no tomorrow because of the near-zero Federal Reserve interest rates and their various Quantitative Easings. Nothing so radical can last forever.

Since the financial crisis erupted in 2008 US Federal debt has more than doubled from $10 trillion to over $21 trillion today. Yet conditions were made manageable by a Federal Reserve emergency policy that dealt with the financial and banking crisis by buying almost $500 billion annually of that debt. Much of the remainder was bought by China, Japan and even Russia and Saudi Arabia. Further debt levels were restrained by the bipartisan spending caps established in the Budget Control Act of 2011 that had kept recent deficits partially in check.

Now conditions of future US Federal debt and deficit growth are pre-programmed for systemic crisis over the next several years.

‘Trumponomics’ Disaster

The economics of the Trump Tax Cuts Act of 2017, signed in December, dramatically cut certain taxes on business corporations from 35% to 21%, but did not offset that with revenue increases elsewhere. The promise is that cheaper taxes will spur economic growth. This is a myth under present economic conditions and overall public and private debt burdens. Instead, the new tax law, assuming ideal economic conditions, will decrease expected revenues by a total of $1 trillion over the next 10 years. If the economy goes into severe recession, highly likely, tax revenues will plunge and the deficits will explode even more.

What the new Trump tax cut act will do is dramatically increase the size of the US annual budget deficit. The Congressional Budget Office estimates that as early as Fiscal Year 2019 the annual deficit that must be financed by debt will reach $1 trillion. Then the Treasury Borrowing Advisory Committee expects government debt issues of $ 955 billion for FY2018, compared with $ 519 billion in FY 2017. Then for FY 2019 and 2020 the deficit will exceed $1 trillion. By 2028, ten years from now, under mild economic assumptions, the size of the USA Federal debt will rise to an untenable $34 trillion from roughly $21 trillion today, and the deficit in 2028 will exceed $1.5 trillion. And this year 2018 alone, with historically low interest rates the cost of interest only on the total Federal debt will reach $500 billion.

Zombie borrowers…time bombs

Now after almost a decade of unprecedented low interest rates to bail out Wall Street and create new asset inflation in stocks, bonds and housing, the Fed is in the early stages of what some call QT or Quantitative Tightening. Interest rates are rising and have been for the past year, so far very gradually as the Fed is being cautious. The Fed however is continuing to raise rates, and now the Fed Funds stands at 1.75% after nearly ten years at effectively zero. Were they to stop now it would signal a market panic that the Fed knew something far worse than they say.

Because never in its history has the Federal Reserve indulged in such a monetary experiment with so low rates so long, the effects of reversing are going to be as well unprecedented. At the onset of the 2008 financial crisis the Fed rates were around 5%. That is what the Fed is aiming at to return to “normal.” However, with rising interest rates, the lowest credit sector, so-called non-investment grade or “junk bonds” face domino style defaults.

Moody’s Credit Rating has just issued a warning that, barring some sort of miracle, as US interest rates rise, and they are, as much as 22% of US corporations that are being kept alive borrowing at historically low interest, not only in shale oil but in construction and utilities, so-called “zombie” corporations, will face an avalanche of mass defaults on their debt. Moody’s writes that, “low interest rates and investor appetite for yield has pushed companies into issuing mounds of debt that offer comparatively low levels of protection for investors.” The Moody’s report goes on to state some alarming numbers: since 2009, the level of global non-financial junk-rated companies has soared by 58%, representing $3.7 trillion in outstanding debt, the highest ever. Some 40%, or $2 trillion, are rated B1 or lower. Since 2009, US corporate debt has increased by 49%, hitting a record total of $8.8 trillion. Much of that debt has been used to fund stock repurchases by the companies to boost their stock price, the main reason for the unprecedented Wall Street stock market bubble.

Fully 75% of federal spending is economically non-productive including military, debt service, social security. Unlike during the 1930s Great Depression when levels of Federal debt were almost nil, today the debt is 105% of GDP and rising. Spending on national economic infrastructure including the Tennessee Valley Authority and a network of federally-build dams and other infrastructure resulted in the great economic boom of the 1950s. Spending $1.5 trillion on a dysfunctional F-35 all-purpose fighter jet program won’t do it.

Into this precarious situation Washington is doing its very best to antagonize the very countries that it needs to finance these deficits and buy the US debt—China, Russia and even Japan. As financial investors demand more interest to invest in US debt, the higher rates will trigger the default avalanche Moody’s warns. This is the real backdrop to the dangerous US foreign policy actions of the recent period. No one in Washington seems to care and that’s the alarming fact.

