Connect with us

Americas

Why at Least America Will Be in Another Great Depression

Published

on

America’s bailout package to overcome the coronavirus ‘recession’ is twofold:

One part is printing money for employees and consumers, so that they won’t be thrown out onto the streets for non-payment of debts such as mortgages, car-loans, credit cards, and student loans.

Another part is printing money for bondholders and stockholders, so that their investments will still have value and there won’t be panicked selling of them as corporations accumulate soaring losses because consumers are staying home and are cutting way back on expenses.

The top-down part of the bailout (the part for investors) will merely add to the wealth of the already-wealthy, while everybody else sinks financially into oblivion. (On April 9th, the Zero Hedge financial site explained in detail why even bailing out the airlines would hurt the economy more than help the economy.) The top-down part supplies the money to the corporations instead of to their employees and consumers, and is therefore supply-boosting instead of demand-boosting. Supplying money to the corporations that the Government selects to protect will enable those corporations to buy up assets and corporations which during the crisis are being auctioned off by the ones that go out of business, and this will leave the nation’s wealth in even fewer hands than before the epidemic struck.  

The bottom-up part (the part for workers and consumers) will be exactly the opposite of that: it will help prevent another Great Depression. By boosting purchases, instead of bailing-out billionaires and such, it will enable the economy to keep functioning, and it will not increase the concentration of wealth.

However, employees and consumers don’t have many lobbyists, but billionaires do, and billionaires also own (through political donations and lobbyists) almost all members of Congress (and also the mainstream press), and they not only own, but are represented by, one inside the White House, who is surrounded there by others, and by representatives of others, so that the concerns of the wealthiest will be very well represented by America’s Government, and will end up dominating the bailouts, so that only the insiders, who are well-connected in Washington, will be protected. (And Joe Biden would be no improvement over Donald Trump, though his rhetoric is different.)

Already, we see, in the ‘news’-reports, that there is ‘chaos’ etc. in the U.S. Government’s response to the crisis, but what’s not being reported in the mainstream ‘news’-media is that there very much is method to this seeming madness, and it is the method of the well-practiced and well-funded takers, definitely not of their victims, from whom they (and their Government) have been, and now increasingly are, taking. The takers own the Deep State, and are protected by it. The vast bulk of the bailouts will go to them. The vast bulk of the bailouts will go to suppliers (investors), not to their workers and consumers.

Printing money for bondholders and stockholders will predominate. It won’t be like Franklin Delano Roosevelt (FDR) did during the first Great Depression, when the federal money went to the public instead of to the megacorporations; it will be the opposite. This will be a supercharged concentration of wealth. Money is power, and the power of billionaires will thus be enormously increased; the power of the public will go to zero.

The inevitable result of this will be enormous spreading poverty, and, ultimately, so many dollars being owned by the billionaires, so that hyperinflation will result if this continues for more than a few months, and it will not be able to be overcome by any form of monetary response, because it will instead be a problem about the distribution of actual wealth (not mere money); and, as Raoul Pal phrased this problem, “Money printing does not make the dollars available. They get stuck in the financial system and hoarded” (by the wealthy), at a time like this. So: there still will be wealth, but increasing percentages of it will be owned by the super-rich; and, so, their corporations will experience plunging sales. Everything (except, perhaps, gold, etc.) will actually be worth less than it was before, even though inflation will be soaring. More dollars will be chasing fewer goods and services that are actually being purchased. The stock and bond markets will then crash. The result will be like Germany during the Weimar Republic. But the cause of it will be different; it won’t be war-reparations payments; it will instead be the almost unimaginable corruption at the very top of the U.S. Government and economy. Whereas Germany had a deeply rooted social-welfare system, America does not, and most of America’s billionaires are Republicans (unapologetically elitist psychopaths), which means they want there to be even less of that: simply dog-eat-dog (survival of the ‘fittest’) amongst everybody else — not their own class. Although Democratic politicians will probably sweep the November elections, those individuals are deeply indebted to Democratic Party billionaires, for their very careers. These billionaires must be served first — it’s the American way, “Greed is good” (at least after 1980).

