The Empty Bubble- Administration Doesn’t Matter

This was posted to Medium on 10/9/19.

The Oil Crisis of the 70’s. The Iranian Oil Embargo of the 80’s. The S&L Crisis of the 80’s. The Dot Com Bubble. The Housing Bubble.

Are you seeing a trend here?

Every 7–10 years the US experiences a recession. Each time it has been a habit to name the recession by the alleged cause of the recession. Though the name is typically only applied retroactively. “Experts” during the Housing Crisis never said that the country was in a housing bubble until after the bubble burst. Same is true with the dot com bubble.

This time is different in several ways.

Longer period preceding a recession. At this point the last recession was 11 years ago and independent economists all agree that we are overdue for a recession. The longer we wait before it comes, the worse it will be when it gets here.

This bubble has no actual source which can be applied as a label. Where previous recessions had labels, this one truly cannot have an accurate label. The truth is that previous recessions may have had labels named after the trigger events but each recession was far more complex than any single trigger. Prior to the Oil Crisis of the 70’s, the auto manufacturing business had been in decline in the US, caused by a slowing economy leading to fewer vehicle sales. Prior to the Dot Com crash, employment in the non-tech sector was sluggish, partly (but not exclusively) caused by the Clinton welfare reform. The coming recession may ultimately be labeled as caused by the China Trade War Bubble or something similar, yet that will in no way be accurate because this recession would be coming even if no trade war were occurring now.

We never actually recovered from the last recession. With the 2008–2009 recession, we saw a dramatic decrease in wages across the country. Wages have never recovered since that time. People learning to adapt to lower incomes is not economic recovery. Jobs offer fewer benefits than prior to the recession, more jobs are part-time than ever. The combination has led many to working temporary (“gig”) positions or multiple part-time jobs. This results in workers paying more to replace benefits like health and life insurance than if they were subsidized by a full time employer. Even if subsidized, deductibles have increased along with premiums while wages have stagnated or declined. Once again, this is not recovery.

The stock market is not a reflection of the economy. I’ve pointed this out many times. The stock market is frequently a negative image of the health of the economy. When wages go up, stocks decline. Your wages are viewed by investors as a cost, a debt, a liability. Thus, an improved wage report will often be followed by mass layoffs to reduce costs. While in previous recessions the stock market did rise, it was typically accompanied by some events in the general economy which could be pointed to as causing that rise. Increased oil prices, home prices rising, expansive investment in internet startups. This time, none of that exists. The only justification for stock prices increasing at this time is stock buybacks by corporations, which is stock manipulation. By definition this is insider trading due to the fact that corporate executives profit from stock repurchases. Stock market rises do not improve the general economy at all. When most of the population is living paycheck to paycheck, stocks have no relation to the real world.

Personal and corporate debt and default are at record levels. One way Americans have been surviving since the last recession has been through incurring more debt than ever. This has been in the face of weak wages, often with the hopes of improving their condition through taking on student loans. It has not worked. Student loan defaults are at the highest rate in US history. We see mass layoffs of people with college/university degrees happening. The average vehicle payment exceeds $500 per month. Bankruptcy rates are rising, both personal and corporate. Corporate debt is at the highest rate in history, while consumer spending is down. Consumer confidence is down. Corporate confidence is down, as indicated by CEO polls and capital expenditures. Capital expenditures have been buoyed up to now by expenditures on contracts which have run their course.

The Fed is bailing out the banks, not the economy. Following the 2008 crash, the federal government bailed out the big banks. However, even that was a response after the crash had recurred. This time around, the Federal Reserve is pumping literally trillions of dollars into the banking and financial services industries to save them before the crash occurs.. Maybe. I’ll get to that. After the 2008 crash, Obama did do one of the few truly valid steps to stimulate the economy he performed during his administration. He increased funding for food stamps, which helped the economy slightly. We may see some similar steps after this crash occurs but only afterward and it is highly questionable it will happen at all with a GOP Senate in place.

Other countries cannot help. The economic contraction being seen in the US is not just here, it is global. Global manufacturing is down. Freight shipping is down. These lead to lower gas and oil requirements, bringing down oil production. It also drags down vehicle manufacturing and sales, fewer freight/shipping jobs, etc. More countries are investing in renewable energy, also impacting oil demand negatively. Numerous countries now have more debt than GDP earnings. Major banks are laying off tens of thousands of workers in all countries. Sociopolitical pressures are forcing more central banks to invest domestically in their home nations, rather than in US assets. US foreign policies are causing independent foreign investors to decrease funding for new US projects. Other countries are selling off US Treasuries, unsure if the US can or even will honor the debts.

Highly questionable rationale. I have been saying for quite some time that as the economy deteriorates, corporate profits based on sales will decline yet stocks will remain high. That is, until all liquidity has been squeezed out of each corporation and stocks are incapable of climbing higher. That is the point we are at right now. The highest valued stocks are for companies that produce nothing for trade. Facebook, Amazon, Apple, Netflix and Google lead, with financial services firms following. Now that liquidity is gone, what will follow will be the rich selling off stocks in massive amounts. That is happening now but will accelerate rapidly. They invest in stocks for the purpose of gaining a profit. Now that no more profit is possible, it’s time to sell.

Once they sell in large enough amounts, they will literally CAUSE the next crash, yet walk away with huge profits. (Smaller investors will lose everything, being last to know the sell off is even happening. The media will only report on it after the fact.) They will deposit those profits in offshore accounts, board their private jets and fly to their private islands or tax havens while the US economy collapses in their wake, causing double and triple digit inflation. The Federal Reserve is helping this process because they have no connection or commitment to anything but money. They will not be held to account because we have no laws holding them to account, no system to hold them to account. Remember the Federal Reserve is NOT a government entity, it is a private capitalist entity and functions in and of itself for profit.

This has all been planned for a very long time and most of it is highly intentional.

None of this means we are without hope. However, it will take some of the most radical steps ever taken by American society to rectify it. I’ll cover the options some other time.

More About False Employment Numbers

Have you noticed how you hear how many jobs were created each month? Yet we still have unemployment. Tens of thousands of jobs created each and every month, yet the unemployment rate does not go down. How does that work?

