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LET’S escape Brexit and see what’s happening in the wider world. Most forecasters are gloomy about global economic prospects. According to Schroders, doyen of UK assets managers: “We forecast a more stagflationary environment in 2019 with global growth set to slow and inflation to rise”. The Davos World Economic Forum predicts a “sharp drop-off in world trade growth, which fell from over 5 per cent at the beginning of 2018 to nearly zero at the end”. Forbes business magazine warns: “The biggest problem for the global economy in 2019 will be massive business failures that could also lead to bank failures in emerging markets”.

Of course, the forecasters have been wrong before but it is clear that the main analysts of the global capitalist economy are pessimistic about current trends. They are right to be worried.

The international economy operates in pulses christened Kondratiev waves after Nicolai Kondratiev (1892-1938), the Russian economist and statistician who first identified them. These K-waves consist of an expansionary upswing lasting normally 15-20 years, followed by a downswing of similar length. We are now in such a downswing that could last till the 2030s.

What causes Kondratiev pulses? There is a rich literature trying to identify the cause, in particular the work of the Belgian economist, the late, great Ernest Mandel. Crudely, it works like this. Social and economic conditions mature to spark a runaway investment boom in the latest cluster of new technologies. After a period, excess investment and increased competition lower rates of profitability, curbing the boom.

At the same time – because this is as much a sociological as an economic process – growth expands the global workforce, both in numbers and geographically. The new, militant workforce launches social struggles to capture some of the wealth created in the boom. This, in turn, adds to the squeeze on profits. The peak and early down wave are characterised by violent social conflicts, whose outcome determines the length of the contraction.

…click on the above link to read the rest of the article…

Game Over? Report Card on Our Planet’s Environment

February 26, 2019

Game Over? Report Card on Our Planet’s Environment

The World Economic Forum’s Global Risks Report for 2019 indicates that most experts point to environmental problems as being the most serious threats to global stability—just as they found in the previous two years. That report follows on one in October 2018 by the UN Intergovernmental Panel on Climate Change (IPCC). It said with “high confidence” that at the current rate of greenhouse gas emissions, “global warming is likely to reach 1.5°C between 2030 and 2052 if it continues to increase at the current rate.” Avoiding the worst-case consequences would require measures that have “no documented historic precedent.”

As Americans see the evidence of climate-influenced destruction, they’re on edge: Seventy-two percent of those polled late last year considered climate change “important,” a 15-percentage point increase over 2015. Sixty-nine percent were “worried” about it.

So here we are again, facing another round of bad news on the environment. Actually, the news is worse this time around. 2018 was the fourth-hottest year on record; 2015-2017 are the other three. The Arctic experienced its second-warmest year ever. The head of the World Meteorological Organization said: “The 20 warmest years on record have been in the past 22 years. The degree of warming during the past four years has been exceptional, both on land and in the ocean.”

Rising sea levels, according to the IPCC, “will continue beyond 2100 even if global warming is limited to 1.5°C in the 21st century (high confidence). Marine ice sheet instability in Antarctica and/or irreversible loss of the Greenland ice sheet could result in multi-metre rise in sea level over hundreds to thousands of years.” Greenland’s and Antarctica’s ice loss has recently received extensive media coverage as scientists have discovered just how far offtheir earlier predictions were. Antarctica’s enormous ice reserves are melting six times faster now than they were between 1979 and 1989.

…click on the above link to read the rest of the article…

Vampire finance sucks the lifeblood out of the economy

January 30, 2019

Vampire finance sucks the lifeblood out of the economy

We need democratic control of the financial sector. An interview with Saskia Sassen

The World Economic Forum. Photo by Studio Roosegaarde (Flickr)

Every year to coincide with the World Economic Forum, the Transnational Institute based in Amsterdam launches a State of Power report to expose and deepen our understanding of the mechanisms that elites use to maintain power and concentrate wealth. For its eighth edition, the report has focused on the financial sector, asking why it has grown more powerful despite causing the financial crisis of 2008. The report features this interview with renowned sociologist Saskia Sassen who has written extensively on how finance has changed the nature of cities today and how its logic of extraction has fuelled new forms of expulsions and dispossession. The interview concludes with a discussion of fractures in the power of ‘high finance’ and how citizens’ movements might take advantage to advance a democratic control of money.

