Article 43

 

Next Recession, Next Depression

Monday, November 21, 2022

America In Collapse 7 - More Suffering

image: class warfare

Over the past several decades a “global elite” has emerged whose connections to each other have become more significant than their ties to their home nations and governments
- Rise of the Superclass, 2008
 
For the most part, American bankers whose rash pursuit of profit brought on the 2008 global financial collapse didn’t get indicted. They got bonuses.
- Vietnam’s Solution to Corrupt Bankers, 2014
 
“The TRANSITION FROM DEMOCRACY to oligarchy usually starts with the very wealthy acquiring political power by buying influence with elected officials,” Hartmann wrote in his book, explaining that their influence grows until they “completely CONTROL THE MECHANISMS OF INFORMATION” and “their agenda overwhelms the governing agenda.”
 
“In the final stages, Hartmann said, “the oligarchs RISE UP through seemingly democratic processes and take complete or near complete control of government, smashing the programs that give economic and democratic power to the people and cruelly punishing dissent.
- Return of the Oligarchs
 
In periods of acute crisis for the bourgeoisie, Fascism resorts to anti-capitalist phraseology, but after it has established itself at the helm of State, it casts aside its anti-capitalist rattle and discloses itself as a terrorist dictatorship of big capital.
- Growth of Socio-Fascism in Britain
 
The only thing that can possibly transform the U.S. government to one that cares for the voters who elect it, rather than for the plutocracy that controls it, is a UNIFIED OPPOSITION BY ALL OF THE PEOPLE, irrespective of their social class or political beliefs. The energy driving such a mass movement must flow from the personal actions taken by each of its individual participants.
- Challenging America’s Plutocracy

AFTER newly-elected Democrat President Biden screwed the working class by NOT SENDING OUT promised covid stimulus checks a year and a half ago, things here keep getting so bad for the 99%, THAT:

Shoplifting is up markedly since the pandemic began in the spring what’s distinctive about this trend, experts say, is whats being taken - more staples like bread, pasta and baby formula… Those who are stealing to survive are not out there talking to the Washington Post about it They’re ashamed to be in the position in which they have to steal.

For the 18 years this website’s been on the internet, inequality keeps getting worse.

Don’t expect any help from politicians masquerading as LAW MAKERS who manage to remain in power, and blame us for everything, while capitalism’s inequality and blood sucking rich run the country. Will “we the people” ever FIGHT BACK?

To show us how out of touch, and insulting our elected officials are with the suffering people they claim to represent, Business Insider quotes SENATOR MITCH MCCONNELL:

“You’ve got a whole lot of people sitting on the sidelines because, frankly, they’re flush for the moment,” the Kentucky Republican said. “What we’ve got to hope is once they run out of money, they’ll start concluding it’s better to work than not to work.”

This year AT AT&T:

CEO John Stankey said that customers are “starting to put off paying their phone bills”

Even the Federal Reserve NOTED IN JUNE people can’t afford a gallon of milk anymore:

“They are also doing things such as purchasing half a gallon of milk instead of a gallon.” Contacts broadly expected to continue to push up their prices over the next 12 months to keep up with rising costs.

Our BRAINWASHED KIDS are being led to think unionizing a couple of Starbucks’ and Amazon warehouses are going to miraculously end a decades old era of corporate America’s outsourcing, offshoring, and replacing of American workers with foreigners and robots.  Uunless they, boomers, young, old, black, white, latinx, etc, rally together in a general strike of all workers everywhere, and grind this country’s production to a halt - they’re going to be in for a rude awakening.

Starbucks and the powerful corporations will just CLOSE THE UNIONIZED STORES, and laugh at us, while government protects them.

Starbucks will tell you it’s all about safety. But a lot of workers are second-guessing that, as are customers who frequent the shops. They say it seems to be more about squashing union activity. About one-third of the stores that are about to close are involved in union efforts.  This is what piqued the curiosity of a lot of workers and customers. These are busy spots, including one on 23rd and Jackson in Seattle, and the beloved Gaybucks, as the kids call it, on Capitol Hill. People are very curious about whether safety is the real reason.

Over at our southern border, battling Covid isn’t the big thing.

THIS IS:

“The record number of illegal migrants coming to the US southern border is OUT OF CONTROL and President Joe Biden appears to be doing nothing to help local law enforcement deal with the crisis,” Maverick County Sheriff Tom Schmerber said.

And President Biden is sending billions to a war that may make this all moot.

How’s the GREAT RESIGNATION doing?

Supposedly - every talking head on mainstream news and politician on TV is talking about a “worker shortage” leang to everything from CUTTING UNEMPOLYMENT in the middle of Covid, to the raising of interest rates on our credit cards, to INFLATION and price gouging from corporate America.

The millenials are so broke that they’re BLAMING BOOMERS for their lousy lives:

“As millennials are now the poorest generation ever, we at Hunter Design Company will no longer be offering a senior discount,” a text overlay on the video reads. Because let’s face it, if you get to retire, you don’t really need it. So, Hunter Design Company is proud to offer, for the first time ever, the millennial discount. A discount for millennials by millennials because you’re entitled to it.

Over at GALLUP:

Lower-income Americans are about as likely now as last fall to say they are experiencing either severe or moderate hardship - 74%, compared with 70% in November.

Footware News REPORTS:

As consumers pivot to mainly non-discretionary categories, big-box and department store retailers have seen excesses in discretionary categories like apparel.

In the last week, retailers like Target, Walmart and Kohls have mentioned cancelling or cutting down on orders to stay ahead of their higher-than-usual inventories. Meanwhile, brands that partner with wholesale retailers have noted the impact of these cancellations.

Kohl’s has also pulled back on order receipts and increased promotions to get through an inventory glut.

Even FACEBOOK is laying off:

Meta Platforms is planning to cut expenses by at least 10% in the coming months, in part through staff reductions

MSNBC last month talked to a bunch of regular people:

EVERYBODY IN CONGRESS, almost everybody in congress is certainly wealthy, independently wealthy, more money than they would be making from their congressional salaries, even if they came from poverty,” said Chris. “And I don’t think they understand how expensive it is to live right now. I don’t think they understand how expensive rent is, the number of houses signed for less than $300,000 has dwindled to almost nothing in the last five years, just the fact that nobody can access, not even building wealth, but just getting stability.”

When asked by Luntz “to describe” in one word “conditions in America right now,” respondents did not hold back.

“Poor,” said Tiffany of New York.

“Disparity,” said Jen of Washington, D.C.

“Struggling,” said Sal of Florida.

“Confusing,” said Kirsten of Illinois.

“Uncertain,” said Paul of New York.

“Depressing,” said Brian of Michigan.

“Miserable,” said John of South Carolina.

“Divided,” said Susan of California.

“Shaky,” said Jana of Nevada.

“Unstable,” said Rich of Idaho.

“Polarized,” said Chris of Pennsylvania.

“Dire,” said Valerie of California.

“Dismal,” said Debra of Wyoming.

“Division,” said Bob of Texas.

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Walmart says shoppers are swapping lunch meat for beans in the latest sign that inflation is roiling low income households

By Aine Cain
Business Insider
August 16, 2022

Walmart shoppers are reaching for beans over lunch meats, the company said Tuesday, in the latest sign that INFLATION is hitting low-income consumers the hardest.