When job creation numbers are reported, what is not included is how many jobs have been eliminated.

Think about the announcements you hear. 30,000 jobs were created last month! Okay, that would mean that if that trend continued, we would create 360,000 jobs in one year. In less than 3 years, we would have created over 1 million jobs.

Let’s dive deeper. The population of the US is roughly 330 million. The Labor Participation Rate is 63.2%, meaning 208.6 million people are actively working or seeking employment. If the unemployment rate were true, standing now at 3.7%, that means about 7.7 million people are unemployed.

Here’s the problem with those numbers. They don’t change!!!!

In point of fact, according to the Labor Department, total non-farm employment increased by 130,000 in August alone. In June, they claimed that payrolls increased by 224,000. In July, 164,000. In May, 75,000. In April, 263,000. In March, 196,000.

So, according to the US Labor Dept, in six months time the US economy added over 1 million jobs. Yet the unemployment percentage hasn’t budged downward. If there were any accuracy to these numbers, the US would be in negative unemployment in less than 3 years.

Of course, the Labor Dept was reporting similar numbers last year. In October 2018, they claimed 250,000 had been added. In November, 155,000. In December, another 312,000.

Even if job growth were slower than expected, it would still be job growth. If the economy were truly adding hundreds of thousands of jobs per month, unemployment would not exist.

In addition, consider normal attrition. People retire, get sick or die. In such cases, they leave the job market entirely. Thus, replacing them means people from the applicant pool are hired. So that should be reducing the number of unemployed but it doesn’t. The birth rate has been decreasing over time, so it is well known there are fewer young people entering the job market than the number of Boomers leaving the job market.

Of course, I’ve mentioned before that many jobs are part time or temporary. To be considered “employed” can mean working 1 hour per week or less. If an employer takes a full time job and splits it in half to make two part time jobs, it’s magic! They just created a job!

If this many jobs were genuinely being created, real wages would also be rising. Real wages as defined by wages in relation to living expenses. They’re not, except in very limited areas. Wages would be growing because employers would be competing for workers. They’re not. In the limited geographic areas which have seen wage growth, prices soon increase, eliminating any benefit seen by workers. That’s because employers want to maintain higher than reasonable profit margins. That’s capitalism.

I expect that next month we will see a larger than average number of jobs added, thanks to auto manufacturers listing jobs available as they attempt to hire scabs to cross union picket lines. That’s an example of another falsehood. Just because a company posts jobs does not mean anyone was hired to do the jobs.

We really need to insist on different ways of measuring employment and unemployment. The system we have right now is completely dishonest.

YOU Just Spent $300 BILLION To Bail Out Wall Street.. And That Cost Just Started

This past week, the Federal reserve began pumping money into “the market” at a rate of $75 Billion PER DAY, for 4 days in a row.

They stated that they will continue doing this for three weeks straight, at a maximum rate of up to $75 Billion per day, every day.

So, 4 days at $75 billion per day adds up to $300 billion. If they pump the maximum amount stated of $75 billion per day, 5 days a week, the grand total potential damage will be $1,050,000,000,000.00. Yes, that is accurate. $1 TRILLION plus $50 billion.

Keep in mind that when the Federal Reserve speaks of helping “the market”, what they are referring to is the stock market. It has absolutely nothing to do with the consumer market, the residential housing market or anything that has anything to do with the typical American. It pays no worker salary, no rent, provides no food to any American that needs it, provides no medical care, subsidizes no life saving medication.

This money simply does not exist before the Fed magically “creates” it for the sole purpose of handing it out freely to shore up a failing stock market. All of this is coming after a massive tax cut that corporations used to repurchase their own stock for the benefit of corporate executives and major investors. It comes after a $38 billion bailout of corporate farmers, which did nothing to reduce food prices for citizens. THAT came after an $18 billion bailout of the same corporate farmers in 2018. It comes after JP Morgan was revealed to have been hoarding gold and an estimated 50% of the global silver market for the purpose of manipulating the international precious metals market. It comes after multiple investment advisers and wealth managers (including JP Morgan) have advised their wealthiest customers to divest from the dollar, invest in foreign currencies and precious metals, especially gold.

Ford has laid off tens of thousands of workers in the past year. GM laid off tens of thousands more. GE laid off tens of thousands more. We have retail closures at a rate higher than any year in US history. Record numbers of federal student loan defaults. Manufacturing is down globally. Transportation of goods is down globally. Bloomberg reported that the economy had lost 600,000 jobs between December 2018 and May 2019. UAW are on strike, while GM canceled thousands of workers health insurance, after posting a profit of $8.1 billion in 2018.

Now, try and imagine what the economy would look like if the same $1 Trillion were provided to workers, to consumers. That money would be enough to hand $50,000 EACH to a total of 20 MILLION workers. Or $25,000 each to 40 million workers. In other words, it would prevent sickness or death, eviction/foreclosure, pay for education, pay off student loans, provide transportation.

So, what has the effect of this cash giveaway to the rich been so far? On Thur and Fri this week, the DOW dropped by a total of 212 points, for a total drop during one week of 285 points.

Why is this happening? Because corporate liquid assets have run dry. Something I have been warning about since 2017. Corporations used all their money to buy back stocks and drive stock prices higher, while outside investors have largely pulled their money out of the stock market, even before the warnings of JP Morgan and the like. With no more cash on hand, the corporations have nothing left to prop up the market.

Remember that the stocks most propping up the stock market are of companies that produce basically nothing. The FAANG stocks- Facebook, Apple, Amazon, Netflix and Google. The value of stocks is measured in the fiat dollar, of which the value is measured based on resources not owned by this country, with more dollars being printed by a private bank out of thin air, valued on uncertain future repayment by the companies that produce nothing.

I have been predicting for years that these events would occur in exactly this sequence. This is the final step before the cliff. There is absolutely nowhere else to go. The Fed can discuss dropping interest rates into the negative all they like. It will do no good. We are now at the edge of a Fukushima-level economic event and there is no turning back. This crash has been formulating for decades but was absolutely certain in June of 2018, when the Federal Reserve raised the core interest rate. That was the sign it could not be averted. Stocks immediately dropped that very same day.