The Coming Collapse

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By Chris Hedges

Source: Occupy.com

The Trump administration did not rise, prima facie, like Venus on a half shell from the sea. Donald Trump is the result of a long process of political, cultural and social decay. He is a product of our failed democracy. The longer we perpetuate the fiction that we live in a functioning democracy, that Trump and the political mutations around him are somehow an aberrant deviation that can be vanquished in the next election, the more we will hurtle toward tyranny. The problem is not Trump. It is a political system, dominated by corporate power and the mandarins of the two major political parties, in which we don’t count. We will wrest back political control by dismantling the corporate state, and this means massive and sustained civil disobedience, like that demonstrated by teachers around the country this year. If we do not stand up we will enter a new dark age.

The Democratic Party, which helped build our system of inverted totalitarianism, is once again held up by many on the left as the savior. Yet the party steadfastly refuses to address the social inequality that led to the election of Trump and the insurgency by Bernie Sanders. It is deaf, dumb and blind to the very real economic suffering that plagues over half the country. It will not fight to pay workers a living wage. It will not defy the pharmaceutical and insurance industries to provide Medicare for all. It will not curb the voracious appetite of the military that is disemboweling the country and promoting the prosecution of futile and costly foreign wars.

It will not restore our lost civil liberties, including the right to privacy, freedom from government surveillance, and due process. It will not get corporate and dark money out of politics. It will not demilitarize our police and reform a prison system that has 25 percent of the world’s prisoners although the United States has only 5 percent of the world’s population. It plays to the margins, especially in election seasons, refusing to address substantive political and social problems and instead focusing on narrow cultural issues like gay rights, abortion and gun control in our peculiar species of anti-politics.

This is a doomed tactic, but one that is understandable. The leadership of the party, the Clintons, Nancy Pelosi, Chuck Schumer, Tom Perez, are creations of corporate America. In an open and democratic political process, one not dominated by party elites and corporate money, these people would not hold political power. They know this. They would rather implode the entire system than give up their positions of privilege. And that, I fear, is what will happen. The idea that the Democratic Party is in any way a bulwark against despotism defies the last three decades of its political activity. It is the guarantor of despotism.

Trump has tapped into the hatred that huge segments of the American public have for a political and economic system that has betrayed them. He may be inept, degenerate, dishonest and a narcissist, but he adeptly ridicules the system they despise. His cruel and demeaning taunts directed at government agencies, laws and the established elites resonate with people for whom these agencies, laws and elites have become hostile forces. And for many who see no shift in the political landscape to alleviate their suffering, Trump’s cruelty and invective are at least cathartic.

Trump, like all despots, has no ethical core. He chooses his allies and appointees based on their personal loyalty and fawning obsequiousness to him. He will sell anyone out. He is corrupt, amassing money for himself—he made $40 million from his Washington, D.C., hotel alone last year—and his corporate allies. He is dismantling government institutions that once provided some regulation and oversight. He is an enemy of the open society. This makes him dangerous. His turbocharged assault on the last vestiges of democratic institutions and norms means there will soon be nothing, even in name, to protect us from corporate totalitarianism.

But the warnings from the architects of our failed democracy against creeping fascism, Madeleine Albright among them, are risible. They show how disconnected the elites have become from the zeitgeist. None of these elites have credibility. They built the edifice of lies, deceit and corporate pillage that made Trump possible. And the more Trump demeans these elites, and the more they cry out like Cassandras, the more he salvages his disastrous presidency and enables the kleptocrats pillaging the country as it swiftly disintegrates.

The press is one of the principal pillars of Trump’s despotism. It chatters endlessly like 18th-century courtiers at the court of Versailles about the foibles of the monarch while the peasants lack bread. It drones on and on and on about empty topics such as Russian meddling and a payoff to a porn actress that have nothing to do with the daily hell that, for many, defines life in America. It refuses to critique or investigate the abuses by corporate power, which has destroyed our democracy and economy and orchestrated the largest transfer of wealth upward in American history.

The corporate press is a decayed relic that, in exchange for money and access, committed cultural suicide. And when Trump attacks it over “fake news,” he expresses, once again, the deep hatred of all those the press ignores. The press worships the idol of Mammon as slavishly as Trump does. It loves the reality-show presidency. The press, especially the cable news shows, keeps the lights on and the cameras rolling so viewers will be glued to a 21st-century version of “The Cabinet of Dr. Caligari.” It is good for ratings. It is good for profits. But it accelerates the decline.

