Finance and the Economy

Why The US Bank Crisis Is Not Over

March 15, 2023 Michael Hudson, Geopolitical Economy. Educate! Banking Crisis, Finance and the Economy, Joe Biden, Modern Monetary Theory

President Biden has done everything that he could to confuse the public as to what is happening. His March 13 speech assured voters that the SVB “rescue” was not a bailout. But of course it was a bailout. Uninsured SVB depositors who did not qualify for safety from losing a penny were rescued without losing a penny. What Biden implied, correctly, was that it was not a taxpayer bailout. But then what was it? It was a demonstration of how powerful Modern Monetary Theory (MMT) is. The banking assets sufficient to “make depositors whole” was simply created by the banking authorities.

Why The US Banking System Is Breaking Up

March 13, 2023 Michael Hudson, Geopolitical Economy. Educate! Banking Crisis, Banks, cryptocurrency, Finance and the Economy, Inflation

The breakup of banks that is now occurring in the United States is the inevitable result of the way in which the Obama administration bailed out the banks in 2008. When real estate prices collapsed, the Federal Reserve flooded the financial system with 15 years of quantitative easing (QE) to re-inflate real estate prices – and with them, stock and bond prices. What was inflated were asset prices, above all for the packaged mortgages that banks were holding, but also for stocks and bonds across the board. That is what bank credit does. This made trillions of dollars for holders of financial assets – the One Percent and a bit more.

The Looming Quadrillion Dollar Derivatives Tsunami

March 13, 2023 Ellen Brown, Scheer Post. Educate! Banking Crisis, Derivatives, Finance and the Economy, Silicon Valley Bank

On Friday, March 10, Silicon Valley Bank (SVB) collapsed and was taken over by federal regulators. SVB was the 16th largest bank in the country and its bankruptcy was the second largest in U.S. history, following Washington Mutual in 2008. Despite its size, SVB was not a “systemically important financial institution” (SIFI) as defined in the Dodd-Frank Act, which requires insolvent SIFIs to “bail in” the money of their creditors to recapitalize themselves. Technically, the cutoff for SIFIs is $250 billion in assets. However, the reason they are called “systemically important” is not their asset size but the fact that their failure could bring down the whole financial system.

Silicon Valley Bank Fails; Deposits Of Venture-Backed Companies Frozen

March 11, 2023 Lambert Strether, Naked Capitalism. Educate! Banking Crisis, Finance and the Economy, Inflation, Silicon Valley

Silicon Valley Bank, the 16th largest in the US, was shut down and put under the control of California Department of Financial Protection and Innovation on Friday. This failure is set to send ripples across smaller technology companies. Even though there is good reason to think that uninsured depositors will eventually be made whole or nearly whole, some may have had so much of their working funds tied up at Silicon Valley Bank that it may be hard for them to find work-arounds, particularly with so many other companies in the same pickle. While is it is likely someone will cobble together financing, at what speed and on what price?

Student Loan Forgiveness Program Appears Headed For Defeat

March 6, 2023 Marjorie Cohn, Truthout. Educate! Education, Finance and the Economy, Student Debt, Supreme Court

A right-wing majority of the Supreme Court is on the verge of denying student debt relief to more than 40 million borrowers. On February 28, the high court heard oral arguments in a pair of cases challenging President Joe Biden’s student loan forgiveness program. Instituted to ameliorate the effects of the COVID pandemic, the program could provide up to $20,000 of debt relief to people with federally held loans. The first case heard by the court was Biden v. Nebraska, brought by Republican state attorneys general from Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina against Biden, his Secretary of Education Miguel Cardona and the Department of Education.

New Report: The Dollar Store Invasion

March 6, 2023 Stacy Mitchell, Kennedy Smith, and Susan Holmberg, Institute for Local Self-Reliance. Educate! Communities, Dollar Store, Finance and the Economy, Poverty

Dollar General, Dollar Tree, and Family Dollar are targeting vulnerable communities, opening stores at a breakneck pace in urban and rural areas alike. It’s tempting to assume that these chains simply fill a need in cash-strapped places. But the evidence suggests that dollar stores are not merely byproducts of economic distress; they are a cause of it. Through predatory tactics, the dollar chains are killing off grocery stores and other local businesses, leaving communities with fewer jobs, diminished access to basic goods, and dimmer prospects for overall well-being. As these losses mount, dollar stores are facing a rising tide of grassroots opposition.

We Live In A Society That Pays Men More When They Have Kids, But Women Less

March 5, 2023 Chabeli Carrazana, Scheer Post. Educate! Finance and the Economy, Human Rights, Wage, Women's Rights, Worker Rights and Jobs

While having children often leads to less pay for mothers, fatherhood leads to an increase: Men with children typically earn more than both women — with or without kids — and men without children. This parenthood paradox, at least in part, may be responsible for maintaining the gender pay gap, which has been consistent for 20 years. Gender stereotypes around parents are so deeply embedded into American work culture that they have had a significant impact in not just how mothers are treated in the workplace, but in how employers compensate fathers, according to a new study of census data by the Pew Research Center, released Wednesday.