At this point there is literally no value in investors or corporations spending money on capital investments to maintain or create jobs, to increase production or anything else. The dollar can no longer be propped up, no matter how many wars we wage or threaten. Consumers have no more money which will fund even a continuation, let alone an expansion of the current system.

The next step will be that the last investors and corporations will begin selling off stocks in a mushroom cloud, each investor and executive trying to sell off as much as possible to cash in while the stocks are at high numbers. Convert to cash, deposit the funds in offshore accounts as they board their private jets out of the country. Smaller investors not sitting directly in front of their computers as day traders will lose basically everything, far worse than 2018 or 1929.

I will offer one single disclaimer to this. If you read over my previous economic writing, the only times I have ever been proven incorrect is when I included an estimated timeline. I have never been incorrect regarding events themselves. So you will notice that I am not including a timeline in this post. The reason I have been incorrect on time frame has been because I literally underestimated the absolute depth of corruption. This crash is definitely at our doorstep, right here, right now. So it is only a matter of time, which will not be long.

The only thing which could potentially stave it off momentarily would be an actual war. Not military intervention, actual war declared by Congress. yet even that will not save the economy and would ultimately lead to the collapse being worse than we currently face.

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I am an independent writer with no corporate sponsors or backing. The only income I make from my writing comes from views. At least I have reached the point where it makes more than it costs me! lol! (Not by much.)My writing is done in between full time (and overtime) nursing, shared custody of my brilliant daughter and mundane existence.

I have opened my new website which is intended to be a central listing of protests and political rallies across the US. It’s still a work in progress but is functional. You can find it at http://RallyAndProtest.com

Please consider becoming a patron on Patreon. I try and average at least 20 articles a month, so a $1 a month donation would come down to 5¢ per article to support independent, non-corporate writing. My Patreon page is here.

If you care to share articles with those who do not have Medium or Patreon accounts, I also post most of my articles on my own website, which has no advertising and I pay for with income from writing. My website is at https://issuesunite.com/ and all articles can be shared freely. You can always quote me, no attribution required. My goal is spreading information and awareness. The whole point is building a better, more peaceful, more equitable world for us and future generations.

The Dangers of Shadow Banking

You have probably heard the term by now, “shadow banking”. However, many people don’t understand the risks it poses because they do not understand exactly what it is.

Shadow banking by all estimates is greater in size than the global banking system. By some estimates, it is greater in size than the global economy.

Comparison. You see lots of stories about how the Chinese shadow banking system poses a threat to the global economy. However, according to Bloomberg, the US shadow banking system is nearly twice the size of the Chinese shadow banking system, with China accounting for 16% of estimated shadow banking programs, while the US accounts for and estimated 31% (almost 1/3 of all shadow banking globally). In 2016, China began enacting policies to rein in their shadow banking problem. This is aside from the fact that most Chinese banks are nationalized. Nationalized banks cannot be shadow banks or pose the level of risk that privatized shadow banking systems do. In the US, any attempt at regulating shadow banking has met with legal, economic and political resistance.

What is it? Shadow banking is comprised of financial institutions and systems which are not held accountable to regulatory agencies the way officially recognized banks are. In the US, financial products and institutions are typically regulated by the Federal Deposit Insurance Corporation (FDIC) and Securities and Exchange Commission, with other regulatory agencies which oversee various smaller segments of the financial market. These agencies ideally place limits on how much financial institutions can loan out in relation to their deposits, practices that reduce fraud or economic/financial risk to the public.

Who is it? Shadow banking (I’m tired of typing that out. Let’s abbreviate it SB, okay?) is comprised of financial institutions which have a wide range of influence. You either right now or have in the past done business with SB entities without knowing it. They include such entities as hedge funds, short term lending agencies like payday lenders and vehicle title loan companies, home equity lenders, insurance companies and many investment firms. It also includes entities such as GoFundMe. However, the largest and most dangerous of all involve financial derivatives and credit default swaps.

Why are they popular? SB entities generally offer the chance of higher returns on investment compared to regulated institutions. However, a major reason they can offer higher returns is that the financial products they offer tend to be high risk. Their loans and products have a much higher default rate than standard financial products. Think of high interest loans to high risk borrowers.

The dangers. The dangers involved with SB is the fact that they do fall outside the regulations that regular banks are subject to. Regulations which require banks to maintain a certain level of collateral deposits as a percentage of how much they can loan out. If the economy or a specific entity show signs of a higher default percentage, leading to decreased returns or even loss on investment, investors in these entities can withdraw their entire investment without notice. If large investors or large numbers of investors withdraw their investments, it causes a run on that institution or even an entire SB industry category. That can have drastic effects alone but it can also have a domino effect, especially if a large SB company offers multiple products.

Not limited to non-banking entities. One huge problem with the SB system is that regulated entities often invest large sums in the SB entities or loan money to them. The SB system had a major role in the 2008 crash thanks to high risk loans and mortgages by SB companies which were packaged as lower risk loans in “bundles” which were purchased by standard banking institutions. However, banks are well known to establish their own SB companies as well. The obvious risk with this is that if these entities fail, they bring down large banks.

Regulation does not stop it. Some may believe that legislation like Dodd-Frank placed limits or regulations on the SB system. Not at all. Dodd-Frank only addressed standard banks and did not address the SB system at all. Many candidates receive campaign donations from SB companies. Some economists claim that if the SB system were eliminated that the economy would suffer greatly. However, all agree that it is an extreme danger which should be regulated.

Shadow Banking steals from the legitimate financial system. Were SB brought under control and regulation, it probably would result in less investment by some. However, it would result in greater stability in the financial system. SB investments divert funds from legitimate, regulated, more transparent financial systems. The fact is that returns on legitimate investment systems suffer as a direct result of funding diverted to the SB system, causing lower returns. SB is popular simply because of lesser regulation and oversight.