One of the reasons why Weimar-era Germans gravitated politically rightward was that Germany at that time did not have a right-wing-populist Government; and, so, right-wing-populist politicians didn’t get the blame. Hitler came to power then. America now does have a right-wing-populist Government. Right-wing populism will therefore get the blame. If the leftwing-populist, democratic socialist, Bernie Sanders had been chosen by Democratic Party voters, then America would not be facing its present very dire prospects, and congressional Democrats (because their Presidential candidate would then be leading them) would now be blocking — instead of passing into law (as it now is) — the bailouts for millionaires and billionaires; but there is no such leadership, at this crucial time. (As a leader, Joe Biden is already a failure.) This is why America now faces a near certainty of another Great Depression. It comes from the leadership, and the leadership don’t represent the public.

The result when a right-wing-populist country faces collapse is a police-state, facing a revolution: military guns and tanks, facing the public. If Democrats win the November elections, then Democratic Party billionaires, and not Republican Party ones, will be making the decisions. Biden is no FDR.

Perhaps there exists no close historical precedent for understanding what the outcome of that would be. If there instead turn out to be Republican billionaires continuing to make the decisions, then there will be massive bloodshed, and increasing defections from the Government, and an increasingly unmanageable revolution, which will be a hell for any predictions. But with Democratic Party billionaires taking charge, there will be at least a possibility of fundamental reform. Perhaps someone like FDR will arise after Joe Biden’s corruption and incompetency (he won the nomination by cheating) will have been sufficiently displayed for a few years. Therefore, maybe, starting in 2024 (after Biden’s failure), things will be able to start turning around, for the better, by means of a new set of primaries for the Democratic Party’s nomination (or else by a Constitutional Amendment doing away with political parties and the Electoral College). 

The fundamental problem, right now, is that the sheer corruption at the very top of the U.S. Government will cause trillions of dollars of federal bailouts to go to the very wealthiest Americans, at a time when there is soaring need by the public. The idea that America will be able to succeed no matter how corrupt its Government is, is now being tested, and I don’t see any way that such an idea will be able to pass such a test. But only time will tell. We’re now in an enormous experiment — that’s for sure. 

There is one reason to hope that the bleak scenario described here might be averted. The most advanced software for predicting Covid-19 cases and fatalities in the United States provides projections at the “Health Data” site, which started on April 7th, by projecting that the peak in cases will be on April 15th and that by May 21st there will have been 81,000 deaths, and that by August 4th the final death will be recorded, at 81,766. Three days later, on April 10th, the projections were instead that the peak will be on April 11th and that by May 22nd there will have been 60,000 deaths, and that the final death will be recorded on August 4th, at 60,415. (But that estimate suddenly soared back up on April 13th to 68,841.) This 26% (or now 16%) reduction in the ultimate total death estimate, within only 3 (or 5) days, indicates that perhaps the outlook is less dire than has generally been thought to be the case. However, if optimistic projections turn out to be true, so that almost no Americans will die from Covid-19 after May 22nd, then the question will still remain: With tens of millions of Americans having gone for so long without income, what will be the consequence to the American economy? It will still be another Great Depression. In fact, on April 9th CNBC headlined “JPMorgan now sees economy contracting by 40% in second quarter, and unemployment reaching 20%”. (Total GDP-contraction during the Great Depression was a decline of 46% during 1929-1933, the steepest such plunge in U.S. history. Peak unemployment that was reached during the Great Depression — also a U.S. record — was 19%, in 1938.) But maybe it won’t last as long as the first one did. Furthermore, if the Government’s response to the crisis will be the opposite of what FDR’s was and will bail out the megacorporations instead of bail out only the public, what type of country will there be afterwards? That’s the problem — the insatiable and enormous grabbing by America’s super-rich, by means of their (not  our) Government. As the liberal billionaire Warren Buffett observed in November 2006, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Now, nearly 14 years later (and especially after the current round of bailouts), we can say, simply: they won. America is a dictatorship by the rich; no longer a government “of the people, by the people, for the people.” Not only do Republican voters want to retain this dictatorship by the rich, but Joe Biden’s victory against Bernie Sanders proves that many Democratic voters also want it to continue. Sanders was the only candidate calling for “revolution,” and that call by him was spurned. That decision by the voters, which was guided by the lobbyists and news-media, which were guided by the billionaires, shapes America’s future.