All this will soon be compounded by financial collapse. Wall Street banks have been handed $16 trillion in bailouts and other subsidies by the Federal Reserve and Congress at nearly zero percent interest since the 2008 financial collapse. They have used this money, as well as the money saved through the huge tax cuts imposed last year, to buy back their own stock, raising the compensation and bonuses of their managers and thrusting the society deeper into untenable debt peonage. Sheldon Adelson’s casino operations alone got a $670 million tax break under the 2017 legislation. The ratio of CEO to worker pay now averages 339 to 1, with the highest gap approaching 5,000 to 1.

This circular use of money to make and hoard money is what Karl Marx called “fictitious capital.” The steady increase in public debt, corporate debt, credit card debt and student loan debt will ultimately lead, as Nomi Prins writes, to “a tipping point—when money coming in to furnish that debt, or available to borrow, simply won’t cover the interest payments. Then debt bubbles will pop, beginning with higher yielding bonds.”

An economy reliant on debt for its growth causes our interest rate to jump to 28 percent when we are late on a credit card payment. It is why our wages are stagnant or have declined in real terms—if we earned a sustainable income we would not have to borrow money to survive. It is why a university education, houses, medical bills and utilities cost so much. The system is designed so we can never free ourselves from debt.

However, the next financial crash, as Prins points out in her book “Collusion: How Central Bankers Rigged the World,” won’t be like the last one. This is because, as she says, “there is no Plan B.” Interest rates can’t go any lower. There has been no growth in the real economy. The next time, there will be no way out. Once the economy crashes and the rage across the country explodes into a firestorm, the political freaks will appear, ones that will make Trump look sagacious and benign.

And so, to quote Vladimir Lenin, what must be done?

We must invest our energy in building parallel, popular institutions to protect ourselves and to pit power against power. These parallel institutions, including unions, community development organizations, local currencies, alternative political parties and food cooperatives, will have to be constructed town by town. The elites in a time of distress will retreat to their gated compounds and leave us to fend for ourselves. Basic services, from garbage collection to public transportation, food distribution and health care, will collapse. Massive unemployment and underemployment, triggering social unrest, will be dealt with not through government job creation but the brutality of militarized police and a complete suspension of civil liberties.

Critics of the system, already pushed to the margins, will be silenced and attacked as enemies of the state. The last vestiges of labor unions will be targeted for abolition, a process that will soon be accelerated given the expected ruling in a case before the Supreme Court that will cripple the ability of public-sector unions to represent workers. The dollar will stop being the world’s reserve currency, causing a steep devaluation. Banks will close. Global warming will extract heavier and heavier costs, especially on the coastal populations, farming and the infrastructure, costs that the depleted state will be unable to address. The corporate press, like the ruling elites, will go from burlesque to absurdism, its rhetoric so patently fictitious it will, as in all totalitarian states, be unmoored from reality. The media outlets will all sound as fatuous as Trump. And, to quote W.H. Auden, “the little children will die in the streets.”

As a foreign correspondent I covered collapsed societies, including the former Yugoslavia. It is impossible for any doomed population to grasp how fragile the decayed financial, social and political system is on the eve of implosion. All the harbingers of collapse are visible: crumbling infrastructure; chronic underemployment and unemployment; the indiscriminate use of lethal force by police; political paralysis and stagnation; an economy built on the scaffolding of debt; nihilistic mass shootings in schools, universities, workplaces, malls, concert venues and movie theaters; opioid overdoses that kill some 64,000 people a year; an epidemic of suicides; unsustainable military expansion; gambling as a desperate tool of economic development and government revenue; the capture of power by a tiny, corrupt clique; censorship; the physical diminishing of public institutions ranging from schools and libraries to courts and medical facilities; the incessant bombardment by electronic hallucinations to divert us from the depressing sight that has become America and keep us trapped in illusions. We suffer the usual pathologies of impending death. I would be happy to be wrong. But I have seen this before. I know the warning signs. All I can say is get ready.

Assets of world’s “high net wealth” millionaires surged to $70 trillion in 2017

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By Barry Grey

Source: WSWS.org

The concentration of the planet’s wealth in the hands of a narrow financial elite is growing by leaps and bounds. A new report published Tuesday reveals that the wealth of the world’s 18.1 million “high net worth individuals”—those having investable assets of $1 million or more—shot up by 10.6 percent last year to top $70 trillion for the first time ever.