SB and regulated markets are tied together. As noted above, regulated systems and SB systems are tied together. However, even when not directly tied together, they are intrinsically tied because of shared investors. Some may believe that if the stock market and regulated systems retract that SB systems will expand. As seen in 2008, the opposite is true. When financial markets retract, they have a domino effect causing all markets to retract concurrently. Many businesses have a combination of funding from regulated and unregulated sources. Thus, when large businesses or a large number of businesses fail, it has an effect on all the above. When investors see a risk of losing because of a retraction, they pull funding from all investments in similar streams. In addition, Quicken Loans is a SB entity, now the largest mortgage lender in the country. Other mortgage lenders are also SB entities, though smaller.

Cyclic effect. As employers see reduced profits, they reduce staffing. When this happens in large numbers as we have only begun to see, it means the consumer market retracts. More consumers default on loans of all kinds. In the case of SB lenders, they are much faster to pursue vehicle repossessions, foreclosures, etc. This is an attempt to claim the property, charge the initial borrower and resell the property to a second borrower at a secondary profit. Yes, this is illegal for regulated lenders but not for unregulated lenders. In the interim and when this fails, SB profits decline. When profits decline, investments decline. When investments decline, the interest rates on any loan offers increase. This causes more rejections and more defaults. All of this reduces finances available for consumers to spend, causing a further decline in consumer spending, bringing us back to reduced profits for employers and the cycle continues. This cycle happens very quickly.

So, while shadow banking is typically described in terms which seem abstract or which affect only large investors, as you can see it absolutely affects you personally in very real terms. The fall of the stock market can mean the fall of shadow banking. The decline in each one and both can affect your credit, your employment, your housing, your retirement savings and on and on.

Wonder what Libertarians will think about this?

Where Would The US Be If Foreign Investors Pulled Out?

There has been a rising nationalistic negative attitude against foreign companies investing in and owning property in the US. I’m not going to make a final judgment on whether this is good or bad, just examine what would happen if those countries pulled their investments out or sold/abandoned their properties.

The nationalistic attitude toward foreign investors owning manufacturing locations in the US is pure folly. The negativity comes from those who make the false assumption that if foreign investors moved out, that domestic investors would increase production.

First thing to note is that in recent years, foreign investors have probably been more aggressive in investing in capital investments in the US than domestic investors have been. Toyota, Hyundai, mining companies have been building factories here. Chinese investors, as well. Have you noticed these companies have not been announcing mass layoffs while Ford, GM, GE, etc have been?

While US corporations took the bipartisan tax break handed to them and used that money to buy back their own stock and fatten the wallets of corporate executives and major investors, it has been left to foreign investors to expand manufacturing and create jobs.

This also means that if and when the stock market crashes, domestic companies will be laying off and closing factories. The only jobs with a chance of stability are going to be the ones owned primarily by foreign investors.

Under Trump, we stand the extreme chance that foreign investors whom he welcomed with open arms will either be forced out or will voluntarily pull up stakes as soon as they recoup their investments. If that happens, we have problems.

Some may believe that American investors would step in and simply take over the existing factories. It’s not that simple. First, there is the problem of establishing entirely new supply lines. Then there is the even bigger problem of intellectual property. An American company could not simply take over and produce the exact same products. They would have to come up with entirely new product designs. Then the factories would have to be retooled. Employees may have to be retrained. If they tried producing the same product, there would be legal challenges and the likelihood that other countries would boycott or ban the products due to those challenges.

Then there would be the problem of having a market to sell to. Depending on the product, like vehicles, with employment and wages taking a large hit, that would mean the market would not be open to new products enough to warrant that much of an outlay. In addition to whether consumers would spend money on major purchases on entirely new product lines meant to replace established product lines. There is a reason that you see vehicle models bearing the same name which have existed for decades. Those are product names that consumers are loyal to.

Last but not least this brings new problems and dimensions to how well American manufacturers and possibly even retailers are welcomed in other countries. One can say all they like about China’s trade policies but their policies are extremely well defined, so US corporations have not done business there and been caught off guard. They knew exactly what they were getting into before they got into it.

Personally, I’m not against each country doing their own manufacturing in their own country. I think that’s the way it should be. However, with the way things have been conducted for so many years, changing suddenly, unilaterally, in mid course will absolutely do damage to our trade agreements globally. Some will say it doesn’t matter because we can produce everything we need. Maybe you’re right, maybe not but that is not the point. If other countries choose to reduce or end trade with us, that does damage to the value of the dollar against other currencies, which will result in runaway inflation. Restoring trade deals under such circumstances would take decades because trade is built primarily on trust. Considering how many agricultural producers, retailers and manufacturers rely heavily on international trade, no small number would go out of business entirely. Don’t forget there are some items we can only get through international trade. Like rare earth minerals, most coffee and all chocolate.

Of the top 500 most profitable companies globally, 129 are in China, 121 in the US. Of the top 10 largest banks by deposits, 4 are in China, 3 in the US, 1 each in the UK, Japan and France.

Too many Americans think the rest of the world cannot survive without us. We comprise only 5% of the world’s population. We account for over 1/3 of all national debt globally. Some sources state that our private debt equals 150% of GDP. In all honesty, if other countries, especially China, decided they wanted to obliterate us economically, it would not be that hard to do at this point. They are not far from getting angry enough at us to do exactly that. With other countries deeply in debt as well, they would not be able to support us in that level of a trade war, even if they wanted to. It’s doubtful they would want to by now. So it is time to rethink this isolationist, nationalistic, arrogant attitude. Put the steroids down and start thinking rationally.

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I am an independent writer with no corporate sponsors or backing. The only income I make from my writing comes from views. At least I have reached the point where it makes more than it costs me! lol! (Not by much.)My writing is done in between full time (and overtime) nursing, shared custody of my brilliant daughter and mundane existence.

I have opened my new website which is intended to be a central listing of protests and political rallies across the US. It’s still a work in progress but is functional. You can find it at http://RallyAndProtest.com

Please consider becoming a patron on Patreon. I try and average at least 20 articles a month, so a $1 a month donation would come down to 5¢ per article to support independent, non-corporate writing. My Patreon page is here.

If you care to share articles with those who do not have Medium or Patreon accounts, I also post most of my articles on my own website, which has no advertising and I pay for with income from writing. My website is athttps://issuesunite.com/ and all articles can be shared freely. You can always quote me, no attribution required. My goal is spreading information and awareness. The whole point is building a better, more peaceful, more equitable world for us and future generations.