Electric Utilities Created One Of The ‘Largest’ Propaganda Campaigns In US

February 26, 2023 Steve Horn, DeSmog. Educate! Book Review, Capitalism, Child labor, Finance and the Economy, Propaganda, Utilities

Science historians Naomi Oreskes and Erik M. Conway, authors of the classic 2010 book Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, have released a new book placing that doubt machine into a longer arc of U.S. business and political history. The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market explores an even more ambitious history dating from the dawn of the 20th century to the present day. The book documents how today’s prevailing anti-regulatory and anti-government postures that deride Big Government and cheer for Big Business did not arise simply from grassroots demands.

Converging Debt Crises

February 26, 2023 Richard Heinberg, Resilience. Educate! Debt, Economic crisis, Finance and the Economy, Global Economy

An enormous debt bomb threatens the US federal government and the nation’s financial system unless warring politicians can agree on a plan to defuse it. However, there are even bigger debt bombs ticking away beneath us all, of which fewer people are aware. It may be impossible to disarm all of them, but action is required to minimize the casualties. Let’s start by focusing on the immediate US debt threat, then widen our view to take in longer-term and more serious liabilities that have the potential to bring down the entire global industrial economy.

What Will Happen When Banks Go Bust?

February 23, 2023 Ellen Brown, Scheer Post. Educate! Bail-Ins, Banking, Credit Unions, Finance and the Economy, Financial Crisis

Financial podcasts have been featuring ominous headlines lately along the lines of “Your Bank Can Legally Seize Your Money” and “Banks Can STEAL Your Money?! Here’s How!” The reference is to “bail-ins:” the provision under the 2010 Dodd-Frank Act allowing Systemically Important Financial Institutions (SIFIs, basically the biggest banks) to bail in or expropriate their creditors’ money in the event of insolvency. The problem is that depositors are classed as “creditors.” So how big is the risk to your deposit account? Part I of this two part article will review the bail-in issue.

The Dawn Of Austerity

February 19, 2023 Nick Serpe, Dissent Magazine. Educate! Austerity, Capitalism, Class Struggle, Finance and the Economy, Worker Rights and Jobs

In The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, Clara E. Mattei brings us back to the dawn of modern austerity politics, just after the First World War. In both liberal Great Britain and fascist Italy, she argues, austerity imposed steep costs in the short term but in the long term proved beneficial to capital. By forcing the working class to rely on the private labor market for survival, austerity ensured the survival of the wage relationship at a moment of anti-capitalist upheaval. In our current moment, as policymakers are once again entertaining monetary tightening as a means to impose necessary hardship and discipline on working people, The Capital Order is a potent reminder of the cruel rationality of austerity: maintaining stable class relations is worth the price of the economic pain austerity causes.

What To Know About Turbotax Before You File Your Taxes This Year

February 10, 2023 Sophia Kovatch, Pro Publica. Educate! Finance and the Economy, IRS, Taxes, Turbotax

Under the Free File agreement, Americans who make less than $73,000 per year should be able to file their taxes for free with one of the tax preparation companies that partners with the IRS. But this program has been historically underutilized, with just 4% of eligible Americans filing for free in 2021. The story of the Free File program is long and twisting, and it can seem more like a fight against free tax filing than a fight for it. One of the biggest players is Intuit, the maker of TurboTax, one of the largest tax preparation software companies in the country. ProPublica has reported on Intuit and the Free File program since 2013. Here’s what we’ve found. In 2002, Intuit, H&R Block and other tax prep companies signed a deal with the IRS to provide free tax filing services to millions of Americans. In return, the IRS agreed it would not create its own tax filing system that could compete with the tax prep companies.

US ‘Neo-Imperialist’ Dollar Scheme Explained By Yanis Varoufakis

February 5, 2023 Ben Norton, Geopolitical Economy Report. Resistance Report Finance and the Economy, Global Economy, US Imperialism

Economist and former Greek Finance Minister Yanis Varoufakis said in a speech this January that the United States is leading a “new, audacious imperialism”, which he calls “neo-imperialism”. “Neo-imperialism’s highest form” is “globalization, financialized capitalist globalization”, Varoufakis added, stressing that this system is based on the dominance of the US dollar.

Worker Ownership Builds Community Wealth And A More Just Society

February 5, 2023 Pamela Haines, Waging Nonviolence. Create! Community, Cooperatives, Finance and the Economy, Worker Rights and Jobs

A recent help-wanted ad for a laundry worker in Cleveland contained some unusual language, asking prospective candidates: “Have you ever wanted to work for a company that is 90 percent employee-owned? What about a company that offers a program to help you become a homeowner?” The ad went on to identify Evergreen Cooperative Laundry as the only employee-owned commercial laundry firm in the country, citing a commitment to building the wealth and careers of its employees. Founded in Cleveland in 2009, Evergreen laundry lies at the heart of a movement that has now spread around the world. This attention to community wealth building is providing a 21st century model for Gandhi’s “constructive program,” which — along with nonviolent direct action — powered his overall campaign to overcome the political and economic oppression of colonialism.

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