The “World Wealth Report 2018,” issued by the consulting firm Capgemini, revealed that the combined wealth of the world’s millionaires rose for the sixth consecutive year in 2017 to reach $70.2 trillion. It is on target to surpass $100 trillion by 2025.

Capgemini defines a high net wealth individual (HNWI) as someone with assets above $1 million, excluding his or her primary residence, collectibles, consumables and consumer durables. This defines a wealthy elite that owns more than $1 million in stocks, bonds, real estate or other investments.

The number of HNWIs grew almost 10 percent, or 1.6 million. The United States, Japan, Germany and China are the four largest markets for millionaires, accounting for 61 percent of the world’s HNWIs. The US tops the list with 5.3 million HNWIs, a 10 percent increase from 2016.

However, the Asia-Pacific region has most of these millionaires overall and accounted for the bulk of the increase in both the number of HNWIs (74.9 percent of the total) and the rise in their global wealth (68.8 percent). Economic inequality appears to be rising faster in this region than any other. Japan saw a 9 percent increase in HNWI millionaires, China an 11 percent rise and India a stunning 20 percent increase.

The financial oligarchy itself resides within what the report calls “ultra-high net wealth individuals,” those with $30 million or more in investable assets. They comprise only 1 percent of HNWIs, or 174,000 individuals, but they account for a vastly disproportionate share of the overall wealth of HNWI millionaires, as well as the increase in HNWI wealth. These ultra-HNWIs own some 35 percent of total NHWI wealth. In 2017, their ranks grew by 11.2 percent and their wealth by 12 percent, reaching $24.5 trillion.

The main factor driving the rapid enrichment of the financial aristocracy is the record rise in stock prices. “High net worth individuals around the world enjoyed investment returns above 20 percent for the second year in a row,” Anirban Bose, head of Capgemini’s financial services global strategic business unit, wrote in the report’s preface. The report noted that global market capitalization grew 21.8 percent in 2017.

The stock market has served as the primary mechanism for central banks and governments around the world to increase the wealth of the financial oligarchy, which dominates the world economy and all of the official institutions of society and dictates the policies of governments. For decades, the central banks, led by the US Federal Reserve, working in tandem with governments of the nominal “left” no less than the right, have deliberately engineered a vast transfer of wealth from the working class to the ruling elite by pursuing policies designed to pump up the financial markets.

These polices have been intensified since the 2008 financial crash. The Fed and the US government, first under Bush and then Obama, responded to the Wall Street meltdown by enacting measures to ensure that the oligarchs recouped all of their losses and were able to exploit the crisis to further enrich themselves. In addition to bailing out the banks and hedge funds with trillions of dollars in tax-payer money, they provided virtually free credit to Wall Street by means of near-zero interest rates and used “quantitative easing”—a euphemism for money-printing—to offload the banks’ bad loans onto the Fed’s balance sheet.

From the low-point of the post-crash recession in March 2009 to the present, US stock prices have risen four-fold, stoking a similar stock bonanza internationally.

This stock market boom and the entire process of social plunder have depended on the suppression of working class opposition and a savage attack on workers’ living standards by means of austerity and wage-cutting. The throttling of the class struggle has been contracted out to the trade unions, the industrial police agencies of the ruling class.

One of the most significant findings in the Capgemini report is that the total financial wealth of the world’s HNWIs more than doubled between 2008 and 2017, rising from $32.8 trillion to $70.2 trillion. This same period has seen, in the world inhabited by the vast majority of humans, a growth of poverty, hunger, homelessness, disease and, in the United States, a decline in life expectancy, a surge in infant and maternal mortality, and record rates of suicide and drug addiction.

This attack has continued and intensified under Trump, as well as governments in Europe, Latin America and Asia. Just last week the Federal Reserve raised interest rates and announced a tightening of monetary policy in response to the growth of workers’ strikes and protests. The oligarchy is petrified that lower unemployment and a tight labor market will encourage a militant wages movement that would undercut the entire basis of the stock market surge. It is moving to slow the economy and drive up unemployment.

To place the wealth of the world’s multi-millionaires and billionaires in perspective, the total of $24.5 trillion owned by “ultra-high net wealth individuals” is almost one-fifth of the world gross domestic product of $135 trillion.

$24.5 trillion is more than the GDP of the United States. It is more than the combined GDPs of the next three countries—China, Japan and Germany.