They Are Miscalculating

The media is reporting on the increasing risk of recession, based on Wall Street predictions. Or should I say manipulations?

By saying “recession” or “slowdown”, they are miscalculating at best, misrepresenting conditions at worst.

“Recession” is an interesting word. There is no universal definition as to what economic conditions constitute a recession or what constitutes a depression. Talk to different economists and you will get different criteria. None of those definitions establish complete collapse of an economy. They will use the term, “economic crisis”, even when that “crisis” lasts for years. Look at the conditions in Greece. Look at the conditions in Venezuela. In both of those countries, the economic conditions have basically been inflicted on those countries. For Greece, the conditions were imposed by creditors. For Venezuela, the conditions have been caused by US sanctions and seizure of assets.

Stock market decline. On 8/23/19 the DOW was down by over 600 points again. Which means we are quickly approaching a drop of 2000 points in less than three months. While the general economy has been suffering for years, the stock market, meaning rich investors, has been riding high through it all. We have been hearing how well the economy is doing but when you talk to real people on the street you hear a far different story.

Media complicity. With the 2020 election coming up, the media who touted the strength of the economy has changed their tune drastically. Now corporate economists are all getting on one page, stating a recession is eminent. A recession has been eminent for years, they just haven’t told you so. They haven’t told you so because they are complicit in the conditions which are leading us into a recession/depression/collapse. If they told you it was coming, they would lose advertising from financial firms. Where economics are concerned, most Americans do not want to hear the truth. They want to hear what makes them feel secure, safe, happy, superior to their neighbors and other countries.

What the media doesn’t say. Of course, most of the media are run by neoliberal oligarchs. They oppose Trump, yet have wanted to capitalize as much as they could from his tax cuts and reduction of the interest rate. Now they have received their tax cuts, further interest rate cuts are not promised and will not amount to much if they happen. Thus, at this point they feel confident in attacking Trump and claiming a recession is going to happen if the current trade war continues. They neglect to tell you the recession/recession/collapse will occur even if the trade war completely stopped right this minute.

That neglect is fully intentional. The timing of the gradual revelation of the economy receding is intentional. Had they previously mentioned the economy weakening, you would have seen exactly what we are seeing right now and will see accelerating rapidly, which corporate media is literally instigating- for people to withhold money from savings and reduce spending. This accelerates the process of economic slowdown. If this had happened in 2017 or even 2018 the slowdown would have occurred much sooner than now. Which would mean that much of the blame could have been laid at the feet of the Obama administration.

Diverting your focus. Much of the blame does fall on the Obama administration. However there are more things to consider. Any earlier revelation would have meant that the GOP tax cut would not have occurred. Increases in defense spending would have either not happened or would have been far less. The focus of media reporting would have had to center on the economy, rather than Russiagate. Have you even noticed that the media focus has so suddenly shifted to the economy and racism now that Russiagate is effectively over? It’s not like anything has drastically changed economically or socially since Mueller testified before CONgress. The exact same things are happening. The only thing that has changed is how the media reports on it.

It’s not the tariffs. The media has built up the rhetoric claiming the economy was doing well and even expanding while manufacturing declined and we have seen record numbers of retail closures. We have seen mass layoffs and the Labor Participation Rate has dropped severely. Student loan defaults hit a record high in 2018. Vehicle sales have been down for years, which led to layoffs in the auto industry. It had nothing to do with tariffs. If the economy were truly doing well, tariffs would cause some inflation but virtually nothing else. So tariffs are not helping but they are nothing but an excuse.

What is the goal? To understand what the goal is, one need do nothing more than look back to 2008/2009. How did Obama deal with the recession? He bailed out the auto industry and the big banks using taxpayer money. That’s what Wall Street is counting on again. They got their tax break, interest can’t go much lower than it is now. Republican and Democratic administrations deal with economic recessions differently. Republicans cut taxes on the rich, using trickle-down economics as a rationale in spite of two decades of Reaganomics proving it false. Democrats bail out the same entities who got the tax breaks. Republicans are also likely to reduce social support programs, while Democrats increase spending on those programs. So the goal is to repeat this process. Allow or even force the crash to occur, then expect to be bailed out. You pay, they collect.

No social spending increase would be enough. In distant history, the increases in social support by Democrats was much greater than in recent years. By 2021, any increase would have to be truly massive if it had any chance of recovering the economy. No increases in social support spending which will be suggested at this point and by the current parties will be sufficient to recover from where we are heading this minute. The national debt is already so high that it would be unrealistic to even expect social spending increases which could have an effective impact.

Wars and past recoveries. There are other factors involved in economic recovery in this capitalist system. Those factors no longer exist nor can they exist. Past recoveries from major economic downturns were coupled with major wars. Those wars allowed for the forced expansion of US markets into other countries. There are no more countries for the US to expand into any more. It doesn’t matter what we manufacture when there is no market for the goods produced. It will not be possible to destroy the manufacturing capacity of China, Russia, India, Mexico and other countries without doing so much damage as to make the planet uninhabitable. So they will remain competitors on global trade. Threats against allies no longer work, as those allies each benefit from global trade and the lower prices brought by competition.

Automation. Increasing production capacity no longer means creating jobs when too much of the work is done by robots and automated systems. I’ve written about automation many times but the concept is simple. Automation does not create jobs, it eliminates jobs. That’s the whole point of automation. It reduces cost of production by the process of eliminating incomes, so fewer people can afford even the lower prices. Past technological advances nearly all created or were incorporated in the creation and expansion of new industries. In the past 20 years or more, what we have witnessed is the automation of existing industries. There have not been any actual new industries since the dawn of the internet and social media.

Major miscalculation. Other than being bailed out, there cannot be any goal in the revelation that the economy is declining. Ultimately, the rationale involved is the concentration of wealth into even fewer hands than what we see now. However, what they are not taking into account is the actual collapse of the economy. This is something we can see coming under current conditions. The decline of the economy is not just national, it is global. Reduction in income have led to reductions in consumer spending (retail decline) in nearly every country. That results in decreased production, which means reduced freight. Reduced income and spending means less taxation. At every level more jobs are lost.