Also on April 9th, the New York Times bannered “Fed’s  Plan Far Exceeds Its 2008 Rescue”. That’s  virtually unregulated money flowing to investors, unlike what will be going to workers and consumers. The Fed even “stopped short of applying limits on offshoring.” And, as the article also noted, this money that the Treasury will lend through the Fed includes “Help for corporations,” “Limited support for risky debt,” and “Help for state and city governments”; and any of these Fed loans that end up not being repaid will increase Americans’ future federal taxes. Though investors will be protected, “offshoring” of workers’ jobs will continue, and the public’s descendants will be left holding the bag of any losses.

Then, on April 13th was the announcement that “Morgan Stanley warns that a potential second wave of infections could strike around November/December”. The firm said “We believe the path to re-opening the economy is going to be long. It will require turning on and off various forms of social distancing and will only come to an end when vaccines are available, in the spring of 2021 at the earliest.” How will it then be possible to avoid a Second Great Depression? Will the Fed be able to continue printing money without limit? Would an immense financial crash be avoided even if it can? The realistic outlook now appears to be super-grim. Perhaps sooner than anyone now expects, every investor will start selling into paper investment-markets that suddenly have no buyers at anything like today’s prices.

Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010

Continue Reading
Comments

Americas

Is the Washington-initiated Climate Summit a Biden Politrick?

Published

on

Earlier on, climate skeptics had wondered if President Biden’s January 27 Executive Order on “climate crisis” was “climate politrick?” Now, scholars in China have likened the US climate envoy’s hurried China visit last week to “a weasel calling on a friendly New Year visit to a chicken” – or a visit with evil intentions. Some overenthusiastic critics of the US in Beijing are even warning President Xi to not login for the online Earth Summit in Washington this week.

                                                                    ***

People in China believe a snake and a wolf must never be rescued. The belief comes from a popular idiom: the Zhongshan wolf or “The Wise Old Man and the Wolf.” In a few words, the essence of the popular Chinese adage is well-captured in the following sentence: a popular fairy tale about the ingratitude of a creature after being saved. Last year, the idiom entered China’s foreign policy discourse as several IR commentators employed it to describe “ingratitude” of the Trump-led America towards the Peoples’ Republic. Following the ascent of President Biden in the White House, the Chinese commentariat quickly course-corrected itself, i.e. neither Trump nor Biden, it is the US bipartisan anti-China consensus which is the real “wicked wolf.”

Just like the curt and bland statement issued by China’s foreign ministry acknowledging China will host the US climate envoy Kerry for three days in Shanghai, 14-17 April, China released on last Sunday the text of the joint China-US statement following Kerry’s departure on Saturday. The statement said: “The United States and China are committed to cooperating with each other and also with other foreign governments to tackle the climate crisis which must be addressed with seriousness and urgency it demands.” Interestingly, or rather conspicuously, the statement neither indicated nor was followed by another press release regarding whether China will be represented at the upcoming crucial 40-nation Earth Summit being hosted by President Biden.

While it is true a few Chinese scholars and think tanks have welcomed the worlds’ two largest carbon emitting nations to come forward to cooperate with each other upholding the spirit of the Paris climate agreement. What is perhaps unprecedented and more significant is the warning to President Xi by a section of China’s leftist intelligentsia to beware of Biden’s “climate politrick.”

Talking of those who welcomed Xi-Biden climate cooperation initiative – the first sign of bilateral cooperation since the Trump interregnum, Zhang Jianyu, chief representative and vice president of the non-profit Environmental Defense Fund’s China Program, reacted positively and said: “The fact that the joint statement has been signed, means that both Beijing and Washington believe in climate change. We are hoping both China and the US take bold actions.” Li Shuo, senior climate adviser for the environmental group Greenpeace, said China could soon respond to a new U.S. pledge with one of its own, building on the “momentum” of the Shanghai talks.“The statement in my view is as positive as the politics would allow: It sends a very unequivocal message that on this particular issue (China and the United States) will cooperate. Before the meetings in Shanghai this was not a message that we could assume,” Li added. 