Just the global increase in ultra-HNWI wealth in 2017, $2.6 trillion, is larger than the GDPs of countries such as Italy, Brazil, Canada and Russia.

What could this money be used for were it not squandered to satisfy the demands of the rich and the super-rich for mansions, private jets and yachts? To give an example, the United Nations estimates it would cost $30 billion a year to eradicate world hunger. That means the money currently controlled by the world’s ultra-HNWIs could eliminate world hunger for 817 years.

The “World Wealth Report 2018” is only the latest in a wave of studies documenting the ever tightening grip of a tiny financial oligarchy and its ultra-wealthy periphery over the world’s resources. Wealth concentration on such a scale makes it impossible to seriously address a single social issue. The staggering diversion of resources into private wealth accumulation by the financial oligarchy starves society of the resources it needs to deal with the most basic problems.

The working class has no choice but to confront head-on the problem of economic inequality. The financial elite enforces its social interests through the wholesale buying of political parties and politicians, making democracy under capitalism nothing but a hollow shell. Any attempt within the framework of the profit system to carry out a modest reallocation of resources to ensure that all people had the basic rudiments of nutrition, health care and education would provoke a furious response from the oligarchy, which has at its disposal not only the courts, politicians and mass media, but, even more decisively, the police and the army.

When social reform becomes impossible, social revolution becomes inevitable. There is no avoiding the conclusion that it is necessary to expropriate the wealth of the financial oligarchs.

America’s Dystopian Future

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By Robert Hunziker

Source: CounterPunch

Imagine a privatized America where rugged individualism reigns supreme within a vast network of corporate America, Inc., similar to 19th century wild west lifestyle, no social security, no Medicare, no Medicaid, no public law enforcement as individuals stand their own ground. Read all about it in Scott Erickson’s History of the Decline and Fall of America (Azaria Press, 2018).

Erickson’s newly released semi-fictional satire of American history and subsequent decline into deepening pits of despair is a sure-fire treasure trove of Americana, at its best. It’s a page-turner par excellence, rich in accurate textured American history and jam-packed with imagery of a dystopian future that is simply unavoidable based upon America’s character and development over the past two centuries. The dye was cast long before onset of dystopian existence.

The History of the Decline and Fall of America highlights and exposes inherent limitations of democratic capitalism whilst explaining in full living color a future American dystopia that is fully expected based upon America’s beginnings from the time of Captain John Smith at historic Jamestown (1607). The history lesson therein is superb, not missing a beat of what shaped America up to the final tipping point of neoliberal dogma and beyond into a deep dark world order.

This beautifully written and conceived historical fiction is a witty tour de force of America past, present, and future, weaving together all of the historical elements into one coherent story from the widely accepted version of American “business success ” of the early period, but over time wistfully morphing into abject failure!

That process of failure, the root causes, is what intrigues, for example, “Americans were not only inventing a country but inventing what it meant to be an American.” Indeed, America came into being as a brand new experiment in capitalistic democracy. Within that quest for a new way forward, inclusive of equality and fraternity amongst equals, Erickson discovers and reveals unique American traits that belie that mission, leading to a neoliberal/privatization hellhole that goes horribly wrong.

That fascinating pathway is explained via enchanting quips, for example, de Tocqueville’s remarkably astute comment: “ I know of no country, indeed, where the move of money has taken a stronger hold on the affections of men.” This one isolated statement from the 1830s tells a tale of American character molded by artificiality of wealth creation simply for the sake of possessing it. America’s pursuit of happiness was the “pursuit of affluence” and remained its dominant trait for the “remaining 200-plus years of American history.”

Indeed, those predominant American character traits are flushed-out and analyzed in the context of eventual failure, of a dystopian world order emanating out of America’s clumsy experimentation with empire-building and constantly striving for the pot at the end of the rainbow, meaning economic growth above all else. It was a frontier spirit that fed into elusive goals of preeminence: “The frontier resulted in Americans being doers rather than thinkers….”

Real scenes of real American cocksuredness, as well as the clumsiness associated with raw ignorance, come to life, e.g., during the presidential race between Ike and Adlai Stevenson in 1954: “A revealing incident occurred while Stevenson was campaigning for president. A citizen shouted to Stevenson that he ‘had the vote of every thinking person.’Stevenson replied, ‘That’s not enough. We need a majority!”
This is excellent history, comparable to a textbook, as well as a peek into the future shaped via trends rooted throughout Americana. Erickson’s lessons in American history are genuine and accurate, which gives the book depth and a powerful sense of significance well beyond similar treatises that try to lay the challenging groundwork leading to how a nation turns sour into a dystopian society.