How powerful is finance today and from where does it derive its power?

First, finance shouldn’t be confused with traditional banking. We need banks – they sell money – whereas finance is a mode of extraction, just like mining: once value has been extracted they don’t care what is done with it. A traditional bank wants its customers’ children to be future clients, so it cares about relationships, but finance doesn’t care at this personal level, except if they are very, very rich.

Second, finance is a dangerous sector because financiers have learnt how to financialise just about everything. And they do this not through traditional banking practices, but through algorithms and highly speculative manipulations. They have invented instruments to serve themselves rather than whoever they are advising. Which means they often don’t lose even when their clients do.

…click on the above link to read the rest of the article…

“It’s A Reunion For People Who Broke The World”: Author Explains Why Davos Should Be Cancelled

January 17, 2019

“It’s A Reunion For People Who Broke The World”: Author Explains Why Davos Should Be Cancelled

Paris is burning, a large chunk of the US federal government is shut down and Britain is careening toward a delay of Article 50 – or possibly a second referendum – as the Brexit process descends into chaos, calls for the World Economic Forum to cancel its annual conference in Davos, a notorious rendezvous for the world’s financial and political elite, are growing louder. Particularly after Donald Trump, Emmanuel Macron and now Theresa May have all decided to skip the conference this year to attend to their respective crises.

While these demands from a frustrated public might seem baffling to the global elites who see Davos as an opportunity for less-fortunate emerging economies to “pitch” themselves in an effort to attract more FDI, one former New York Times columnist and the author of a new book that explores the causes of the surge in populism sweeping the Western world offered a surprisingly articulate and trenchant explanation for why people across the west are “mad as hell”, and, furthermore, what role the average Davos attendee played in bringing our society to this point.

In an interview with Bloomberg TV, Anand Giridharadas placed the blame on plutocrats like Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos for helping to “break the world” with ruthless corporate agendas that helped monopolize political power in the hands of the elite…leaving the rest of the population with deep-seated feelings of frustration as the usual avenues of social mobility have been closed, and people feel more powerless to change their future.

…click on the above link to read the rest of the article…

The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy

January 15, 2019

The founder of the World Economic Forum shares what he sees as the biggest threat to the global economy

Economist Klaus Schwab is the founder and executive chairman of the World Economic Forum which will be holding it’s Annual Meeting in Davos, Switzerland January 22-25, 2019.
Schwab explains the theme of this year’s meeting, “Globalization 4.0: Shaping a New Architecture in the Age of the Fourth Industrial Revolution.”
When asked if we were currently in a trend of deglobalization he said no, “we have to make a differentiation between globalization, which is a fact, and globalism.”
He says the biggest threat to economic stability is the imbalances in the world.
Schwab says he believes trade imbalances are a problem. He is not an unconditional advocate for free trade, which he says is great but only if there is equality.

Sara Silverstein: This year’s theme for 2019 for the meeting is Globalization 4.0 and shaping the architecture of the Next Wave of Globalization which is the industrial revolution, the fourth industrial revolution, which you’ve literally wrote a book on. Can you tell me what makes up the fourth industrial revolution?

Klaus Schwab: We are living in a time of multiple technological innovations. I just mentioned artificial intelligence, blockchain, you could add and add, and all those technologies together will fundamentally transform the world, not just business models but economies, society, politics and so on. So when we speak about globalization 4.0, we want to address the global architecture which is needed in this new context of the fourth industrial revolution.

Silverstein: And what was the issue with the last wave of globalization?

Schwab: We see it already now so so many issues like inequality, trade wars, and I could go on and on. The danger is that we deal with those issues, we address those issues with patchwork policies.