In contrast, an article in Utopia, one of the influential “anti-US” platforms for ideological debate in China, cautioned China’s top leadership while questioning Biden’s credentials to host the Earth Summit. The pro-Mao, leftist online intellectual discourse forum advocates Maoist and communist ideology. In a signed article on the forum’s website last Saturday – the day John Kerry concluded his 3-day stay in Shanghai and left for Seoul, a commentator using strong words not only “condemned” Joe Biden for his “arrogant” and “hypocritical” foreign policy thinking, but also urged the Chinese leadership to thwart Washington’s attempt to regain the US leadership by holding the Earth Summit beginning Thursday. The article was entitled: “China must resist and fight back hypocrite Biden.”   

In fact, as early as in November last year, within days of the presidential voting, a section of scholars in China were writing “the election of Biden may or may not turn out to be a turning point for easing Sino-US frictions…with Biden in power, the nature of Sino-US relations will not see a fundamental change, but the mode of confrontation will be relatively soft and the direction of negotiations will be more predictable.” However, with each passing day since taking office, President Biden’s China policy has consistently been predictable in only one direction – in enduring the Trump legacy. The most recent manifestation of which was on display at the testy diplomatic summit last month in Anchorage where senior officials from the two countries “traded sharply critical assessment” of each others’ policies.

Another Chinese commentary has highlighted six ideological “attacks” the US has carried out against China in the international arena under Trump and Biden administrations respectively. First is the classic example of the US-Japan nexus in politicizing and turning on its head the Chinese opposition to Japan’s decision to release radioactive contaminated water from Fukushima into the sea; second is the Western governments and media carrying out slanderous campaign of China’s “economic colonialism” in Africa; third, as soon as China succeeded in containing fight against COVID-19 last year in May and started offering humanitarian assistance abroad, the US-led started defaming and discrediting China by launching “mask diplomacy” campaign against Beijing; fourth, just like vicious propaganda maligning China’s economic assistance to Africa and China’s humanitarian aid by free supply of PPE and masks, the US launched “vaccine diplomacy” campaign to vilify China; the fifth is attacking China using the virus trajectory and accusing China of developing COVID-19 virus and exporting it from chemical laboratory in Wuhan; the sixth and the latest anti-China “false” propaganda is the “genocide” in Xijiang. Unlike the genuine human rights violation by Japan to release the contaminated water into the sea, the false propaganda against China is aimed at creating anti-China world public opinion, creating social unrest and turbulence in China and ultimately achieving their goal of destroying China, the article stated.   

Finally, it is not incorrect to view President Xi’s highly charged remarks made at two most recent international events respectively in the context of strongly-worded articles published in Utopia and other left-leaning online websites in the past few days. Two days prior to the arrival of Kerry in China, President Xi, according to the Xinhua news agency, warned the US in his speech at the China-Germany-France trilateral video conference on climate change: “Climate change could be used as a tool to disparage some countries for not doing enough.” Then two days prior to the Earth Summit, Xi apparently reiterated his stern warning to President Biden: “We must not let the rules set by one or a few countries be imposed on others, or allow unilateralism pursued by certain countries to set the pace for the whole world.” The remarks by Xi were made at China’s annual Boao Asia Forum on Tuesday.    

China’s semi-official “independent” English language CX Daily interpreted Xi’s above remarks as “veiled swipe at the new US administration under Biden” who has been busy forming alliances challenging China over issues such as Taiwan, Hong Kong and Xinjiang. Of late, mainstream media in China has been accusing Biden of not only carrying on and enduring the Trump legacy in relentlessly “attacking” China, but also that Biden has gone far beyond Trump in insulting and condescending Beijing. In fact, the Utopia commentary uses another Chinese idiom “externally strong, empty inside” to caricature Biden’s personality. It cites two recent incidents to establish how weak and hollow is President Biden, i.e. the US-China talks in Alaska and Putin’s resolve to dare the US in the Black Sea – in both instances, Biden simply caved in after he was challenged, the commentary observed. “On Iran nuclear deal issue too we saw Biden acting in the same surreptitious and crude manner. He [Biden] is typical treacherous man,” the Utopia commentary continued its verbiage.

Some Chinese scholars, therefore, have welcomed Xi’s remarks as clear rebuff to what the mainstream Western media, in particular the Wall Street Journal has been spreading, i.e. “Xi would participate in the US-initiated climate summit later this week.” These scholars are invoking yet another ancient Chinese proverb “Mouth honey belly sword” or Koumifujian in Chinese. The idiom is used as a metaphor for describing someone extremely sweet on the outside but actually shrewd, cunning and sinister. Most Chinese IR commentators are telling us, the idiom is a perfect description of Biden. 