He weaves the path of Manifest Destiny all the way from 1840s to the planting of the American flag on the surface of the moon. Until the 1970s when American pre-eminence tipped downward, humiliated in Vietnam in what future generations came to know as The Vietnam Syndrome,” the psychological attempt to live with the unacceptable reality that it was possible for America to not win.

Not only was America no longer a winner in war, its “unparalleled level of affluence… began to decline.” The 1970s marked the high point, forever downward into a bottomless septic tank, a cloaca of messy foul shit earmarking America’s final destiny, third world status within a realm of excessive, pretense of wealth glistening behind spiked electronic gates.

The signs of decline were easy to spot by the early-mid 2000s: “… the situation had declined dramatically. According to statistics from 2015, among industrialized nations, America was notable for having the highest poverty rate, the lowest score on the UN index of ‘material well-being of children,’ the highest health care expenditures, the highest infant mortality rate, the highest prevalence of mental health problems, the highest obesity rate, the highest consumption of antidepressants per capita, the highest homicide rate, and the largest prison population per capita. By international standards, the rural counties of southern West Virginia and eastern Kentucky qualified as developing countries, as did large sections of American cities such as Detroit, Cleveland, Gary, and many others.” (Pg. 112)

Thereafter, America’s youth no longer embraced the long-standing belief that they would have more than their parents. No, they knew it would be less and less. America entered a “permanent recession” cycle.
By the late 2030s American experienced a series of extreme crises. A number of cities declared bankruptcy. Houston, America’s 4th largest city goes bankrupt. Cleveland goes bankrupt. The head of the Federal Reserve quits and becomes a banjo player in a bluegrass group. America’s banking system collapses under the weight of fishy loans and massive crazed derivatives all permitted by increasingly hands-off regulations. The brutal hand of libertarianism smears a once proud republic.

Regular citizens, entire families carry torches surrounding Wall Street in protest of loss savings, ATMs not functioning, banks closed. An economic death spiral unleashed. The Save America Act followed, consisting of pure right wing neoliberal fix-its to save corporate America, to save Wall Street, turning to America, Inc. as the only answer to all that ails.

And, as the financial markets unravel in the face of nationwide bankruptcies, the government convincingly informs the public: “We need to defy the Constitution in order to preserve it… Americans were so thoroughly confused about the relationship between government and economics that most of them thought that the terms democracy, free-enterprise, and capitalism were the same thing.” (Pg. 165)

As time progresses, America’s Labor Day is changed to Management Day, and the Catholic Church is permitted to re-name the Statue of Liberty as “Our Lady of Perpetual Economic Growth.” America the nation turns into America, Inc. It is the only way the establishment knows to drive the country out of its doldrums. As such, The Star Spangled Banner is changed to The Free Market Ramble.

Privatization of the entire country in harmony with massive tax cuts alongside elimination of Social Security, Medicare, Medicaid, public education, law enforcement, postal service, and maintenance of roads and infrastructure, thereafter, people take care of themselves from birth to the death, alone with family backing. Self-directed medical care becomes a beacon of survival of the fittest of the fittest. Those that participated as y0ungsters in Boy/Girl Scouts have a leg up in a society that increasingly places emphasis on rugged individualism. However, the many, many weaklings stumble in rows after rows of slimy gutters.

In the end, and similar to America’s 2008-09 financial collapse, which was only a warm up for much bigger things to come: “The decisive trigger, the one that pushed America beyond the point of no return, was the total collapse of the economy. It had been something of a miracle that the doomed economy had not collapsed long before. Toward the end it had been sustained by little more than momentum, since according to all economic indicators it should not have been functioning at all. The economic system based on infinite growth had reached the point where it could grow no more. American banks could not pay off previous debt by making further loans to generate more money. The pyramid scheme was over… An eerie calm descended upon all those involved in economics and finance.”

US Collapse – the Spectacle of Our Time

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By Finnian Cunningham

Source: Axis of Logic

May you live in interesting times, goes the Chinese proverb. Few can doubt that we are indeed living in such an interesting time. Big changes are afoot in the world, it seems.

None more so than the collapsing of the American Empire.

The US is going through an historic “correction” in the same way that the Soviet Union did some 30 years ago when the latter was confronted with the reality of its unsustainable political and economic system. (That’s not meant to imply, however, that socialism is unviable, because arguably the Soviet Union had fatally strayed from its genuine socialist project into something more akin to unwieldy state capitalism.)

