The Retson Tedheke's Blog: October 2015

Saturday, October 31, 2015

11 Trillion Dollars in Stock Markets Wealth Was Wiped Out In the 3rd Quarter of 2015 - Michael Snyder

Yes, This Is Already a Global Financial Crisis Did you know that 11 trillion dollars in global stock market wealth was wiped out during the third quarter of 2015? When I was emailed this figure by a friend, I was stunned for a moment. I knew that things were bad, but were they really this bad? When I first received this information, I had just finished a taping for a television show in which I had boldly declared that 5 trillion dollars of stock market wealth had been wiped out around the world. Unfortunately, the final number has turned out to be much larger than that. Over the past three months, the stock markets of all major global economies have been crashing simultaneously, and 11 trillion dollars of “paper wealth” has now completely vanished. The following comes from Fortune… Global equity markets suffered a bruising third quarter, shedding $11 trillion worth of global shares over three months, according to Bloomberg. It was the market’s worst quarter since 2011. The prolonged slump was due to low prices for commodities such as oil, instability in China’s markets, and the anticipation that the U.S. Federal Reserve...

Why the United States Is On the Road to Being a Third World Country - Paul Craig Roberts

THE IMPLICATIONS OF OFFSHORING THE UNITED STATE ECONOMY On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs offshoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs offshoring would be that the US would be a Third World country in 20 years. That was 11 years ago, and the US is on course to descend to Third World status before the remaining nine years of my prediction have expired. The evidence is everywhere. In September the US Bureau of the Census released its report on US household income by quintile. Every quintile, as well as the top 5%, has experienced a decline in real household income since their peaks. The bottom quintile (lower 20 percent) has had a 17.1% decline in real income from the 1999 peak (from $14,092 to $11,676). The 4th quintile has had a 10.8% fall in real income since 2000 (from $34,863 to $31,087). The middle quintile has had a 6.9% decline in real income since...

Israeli/Palestine's Recent Jerusalem Chaos Is a Warning of Things to Come - Jonathan Cook

Among Palestinians and Israelis, the recent upsurge in violence has been variously described as the children’s, lone-wolf, Jerusalem and smartphone intifadas. Each describes a distinguishing feature of this round of clashes. The steady erosion of Fatah and Hamas’ authority during the post-Oslo years, as the Palestinian factions proved incapable of protecting their people from the structural violence of the occupation, has driven Palestine’s orphaned children to the streets, armed with stones. The growing hopelessness and sense of abandonment have led a few so-called “lone wolves” to vent their fury on Israelis with improvised weapons such as knives, screwdrivers and cars. These attacks have attracted the most publicity, becoming the equivalent of the second intifada’s suicide bomber. But they serve chiefly as a barometer of Palestinian despair. Jerusalem is the centre of events, with the Palestinians’ only unifying symbol, Al Aqsa mosque, at its heart. For Palestinians, the incremental takeover of the compound – and the West’s indifference – is like watching the mass dispossession of 1948 play out again in slow motion. In addition, Jerusalem is the main fault line. Israel’s illegal...

Austerity: The History of A Dangerous Idea - Mark Blyth

WHY AUSTERITY IS A DANGEROUS IDEA: When everyone tries it at once, austerity makes the debt bigger, not smaller The current debt and deficit panic is nothing new. It’s been a staple of American politics since the Republic’s inception. But this season it has taken a new turn. Congress, the fiscal arm of the government, is engaged in asymmetric siege warfare. On one side the Republicans want only cuts, on the other the Democrats want both cuts and tax increases. Both agree however that cuts are absolutely necessary; the only question is the timing and magnitude involved. Unfortunately, budget cuts are exactly the wrong thing to do at this moment. And before anyone throws up their hands and says “Keynesian claptrap,” there is nothing necessarily Keynesian in what I am about to say. Simple logic and arithmetic will suffice. (MORE: America’s Forgotten Economic Challenge) Austerity, the policy of cutting state spending to solve debt and growth problems, sells itself to us through a strange combination of morality and seduction. Its moral claim lies in the love of parsimony over prodigality that characterizes economic thought from Adam Smith onward. In this morality...

Capital In The Twenty First Century By Thomas Piketty – A Review

This is a VIB – very important book. Nearly everyone agrees about that. But the reasons for its importance have changed in the months since it was published. At first it was important because it was a big book on a big subject: a book of grand ambition about inequality, written not by the latest "thinker" but a respected academic economist with real numbers to go with his theory. We hadn't had anything like that in ages. This was the "Piketty as rockstar" phase, when the book was an "improbable hit" and people wrote breathless articles about the modern successor to Marx who could crunch the numbers but also quote Balzac, The Simpsons and The West Wing. Writing a bestselling economics book is usually a good way to make other economists hate you. But at first even they heaped praise on Thomas Piketty for casting fresh light on inequality – an area where the official statistics are notoriously weak. Say what you like about the theory, the argument went, you had to thank him for the numbers. At this point you didn't need to read it to have an opinion about it. Indeed for some, not having read it was a badge of pride. Ed Miliband...

Profits Without Prosperity - William Lazonick

Five years after the official end of the Great Recession, corporate profits are high, and the stock market is booming. Yet most Americans are not sharing in the recovery. While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity. The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees. The buyback wave has gotten so big, in fact, that even shareholders—the presumed beneficiaries of all this corporate largesse—are getting worried. “It concerns us that, in the wake of the financial...

Corruption 'Impoverishes, Steals Trillions of Dollars And Kills Millions Annually' - One

In a report released by ONE, an anti-poverty organization, it is estimated that corruption causes 3.6 million unnecessary deaths and costs poor countries $1 trillion each year as at September 2014. Using three different methodologies to calculate the cost of corruption, all three measures indicated that the loss was either $1 trillion or $2 trillion. In what is called a “trillion dollar scandal,” corrupt business practices, “anonymous shell companies, money laundering and illegal tax evasion” all serve to severely reduce the effectiveness of poverty relief efforts. While extreme poverty has been reduced to half its original level over the past 20 years and has the potential to be completely eradicated by 2030, corruption is putting much of that progress at risk. While corruption is damaging in almost all countries, it is especially dangerous in poorer and developing countries and mostly affects children. It is estimated that millions of deaths could be avoided if corruption was combated and recovered funds were reinvested in essential fields. Furthermore, the money that is siphoned out of poor countries is not from international development aid, which has helped...

23 Things They Don't Tell You About Capitalism - Ha-Joon Chang

THERE IS NO SUCH THING AS A FREE MARKET WHAT THEY WILL TELL YOU: Markets need to be free. When the government interferes to dictate what market participants can or cannot do, resources cannot flow to their most efficient use. If people cannot do the things that they find most profitable, they lose the incentive to invest and innovate. Thus, if the government puts a cap on house rents, landlords lose the incentive to maintain their properties or build new ones. Or, if the government restricts the kinds of financial products that can be sold, two contracting parties that may both have benefited from innovative transactions that fulfill their idiosyncratic needs cannot reap the potential gains of free contract. People must be left "free to choose," as the title of free-market visionary Milton Friedman’s famous book goes. LABOUR OUGHT TO BE FREE: In 1819 new legislation to regulate child labor, the Cotton Factories Regulation Act, was tabled in the British Parliament. The proposed regulation was incredibly "light touch" by modern standards. It would ban the employment of young children – that is, those under the age of nine. Older children (aged between ten and sixteen)...