Continue Reading

Americas

Russia Or China: Is Biden Right To Target Russia?

Published

on

No one can disagree with President Joe Biden when he wants to overhaul infrastructure — although a single-minded concentration on one aspect is likely to be longer lasting and a legacy.  Consider, for example, a high-speed rail link between New York and Los Angeles,  True high-speed, that is, and truly modern like the new lines in China with a design speed up to 350 km/h (220 mph), or preferably higher by the time the rails are constructed in the US.  It would make overnight coast to coast (3,000 miles) railroad trips a reality.  

What is more difficult to fathom is Biden’s foreign policy.  He appears to have identified Russia as an adversary or worse, starting with calling Vladimir Putin a killer and exposing several Russian companies that possibly support its intelligence services.  Do American companies ever provide cover for the CIA?  That is the obvious question coming to mind with an obvious answer.  Have western intelligence services including the CIA ever carried out assassinations?  If so, would the US president be called a killer?

At the same time, Russia is not the country with a stated goal of becoming the world’s leader in its economy, technology and military.  No, that’s China.  Russia only wants closer ties with the west but is being driven into the arms of China.

Given China’s stated goals and its progress towards them, it is transparent that its aims require the displacement of the US from its leadership position.  Any prospect of thwarting China’s ambitions would impel the US to cordon the  country to some extent or at the very least attempt to challenge its influence.  Instead, China is signing treaties with neighbors.  It is in Iran and it announced that it might send its own troops to Afghanistan to maintain its “peace” after the US departs.  Afghanistan, by the way, is rich in minerals and rare earth elements.  

So far Mr. Biden’s foreign policy initiatives appear tactical with a kind of tit-for-tat approach that is absent a coordinated (with allies) strategic plan to prepare the US for a confrontation politically and economically — not militarily, although as the US ramps up pressure, a skirmish here and there on the high seas could be a possibility.

A string of Chinese bases now ring the Persian Gulf extending west to East Africa and east along the Iran and Pakistan coast to Sri Lanka, across to Burma and then south to the western end of Indonesia.  The recent treaty with Russia allows convenient Eurasian access while the new closeness with Iran permits an overland route to its oil riches.  East of Iran is Pakistan which is a Chinese client state of long standing and where it has built the Gwadar port.

Given the circumstances, the US is obliged to reassess Iran from a geostrategic perspective but also Pakistan, a country that has been on the frontlines of the Afghan war since the beginning.  Pakistan is also a key to long term peace in Afghanistan as its own Pashtun population is connected to Pashtuns there through family ties and a traditionally porous border.  They also command a plurality as the largest ethnic group in Afghanistan. 

Further east China is increasing its influence in Sri Lanka, and is by far Burma’s largest trading partner.  The recent coup in Burma is its own story and an oft-reported tale in that country without noting China’s silence.  

Despite the local politics, the US can ill afford to surrender such a vast region to China without counter moves to ensure some freedom of movement within China’s tight embrace.

Continue Reading

Americas

Playing Politics in Times of Covid: AMLO’s Whimsical Inoculation Programme

Published

on

Image source: as-coa.org

Andrés Manuel López Obrador (AMLO) has capriciously modified Mexico’s inoculation programme as he sees fit. He has followed an improvised strategy along the way that follow no logical approach.

The initial vaccination schedule was set up in 5 stages that placed frontline and essential workers as priority sectors; the rest of the population would be divided up by age ranges and inoculated accordingly. However, last January, AMLO announced the creation of 10,000 brigades who would oversee the vaccination programme. Each brigade is made up 12 people majority of whose are active members of the president’s political party MORENA. They also were prioritised for vaccination, even ahead, some key workers. This process alone took up 120,000 vaccines that otherwise would have gone directly to frontline workers or the elderly.

As of mid April, Mexico, with a population of 117 million people, has only vaccinated over 10 million people, roughly 8.5% of the population. Only 2.6 million have received the second shot, only 2.2%. The government also announced that it was prioritising the poorest citizens and indigenous communities. In a more recent announcement, he declared teachers would be also bumped up for priority vaccination ahead of the elderly. This again demonstrates the arbitrary standards of his vaccination schedule.