In any case, all empires come to an end eventually. History is littered with the debris of countless empires. Why should the American Empire be any different? It’s not. Only arrogant “American exceptionalism” deludes itself from the reality.

The notable thing is just how in denial the political class and the US news media are about the unfolding American crisis.

This is partly where the whole “Russiagate” narrative comes into play. Blaming Russia for allegedly destabilizing US politics and society is a cover for denial over the internal rot facing the US.

Some may scoff at the very idea of an “American Empire”. That’s something Europeans did, not us, goes the apologist for US power. The quick retort to that view is to point out that the US has over 1,000 military bases in more than 100 countries around the world. If that is not a manifestation of empire then what is?

For seven decades since the Second World War, “Pax Americana” was the grandiose name given to US imperial design for the global order. The period was far from peaceful as the vainglorious name suggests. Dozens of wars, proxy conflicts and violent subversions were carried by the US on every continent in order to maintain its empire. The so-called “global policeman” was more often a “global thug”.

That US empire is now teetering at the cusp of an emerging multipolar world order led by China, Russia and other rising powers.

When US leaders complain about China and Russia “reshaping the global order” to reflect their interests what the American leaders are tacitly admitting is the coming end of Washington’s presumed hegemony.

Rather than accepting the fate of demise, the US is aggressively resisting by denigrating China and Russia’s power as somehow illegitimate. It’s the classic denial reaction of a sore loser.

So, what are the telltale signs that the US is indeed undergoing a seminal “correction” — or collapse?

The heyday of American capitalism is well passed. The once awesome productive system is a skeleton of its former self. The rise of massive social poverty alongside obscene wealth among a tiny elite is a sure sign that the once mighty American economy is chronically moribund. The country’s soaring $20 trillion national debt is another symptom of chronic atrophy.

Recent self-congratulatory whooping by President Trump of “economic recovery” is like the joy felt from looking at a mirage. The roaring stock market is an elite phenomenon which can just as easily slump over night.
What the champagne bubbles can’t disguise is the structural failing of US capitalism to reverse exploding inequality and endemic poverty across America. The national prowess of US capitalism has been superseded by global capitalism where American corporations among others scour the planet for cheap labor and tax havens. There is no going back to a supposed golden age, no matter how much Trump crows about “America First”.

The other side of the coin from historic US economic demise is the concomitant rise in its militarism as a way to compensate for its overall loss of power.

It is no coincidence that since the end of the Cold War following the dissolution of the Soviet Union, US military interventions around the world have erupted with increased frequency and duration. The US is in a veritable permanent state of war actively deploying its forces simultaneously in several countries, particularly in the oil-rich Middle East.

Washington of course gives itself a fig leaf cover by calling its surge in militarism a “war on terror” or “defending allies”. But, increasingly, US war conduct is seen for what it plainly is — violation of international law and the sovereignty of nations for the pursuit of American imperial interests.

In short, the US is patently lashing out as a rogue regime. There’s no disguising that fiendish fact.

In addition to waging wars, bombing countries, sponsoring terrorist proxies and assassinating enemies at will with drones, Washington is increasingly threatening others with military aggression. In recent months, North Korea and Iran have been openly threatened based on spurious claims. Russia and China have also been explicitly warned of American aggression in several strategic documents published by the Trump administration.

The grounds for American belligerence are baseless. As noted, the real motive is to do with compensating for its own inherent political, economic and social crises. That then amounts to American leaders inciting conflicts and wars, which is in itself a grave violation of international law — a crime against peace, according to Nuremberg principles.

The American Empire is failing and flailing. This is the spectacle of our time. The Western mainstream news media are either blind, ignorant or complicit in denying the historic collapse. Such media are indulging reckless fantasies of the US political class to distract from the potential internal implosion. Casting around for scapegoats to “explain” the deep inherent problems, the political class are using Russia and alleged Russian “interference” as a pretext.

World history has reached a foreboding cross-roads due to the collapsing of the American Empire. Can we navigate a safe path forward avoiding catastrophic war that often accompanies the demise of empires?

A lot, it seems, depends on ordinary American people becoming politically organized to challenge their dysfunctional system run by and for the elites. If the American people cannot hold their elites to account and break their corrupt rule, overhauling it with something more equitable and democratic, then the world is in peril of being plunged into total war. We can only but wish our American brothers and sisters solidarity and success.