Decades in the making. Right now we cannot prevent what is coming. It has been decades in the making. When it finally does happen it will appear to be sudden but anyone who has paid attention has been able to see it coming for at least the last decade. Not only is it eminent, it is intentional, hence the gradual concentration of wealth and reduction of rights. Both major parties are complicit while blaming one another. Keep in mind it was a Democratic majority under Obama that bailed out the banks, indicted not one person, enacted a corporate welfare program for health insurance and made the GWB tax cuts for the rich permanent. Both sides increase “defense” spending every year. Both sides approved the Trump tax cut for the rich. Both sides voted to suspend the debt ceiling until July 2021. Republicans cut social spending, Democrats restore a fraction of that spending, moving ever further to the right. One step forward, three steps back in a continual dance theater performance.

What they do not count on. While the rich are counting on the concentration of wealth, what they do not take into account is the ultimate response. We have seen revolutions in world history where the oppressed masses rose up to seize the accumulated wealth of the elite. This is becoming a very real scenario under the circumstances forming right now. They may have the idea of creating a global modern form of feudal system, which is what exists to a degree right now.

However, even as we bemoan educational standards, we now live in a world with the highest level of education in world history. We also have the best communications in world history. That combination of factors make today far different than any time in the past where large masses were oppressed. We, the people, have more advantages in our capacity to fight back than at any point in history. We don’t need violence and that would be counter-productive. We can turn off corporate media completely. We can call and write elected officials and media, tell them they do not represent our views. Boycott support for candidates who take corporate money. We can pull money out of corporate investments and buy precious metals.

Most of all, we can talk to each other. Stop attacking one another and instead talk about issues. Leave names out of the discussion unless it involves policies. Stop closing our eyes, ears and minds to the flaws in candidates. Stop making excuses. Stop voting AGAINST and know what we vote FOR. Our unity is what is feared most by the oligarchy.

Capitalist Challenge

Capitalists and capitalist wannabe puppets (who own no capital yet support the agenda of the ultra-rich) are fond of claiming that Socialism has never worked. Of course, they leave out the trade sanctions and militaristic threats or outright military destruction imposed by capitalistic countries (mostly the US) on Socialist countries.

Be that as it may, here is a challenge for anyone who supports any level of Socialism to present to said capitalists:

Ask them to name one single country in all of world history in which capitalism has worked for all citizens. That has to include high wages, low taxes, affordable healthcare, no crushing poverty, no slavery, little to no homelessness, no debtors prisons, no wars for profits, protection of the environment, worker safety laws, consumer protection laws, high rate of home ownership and freedom of the independent press with no censorship.

Hell, it doesn’t even have to be a country. It can be a city.

What you can consistently expect is going to be diversion. They will try to redefine the question, the challenge, even the definition of capitalism. They will try to throw around terms like “free market”, which they will refuse to actually define. Yes, I fully expect responses which will focus on that last sentence and ignore the challenge. Just wait for it. They will try and claim capitalism is about small business, yet not explain how limits are imposed on business growth without Socialist-leaning policies.

The reason they do this is because capitalism has never worked for the population. It does not work for the general population now. It will never work because it cannot work. It is not designed to work for the general population.

The entire design of capitalism is intended to work only by force, subjugation, oppression, propaganda, brainwashing, poor education and legal control of all resources available to a society.

In the most prosperous years in the history of this country, we had controls and limits on capitalism. We had price controls on certain necessities. The subsidies we have in place right now are relics of Socialist-leaning policies meant to help the middle class and poor. Such as subsidies on fossil fuels, coal, milk and corn. The original intent was to protect society. Over time, the subsidies grew ever larger while profit caps were removed. Thus today we will hear capitalists rage against profit caps and price controls while they never mention subsidies.

During the same prosperous years, taxes on the rich were the highest they have been in US history.

Yet that prosperity did not reach all our citizens by any means. Many lived in abject poverty, often with no plumbing or electricity.

Some reading this may recall or have heard of “urban blight” from the late 60’s through the 70’s. Yet few recall what brought that blight into being. Give you one guess. It was capitalism. Elitism. Gentrification which drove up rents and property values. Racism played a heavy hand. This was topped off by the reduction of taxes on the rich. This resulted in insufficient resources to maintain public transportation and infrastructure. As desegregation spread, the affluent white moved away from city centers to the suburbs, often taking their retail and possibly manufacturing businesses with them. There was often little to no public transportation to these areas, so the living wage jobs they offered were typically off limits to the poorest in society. What remained in city centers were vacant, decaying business locations with high rent, so if less affluent businesses with less affluent customers moved in, the conditions were poor and crime escalated.

This was not a new pattern. Look at the history of slums across major cities in the US. Nearly all slum sections of major cities were once wealthy, thriving middle class white neighborhoods. Harlem is a good example, should you care to look into the history. Yes, Harlem was a white neighborhood before it later was largely segregated. Today in some areas we are seeing these areas renovated. Though that is not typically good. The renovations lead to gentrification, bringing back high rents and property costs by equity owners seeking to make fast, easy, often unrealistic profits. Thus we have the poor who cannot afford the increased rents and taxes forced out. Sometimes with no place to go. If employment is in these areas, we now have people sleeping in cars and tent cities to have access to their jobs because they cannot afford the rent.

This is all a capitalist cycle we will keep repeating until we put an end to it. No capitalist can ever explain how paying profits and reducing profits for the rich is better than what Socialist-leaning policies offer. Capitalists always claim the higher taxes, price controls, higher wages and any limits at all will destroy the economy. The opposite has been proven true every single time, with no exception.

So, when you encounter a “capitalist”, go back to the challenge above and issue that challenge to them. Accept no diversions, no excuses. If they try it, drag them kicking and screaming back to the subject. Once they predictably resort to personal insults, walk away. You’ve already won that debate. No need to continue the discussion further.

Decline of The US As The Leading Economic Superpower

For over a year economists have been discussing the fact that China has emerged as the largest global consumer market.