While Walmart’s average customer is an EDUCATED SUBURBAN WOMAN, the chain has also historically catered to LOWER INCOME SHOPPERS. When inflation first began to spike, the company even saw a BOOST in sales, owing to its penchant for steep discounts. But as prices continued to skyrocket, Walmart began to deal with its own CUSTOMERS erasing items from their shopping lists or swapping certain purchases for cheaper substitutes.

“Instead of buying maybe deli meats or beef, they’re trading down to things like canned tuna, chicken and, even, beans,” Walmart CFO John Rainey told investors. “We’re seeing the same thing in the quantity, where they’re trading down for smaller pack sizes that are more affordable. So instead of buying 12 items to buy six items in a pack.”

Rainey said the big box giant’s shoppers are also generally buying fewer items and foregoing general merchandise for cheap food options like Walmart’s private label offerings.

In June, the inflation rate hit 9.1%, a 40-YEAR-HIGH. Since then, prices have begun to cool down somewhat. In July, PRICES only rose 8.5% year over year, marking an end of the trend of month-over-month spikes. Still, ongoing inflation has made many Americans feel substantially poorer whenever they hit the grocery store or the gas pump.

Fuel proved to be an increasingly-expensive necessity over the summer. Staples like eggs, beef, and pork have also seen surging costs. In June, the price of beef jumped 4.5%% month-to-month, while eggs increased 3% and pork leaped 3.1%.

But these high prices aren’t borne equally by everyone. Rising prices have especially harmed low-income to middle-class individuals, as opposed to their wealthy counterparts. Thousands of citizens fell below the poverty line in 2020, and experts have expressed concern that ongoing inflation could make matters worse by sparking a recession.

SOURCE

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Parents are buying fewer baby clothes, a sign of deep financial distress

By Parija Kavilanz
CNN Business
November 21, 2022

Customers are pulling back on spending at Gap and Old Navy - particularly in one specific category that shows just how much families are feeling inflations pinch.

In tough times, parents typically skimp on themselves and focus on meeting the needs of their growing children. But Gap and Old Navy said Thursday theyҒre now seeing less spending on babies and kidsҒ items.

“Spending on kids is one of the last areas most parents cut back on, so softness at Gap and Old Navy suggests that some households are under significant financial strain, said Neil Saunders, retail industry analyst and managing director of Globaldata.

Because these brands cater to mid-to-low income shoppers, this decline in spending is a very real indicator of how deeply budget-conscious households are feeling the pain of higher prices. They’ve been forced to go to their last resort.

Overall inflation is up 7.7% compared to 2021, even as the latest reading on prices that households pay for necessities and discretionary purchases showed a SLIGHT SHUTDOWN.

The cutback in kids’ clothing spend at Gap Inc. (GPS) - which operates its namesake Gap stores, Old Navy, Banana Republic and Athleta divisions under its corporate umbrella - was part of the companys third-quarter earnings release Thursday.

While overall company sales were up 2% from last year to $4 billion for the quarter ended October 29, the retailer noted that sales growth at both Gap and Old Navy were offset by weaker sales in kids and baby categories.

“Old Navy customers still have a propensity to buy. That being said, it continues to experience softness in spending and shopping frequency from its lowest-income consumers,” Bobby L. Martin, Gap Inc.Ғs interim CEO, told analysts during the earnings call Thursday.

It’s not just Gap. According to market research firm NPD, purchases of infant and toddler clothing are down this year: From January through October, sales of clothing for infants and toddlers declined by 3% in revenue and 6% in units sold versus the same period last year.

“This is a huge indicator of financial strain,” said Marshal Cohen, chief retail industry analyst with NPD. “One has to look at the total picture. Are families just trading down to less expensive products and stores or is it a pullback in general?”

“The other thing to watch is how long the pullback lasts,” he said. “Parents can go just so long in clothes that are getting a bit small, but not for long. So a quarter slide is one thing - multiple quarters [of decline] send a strong message.”

Turning to resale

As parents purchase fewer new items, theyre turning to resale platforms instead to buy kids clothing and other necessities for less.

Resale platform Mercari said a survey of more than 2,000 parents in March by Globaldata found that 62% said they bought secondhand items for children sometime in the past year. More than a quarter said inflation motivated those purchases, and half of parents surveyed sold a secondhand item in the kids’ and baby items category.

Mercari said parents of kids 2 and under are the most active secondhand shoppers, according to its survey.

“This shift [to reuse] is gaining momentum in 2022 as consumer prices rise amid inflation and ongoing uncertainty,” Mercari US CEO John Lagerling, said in Mercari’s 2022 REUSE REPORT: FAMILY EDITITION.

“Americans spent a total of $143 billion on kids and baby items alone in 2021. By 2030, this figure is expected to grow to $182 billion. In our opinion, that’s simply too much,” he said.

“Secondhand shopping is becoming a lifeline for budget-strapped households,” said Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group.

“Families are relying heavily on CREDIT CARDS to pay their rent, food and gas bills and everything else. “Household wealth is down, while cost of food has surged,” said Flickinger. “If they didn’t plan for it earlier, parents are shopping at resale and taking hand-me-downs from family and friends.”

SOURCE

Posted by Elvis on 11/21/22 •
Section Revelations • Section NWO • Section Dying America • Section Next Recession, Next Depression • Section Austerity American Style
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Friday, September 23, 2022

The Next Depression Part 66 - Interest Rates Hikes, and Forced Unemployment

image: class warfare
 
In the boardrooms of corporate America, profits aren’t everything - they are the only thing. A JPMorgan research report concludes that the current corporate profit recovery is more dependent on falling unit-labor costs than during any previous expansion.
- Why The Rich Love Unemployment
 
After saying that “the halls of Congress are no joke,” Ocasio-Cortez said that “standing up to corporate power, and established interests is no joke. It’s not just about standing up and saying these things, but behind closed doors, your arm is twisted, the vise pressure of political pressure gets put on you, every trick in the book, psychological, and otherwise is to get us to abandon the working class.”
- AOC - Bernie Sanders Won’t Abandon the Working Class, 2020
 
To Wall Street and its backers, the solution to any price inflation is to reduce wages and public social spending. The orthodox way to do this is to push the economy into recession in order to reduce hiring. Rising unemployment will oblige labor to compete for jobs that pay less and less as the economy slows.
- Austerity American Style Part 22 - Forced Unemployment
 
Fed Chair Powell says
(1) interest rate hikes will inflict pain,
(2) no other choice exists.
 