Big Pharma, Big Oil and Big Banks Meet the Definition of Terrorists

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Common threads persist throughout definitions of terrorism: violence, injury or death, intimidation, intentionality, multiple targets and political motivation. Big pharma, big oil and big banks meet them all.

By Paul Buchheit

Source: Mint Press News

Various definitions of terrorism have been proposed in recent years, by organizations such as the FBI, the State Department, Homeland Security, and the ACLU. Some common threads persist throughout the definitions: violence, injury or death, intimidation, intentionality, multiple targets, political motivation. All the criteria are met by pharmaceutical and oil and financial companies. They have all injured and intimidated the American public, and caused people to die, with intentionality shown by their refusal to acknowledge evidence of their misdeeds, and political motives clear in their lobbying efforts, where among all U.S. industries Big Pharma is #1, Big Oil is #5, and Securities/Investment #8.

The terror inflicted on Americans is real, and is documented by the facts to follow.

Big Pharma: Qualifying for Trump’s Call for Capital Punishment for Drug Dealers

In a Time Magazine article a young man named Chad Colwell says “I got prescribed painkillers, Percocet and Oxycontin, and then it just kind of took off from there.” Time adds: “Prescriptions gave way to cheaper, stronger alternatives. Why scrounge for a $50 pill of Percocet when a tab of heroin can be had for $5?” About 75% of heroin addicts used prescription opioids before turning to heroin.

Any questions about Big Pharma’s role in violence and death in America have been answered by the Centers for Disease Control and the American Journal of Public Health. Any doubts about Big Pharma’s intentions to intimidate the public have been put to rest by the many occasions of outrageous price gouging. And any uncertainty about political pressure is removed by its #1 lobbying ranking.

As for malicious intentions, Bernie Sanders noted, “We know that pharmaceutical companies lied about the addictive impacts of opioids they manufactured.” Purdue Pharma knew all about the devastating addictive effects of its painkiller Oxycontin, and even pleaded guilty in 2007 to misleading regulators, doctors, and patients about the drug’s risk. Now Purdue and other drug companies are facing a lawsuitfor “deceptively marketing opioids” and ignoring the misuse of their drugs.

No jail for the opioid pushers, though, just slap-on-the-wrist fines that can be made up with a few price increases. But partly as a result of Pharma-related violence, Americans are suffering “deaths of despair”— death by drugs, alcohol and suicide. Suicide is at its highest level in 30 years.

Big Oil: Decades of Terror

Any doubts about the ecological terror caused by fossil fuel companies have been dispelled by the World Health Organization, the American Lung Association, the United Nations, the Pentagon, cooperating governments, and independent research groups, all of whom agree that human-induced climate change is killing people.

The oil industry’s intentionality and political motives have been demonstrated by their refusal to admit the known truth, starting with Exxon, which has covered up its own climate research for 40 years, and continuing through multi-million dollar lobbying efforts by Amoco, the US Chamber of Commerce, General Motors, Koch Industries, and other corporations in their effort to dismantle the Kyoto Protocol against global warming.

Big Banks: Leaving Suicidal Former Homeowners Behind

Any doubts about the violence stemming from the 2008 mortgage crisis have been resolved by studies of recession-caused suicides. Both the British Journal of Psychiatry and the National Institutes of Healthfound definite links between the recession and the rate of suicides.

As with Big Pharma and Big Oil, intentionality and political motives are evident in the banking industry’s lobbying efforts on behalf of deregulation — leading to the same conditions that threatened American homeowners in 2008. There has also been a surge in the number of non-bank lenders, who are less subject to regulation.

Making it all worse are private developers, who make most of their profits by building fancy homes for the rich. And by avoiding affordable housing. Since the recession, Blackstone and other private equity firms — with government subsidies — have been buying up foreclosed houses, holding them till prices appreciate, and in the interim renting them back at exorbitant prices.

This is leaving more and more Americans out in the cold — literally. A head of household in the U.S. needs to make $21.21 an hour to afford a two-bedroom apartment at HUD standards, much more than the $16.38 they actually earn. Since the recession, the situation has continually worsened. From 2010 to 2016 the number of housing units priced for very low-income families plummeted 60 percent.

Here’s the big picture: Since the 1980s there’s been a massive redistribution of wealth from middle-class housing to the investment portfolios of people with an average net worth of $75 million. It’s not hard to understand the “deaths of despair” caused by the terror inflicted on people losing their homes.