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The world on the brink of the abyss. Looking at the real danger

March 29, 2022

The world on the brink of the abyss. Looking at the real danger

The neoliberal ideology of unrestrained markets has led to a global crisis. Humanity now faces an existential threat as the result of global dominance by corporations, whose ultimate goal is at odds with human flourishing

Back in 1947, as the world was rebuilding from the destruction of the Second World War, a few dozen free-market ideologues met in a luxury Swiss resort to form the Mont Pelerin Society—an organization devoted to spreading the ideology of neoliberalism throughout the world. Their ideas—that the free market should dominate virtually all aspects of society, that regulations should be dismantled, and that individual liberty should eclipse all other considerations of fairness, equity, or community welfare—were considered fanatical at the time. Over three decades, though, financed by wealthy donors, they assiduously established networks of academics, businessmen, economists, journalists, and politicians in global centers of power.

When the stagflation crisis of the 1970s threw classic Keynesian economics into disrepute, their moment of opportunity arrived. By 1985, with free market disciples Ronald Reagan and Margaret Thatcher entrenched in power, they initiated a campaign to systematically transform virtually all aspects of life into an unrestrained marketplace, where everything could be bought and sold to the highest bidder, subject to no moral scruple. They crippled trade unions, tore up social safety nets, reduced tax rates for the wealthy, eliminated regulations, and instituted a massive transfer of wealth from society at large to the uber-elite.

*Ronald Reagan and Margaret Thatcher helped initiate the neoliberal takeover of global politics, economics, and media. (Photo by Ron Galella/WireImage)*

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

Hogwash

November 23, 2021

Hogwash

In the early 1980s, to Margaret Thatcher’s annoyance, union reps and managers at the steelworks in Port Talbot agreed a strategy to save the plant. As a result, Port Talbot was spared the post-industrial blight visited upon most of Britain’s ex-industrial towns. Now in private hands, and despite periodic crises, the steelworks employs some 4,000 people – a big drop from the 20,000 workers during the plant’s heyday in the 1960s. Nevertheless, those 4,000 jobs are supplemented by hundreds more sub-contractors, and together these provide the demand for local small and medium businesses.

What saved the Port Talbot plant was an agreement to implement neoliberal efficiency savings. Key among these was the sub-contracting of what we might think of as efficiency buffers – redundant capacity to cope with emergencies. For example, prior to the agreement, the steelworks employed a small army of fitters, electricians, welders and other skilled workers whose skills were only required when something went wrong. Instead of being paid a full wage – often for sitting around playing cards and drinking tea – they would be paid a retainer together with a set fee every time they were called out.

Similar arrangements were in place in the railway industry in those days too. And I personally spent shifts playing cards and drinking tea as part of the spare train crews kept on standby for sickness cover and unforeseen emergencies.

Whatever else neoliberalism was about, cutting out these “inefficiencies” lay at its heart. Companies were losing money paying people like me to sometimes sit around all day. And so, the redundancy process was enlisted to cut the workforce down to its bare minimum…

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

How Long Can Lies & Control Supplant Reality & Free Markets?

November 9, 2021

How Long Can Lies & Control Supplant Reality & Free Markets?

The facts of surreal yet broken (and hence increasingly controlled and desperate) financial markets are becoming harder to deny and ignore. Below, we look at the blunt evidence of control rather than the fork-tongued words of policy makers and ask a simple question: How long can lies & control supplant reality?

The Great Disconnect: Tanking Growth vs. Supported Markets

It’s becoming harder to keep up with the increasingly downgraded GDP growth estimations from the Atlanta Fed.

As recently as August, its GDPNow 3q21 estimates for the quarterly percentage change was as high as 6%.

But within a matter of weeks, this otherwise optimistic figure was cut embarrassingly in half.

Last month their GDP forecast sank much further to 0.5%, and as of this writing, it has been downgraded yet again to 0.2%.