…click on the above link to read the rest of the article…

Political Nightmares Multiply for Europe Ahead of Davos

January 12, 2019

Political Nightmares Multiply for Europe Ahead of Davos

Europe’s dreams of integration are slipping away as the people wake up from the nightmare erected for them.

As we approach Act IX of the Yellow Vest protests in France and the threats of creating bank runs we get the news that both Presidents Trump and Macron will not be attending the convocation of globalists known as the World Economic Forum at Davos.

Trump’s not attending because it’s clear he’s no longer a member of The Davos Crowd and Macron isn’t because any public appearance by him will double the number of people donning high visibility safety gear and taking to the streets.

It almost feels like we’ve reached Peak Davos, with these announcements. But, clearly neither of these men are invited because in the minds of The Davos Crowd they no longer figure in their long-term plans.

Macron not attending is also a sign his government will be sacrificed on the altar of the Yellow Vests in the near future.

The Yellow Vest protests will have to be dealt with in a substantive manner that goes far beyond a few temporary injunctions against higher taxes. They are now vandalizing another symbol of middle class oppression in France, speed cameras.

All of the governments of Europe are broke. And the speed camera is simply another in a long line of instances of them trying to squeeze blood from the now impoverished and shrinking middle class.

The symbology of them smashing speed cameras and demanding their money from the banks cannot be clearer. When you take everything from someone, when he has nothing left to lose, he becomes free.

…click on the above link to read the rest of the article…

Market crash? Another red card for the economy

October 13, 2018

Market crash? Another red card for the economy

A few months ago I wrote this article at the World Economic Forum called “A Yellow Card For The Global Economy“. It tried to serve as a warning on the rising imbalances of the emerging and leading economies. Unfortunately, since then, those imbalances have continued to rise and market complacency reached new highs.

This week, financial markets have been dyed red and the stock market reaction adds to concerns about a possible impending recession.

The first thing we must understand is that we are not facing a panic created by a black swan, that is, an unexpected event, but by three factors that few could deny were evident:

Excessive valuations after $20 trillion of monetary expansion inflated most financial assets.
Bond yields rising as the US 10-year reaches 3.2%
The evidence of the Yuan devaluation, which is on its way to surpass 7 Yuan per US dollar.
Global growth estimates trimmed for the sixth time in as many months.

Therefore, the US rate hikes – announced repeatedly and incessantly for years – are not the cause, nor the alleged trade war. These are just symptoms, excuses to disguise a much more worrying illness.

What we are experiencing is the evidence of the saturation of excesses built around central banks’ loose policies and the famous “bubble of everything”. And therein lies the problem. After twenty trillion dollars of reckless monetary expansion, risk assets, from the safest to the most volatile, from the most liquid to the unquoted, have skyrocketed with disproportionate valuations.

(courtesy Incrementum AG)

Therefore, a dose of reality was needed. Monetary policy not only disguises the real risk of sovereign assets, but it also pushes the most cautious and prudent investor to take more risk for lower returns. It is no coincidence that this policy is called “financial repression“. Because that is what it does. It forces savers and investors to chase beta and some yield in the riskiest assets.

…click on the above link to read the rest of the article…

Steven Pinker’s Ideas About Progress Are Fatally Flawed. These Eight Graphs Show Why.

May 18, 2018

Steven Pinker’s Ideas About Progress Are Fatally Flawed. These Eight Graphs Show Why.

It’s time to reclaim the mantle of “Progress” for progressives. By falsely tethering the concept of progress to free market economics and centrist values, Steven Pinker has tried to appropriate a great idea for which he has no rightful claim.

In Enlightenment Now: The Case for Reason, Science, Humanism, and Progress, published earlier this year, Steven Pinker argues that the human race has never had it so good as a result of values he attributes to the European Enlightenment of the 18^th century. He berates those who focus on what is wrong with the world’s current condition as pessimists who only help to incite regressive reactionaries. Instead, he glorifies the dominant neoliberal, technocratic approach to solving the world’s problems as the only one that has worked in the past and will continue to lead humanity on its current triumphant path.