Both points mislead.
(1) Pain will fall unjustly on those losing jobs (they did not cause an inflation the FED failed to prevent).
(2) Powell’s FED refuses to discuss price/wage controls that COULD DISTRIBUTE PAIN DIFFERENTLY.
- Richard Wolff on Facebook, 9/21/2022
 
THANK YOU President Obama for bailing out the BANKS, so the American People are the big owners, and thank you very much for the new Credit Card bill thats supposed to stop THE BIG BANKS from SCREWING US on on our credit cards starting next February.  I’ve had my CWA branded Union Plus Credit Card for at least 25 years, and don’t think I’ve ever missed a payment in all that time.  Saturday I got a letter from the bank that the INTEREST RATE IS GOING UP from 12% to 18% starting next month.
- Obama’s Big Business Bailout Screws The Public, 2009
 
The combination of lost jobs and millions of foreclosures means a lot of folks are homeless and hungry for the first time in their lives. One of the consequences of the recession that you don’t hear much about is the record number of children descending into poverty. The government considers a family of four to be impoverished if they take in less than $22,000 a year. Based on that standard, and the government projections of unemployment, it is estimated that the poverty rate for kids in this country will soon hit 25 percent.
- Poverty In Central Florida, November 2011
 
Today I had the opportunity to speak before Congress about a major driver of inflation that’s being ignored - price gouging corporations.
- Robert Reich’s Full Testimony Regarding Corporate Profits and Inflation to House Oversight Committee, September 21, 2022
 
Average long-term U.S. mortgage rates jumped by more than a quarter-point this week to their highest level since 2007 as the Federal Reserve intensified its effort to tamp down decades-high inflation and cool the economy.
- CBS News, Moneywatch, September 22, 2022
 
The only thing that can possibly transform the U.S. government to one that cares for the voters who elect it, rather than for the plutocracy that controls it, is a UNIFIED OPPOSITION BY ALL OF THE PEOPLE, irrespective of their social class or political beliefs. The energy driving such a mass movement must flow from the personal actions taken by each of its individual participants.
- Challenging America’s Plutocracy

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Axios Macro

By Neil Irwin, Courtnay Brow
Axios
September 22, 2022

The overriding message out of the Fed’s communications yesterday was a simple one: Its leaders believe that some meaningful economic pain is necessary to bring inflation down, and they are willing to impose it.

It is a contrast with just three months ago, when the policymakers clung to a more optimistic story in which inflation resolves itself with a mere bumpy patch for the economy.

Why it matters: The Fed is now forecasting a meaningful rise in unemployment over the next year as it pushes interest rates to their highest levels since 2007 - which implies that it will not only tolerate a recession or near-recession, but see it as evidence of success.

“We have got to get inflation behind us,” chair Jerome Powell said in his news conference. “I wish there were a painless way to do that. There isn’t.”

The big picture: What matters most for both the economic and political outlook is who will feel that pain, and how. Already, some on the left are assailing the Fed for throwing workers under the bus in its inflation-fighting campaign.

Perhaps most prominently, Sen. Elizabeth Warren (D-Mass.) tweeted yesterday that she’s “been warning that Chair Powell’s Fed would throw millions of Americans out of work - and I fear he"s already on the path to doing so.”

If yesterday’s projections prove accurate meaning a 4.4% unemployment rate late next year, up from a low of 3.5% in July ח that would imply another 1.5 million Americans unemployed.

Hypothetically, unemployment could rise that much due to a mere soft patch in the economy. But in practice, historical examples of that playing out are scarce. Unemployment only rises that much in recessions.

There’s no doubt that in this scenario, moderately HIGHER UNEMPLOYMENT IS, IN FACT, A GOAL OF THE FED, with all the moral and political consequences that implies. But it goes too far to say workers bear the entire brunt of the war on inflation.

Tighter money from the Fed has its first-order effects through financial markets, as witnessed in the S&P 500’s 21% collapse this year.

Indeed, if you believe, as many people do, that the era of zero interest rates and quantitative easing made the rich richer and increased inequality, then the era of rate hikes and quantitative tightening ought to have the reverse effect.

There are many channels through which the Fed tightening can help bring down demand and inflation without people losing their jobs.

For example: An affluent investor decides they can’t afford a vacation home because of stock market losses. Or a business accepts lower profit margins because it believes it can’t raise prices in a slump.

Reality check: But just because those channels exist doesn’t mean job losses won’t be the most salient in how people experience the economy.

The bottom line: The 1.5 million people who may lose their jobs in the Fed’s scenario will experience a lot more pain than the tens of millions who experience a moderately lower balance in their investment portfolio.

SOURCE

Posted by Elvis on 09/23/22 •
Section Revelations • Section NWO • Section Dying America • Section Next Recession, Next Depression
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Wednesday, September 21, 2022

The Next Depression Part 65 - Another Global Collapse

imahe the end is near

The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as AUSTERITY continues to take a huge toll on the economies of the eurozone.
- Bad Moon Rising Part 56, Fiscal Collapse, 2013
 
With the exception of a few thousand very powerful people, the entire worlds’ population, all seven billion of us, are trapped - trapped into a criminal debt creating banking system that has taken hundreds of years to perfect and to come to fruition.

[T]he banking dynasties, such as the House of Rothschild, control the political processes around the world to such an extent that their network of private central banks have the right to create money completely out of thin air and then charge interest on that nothingness. The polite term is “Fractional Reserve.” Lending but in reality it is just simple fraud. The result is that the whole world is currently drowning in a sea of fraudulent debt.

There is absolutely no defence for the present system whereby private bankers create money completely out of thin air for themselves to lend and then charge interest on that “nothingness.”

If our government were to go down the path of a new Bradbury Treasury Note (as well as pursuing the banksters with Common Law for their crimes against humanity) then our debt burden would be removed overnight - there would be no deficit and no national debt.
- Bankers, Bradburys, Carnage And Slaughter On The Western Front , Justin Walker, UK Column, November 19, 2012
 
In just over a week the government is probably going to enter full-scale austerity. Republicans are refusing to end tax loopholes for big corporations and billionaires, choosing to let the sequester occur instead. Unless something changes, and soon, $1.2 trillion in cuts to defense and domestic spending begin to kick in. This will hit jobs, growth, and above all it will hit real people.
- Austerity American Style Part 9, 2013
 
The war industry loves the Christian fascists who turn every conflict from Iraq to Ukraine into a holy crusade to crush the LATEST ITERATION OF SATAN
 
The glue holding this Christianized fascism together is not prayer, although we will get a lot of that, but war. War is the raison dtre of all systems of totalitarianism. War justifies a constant search for internal enemies. It is used to revoke basic civil liberties and impose censorship.
 
Christian fascists have never hidden their agenda or their desire to create a “Christian” nation, any more than Adolf Hitler hid his demented vision for Germany in Mein Kampf. They prey, like all fascists, on the despair of their followers. They paint gruesome portraits of the end times when the longed-for obliteration of non-believers presages the glorious return of Jesus Christ. The battle at Armageddon, they believe, will be launched from the Antichrist’s worldwide headquarters in Babylon once the Jews again have control of Israel. The closer we get to Armageddon, the giddier they become.
 
Violence is embraced as a cleansing agent, a key component of any fascist movement. The Christian fascists do not fear nuclear war. They welcome it.
- Jesus, Endless War, and the Rise of American Fascism, Chris Hedges, May 8, 2022

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Economic Collapse Has Arrived In Germany. Will The U.S. Be Close Behind?

By Michael Snyder
The Economic Collapse Blog
September 20, 2022

Things are starting to get really crazy in Germany.  The Germans are dealing with the worst inflation crisis that they have seen since the days of the Weimar Republic, and meanwhile economic activity is starting to shut down all over the nation.  Of course other European countries are facing similar problems, but Germany was supposed to be the economic rock that the rest of Europe could always depend upon.  Unfortunately, the decision by the Russians to cut off the flow of gas through the Nord Stream 1 pipeline is hitting Germany extremely hard.  If we could just get both sides to agree to end the war in Ukraine, that would greatly help matters, but that simply isnt going to happen.  In fact, it appears that Vladimir Putin has decided to greatly escalate matters, and the western powers will inevitably greatly escalate matters in response.  What this means is that the economic turmoil that we are witnessing in Europe isn’t going anywhere any time soon.