Meanwhile the US has claimed jobs and income growth, which has been demonstrably proven false. It is not possible to have expansion of jobs and income while concurrently having mass layoffs and retail closures. It simply doesn’t work that way.

Some have pointed to the stock market numbers as indications of economic health. I’ve covered many times how the stock market is an inverse indicator of the general economy at worst or completely unrelated at best.

Now new numbers are telling more of an advancing tale of the decline of the US market. Perhaps this will be enough for more people to awaken to the truth.

In the most recent Global Fortune 500 list, the US is headquarters to 121 of the most profitable companies. China is headquarters to 129 of the most profitable companies. 20 years ago, in 1999, China was headquarters to 8.

In the global list of the largest banks, 3 are headquartered in the US. China is headquarters to 4. There are one each in Japan, the UK and France. JP Morgan Chase is the highest on the list of American banks and it comes in at number 6. The Chinese banks occupy spots numbers 1,2,3 and 5. This has remained unchanged for several years, even as US media makes claims that China’s economy is declining and US economy is growing.

In the last few months, cryptocurrency has seen a resurgence with Bitcoin as of this writing valued at $11, 834 and precious metals are increasing in value with gold spot price now $1499 per oz, while bonds have shown an inverted yield curve, with short term bonds having more return value than long term bonds.

At the last meeting of the Federal Reserve board, the interest rate was decreased by 0.25% to between 2% and 2.25%. This is unprecedented, as the only time to interest rate has ever declined has been when the economy was showing signs of recession and the interest rate was decreased to encourage spending to spark growth. If our economy is doing so well, why do we need to decrease the interest rate, which is already extremely low? That leaves virtually no buffer for safety if we enter an officially recognized recession/depression.

Of course, those of us paying attention know the US has remained in a recession since the 2008 crash. Yes, it was a crash. Not a “crisis”, not a small event, a crash.

Yet the China trade war still has major implications.

Last year, China temporarily halted purchases of soy from the US, leading to Trump announcing a bailout of mostly corporate farmers to the tune of $16 billion. As of this week, China responded to increased tariffs on Chinese goods with a complete ban on agricultural purchases from the US.

Trump’s response? Threatening even more tariffs on Chinese goods by as much as an additional 15% on top of the recent 10% tariffs.

Last year, China temporarily stopped buying oil from the US. They began buying oil again in February this year but at much lower amounts, less than 50% of their previous purchases. China is likely to respond to this recent threat with banning all oil purchases from the US for good.

Many alleged economic “experts” say the loss of sales to China is basically no big deal and the US will gain additional revenue by selling to Europe. They do not explain where any “additional” sales are going to magically appear from. I haven’t heard of Europe having a sudden increase in their desire for soybeans.

Many countries are banning the import of many US agricultural products because of concerns regarding GMO’s and glyphosate, declared a likely carcinogen by the World Health Organization. The “experts” too often fail to mention these concerns or the fact that the US State Dept has literally tried to sue other nations to force them to accept sales of our produce in contradiction to the will of their own people, who demanded the bans. Alternative agricultural producing countries have primarily already turned away from GMO’s and glyphosate, meaning they are more likely to buy and sell from each other than from the US at this point. Even a large percentage of Americans have objections to the same things.

As of this past week, Trump announced another bailout of farmers to the tune of $28 billion. Combined with the $16 billion already mentioned, that adds up to $44 billion, which comes to a cost of $130 each for every man, woman and child in this country. Plus he has promised he will bail the farmers out again next year if necessary. Of course, the major recipients of these bailouts are corporate farm owners and investors.

Trade deals, especially with such contentious issues as China is facing with the US at this moment, once China establishes trade agreements with other countries, they will not easily be swayed to change those agreements back to the US. They are in the process of negotiating new trade agreements with other countries right now. Which means future sales may be lost indefinitely.

No matter how we look at it, the US cannot force other countries to buy from us. This is even more true when we try and force our sales onto other nations at the point of a gun, literally or figuratively. We cannot sue other nations into submission. Other nations see the fact that we are threatening all of them. The likely outcome is that they will form alliances in opposition to our government. That risk increases when considering that we have a trade deficit with most of the countries we trade with. It increases more when those countries view our massive national debt which has only increased every year for 18 years now and the suspension of the debt ceiling. All those nations are acutely aware that we do not have the resources to pay off that debt.

The road to where this nation is at this moment began decades before Trump. He did not cause all of it but is definitely making it worse. Of course, Trump was merely a logical progression of what came before him with each successive administration since Reagan, at the very least. The flow of wealth to the top is now about to capsize this country. The Panama Papers. Tax cuts for the rich while our own citizens suffer. Collapsing infrastructure, rising “defense” costs.

In terms of international relations, we have been following the same path for well over 100 years. Trade agreements under threats, regime change, the fiat petrodollar, American “investors” who then try to rule over other countries.

We are now in the precise circumstances where all empires in history have fallen. Only on a larger scale.

The Real Cost of Gas and Oil

Americans think when they fill up their gas tank that the price displayed on the pump is what they are paying. Many of these people also think they hate Socialism. Yet when they fill up their tank, they are benefiting from what comes down to Socialism.

Oil companies receive direct government subsidies from the federal government of roughly $38 billion a year. However, that’s not nearly all they get from the taxpayer.

Some oil companies have government contracts, federal, state and/or local. Some of those contracts are with the US military, the singular entity which uses more oil than any other entity on earth. More than all of Europe, the UK and all South American military organizations combined. You pay for that.

In many cases, oil tankers have military escorts for their security, whether the tanker is coming in or leaving. We have military vessels in the Persian Gulf and Strait of Hormuz, providing security for tankers that are not American owned, not delivering anything to or from America. You pay for that.

If a US oil company has a major spill or explosion anywhere in the world, our government pays for 90% of the cleanup. In fact, it does not have to be a US company. Remember BP with the largest oil spill in history? The fine levied on them paid for maybe 10% of the cleanup cost, the US government funded the rest. You pay for that.

When an oil company had a standoff with the Water Protectors over the DAPL using militarized police, you paid for that. Each time police respond to any protest against corporate interests of any kind, you pay for that.