His book has incited strong reactions, both positive and negative. On one hand, Bill Gates has, for example, effervesced that “It’s my new favorite book of all time.” On the other hand, Pinker has been fiercely excoriated by a wide range of leading thinkers for writing a simplistic, incoherent paean to the dominant world order. John Gray, in the New Statesman, calls it “embarrassing” and “feeble”; David Bell, writing in The Nation, sees it as “a dogmatic book that offers an oversimplified, excessively optimistic vision of human history”; and George Monbiot, in The Guardian, laments the “poor scholarship” and “motivated reasoning” that “insults the Enlightenment principles he claims to defend.” (Full disclosure: Monbiot recommends my book, The Patterning Instinct, instead.)

In light of all this, you might ask, what is left to add? Having read his book carefully, I believe it’s crucially important to take Pinker to task for some dangerously erroneous arguments he makes. Pinker is, after all, an intellectual darling of the most powerful echelons of global society.

…click on the above link to read the rest of the article…

The Strategy of Maximal Extraction

February 14, 2018

The Strategy of Maximal Extraction

How Donald Trump Plans to Enlist Fossil Fuels in the Struggle for Global Dominance

The new U.S. energy policy of the Trump era is, in some ways, the oldest energy policy on Earth. Every great power has sought to mobilize the energy resources at its command, whether those be slaves, wind-power, coal, or oil, to further its hegemonic ambitions. What makes the Trumpian variant — the unfettered exploitation of America’s fossil-fuel reserves — unique lies only in the moment it’s being applied and the likely devastation that will result, thanks not only to the 1950s-style polluting of America’s air, waters, and urban environment, but to the devastating hand it will lend to a globally warming world.

Last month, if you listened to the chatter among elite power brokers at the World Economic Forum in Davos, Switzerland, you would have heard a lot of bragging about the immense progress being made in renewable energy. “My government has planned a major campaign,” said Indian Prime Minister Narendra Modi in his address to the group. “By 2022, we want to generate 175 gigawatts of renewable energy; in the last three years, we have already achieved 60 gigawatts, or around one-third of this target.” Other world leaders also boasted of their achievements in speeding the installation of wind and solar energy. Even the energy minister of oil-rich Saudi Arabia, Khalid Al-Falih, announced plans for a $30 billion to $50 billion investment in solar power. Only one major figure defied this trend: U.S. Secretary of Energy Rick Perry. The United States, he insisted, is “blessed” with “a substantial ability to deliver the people of the globe a better quality of life through fossil fuels.”

A better quality of life through fossil fuels? On this, he and his Trump administration colleagues now stand essentially alone on planet Earth.

…click on the above link to read the rest of the article…

Soros and the EU Commission are now against the free Internet

February 14, 2018

Soros and the EU Commission are now against the free Internet

With his investments, Soros has become a billionaire. Unfortunately, for many years he has been interfering in the political and demographic developments in Europe and has been financially promoting ethnic replacement. Now he is turning against CSU, Facebook and Twitter because they are endangering his leftist revolution.

Like every year, Soros gave his speech on the state of the world at the World Economic Forum in Davos (see movie).¹⁾The neo-liberal quasi self-made sage spoke to his heart’s content, while the open, freedom-loving society he invited soaked in each of his words like a sponge. Now hardly anyone noticed that Soros was trying to take away their freedoms.

In the beginning Soros spoke about Russia, which he describes as a mafia state, which adopted nationalist ideology and then he said that the US under Trump’s presidency will become similar in this respect. He now also included Hungary in the axis of evil. It is nothing new because he has always been hostile towards governments that are trying to protect their citizens from the consequences of open borders policies and the idea of an open society. What was new was that he scourged social networks. Soros maintains that since they have grown into powerful monopolies, they influence our behaviour and consciousness (especially during election time) too much.