This week, we got some inflation numbers out of Germany THAT ARE SO HIGH that it is difficult to believe that they are actually real

German producer prices rose in August at the fastest rate since records began in 1949, data released by the Federal Statistical Office showed today, pointing to a further increase in consumer prices.

Producer prices of industrial products rose by 45.8 percent compared to the same month of last year. Compared to July 2022, prices rose 7.9 percent.

Soaring energy prices on the back of Russia’s war against the Ukraine remain the main driver behind rising prices.

If we continue to see monthly increases of around 8 percent, next year at this time we could be talking about a yearly jump of close to 100 percent.

Wow.

How bad do things have to get before we actually start using the term “hyperinflation”?

Energy prices are the biggest reason why inflation has gotten completely out of control, and the German government has been forced to nationalize a huge natural gas company in order to TO KEEP IT FROM GOING UNDER.

The German government is closing in on an agreement to nationalize gas giant Uniper SE, as Berlin moves to stave off a collapse of the countrys energy sector.

A provisional agreement between the government, Uniper and its main shareholder, Finland’s Fortum Oyj, has been reached, according to people familiar with the situation. While contracts havent been signed, Berlin is aiming for an announcement later this week.

According to the CEO of Uniper, the company has been losing about 100 million euros a day during this crisis.

Needless to say, the German government cannot save everyone, and so a lot of firms won’t survive this crisis at all.

For example, a manufacturer that has been making toilet paper for Germans for nearly 100 years is now HEADED INTO INSOLVENCY

Hakle has been a German household name since 1928, but the Duesseldorf-based toilet paper manufacturer said all it took was this summer’s gas price shock to drive it into insolvency.

Sadly, this is just the beginning.

According to the German central bank, the nation is moving into a BROAD-BASED AND PROLONGED DECLINE IN ECONOMIC OUTPUT

“Economic activity may pull back somewhat this quarter and shrink markedly in the autumn and winter months,” the central bank said, adding that it didnt forecast this adverse scenario in a June report.

Bundesbank continued: “There are mounting signs of a recession in the German economy in the sense of a clear, broad-based and prolonged decline in economic output.” It said a contraction is expected in the third quarter with deeper declines in economic activity in the fourth.

“High inflation and uncertainty with regard to energy supply and its costs affect not only the gas and electricity-intensive industry and its export business and investments, but also private consumption and the service providers dependent on it,” the central bank said.

You can refer to such a scenario as a “recession” or a “depression” if it makes you feel better.

I call it an economic collapse.

The U.S. economy will soon be experiencing immense turmoil as well.

According to billionaire Barry Sternlicht, the Fed’s exceedingly foolish policies are pushing us toward a SERIOUS RECESSION

In an interview with CNBC’s “Squawk Box” on Thursday, Barry Sternlicht, the chairman and CEO of Starwood Capital, said he believes Americans are facing a major recession if the Federal Reserve proceeds with several more rate hikes as a means of curbing inflation, which is reportedly the central bank’s plan.

“The economy is braking hard,” Sternlicht told the financial news outlet, according to the Daily Caller. “If the Fed KEEPS THIS UP, they are going to have a serious recession and people will LOSE THEIR JOBS.”

He is right on target, but instead of saying people “will lose their jobs” he should have noted that lots of people are ALREADY being laid off.  This is something that I have been documenting ON MY WEBSITE for quite some time, and this week we learned that GAP HAS DECIDED TO LAY OFF HUNDREDS OF CORPORATE WORKERS

Gap Inc. is cutting about 500 corporate jobs as the clothing retailer struggles with declining sales.

The job cuts, which include open positions, will be primarily at Gap’s offices in San Francisco, New York and Asia and hit various departments, a representative for the retailer confirmed Tuesday. The moves were first reported by The Wall Street Journal.

Ouch.

In this environment, very few workers are truly safe.

At this point, EVEN THE ENTERTAINMENT INDUSTRY IS LETTING LOTS OF PEOPLE GO

The struggling TV and film industry continues to run face first into bad news. This week it was reported that Warner Bros. Discovery was firing 100 TV ad salespeople at the same time that Paramount has considered ending offering Showtime as a standalone service, Bloomberg reported.

Netflix followed suit with their own layoffs, the report says. The company has reportedly let go hundreds of employees and abandoned some of its office space. At the same time, the firms stock price has collapsed and fallen more than 60% from its all time highs.

Back in 2008 and 2009, millions of Americans lost their jobs.

Will we see something similar in the months ahead?

And just like during “the Great Recession,” the housing market is really starting to slow down.  In fact, we just learned that HOMEBUILDER CONFIDENCE HAS NOW FALLEN FOR NINE MONTH IN A ROW

The confidence of builders of single-family houses fell again in September, the ninth month in a row of declines, ғas the combination of elevated interest rates, persistent building material supply chain disruptions, and high home prices continue to take a toll on affordability, the NAHB report said.

With today’s index value of 46, the NAHB/Wells Fargo Housing Market Index is now below where it had been in May 2006, on the way down into the Housing Bust.

This time around, it wont just be a few areas of the planet that suffer.

At this moment we are literally witnessing economic implosions all over the planet, and the stage is being set for an immensely painful 2023.

The one thing that could really turn things around would be peace.

Unfortunately, global leaders on both sides seem absolutely determined to drag us into the type of cataclysmic global conflict that I have BEEN WARNING ABOUT FOR YEARS

So there isn’t going to be peace, and that means that things are going to get really bad in 2023 and beyond.

But I also believe that you were put at this specific moment in history for a reason.

It is when times are the darkest that the greatest good can be done, and that is something that we will all need to remember during the very dark times in front of us.

SOURCE

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The Fed just raised interest rates by another 0.75%, putting Main Street economy ‘dangerously close’ to edge of lending cliff

By Eric Rosenbaum
CNBC
September 21, 2022

The FEDERAL RESERVE’S DECISION TO RAISE INTEREST RATES by 0.75%, or 75 basis points, for the third-consecutive time at the Federal Open Market Committee meeting, is a step being taken to cool the economy and bring down inflation, but it is also putting small business owners across the country in a lending fix they have not experienced since the 1990s.

If the Federal Reserve’s FOMC next moves match the market’s expectation for two more interest rate hikes by the end of the year, small business loans will reach at least 9%, maybe higher, and that will bring business owners to a difficult set of decisions. Businesses are healthy today, especially those in the rebounding services sector, and credit performance remains good throughout the small business community, according to lenders, but the Feds more aggressive turn against inflation will lead more business owners to think twice about taking out new debt for expansion.

Partly, it is psychological: with many business owners never having operated in anything but a low interest rate environment, the sticker shock on debt stands out more even if their business cash flow remains healthy enough to cover the monthly repayment. But there will also be more businesses finding it harder to make cash flow match monthly repayment at a time of high inflation across all of their other business costs, including goods, labor, and transportation.

“Demand for lending hasn’t changed yet, but weҒre getting dangerously close to where people will start to second guess,” said Chris Hurn, the founder and CEO of Fountainhead, which specializes in small business lending.

“Were not there yet,” he said. “But weҒre closer.”

Increasing interest cost

As traditional banks and credit unions tighten lending standards and businesses begin to breach debt covenants based on debt service coverage ratios [ the amount of cash flow needed to cover debt - more business owners will turn to the SBA loan market in which firms like Hurns specialize.