The government’s decision to inoculate teachers ahead of even health workers does not come as a surprise: they’re a key voting bloc. Mexico is holding mid-term elections this coming July, and vaccinating teachers so close to voting time is the latest evidence that the president is playing politics with the vaccinations. Just like in old times under the hegemonic party, unionised teachers are crucial for AMLO’s political party to win the most votes in the next elections.

Using certain sectors of the population to mobilise voters in favour of political party is not something new in Mexican politics. In Mexico, just like in many other unconsolidated democracies, political parties and candidates themselves can turn to political agents to ensure victory in elections through the use of patronage systems or vote-buying strategies.

To fully understand the role of the Teachers’ Union (SNTE and CNTE) as a political machine, it is essential to understand its history and role in elections over the last decades. The SNTE has more than 1.6 million members nationally, while the CNTE has over 100,000 members, it was founded in 1980 and has considerably less influence than the SNTE.

The SNTE was founded in 1949, and since then they served as a satellite organisation of the hegemonic party, PRI. Up until 1992, it was mandatory for all Union members to register as active party members. Therefore, throughout these years, the PRI, regularly received electoral support from the Union. The alliance between the hegemonic party and the SNTE strengthened in 1989 when Elba Esther Gordillo was appointed as the new leader of the Union.

What was behind the motivation of the SNTE in becoming an electoral agent? For many years, the Union received monetary incentives and access to political posts. Under this arrangement, political parties and even candidates may monitor the performance of such agents to make sure they are still aligned to those of the government, political party or candidate. As long as the interests of both sides are aligned, the electoral agent is expected to work efficiently to deliver the expected results either on election day or throughout the length of the administration.

In 2005, Elba Esther Gordillo was expelled from the PRI, ending the alliance between the SNTE and the hegemonic party. The leader of the Union founded her own political party, PANAL, and participated in the 2016 federal elections. However, due to the number of voters the newly created party attracted, it was only limited to proportional representation positions. Although PANAL, presented its own candidate for the presidency, Elba Esther offered the votes of the Union in the presidential elections to other political parties with greater possibilities of winning.

The SNTE supported Felipe Calderón, the PAN candidate in 2006 and in 2012 they backed the PRI candidate, Enrique Peña Nieto. The SNTE’s geographical outreach and the role of teachers as community and educational leaders facilitate their role as electoral agents. They’re able to influence informally the vote of others as well as the opinions and voting decisions of students and their parents.

In many democracies, it is not unusual for teachers to have strong ties to political parties and their candidates, and this is critical when it comes to explaining their effectiveness as electoral agents. It is not uncommon also for teachers to be appointed as voting stations representatives. The combination of these institutional characteristics opens the door for teachers to continue to influence voters through either legal or illegal.

AMLO’s courting of the Teachers’ Union dates to his electoral campaign in 2018. José Alfredo González, son in law of Elba Esther Gordillo, was seen in a presidential campaign event to support AMLO’s candidacy. He is also an active member of Redes Sociales Progresistas, a newly created party with links to Elba Esther Gordillo. Soon after AMLO’s inauguration in 2018, AMLO set to dismantle the education reform that has been approved by Enrique Peña Nieto in 2012. This was well received by the 2 Teachers’ Trade Unions. In 2020, the SNTE expressed its support for the president, and they also ratified its adherence to the political programme of the president. AMLO also publicly asked Elba Esther Gordillo to talk openly about the (alleged) fraud of 2006. AMLO’s intentions in doing this are very clear: He wants the former leader of the Union to enter the political game by talking about the issue and taking a stance that would not be antagonistic towards the incumbent party.

There is no doubt that the president has an underlying agenda in prioritising the vaccination of teachers when mid-term elections will be held in less than 2 months in Mexico. The president has chosen CanSino as the vaccination to be used to inoculate teachers across Mexico to allow schools to reopen by the end of May in some states. Now, with only less proven vaccine options, CanSino has an efficacy rate of less than 65%, questions undoubtedly arise as to how effective the inoculation of Mexicans will be with the use of these vaccines over the already proven ones.

Continue Reading

Publications

Latest

Trending