They deceive their users by manipulating their attention and directing it towards their own economic interests and (…) making them dependent on their services (…) The platforms resemble casinos (…) and force people (…) to renounce what John Stuart Mill called the freedom of thought. Is that why Facebook and Twitter are banned in countries like China, Afghanistan and North Korea? Are people really allowed to think freely without access to the internet and the opportunity to post their opinions?

…click on the above link to read the rest of the article…

When it comes to Davos, it’s inequality, stupid

January 27, 2018

When it comes to Davos, it’s inequality, stupid

This is what ‘the great and the good’ in the business world will not be discussing during the annual talk-fest at the Swiss luxury resort

The curtain has gone up on the annual World Economic Forum in the Swiss resort of Davos. Photo: Reuters / Denis Balibouse

For billions of people, the Groucho Marx rule applies when talking about Davos. This is the exclusive club, which meets in the luxury Swiss resort each year to discuss the global business environment.

Groucho, of course, has been immortalized along with the rest of the Marx Brothers in the zany Hollywood movies of the 1930s, such as A Night a the Opera, A Day at the Races and Animal Crackers.

In one quick-fire response, he joked: “I sent the club a wire stating, ‘Please accept my resignation. I don’t want to belong to any club that will accept me as a member’.”

Well, to start off with those billions of people would not get past the bouncers, because the self-defined World Economic Forum is about exclusion. Yet even if, by divine design, they were handed free passes, what would be the point?

The austerity mantra holds sway over large swathes of Europe. The US remains mired in the fiscal cliff maelstrom and the Japanese are about to unleash an economic tsunami – devaluation of the yen at all costs.

On the other hand, growth does apply to parts of the BRICS (Brazil, Russia, India, China and South Africa) group of emerging nations and selected members of Next 11.

Certainly, Indonesia, Mexico, the Philippines, Turkey, South Korea and Vietnam fall into this category in N-11, a BRICS-like organization.

…click on the above link to read the rest of the article…

These Are The Top Global Risks For 2018 According To The World Economic Forum

January 17, 2018

These Are The Top Global Risks For 2018 According To The World Economic Forum

As the World Economic Forum scrambles to accommodate the additional security measures necessitated by president Donald Trump’s decision to break with presidential tradition and attend Davos this year, the organization has released what’s become an annual tradition: Its report of what it believes are the top global risks for 2018.

The most prominent theme is the shift in perceived risk factors: conflict and war, natural disasters, extreme weather and cyberattacks have supplanted social polarization and the rise of populism as the biggest global risk for 2018.

As the report summarizes, last year’s Global Risks Report was published at a time of heightened global uncertainty and rising popular discontent with the existing political and economic order. The report called for “fundamental reforms to market capitalism” and a rebuilding of solidarity within and between countries.

The survey of nearly 1,000 experts from government, business, academia and non-governmental organizations showed 93% expect a worsening of political or economic confrontations between major powers in 2018, including 40% who believe those risks have increased significantly.

One year on, the WEF authors notes that the urgency of facing up to these challenges has, if anything, intensified. Economic growth is picking up, but 2017 was a year of widespread uncertainty, instability and fragility—and the latest results of the Global Risks Perception Survey (GRPS) suggest respondents are pessimistic about the year ahead: in a new question gauging expectations for 2018, only 7% of responses point to a reduction of risk, compared with 59% pointing to an increase.

The report highlights four concerns: (1) persistent inequality and unfairness, (2) domestic and international political tensions, (3) environmental dangers and (4) cyber vulnerabilities.

The visual summary of the global risk landscape is shown below:

…click on the above link to read the rest of the article…

World faces wave of epic debt defaults, fears central bank veteran

November 23, 2017

World faces wave of epic debt defaults, fears central bank veteran

Exclusive: Situation worse than it was in 2007, says chairman of the OECD’s review committee

The next task awaiting the global authorities is how to manage debt write-offs without setting off a political storm Photo: Rex

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).

“Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem, too.”
William White, OECD

“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” he said.