“Every time we get into one of these cycles and the economy is slowing and rates are going up, one of the few places to get business credit is SBA lenders,” he said.

But even in the SBA market, business owners are beginning to pause as a result of the Fed’s rate actions, said Rohit Arora, co-founder and CEO of Biz2Credit, which also focuses on small business lending. ғFrom a credit perspective, people are getting more cognizant about increasing interest cost, and that the Fed will keep interest rates at 4-4.50%, Arora said.

FED OFFICIALS SIGNALLED the intention on Wednesday of continuing to hike until the funds level hits a “terminal rate,” or end point of 4.6% in 2023.

“Even a month ago, this was a ‘2022 phenomenon’ and now they will have to live with the pain for longer,” Arora said. “ItԒs a harder decision now because you don’t have the Fed ‘put’ behind you,” he added, referring to an environment in which you could bank on adjustable loan rates not going higher.

Fed expected to keep rates higher for longer

The big change since the summer, reflected in the stock market as well, is the acknowledgment that the Fed is not likely to quickly reverse its interest rate hikes, as inflation proves stickier than previously forecast, and key areas of the economy, like the labor market, dont cool fast enough. As recently as the last FOMC meeting in July, many economists, traders and business owners expected the Fed to be cutting rates as soon as early 2023.

Now, ACCORDING TO CNBC’S SURVEYING of economists and investment managers, the Fed is likely to reach peak rates above 4% and hold rates there throughout 2023. This outlook implies at least two more rate hikes in November and December, for a total of at least 75 basis points more, and including WednesdayҒs hike, 150 basis points in all from September through the end of the year. And that is a big change for business owners.

The FOMC meeting decision reinforced this expectation of a more hawkish Fed, with the TWO YEAR TREASURY BOND YIELD HITTING ITS HIGHEST RTE SINCE 2007 and the central bank’s expectations for when it starts cutting rates again pushed out even further in time. In 2025, the fed funds rate median target is 2.9%, implying restrictive Fed policy into 2025.

How SBA loans work and why rate hikes are a big issue

SBA loans are floating rate loans, meaning they re-adjust based on changes in the prime rate, and that has not been an issue for business owners during the low interest rate environment, but it is suddenly becoming a prominent concern. With SBA loans based on the prime rate, currently at 5.50%, the interest rates are already between 7%-8%. With the prime rate poised to reach 6.25% after the Feds latest 75 basis point hike, SBA loans are heading to as high as the 9%-9.5% range.

“Most of the business owners today, because they have lived in such a low rate environment, while they have floating interest rate loans they didnҒt even realize that on existing loans it could go up,” Arora said. “Everyone expected with gas prices coming down to what I would call ‘pre-high inflation levels’ that things looked a lot better. Now people are realizing that oil prices dont solve the problem and thatҒs new for lots of business owners who thought inflation would taper off and the Fed not be so hawkish.”

He stressed, like Hurn, that demand for business loans is still healthy, and unlike deteriorating consumer credit, small business credit performance is still strong because many firms were underleveraged pre-Covid and then supported by the multiple government programs during the pandemic, including the PPP and SBA EIDL loans. “They are well capitalized and are seeing strong growth because the economy is still doing pretty well,” Arora said, and he added that the majority of small businesses are in the service economy, which is the strongest part of the economy right now.

But many business owners were waiting for the Fed to cut in early 2023 before making new loan decisions. Now, theyve been caught flatfooted by adjustable loan rates that went up, and an interest rate environment poised to go higher still.

“Lots of business owners look at gas prices first and that was true for most of the year, and now itҒs broken down. Wage inflation and rent inflation are running amok, so were not seeing inflation coming down anytime soon,” Arora said.

That’s leading to more interest in fixed-rate products.

Fixed versus adjustable rate debt

Demand for fixed-rate loans is going up because businesses can lock in rates, from a year to three years. “Though its pretty late to the game, they feel like maybe the next 14 to 15 months, before rates start coming down, they can at least lock in a rate,” Arora said. “The expectation is, in the short term, SBA loans will adjust up and non-SBA loans are shorter tenure,” he said.

SBA loans range from three years to as long as 10 years.

A fixed rate loan, even if it is a little higher than an SBA loan today, may be the better option given the change in interest rate outlook. But thereҒs considerable potential downside. Trying to time the Fed’s policy has proven difficult. The change from the summer to now is proof of that. So if there is a significant recession and the Fed starts cutting rates earlier than the current expectation, then the fixed-rate loan becomes more expensive and getting out of it, though an option, would entail prepayment penalties.

‘Thats the one big risk you run if taking a fixed-rate loan in this environment,” Arora said.

The other tradeoff in choosing a fixed-rate loan: the shorter duration means a higher monthly repayment amount. The amount a business can afford to pay back every month depends on the amount of income coming in, and a fixed rate loan with a higher monthly repayment amount requires a business to have more income to devote to servicing the loan.

“After 2008, business owners never experienced a jumped in SBA loans and now they see monthly interest payments increasing, and are feeling the pinch and starting to plan for it ... get adjusted to the new reality,” Arora said. Demand is still healthy but they are worried about the increased interest cost while they are still battling inflation, even as lower oil prices have helped them.Ӕ

SBA loan guaranty waiver ending

Another cost that is suddenly influencing the SBA loan decision is the end of a waiver this month on SBA loan guaranty fees that are traditionally charged to borrowers so that in the event of a default, the SBA pays the portion of the loan that was guaranteed.

With that waiver ending in September, the cost of guaranteeing a loan can be significant. For example, a 3% SBA guaranty fee on a $500,000 loan would cost the business borrowing the money $15,000.

“Its adding to the costs,” Arora said.

ItҒs still a mistake to wait too long to access credit

While oil prices are coming down, food and other inventory costs remain high, as do rent and labor costs, and that means the need for working capital isn’t changing. And business owners who have been through downturns before know that the time to access credit is before the economy and cash flow start to deteriorate. At some point, in the most severe downturns, “you won’t get money at any cost,” Arora said.

“If you have a reasonably calculated growth plan, no one is going to say keep your head in the sand and wait until Q2 of next year and see where rates are,” Hurn said. “Banks don’t like to lend when the economy is slowing and there are higher rates, which translate to higher risk of defaults.”

Hurn said loan covenants are being “tripped” more frequently now in deteriorating sectors of the economy, though that by no means typifies the credit profile on Main Street.

“Once interest rates go up, and if inflation does not go down, we will see more debt service coverage ratios getting violated,” Arora said. This has to be taken into account because here is a lag between Fed policy decisions and economic impact, and this implies that sticker forms of inflation will last for longer even as sectors like housing and construction are deteriorating.

Much of the surplus liquidity businesses are sitting on due to government support is being eroded, even amid healthy customer demand, because of high inflation. And even if this economic downturn may not be anything like the severe liquidity crisis of 2008, business owners are in a better position when they have the access to credit before the economic situation spirals.

This is not 2008, or 1998

The systemic issues in the financial sector, and the liquidity crisis, were much bigger in 2008. Today, unemployment is much lower, lender balance sheets are much stronger, and corporate balance sheets are stronger too.

“Were just running into a slowing economy,” Hurn said.

When he started in small business lending back in 1998, business loans reached as high as 12% to 12.5%. But telling a business owner that today, like telling a mortgage borrower that rates used to be much higher, doesn’t help after an artificially low interest rate era.