When the government hands money to oil companies which the nation goes further in debt for, including the interest on national debt, you pay for that.

When our government spends trillions bombing other countries for decades for the sake of seizing that country’s resources, you pay for that.

Both major parties approved a tax cut for corporations, which they used to buy back their own stock. That’s still happening. You pay for that.

The thing to keep in mind is that oil subsidies are absolutely a form of Socialism. We all pay for the subsidies, even if a person does not drive or lives off the grid. In other words, they are not buying gas and oil yet they are paying for you to pay less at the pump. Which makes you a Socialist.

You subsidize low gas and oil prices for corporate fleets. You pay subsidies in the form of higher taxes on every dollar you earn, even if you get nothing in return. This helps corporations state higher profits and boost their stock prices. Rich investors and CEO’s get subsidies for their stock values and dividends. You pay for that.

No matter how you view it, this is welfare and Socialism for corporations and the rich. You insure the continued profits for them, no matter what the economy looks like, no matter how many workers they lay off. Capitalism for you, Socialism for them.

Add all the above to how much you pay at the pump and ask yourself how much you are really paying. What is the real price of that gallon of gas? You have no idea and neither do I. Nobody does because it cannot truly be calculated.

Even if you think climate change is not real, how is renewable energy looking now?

True Low Unemployment Would Mean Things We Are NOT Seeing

Corporate media is fond of saying that unemployment is low, which would mean employment is up. I have previously covered the Labor Participation Rate, the Bloomberg report calculating that 600,000 jobs have been lost just since December, unreported and that report came out several months ago. However, even that isn’t necessary because the evidence that employment is as high as claimed does not add up with what we see all around us.

For one thing, if employment were truly up, we would not be having the discussion about immigration at all. We have seen incidents in the past when employment was high. At that time, the US was welcoming immigrants with open arms. Compare to what we see occurring right this minute.

Deporting large numbers of immigrants may have some impact on employment but barely enough to budge percentages or numbers. Consider that the estimate was that there were 11 million illegal immigrants in the US. Not all of those were in any condition or age to be employed. Many are children, as we can clearly see from the children being caged at the border this very minute. Others have been here for years and are too elderly to work. Still more are disabled in some way.

Thus, we can consider that possibly 3 million may have possibly been employed and most of those have worked in low-wage agricultural or similar jobs. In cases where they have occupied jobs with higher pay and skills, deporting them does more damage than good to the economy, as many corporations have moved jobs to South American countries. Those are the DREAMERS, who have gained education and skills which many natives lack. In other words, not only are the immigrants being deported but the jobs they occupied are being deported as well.

Even without the above, if employment was as high as claimed, immigrants would be welcomed to occupy lower levels of employment, allowing more skilled Americans to fill higher positions.

Next, consider that if employment were up, we would not be seeing other signs of a declining economy which we are seeing. Student loan defaults are at record levels. Vehicle loan defaults have been increasing for several years while new vehicle sales are down, causing mass layoffs in the auto industry. New and used home sales are declining. Consumer credit debt is rising rapidly as consumers are forced to use credit to meet basic needs. While we already have the highest level of consumer and corporate debt in world history.

In times of high employment, pay and benefits increase because employers compete for the best, most qualified workers first and then move down the skill/experience ladder from there. Wages do not remain stagnant at any level.

It is well known we are living in a “gig economy”, with a large percentage of jobs being contract or temporary work. I had written that this was coming in 2001, beginning primarily with medical professionals and then spreading to other fields. That is precisely what happened. However, what has changed over time has been a decline in pay and benefits for such positions as they became more common across industries. In fact, that is why it has become more common. Temporary and contract workers were once used to fill positions which were short-staffed and as a result, pay and benefits were above average. They typically led to offers of permanent employment for good workers. Today, these positions are used to avoid the need to hire full time staff. Workers are offered part time and contract positions or nothing at all, while they rarely lead to offers of permanent employment. This does not happen in times of high employment because employers are anxious about being stranded with inadequate staffing. In fact, they would be offering nearly unlimited hours to the best temp/contract workers who have already shown their value.

In times of truly high employment, one can see an initial anomalous dip in the stock market as employment rises due to wages being seen as a cost. Then stocks increase as profit margins rise due to consumer spending due to the employment and wage levels.

Right now we see prices rising in comparison to wages. In times of high employment, prices rise but only secondary to higher wages and employment. Yes, tariffs are playing into inflation but there has not been a time that prices have decreased at any time since the 2008 crash. In fact, rent in general has continued rising unabated since that time.

In times of high employment, employers will eagerly subsidize or even pay for higher education for valuable employees wishing to advance. Today, companies are mandating continued education at employee expense, with or without advancement. Note that some may use the example that employers once paid for travel and attendance to conferences and this has become less common. I find this not anything abnormal with technology advancements which have resulted in video conferencing becoming far more common gradually over time, reducing the need for travel.

When employment is high, increased wages and benefits result in a decrease in out of pocket costs for workers. That leads to increased consumer spending. Increased consumer spending results in a further cycle, maintaining and creating more jobs. Right now we are seeing reduced consumer spending outside of absolute essentials. Tariffs would have some effect to slow the volume of goods being sold but would not by itself result in a depressed consumer market resulting in mass layoffs and loan defaults.

Obviously, capitalists will be capitalists and rent prices will continue rising, as we have seen in this battered economy. That leaves even less disposable income for consumers to spend.

These conditions are only going to get worse due to Trump’s trade war with China. No matter how much he gives farmers in subsidies at our expense, that does nothing for downstream jobs in trucking, packaging and shipping. Tariffs are a tax on the American people which slow consumer spending by volume purchased. When consumers have a limited budget, that budget does not increase because prices do, meaning they spend the same but obtain less. The tariffs do not mean more profit for retailers, so they see reduced sales volume. Less sales volume means less requirement for labor. That means more layoffs but will be less immediately evident because it will not be mass layoffs and instead be widespread and gradual reduction in staff. Then more downstream reductions in trucking, shipping, manufacturing and so on.

When corporate media is telling you anything about how well the economy and job markets are doing (among other things), it is highly advisable to question it very critically.