Needless to say, 6% estimated growth falling to effectively 0% growth is hardly a bullish indicator for the kind of strengthening economic conditions which one might otherwise associate with risk asset prices reaching all-time highs for the same period.

The current ratio of corporate equities to GDP in the U.S. (>200%) is the highest in history.

Markets are at an all-time high according to the buffett indicator

This growing yet shameful disconnect between market highs and economic lows is getting harder to explain, ignore or deny by the architects of the most artificial, rigged and dishonest market cycle in modern history.

In short, it is no longer even worth pretending that stock markets are correlated to such natural measurements as natural supply & demand or a nation’s economic productivity.

After all, who needs GDP in the New Abnormal?

By now, even Fed doublespeak can’t hide the fact that the only market force which the post-08 markets require is an accommodative central bank—i.e., a firehose of multi-trillion liquidity on demand.

The S&P 500 rises with central bank assets.

But as for this most recent GDP downgrade, it is being blamed on tanking US export data.

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

Will the Gov’t Close all Markets?

September 17, 2021

Will the Gov’t Close all Markets?

QUESTION: Marty, the government closed the New York Stock exchange in 1914 due to World War I. Do you think they will do that again?

Looking forward to Orlando

ANSWER: The closure of 1914 was not the only time they shut down markets. Even the London market was shut down during war. On June 17, 1864, Congress responded to the wild speculation and simply prohibited buying or selling gold for future delivery to stop the speculation driven by each battle. The penalty was now imprisonment, a heavy fine, or of course, both. The only exception was a gold transaction in a private office. Yet, it was clearly aimed at closing and any minor gold exchanges. Nonetheless, the government simply could not stop the speculation of gold.

Gold advanced from $190 to about $280. Therefore, the Gold Act of 1864 (13 Stat. 132), which passed with little debate on June 17, 1864, only confirmed that the dollar was in trouble and it tumbled against the British pound driving its value to $9.97 per pound sterling.

There is a risk that the FREE MARKETS may be shut down as we approach 2027. There are Panic Cycles in politics both in 2022 and 2024. These people behind the Great Reset will NOT tolerate a free market when it comes to the Euro. You must understand that the crack in the Euro is a debating political factor in Europe which is entirely different from that of what you see in the dollar. Since World War II, Europ[ean politicians have used the strength of their currency as confirmation that they have done a good job. No American president could run to say the dollar is up against Canada and Mexico which proves I have done a great job. He would be laughed at as nuts.

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

Portrayals of Degrowth in the Press: ‘Free market magic’ vs ‘Radical doomsayers’

June 12, 2021

Portrayals of Degrowth in the Press: ‘Free market magic’ vs ‘Radical doomsayers’

In October 2020, I analysed press coverage of degrowth in Western European (English language) newspapers and magazines between January 2015 and October 2020. Using media theory concepts such as agenda setting and framing, my research explored how degrowth is being considered in the press, particularly as a potential response to climate change.

* * *

Are you a fanatic, a fetishist or a member of a cult? If you are a supporter of degrowth, then you are likely to be portrayed that way in the press. My research found that degrowth is not yet on the media agenda, except in a very limited and mostly dismissive way. The English-language press is not informing the public thoughtfully of alternatives to our current political-economic system or the impact of unfettered growth on the planet.

Greta Thunberg gave a stirring speech to the United Nations in 2019, challenging the leaders of the world to think differently about their approach to climate change. In her direct style, she delivered a stinging rebuke of governments’ emphasis on continuous economic growth, telling the gathering: “We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth.”

Thunberg echoes the degrowth movement – an increasing body of academics and activists, who argue that economic growth cannot be decoupled from increased greenhouse gas emissions. Instead, they advocate for degrowth as a potential solution to climate change. An open letter proposing putting degrowth principles at the root of a new economy attracted over 2,000 signatories and has been translated into 18 languages. Academic interest in degrowth appears to have increased significantly in recent years.