“Psychologically, people set their expectations for borrowing costs… ‘they will be this cheap forever,’” Hurn said. “ItҒs changing radically now.”

“If rates go close to 10%, psychologically, businesses will start hesitating to borrow,” Arora said. 

And with a peak Fed rate level of 4% or higher reached by late this year, that is where SBA loan rates are heading.

The problem of higher interest rates and recession

Another 150-175 basis points in total from the Fed, if it has its intended effect of bringing inflation down, would leave many businesses in a stable condition because all of the other costs they are facing outside of debt would be more manageable. But the key question is how quickly the interest rate actions bring down inflation, because the higher rates will impact the cash flow of businesses and their monthly loan payments.

Lower inflation in stickier parts of the economy, like labor, combined with energy costs remaining lower, would allow small businesses to effectively manage cash flow. But if those things don’t happen as quickly as people are expecting, “then there will be pain, and consumer spending will be down too, and that will have a bigger impact,” Arora said. “The challenge is recession and high interest rates together that they have to handle and havent seen in 40 years,” he said.

Rates are not ordinarily considered the determining factor in a businessҒs decision to take out a loan. It should be the business opportunity. But rates can become a determining factor based on the monthly repayment amount, and if a business is looking at cash flow against monthly costs like payroll being harder to make, expansion may have to wait. If rates go up enough, and inflation doesnt fall off fast enough, all borrowing may need to be applied to working capital.

One thing that won’t change, though, is that the U.S. economy is based on credit. “People will continue to borrow, but whether they can borrow at inexpensive rates, or even get capital trying to borrow form traditional sources, remains to be seen,” Hurn said.

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Posted by Elvis on 09/21/22 •
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Tuesday, July 12, 2022

NWO Covid Year 3 Part 3

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The central claim of the ruling elite and its political mouthpieces - that “there is no money for jobs, education, health care, housing, pensions” - is a lie. The American financial elite has never been richer. Even as the government was launching its attack on social programs, the Dow Jones Industrial Average was heading for a new record high. Corporate profits and CEO pay continue to soar, subsidized by trillions in virtually free loans and bailouts from the Treasury and the Federal Reserve.
- Austerity American Style Part 9

“And thus it renders more and more evident the great central fact that the cause of the miserable condition of the working class is to be sought, not in these minor grievances, but in the capitalistic system itself.”
- The Condition of the Working Class in England (1845), (preface to the English Edition, p.36), Fredrich Engels

IMF “structural adjustment” policies have resulted in 52% of Africans lacking access to healthcare and 83% having no safety nets to fall back on if they lose their job or become sick.
- Even the IMF has shown that neoliberal policies fuel poverty and inequality.

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What Was Covid Really About? Triggering A Multi-Trillion Dollar Global Debt Crisis. “Ramping up an Imperialist Strategy”?

By Colin Rodhunter
Global Research
July 7, 2022

The IMF and World Bank have for decades pushed a policy agenda based on cuts to public services, increases in taxes paid by the poorest and moves to undermine labour rights and protections.

In 2021, an Oxfam review of IMF COVID-19 loans showed that 33 African countries were encouraged to pursue austerity policies. The worlds poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports.

Oxfam and Development Finance International (DFI) have also revealed that 43 out of 55 African Union member states face public expenditure cuts totalling $183 billion over the next five years.

According to Prof MICHEL CHOSSUDOVSKY of the Centre for Research on Globalization, the closure of the world economy (March 11, 2020 Lockdown imposed on more than 190 countries) has triggered an unprecedented process of global indebtedness. Governments are now under the control of global creditors in the post-COVID era.

What we are seeing is a de facto privatisation of the state as governments capitulate to the needs of Western financial institutions.

Moreover, these debts are largely dollar-denominated, helping to strengthen the US dollar and US leverage over countries.

It raises the question: what was COVID really about?

Millions have been asking that question since lockdowns and restrictions began in early 2020. If it was indeed about public health, why close down the bulk of health services and the global economy knowing full well what the massive health, economic and debt implications would be?

Why mount a military-style propaganda campaign to censor world-renowned scientists and terrorise entire populations and use the full force and brutality of the police to ensure compliance?

These actions were wholly disproportionate to any risk posed to public health, especially when considering the way ґCOVID death definitions and data were often massaged and how PCR tests were misused to scare populations into submission.

Prof FABIO VIGHI of Cardiff University implies we should have been suspicious from the start when the usually “unscrupulous ruling elites” froze the global economy in the face of a pathogen that targets almost exclusively the unproductive (the over 80s).

COVID was a crisis of capitalism masquerading as a public health emergency.

Capitalism

Capitalism needs to keep expanding into or creating new markets to ensure the accumulation of capital to offset the tendency for the general rate of profit to fall. The capitalist needs to accumulate capital (wealth) to be able to reinvest it and make further profits. By placing downward pressure on workers’ wages, the capitalist extracts sufficient surplus value to be able to do this.

But when the capitalist is unable to sufficiently reinvest (due to declining demand for commodities, a lack of investment opportunities and markets, etc), wealth (capital) over accumulates, devalues and the system goes into crisis. To avoid crisis, capitalism requires constant growth, markets and sufficient demand.

According to writer TTED REESE, the capitalist rate of profit has trended downwards from an estimated 43% in the 1870s to 17% in the 2000s. Although wages and corporate taxes have been slashed, the exploitability of labour was increasingly insufficient to meet the demands of capital accumulation.

By late 2019, many companies could not generate sufficient profit. Falling turnover, limited cashflows and highly leveraged balance sheets were prevalent.

Economic growth was weakening in the run up to the massive STOCK MARKET CRASH in February 2020, which saw trillions more pumped into the system in the guise of “COVID relief.”

To stave off crisis up until that point, various tactics had been employed.

Credit markets were expanded and personal debt increased to maintain consumer demand as workers wages were squeezed. Financial deregulation occurred and speculative capital was allowed to exploit new areas and investment opportunities. At the same time, stock buy backs, the student debt economy, quantitative easing and massive bail outs and subsidies and an expansion of militarism helped to maintain economic growth.

There was also a ramping up of an imperialist strategy that has seen indigenous systems of production abroad being displaced by global corporations and states pressurised to withdraw from areas of economic activity, leaving transnational players to occupy the space left open.

While these strategies produced speculative bubbles and led to an overevaluation of assets and increased both personal and government debt, they helped to continue to secure viable profits and returns on investment.

But come 2019, former governor of the Bank of England Mervyn King warned that the world was sleepwalking towards a fresh economic and financial crisis that would have devastating consequences. He argued that the global economy was stuck in a low growth trap and recovery from the crisis of 2008 was weaker than that after the Great Depression.

King concluded that it was time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians.

That is precisely what happened as key players, including BlackRock, the world’s most powerful investment fund, got together to work out a strategy going forward. This took place in the lead up to COVID.

Aside from deepening the dependency of poorer countries on Western capital, Fabio Vighi says lockdowns and the global suspension of economic transactions allowed the US Fed to flood the ailing financial markets (under the guise of COVID) with freshly printed money while shutting down the real economy to avoid hyperinflation. Lockdowns suspended business transactions, which drained the demand for credit and stopped the contagion.