“It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he told The Telegraph on the eve of the World Economic Forum in Davos.

“The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.”

The next task awaiting the global authorities is how to manage debt write-offs – and therefore a massive reordering of winners and losers in society – without setting off a political storm.

…click on the above link to read the rest of the article…

The Great Acceleration Death Trap

October 2, 2017

The Great Acceleration Death Trap

The Great Acceleration, post WWII humanity forcing the earth system, is charging ahead at exponential speed, including record temps year-after-year-after year-after year and on and on it goes, relentlessly.

Fatally, many parts of the world become uninhabitable with a 2°-4°C increase in temps, too hot for human physiology. Under the circumstances, the human body cannot get rid of bodily heat fast enough. People die. Will worldwide average temps increase by 2°-4° and if so, how fast? Nobody knows for sure, but the outlook is lousy.

“We need to understand that we are in a nonlinear exponential phase… we have overwhelming scientific evidence that humanity now faces a new juncture of grand global risk. We have in just five decades transitioned from being a small world on a big planet where we could allow ourselves to have unsustainable economic growth without Earth sending any invoices back to humanity up to now with overwhelming scientific evidence of a new big world on a small planet. We’ve reached the saturation point. We’re hitting the ceiling of the biophysical capacity where we can no longer exclude destabilizing the entire earth system.” (Source: Beyond the Anthropocene | Johan Rockström, Stockholm Resilience Centre- Sweden, World Economic Forum, Zurich, Feb. 14, 2017)

Ergo, the overriding risk is a complete breakdown of the earth system, ecosystem collapse. In that regard, traversing from a linear to an exponentially charged earth system is risky and could be fatal. Here’s how Johan Rockström describes the impact of the new exponential biosphere, speaking from the World Economic Forum in Zurich: “If I take 35 linear steps, I’ll barely reach the coffee stand outside of this room. What happens if I take 35 exponential steps? I’d reach Copenhagen after 21 steps. Three more steps, I’m in New York. Another two steps and I encircle the entire planet. And, if I add another nine steps to my 35, I reach planet Mars.”

…click on the above link to read the rest of the article…

How Solid are Canada’s Big Banks?

March 23, 2017

How Solid are Canada’s Big Banks?

The World Economic Forum consistently ranks Canada’s banks among the world’s safest. Competent regulators have overseen stress tests, tightened lending standards and delinquency rates are low. Demographics are good and the country’s diversified economy is backed by a treasure of oil, wood, gold and other natural resources.

So the experts say.

Institutional investors, relying on the work of Jeremy Rudin, Canada’s chief bank regulator, agree. In fact, Canadian financials accounted for 35.5% of the market capitalization of the benchmark exchange (NBF February).

However this façade hides major uncertainties. Key concerns stand out, which if unaddressed, could spark solvency and liquidity issues in one or more of Canada’s Big Six banks.

The fragilities can be seen in an IMF report, which calculated that Canada’s financial sector accounted for a stunning 500% of GDP in 2012. Today, the assets of the Big Six banks alone are more than double the size of the country’s economy.

Each (RBC, CIBC, Scotiabank, BMO, TD and National Bank) have been designated “systemically important,” which in turn, due to sheer size and interconnectedness, suggests that they are almost certainly “too big to fail.” That means the collapse of any one Big Bank would threaten to trigger systemic implosion.

More ominously, if Canada’s financial system, arguably the world’s best, is riddled with pores, what does that say about the US, the UK, and Japan? Let alone Italy and Spain?

Yet signs of fragility are everywhere. Consider:

Complacency following “secret” $114 billion bailout

A quick review of key metrics suggests Canada’s banking sector, which, on the surface, having largely escaped the 2008 financial crisis, has thus learned little from it.

As David Macdonald demonstrated in a paper for the Canadian Center for Policy Alternatives, Canada’s Big Banks benefited from nearly $114 billion in cash, liquidity, and other bailout help from both local and US sources following the financial crisis.

…click on the above link to read the rest of the article…

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