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

Free Markets Are Dead: Fed To Start Buying Junk Bonds, High Yield ETFs

April 9, 2020

Free Markets Are Dead: Fed To Start Buying Junk Bonds, High Yield ETFs

Back on March 23, when the Fed unveiled it would start buying investment grade corporate bonds, we said “now that the Fed is effectively all in, it will buy stocks and junk bonds next.”

Two weeks later, we were right and this morning the Fed announced it would, as expected, start buying junk bonds (we have to wait for the next “market” – we use the term loosely because it is no longer a market which is terminally disconnected from fundamentals but a giant, Fed-fueled Ponzi scheme – crash before the Fed goes literally all in and starts buying stocks and pretty much anything else).

But let’s back up. A few days ago, we pointed out that the day so many credit bears had been waiting for had arrived, when a record $150BN in investment grade bonds were downgraded to junk, becoming so-called fallen angels, and sparking concerns about what will happen to the $1.3 trillion junk bond market as hundreds of billions of formerly investment grade debt is downgraded to junk and violently reprices the entire high yield space.

Those concerns were answered this morning when as part of the Fed’s expanded $2.3 trillion loan/bailout program, the Fed announced the expansion of its Primary and Secondary Market Corporate Credit Facilities, which will now purchase – drumroll – junk bonds, which were initially investment grade bonds but were downgraded after March 22.

Why March 22? Because Ford was downgraded on March 24, and as a result its bonds are surging.

In the term sheet of the revised term sheet of the Secondary Market Corporate Credit Facility, the Fed now writes that “to qualify as an eligible issuer, the issuer must satisfy the following conditions”

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

The Fed Detests Free Markets

November 29, 2019

The Fed Detests Free Markets

Paul Gauguin **Tahitians at rest (unfinished)** 1891

To be completely honest, I wrote -most of- the second part of this a while ago, and then I was thinking this first part should be part of the second, if you can still follow me. But it doesn’t really, it’s fine. I wanted to write something to address how little people know and acknowledge about how disastrous central bank policies have been for our societies and economies.

Because they don’t, and they have no clue, largely and simply because of the way central banks are presented both by themselves and by the financial press that covers them. Make that “covers”. Still, going forward, we will have no way to ignore the damage done. All the QE and ZIRP and NIRP will turn out to be so destructive for us all they will rival climate change or actual warfare. That’s what I wanted to talk about.

You see, free markets are a great idea in theory. Or you can call it “capitalism”, or combine the two and say “free market capitalism”. There’s very little wrong with it in theory. You have an enormous multitude of participants in an utterly complex web of transitions, too complex for the human mind to comprehend, and in the end that web figures out what values all sorts of things, and actions etc., have.

I don’t think capitalism in itself is a bad thing; what people don’t like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much.

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

The Reasons Behind The Relentless Ideological Onslaught Against Free Markets

April 6, 2019

The Reasons Behind The Relentless Ideological Onslaught Against Free Markets

I sometimes think that the free market concept is treated like The Hunchback of Notre-Dame’s Quasimodo in the long novel of global economic history. It is considered ugly and undesirable by most people who judge it at a mere glance without bothering to understand it. It is a bogeyman; a scapegoat for numerous societal problems that it has nothing to do with. In reality, the only time free markets do cause trouble is when they are manipulated or misused by elitists seeking to turn them into something other than free markets. And, even when free markets display their great value and internal beauty, many still prefer other systems that are intrinsically corrupt but flashier on the surface.

There are many reasons behind this persistent attitude. However, they are not coincidental or natural. Human beings actually tend to gravitate toward free markets over and over again in history, and away from centralized government interference and dominance in economic trade. But whenever they do, they get hammered down by the-powers-that-be. In our modern era, establishment elites have chosen to be more subtle (for now) and dissuade people from free markets through disinformation and propaganda.