COVID provided cover for a multi-trillion-dollar bailout for the capitalist economy that was in meltdown prior to COVID. Despite a decade or more of “quantitative easing,” this new bailout came in the form of trillions of dollars pumped into financial markets by the US Fed (in the months prior to March 2020) and subsequent “COVID relief.”

The IMF, World bank and global leaders knew full well what the impact on the world’s poor would be of closing down the world economy through COVID-related lockdowns.

Yet they sanctioned it and there is now THE PROSPECT that in excess of a quarter of a billion more people worldwide will fall into extreme levels of poverty in 2022 alone.

In April 2020, the Wall Street Journal stated THE IMF AND WORLD BANK FCED A DELUGE OF REQUESTS FROM SCORES OF POORER COUNTRIES seeking bailouts and loans from financial institutions with $1.2 trillion to lend.

In addition to helping to reboot the financial system, closing down the global economy deliberately deepened “poorer countries” dependency on Western global conglomerates and financial interests.

Lockdowns also helped accelerate the restructuring of capitalism that involves smaller enterprises being driven to bankruptcy or bought up by monopolies and global chains, thereby ensuring continued viable profits for Big Tech, the digital payments giants and global online corporations like Meta and Amazon and the eradication of millions of jobs.

Although the effects of the conflict in Ukraine cannot be dismissed, with the global economy now open again, inflation is rising and causing a cost of “living” crisis. With a debt-ridden economy, there is limited scope for rising interest rates to control inflation.

But this crisis is not inevitable: current inflation is not only induced by the liquidity injected into the financial system but also being fuelled by speculation in food commodity markets and corporate greed as energy and food corporations continue to rake in vast profits at the expense of ordinary people.

Resistance

However, resistance is fertile.

Aside from the many anti-restriction/pro-freedom rallies during COVID, we are now seeing a more strident trade unionism coming to the fore in Britain at least - led by media savvy leaders like Mick Lynch, general secretary of the National Union of Rail, Maritime and Transport Workers (RMT), who know how to appeal to the public and tap into widely held resentment against soaring cost of living rises.

Teachers, health workers and others could follow the RMT into taking strike action.

Lynch says that millions of people in Britain face lower living standards and the stripping out of occupational pensions. He adds:

“COVID has been a smokescreen for the rich and powerful in this country to drive down wages as far as they can.”

Just like a decade of “imposed austerity” was used to achieve similar results in the lead up to COVID.

THE TRADE UNION MOVEMENT SHOULD NOW BE TAKING A LEADING ROLE in resisting the attack on living standards and further attempts to run-down state-provided welfare and privatise what remains.

The strategy to wholly dismantle and privatise health and welfare services seems increasingly likely given the need to rein in (COVID-related) public debt and the trend towards AI, workplace automisation and worklessness.

This is a real concern because, following the logic of capitalism, work is a condition for the existence of the labouring classes. So, if a mass labour force is no longer deemed necessary, there is no need for mass education, welfare and healthcare provision and systems that have traditionally served to reproduce and maintain labour that capitalist economic activity has required.

In 2019, Philip Alston, the UN rapporteur on extreme poverty, accused British government ministers of the systematic immiseration of a significant part of the “British population” in the decade following the 2008 financial crash.

Alston stated:

“As Thomas Hobbes observed long ago, such an approach condemns the least well off to lives that are solitary, poor, nasty, brutish, and shortђ. As the British social contract slowly evaporates, Hobbes prediction risks becoming the new reality.”

Post-COVID, Alston’s words carry even more weight.

As this article draws to a close, news is breaking that Boris Johnson has resigned as prime minister. A remarkable PM if only for his criminality, lack of moral foundation and double standards - also applicable to many of his cronies in government.

With this in mind, lets finish where we began.

“I have never seen a class so deeply demoralised, so incurably debased by selfishness, so corroded within, so incapable of progress, as the English bourgeoisie”

For it nothing exists in this world, except for the sake of money, itself not excluded. It knows no bliss save that of rapid gain, no pain save that of losing gold.

In the presence of this avarice and lust of gain, it is not possible for a single human sentiment or opinion to remain untainted.Ŕ Friedrich Engels, The Condition of the Working Class in England (1845), p.275

About the author:

Renowned author Colin Todhunter specialises in development, food and agriculture. He is a Research Associate of the Centre for Research on Globalization (CRG) in Montreal.

THE AUTHOR receives no payment from any media outlet or organization for his work. If you appreciated this article, consider sending a few coins his way.

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Posted by Elvis on 07/12/22 •
Section Revelations • Section NWO • Section Dying America • Section Next Recession, Next Depression
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Friday, May 20, 2022

The Next Recession Part 29 - Rising Inflation

rdwolff-dw.jpg image: economist richard wolff border=0

“The Fed uses interest rates as either a gas pedal or a brake on the economy when needed,” said Greg McBride, chief financial analyst at Bankrate. “With inflation running high, they can raise interest rates and use that to pump the brakes on the economy in an effort to get inflation under control.”
- CNBC - Why the Federal Reserve raises interest rates to combat inflation

“Relentless high inflation is the culprit here: As the Federal Reserve attempts to tame it by rising interest rates, investors read depressed earnings ahead. We’re going to have high inflation throughout this year and into next year, and I dont really see a slowdown until 2024”
- Wharton’s Jeremy Siegel says that high inflation will last until 2024 and the Fed is playing catch-up with its late response.

The US Department of the Treasury recently announced that student loan interest rates will increase for the 2022-2023 school year. These new rates go into effect July 1, 2022, and you can’t take out any new student loans before that date.
- Student Loan Interest Rates Are About To Go Up, Business Insider, May 18, 2022

University of Florida economist Dr. Amanda Phalin said she also anticipates a recession to form over the next year or two despite efforts to avoid job losses.

“It is possible to raise the interest rates without increasing unemployment theoretically, but it has never been done before, Phalin explained.
- Anticipate Another Recession

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Economics 101: What rising interest rates, inflation mean for you

By Paul Guggenheimer
Tribune Total Media
May 20, 2022

The price of just about everything has gone up.

Inflation, the rate at which prices rise in the economy, is the worst its been in 40 years. The Federal Reserve, the central bank for the U.S. - more commonly known as the Fed - announced earlier this month that it was raising its benchmark interest rate by a half percent. That marked the largest rate hike since 2000 and came as a direct result of rising inflation.

Fed Chairman Jerome Powell said future interest rate hikes are likely.

But what does this all mean for you?

It means the cost of borrowing money has gone up. If you carry credit card debt, your rates are going to jump. Adjustable-rate mortgages and home-equity lines of credit also will be affected.

Risa Kumazawa, an associate professor of economics in Duquesne Universitys Palumbo Donahue School of Business, teaches the course “Economics 101 - Principles of Macro Economics.” She spoke with the Tribune-Review and explained what you need to know.

Question: What is inflation and what causes it?

Answer: Inflation simply means that there are higher prices. There is always inflation in the economy. Prices are always rising. But when it becomes a problem is when prices are so much higher than the year before. Were experiencing inflation that is not the typical norm. In the U.S., prices (usually) grow by about 2% to 3% per year. But (now) we’re suddenly faced with an 8.5% (increase) in March of this year compared with March of last year. So we’ve deviated from the norm, which is why this inflation is on everybody’s minds.

Q: How would you sum up what is currently happening with the economy and what were seeing with inflation?