To break it all down to a simple observation – Whenever disaster strikes economically, free markets are blamed. Whenever something is fixed, even if that fix is a temporary band-aid on a sucking chest wound, government involvement and socialism are applauded. And so the cycle continues until free markets become a pariah with no place in our world and centralization becomes the prevailing answer to everything.

Free market trade is ever present at a local level and always has been. But, those who favor globalism are hell-bent on putting an end to any and all private unregulated commerce forever.

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

The Psychological Warfare Behind Economic Collapse

December 21, 2018

The Psychological Warfare Behind Economic Collapse

The concept of using the economy as a weapon is not an alien one to most people. Generally, we understand the nature of feudalism and how various groups can be herded onto centralized plantations to be exploited for their labor. Some people see this as a consequence of “capitalism,” and others see it as an extension of socialism/communism. Sadly, many people wrongly assume that one is a solution to the other — meaning they think that crony capitalism is a solution to communist centralization or that communism is a solution to the corruption of crony capitalism. The reality is that this is just another false paradigm.

What is most disturbing is that the majority of the public have no grasp whatsoever of the true solution to the problem of corrupt or totalitarian economies: free markets.

Free markets have not existed within the global economy on a large scale for at least the past 100 years. The rise of central banking has eroded all vestiges of freedom in production and trade. Crony capitalism with its focus on corporate power and monopoly has nothing to do with free markets, despite the arguments of rather naive socialists who blame “free markets” for the problems of the world. If you ever hear anyone making this claim, I suggest you remind them that corporations and their advantages are a creation of governments.

The protections of corporate personhood, limited liability, unfair taxation of small business competition and legislation shielding corporations from civil lawsuits are all generated by government. Therefore, corporations and crony capitalism are much more a product of socialist-style systems, not free markets.

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

The Myth of Capitalism – A Book by Jonathan Tepper

November 7, 2018

The Myth of Capitalism – A Book by Jonathan Tepper

Crony Capitalism vs. Free Markets

Many of our readers are probably aware of the excellent work our friend Jonathan Tepper does for Variant Perception (VP)*****, a financial research boutique that really does bring a unique perspective to the table*. Jonathan (with co-author Denise Hearn) has just added a new book to his résumé, which is going to be released on 12 November: The Myth of Capitalism (MoC) – Monopolies and the Death of Competition** (a link to the official site is at the end of this post).

Jonathan Tepper and Denise Hearn: The Myth of Capitalism, an excellent plea for more competition and free markets.

MoC deals with a subject that has increasingly captured the attention of political and economic observers in recent years: the growing quasi-monopolistic powers of a small (and shrinking) number of large corporations that have seemingly succeeded in exempting themselves from competition.

They are often aided and abetted by government imposing regulations certain to suppress competition from less well-funded upstarts and smaller firms. At the same time governments are creating loopholes which only the biggest established firms with international operations are able to take advantage of.

Don’t get us wrong – we have no problem with loopholes as such: to paraphrase Mises, they allow capitalism to breathe. Problematic is only that the benefits granted to the most powerful players are denied to their potential competitors; we wouldn’t want to see these loopholes closed, we would like to see them extended far and wide.

Restoring Consumer Sovereignty

MoC is not focused on questions of monopoly theory***. The book is actually quite a page turner, at the same time informative, entertaining and infuriating. It is primarily concerned with practical problems and discusses what might be done to overcome them.

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

Misesians gather as ghost of dead economist haunts the planet

November 1, 2018

Misesians gather as ghost of dead economist haunts the planet

Growing stock market volatility is increasingly reminding investors of downturns that twice crashed valuations by more than 50% since the turn of the century. Many Americans remain perplexed as to why the economy appears to teeter perennially on the brink.

A small group of radical economists, followers of the late Ludwig von Mises, think they know why.

“Conventional economists believe that free markets cause booms and busts,” said George Bragues, an adjunct professor at the University of Guelph-Humber, who will be speaking at the International Conference of Prices and Markets taking place in Toronto this weekend.

“That’s only partially true,” said Bragues . “There is a good argument that governments themselves, more specifically central-bank driven borrowing, are the biggest creators of economic euphoria and subsequent depression.”

Do governments cause depressions?

Von Mises’s free-market ideology— so radical it makes the American Republican party look communist—is almost completely ignored by governments, ivy league university economics departments and central banks.

However, that ignorance comes at a price.

Today, the ghost of Von Mises’s ideas haunts much of the planet, where governments have quietly, often secretly, fostered colossal debt bubbles that will almost be impossible to deflate without calamity.

Von Mises’s suggestion that credit bubbles are the key drivers of booms and depression, broadly known as the Austrian Business Cycle Theory, was first outlined in his 1912 book Theory of Money and Credit.

Murray Rothbard built on this theory in his own 1963 work America’s Great Depression, which provided a convincing case study on how the U.S. government fueled the 1920s stock market expansion, collapse and the ensuing spillover effects.

Mises’s out-of-the-box works are particularly important as the planet inches towards peak debt and what the IMF warns could be an impending depression, because populist socialist politicians such as Bernie Sanders will almost certainly blame the free markets.

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

Disruptive Markets–What Sustainability Really Means For Business

August 26, 2018

Disruptive Markets–What Sustainability Really Means For Business

Many look around at today’s crises – climate change spinning out of control, inequality driving political instability and our oceans filling with plastic – and despair at the prospects for serious change. Most then try to apportion blame or at least seek to understand why. Business blames consumers. NGOs blame business. Everyone blames politicians.

Almost everyone who is engaged and thoughtful on this, even inside companies, at some level blame capitalism, markets and big business. This is well justified given, after all, it has been the delivery vehicle for all these crises.

But where does that leave us? As a campaigner who has spent 40+ years on these issues, I’m not satisfied with just a problem diagnosis, I need a way forward, a credible path to success. When talking about risks to the future of civilisation, accepting failure is not really a strategic option.

I don’t disagree that capitalism has been the problem. I emphasise capitalism rather than Western free markets – just take a look at China where capitalism took hold and delivered an epidemic of pollution that nearly overwhelmed the country – and still may.

But problem accepted, we have to find a way forward and I would argue that some form of the market system, if guided or constrained by policy, is our best and probably only hope of moving fast enough.

I do not argue this from a love of markets or an inherent belief in the philosophies espoused by many of that system’s advocates. I approach this as a person who lives and breathes the fear of global collapse and I can’t see another viable way forward.

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

The Limits of Free Markets, Both Economic and Intellectual

March 13, 2018

The Limits of Free Markets, Both Economic and Intellectual

Both in economics and speech, the market is a powerful metaphor. Free economic markets are efficient, and produce the greatest good for the greatest number of people by the fair interplay of sellers and buyers. The marketplace of ideas is supposed to produce truth, and maximize free inquiry of ideas through the competition or rival ideas. Both marketplaces are supposed to support contrasting forms of individual freedom. Except the truth is that neither work in practice compared to theory, fixing their externalities and preventing one from corrupting the other is challenge and task of contemporary western politics.

The market is a metaphor of modern western politics. Belief in the efficiency of economic free markets dates at least to Adam Smith’s 1776 The Wealth of Nations. For some economists, free markets maximize individual freedom producing both what is called Pareto efficiency (no one can be made better off without someone being made worse off) and Kaldor-Hicks efficiency (overall greatest net wealth for a society). Government regulation interferes with economic markets, damaging both individual freedom and both forms of efficiency. Market fundamentalism in the guise of contemporary Republican or neo-liberal politics, ascribes to this belief.