A: This is the perfect storm - with Russia going to war with Ukraine, the supply chain issue, higher demand, stuff not being shipped quickly enough and prices rising for certain things in the economy. People are facing unexpected higher prices. The first place people are noticing this is at gas stations. The one thing that shot up in price is oil. Your gasoline now costs a lot more (per gallon) than it used to. Russia’s war with Ukraine has definitely played a role in this. Russia is one of the primary countries that supplies oil to the world. So this is a major blow to countries that were importing oil from Russia. That usually comes with higher food costs, and we’re definitely seeing that as well.

Q: So its like a domino effect? Do higher gas prices impact food prices?

A: They do because when truck drivers ship things, or if you’re flying things, gasoline costs are involved, so then the sellers of these products raise their prices as well to make a profit.

Q: How do you arrive at the figure of 8.5% to show how much prices have increased in the last year?

A: Were tracking multiple prices in the economy. You’re not just tracking the price of gasoline but food milk, bread, eggs - we track all these prices as well. We have a way of combining all of these individual prices together in whats called the (Labor Department’s) consumer price index, and then when we take the percentage change in that, we can figure out the inflation rate in the economy.

Q: So this is what our current inflation looks like, and its not good for consumers. The Federal Reserve is responding to inflation by raising interest rates. What is the Fed, what is it designed to do, and why is it raising interest rates?

A: The Fed is considered to be the central bank of the country. It conducts monetary policy, which includes lowering and raising of interest rates depending on how well the economy is doing. The Fed lowers the interest rate to stimulate a slowing economy. It impacts big-ticket purchases that people make - cars, homes, appliances. If there’s a lower interest rate that people are going to be paying, they’re going to spend more, and this is how the economy gets stimulated. The Fed also raises interest rates to combat an economy with high inflation. When interest rates are high, people aren’t going to be spending as much because you’re going to be paying (more money) for your car loan, your mortgage, credit cards. (Consumers) aren’t spending as much, so prices will come back down again. But by slowing down the economy, it could lead to a recession. The Fed has decided that the inflation issue is a big enough problem that they’re going to fight that one.

Q: When do we, as a collective economy, feel the pinch of this, and whats the worst thing that can happen?

A: The worst, I think, is because of these (higher) interest rates, the Fed actually pushes us into a recession. That’s the worst that could happen in this scenario.

About the author

Paul Guggenheimer is a Tribune-Review staff writer. You can contact Paul at 724-226-7706 or EMAIL

SOURCE

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“Is there anything the Biden administration can do to decrease the rate of inflation significantly, even though it is worldwide?  Is there any approach to price controls that could really work?”

By Richard Wolff
Democracy At Work
May 18, 2022

Transcript

Q. Is there anything the Biden administration can do to decrease the rate of inflation significantly even though it is worldwide?

A. There’s all kinds of things that Mr Biden can do. I’m going to go over several of them, but they’re not that’s not a complete list.

The tragedy in the United States is that we are dealing with the inflation by raising interest rates through the Federal Reserve and the public discussion is as if that’s it that’s our option. That’s what we’re going to do - that’s what we have to do.  As if there were not loads of other possibilities, which are all cut off by this conversation that is really a story of silencing.  And i want to unsilence so that we all understand it

First of all, the United States impacts global inflation because it is an outsized participant

Let me give you an example. The GDP, the gross domestic product of the United States is about 21 trillion dollars. The next biggest country, China, is only 15. And after that they’re very small.  Germany is about four, Russia’s about one and a half.

The United States is a huge outside player in the world economy, and if we bring down inflation here, everybody else confronted with the fact that prices aren’t rising here, they were wouldn’t dare raise their prices, because they priced themselves out of the world market. So put aside the question of direct control, we don’t need it.

In the united states what we do here impacts the rest of the world.  So let’s begin.

Here’s a way to stop an inflation.  I’m not going to speculate on a possible one, I’m going to describe it for you historically.

Richard Nixon, a conservative republican president on August 15 1971 declares a wage price freeze. He says “I’m speaking to you Americans on radio and television and as of tomorrow morning we will make it illegal for anyone to raise a price or a wage. If you do that we will arrest you and put you in jail.”

Is that an option?  Yes.  Was it done in the united states? Yup. Has it been done in other countries? Yes. Is it an alternative to raising interest rates to stop an inflation?  You bet. Is it being discussed in the United States?  Nowhere not at all.  It’s as if what i just said had never happened.

Here’s a second way to stop an inflation.  In World War II we had to do that. The democratic President Roosevelt understood that to fight world war II resources that used to be used to make consumer goods would be diverted to making uniforms - guns, planes, tanks, all of the apparatus of war - and that meant that the quantity of resources available to produce consumer goods would shrink and therefore consumer goods would be scarce.

The demand hadn’t changed, or people of America still wanted to eat and dress and live the way they had in the past, but there wouldn’t be the equivalent stuff, and the government decided. If we allow the market to handle this, the rich people will come in, see quickly that there’s a shortage, and make sure they get it by bidding up the price that’s how they make sure they get what is scarce.

Markets always distribute whatever is scarce to the richest people.

Do you find that offensive does it contradict your morality? Think about what you just agreed to.

Wow! And so the government didn’t allow it, It didn’t want an inflation. They didn’t want the prices of consumer goods to go up so that only the rich people could get it, and the mass of people couldn’t afford it who would then get angry and bitter and we would have disunity at a time of war when we needed unity, so that was out, and they issued ration books that had in them ration stamps and store keepers could not sell you a quart of milk, a gallon of gas, whatever it is that was in the rules of those days without you having a stamp, and the stamps were distributed to people according to their need not according to their wealth. Wow! We didn’t have an inflation for that reason we didn’t allow it to happen.

And here’s a third one that’s also a reality of American life, making it all the more amazing that there’s no conversation about it.

That the desperate government of Biden, and the political center republican and democrat determined to survive politically and rebuild their shattered hold on American society have to make us all unite in a war, and have us all unite in the Federal Reserve as if the raising of interest rates is the only way to deal with an inflation. 

Here’s one more that time allow. We already do in this country a very interesting thing with the prices of utilities, you know electricity, water, things like that, and the price of insurance policies, because they have been abused by the capitalists who own those businesses who raised their prices too high, who made a little personal inflation, we have what are called utility commissions in every one of the 50 states, and we have insurance commissions. And you know what?  Before an insurance company can raise a price, before a utility can raise a price, they have to go before the commission and demonstrate that it’s a reasonable thing to do, which the commission has the power to reject, and that happens all the time. Well if you don’t want an inflation, why don’t you do that for everything? Why don’t we set up a wage price control board - oh wait a minute - during world war II we had that.

One of the greatest economists at that time - John Kenneth Galbraith - wrote a book: A THEORY OF PRICE CONTROL - because he worked during the war on the board that controlled prices in this country.  So don’t tell us that there’s nothing you can do but interest rates.  That’s a lie. It’s just a lie.

I’ve just given you rationing, I’ve given wage price freeze mr dixon thing, and I’ve talked about using commissions to control prices.

There are others, but the important thing is to understand that if there were a political will to stop the inflation it could be done tomorrow, but instead it’s taking months and months, and it’ll be done by raising interest rates, which will mean it’s harder to afford a home, harder to pay for a car, harder to carry credit. It’ll hurt the mass of people as if that were the only way to go.

SOURCE

Posted by Elvis on 05/20/22 •
Section Dying America • Section Next Recession, Next Depression
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