Yet there are limits to this economic market fundamentalism. The same Adam Smith who wrote The Wealth of Nations also penned The Theory of Moral Sentiments and argued how economic markets are circumscribed by ethical values and virtues. The Wealth of Nations in book five recognizes an important role for the government investing in infrastructure. Later on, other economists have described unregulated markets as producing externalities such as pollution or monopolies. Others see externalities to include the mal-distributions of wealth and income in the world or racial and gender discrimination. Economic markets are also plagued by problems such as free riders or collective goods. These problems necessitate government action. Even Milton Friedman recognized the need of the government to enforce the rules of the marketplace against force and fraud so that it would work properly.

The point is markets are not architectonic. Markets are not inherently self-regulating or natural. Karl Polany’s 1944 The Great Transformation made this point. It took enormous state power to construct and maintain market capitalism. The logic of both capitalism and human nature is often against free markets, wanting to produce collusion, monopolies, or engage in rent-seeking behavior or political action to favor oneself. Pure self-interest left on its own, as Nobel Prize economist Kenneth Arrow pointed out, cannot be aggregated to produce collective goods for a society.

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

It’s Time to Retire “Capitalism”

January 19, 2018

It’s Time to Retire “Capitalism”

Our current socio-economic system is nothing but the application of force on the many to enforce the skims, scams and privileges of the self-serving few.

I’ve placed the word capitalism in quotation marks to reflect the reality that this word now covers a wide spectrum of economic activities, very little of which is actually capitalism as classically defined. As I have explained here for over a decade, the U.S. economy is dominated by cartels and quasi-monopolies that are enforced by the Central State, a state-cartel system of financialized rentier skims that has no overlap with Adam Smith’s free market, free enterprise concept,i.e. classical capitalism.

This is what passes for “capitalism” in modern-day America: the super-rich get super-richer, a thin slice of technocrats, speculators and entrepreneurs advance their wealth and the vast majority lose ground or stagnate:

Here’s another snapshot of state-financier “capitalism” in modern-day America: the centralized organs of the state (the quasi-public Federal Reserve) creates trillions of dollars and hands the nearly free money to financiers, insiders and speculators, all of whom benefit immensely as this flood of cash pushes stocks into the stratosphere:

There are other versions of “capitalism” that are equally rapacious, all of which are iterations of crony-capitalism: gangster-capitalism, theocratic-capitalism, colonial-capitalism, and so on.

The key feature of these forms of organized pillage that mask their predatory nature by claiming to be “capitalist” is they ruthlessly suppress the three core dynamics of classical capitalism:

1. Competition

2. Open/free markets

3. Free flow of capital in all its forms (financial, social, intellectual, etc.)

The only way the few can pillage the many is if the many are denied access to competition, open markets and freely flowing capital.

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

This Is What a True Liberty-Loving Politician Would Look Like

October 27, 2017

This Is What a True Liberty-Loving Politician Would Look Like

What would a real friend of freedom say if he was offering himself for political office?

In modern democracies, political cycles never end. As soon as one election is over, those seeking office are already running for the next election. Having recently attended a public forum of state-level candidates looking to the 2018 election, I wondered what a real friend of freedom might say if he was offering himself for such a political office.

Liberty Rhetoric, But Interventionist Policies

At a luncheon event several candidates running in the forthcoming Republican Party primary in South Carolina made their pitch as to why they should be their party’s nominees for state legislative offices in the next general election. They answered questions submitted by attendees at the lunch and made opening and closing statements about who they were and what they stood for.

They all clearly believed that growth needed to be harnessed within “reasonable” rules and regulations.

Not too surprisingly they all, in their respective ways, said they were “pro-business,” advocated lower taxes, a freer enterprise market environment, greater transparency, and more accountability for those in power in the state capital.

Why did each say they were running for elected office? They all had been in business but now wanted to “give back” and “serve” their communities.

What were major themes in many of the questions directed at them? South Carolina is a growing state where international corporations are opening more manufacturing facilities, and, as more people move to the Palmetto State, it has an increasing population to match. Those who submitted questions wanted to know what the candidates would do, if elected, to improve and widen road infrastructure to reduce increasing congestion, and how they would “manage” growth in the state?

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

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