Tuesday, April 21, 2020

Oil Price Collapse Delivers A Loud Warning -- Wall Street on Parade


Biggest” or “fastest” declines in history are  becoming routine characterizations in business media of everything from stocks to unemployment claims to U.S. Treasury yields and now to commodity prices. You’d have to go back to the 1930s and the Great Depression to find as many similar references.

And there was one other key characteristic that defined the early 1930s and now: unprecedented wealth inequality that had been manufactured by Wall Street running an institutionalized wealth transfer system that culminated in a stock market crash that erased 90 percent of the stock market’s value from 1929 to 1932.

The late MIT economist, Lester Thurow, explained some three decades ago what happens when wealth is concentrated in too few hands:

“Depression is seen as a product of systematic tendencies for the distribution of wealth to become concentrated among a few. When this happens, demand eventually sags relative to supply and long cyclical downturns commence…

“Essentially, the economic problem is like that of the wolf and the caribou. If the wolves eat all the caribou, the wolves also vanish. Conversely, if the wolves vanish, the caribou for a time multiply but eventually their numbers become too great and they die for lack of food. Producers need consumers, and if producers deprive workers of their fair share of production income they essentially deprive themselves of the affluent consumers they need to make their facilities profitable….”

Yesterday, the price of the front futures contract for U.S. domestic crude oil, known as West Texas Intermediate or WTI, closed in negative territory for the first time in history. The reason was that no one wanted to take physical possession of that crude oil because they could not find any place to store it. There is now such a global oversupply of crude that traditional storage places, like tankers and storage tanks, are full for the most part.

The May contract expires today and the price action in the new front month June contract does not look promising. At 9:25 a.m. this morning, the June contract was down by 29 percent with WTI trading at $14.50.

While the price action in crude yesterday was historic, it is far from the only commodity experiencing dramatic price declines.

On April 17, a devastating report was published in the Immokalee Bulletin titled “The Day South Florida Agriculture Died.” The report came from Gene McAvoy, associate director for stakeholder relations for the University of Florida IFAS Southwest Florida Research and Education Center and president of the National Association of County Agricultural Agents.
McAvoy described the situation as follows:

“On Tuesday, March 24, a local broker says, everything changed. From brokers, orders stopped and everything got quiet. On Wednesday, March 25, it got super quiet.
“Since then, tomato volumes are down 85%, green beans are like 50% and cabbage is like 50%.

“R.C. Hatton has plowed under 100 acres of green beans, around 2 million pounds, and 60 acres of cabbage, or 5 million pounds.

“Florida’s tomato growers target 80% of their production to restaurants and other food service companies, rather than to supermarkets. In this sector, growers are walking away from big portions of their crop.

“Tony DiMare estimates that by the end of the growing season, about 10 million pounds of his tomatoes will go unpicked.”

The demand destruction has also impacted cattle ranchers. The article notes that “The cash market and futures prices are lower than anyone can remember. One local rancher sold calves last week and averaged $250 per head at the Arcadia auction barn. A few weeks ago he would have received $450 per head average, and that constitutes below break-even.” That’s a 44 percent price decline.

Hog farmers are also facing a crisis. The Associated Press reported yesterday that “…almost overnight millions of hogs stacking up on farms now have little value.”

There is growing evidence that all of this demand destruction leading to collapsing prices cannot be blamed on the coronavirus outbreak. Treasury yields were plunging in August and September of last year, long before there was a coronavirus outbreak anywhere in the world. The Federal Reserve had to step in on September 17, 2019 – four months before the first coronavirus case in the U.S. – to shore up a liquidity crisis on Wall Street. The crisis was so bad that the Fed had to pump hundreds of billions of dollars weekly into the trading houses on Wall Street for months on end. (See the more than six dozen articles we penned on that topic from September 17 onward.)

U.S. manufacturing had already entered a recession in 2019 and the International Monetary Fund announced in October of 2019 that it was downgrading its global outlook and “predicted that growth in advanced economies would slow from 2.3% in 2018 to 1.7%” in 2019.

The U.S. had a previous warning of what causes this type of demand destruction. It is now known as the Great Financial Crisis of 2007 to 2010. The roots of that era of collapsing prices and today’s date back to November 12, 1999 when President Bill Clinton signed the Gramm-Leach-Bliley Act repealing the Glass-Steagall Act. Clinton’s signature on that legislation ended the 66-year long ban against Wall Street trading houses owning federally-insured banks holding the deposits of moms and pops across America.

Clinton released a statement on the signing of the Gramm-Leach-Bliley Act which said that the legislation would stimulate “greater innovation and competition in the financial services industry.” 

Today, just five Wall Street mega banks control the majority of assets of the more than 5,000 banks and savings associations that exist in the U.S. today. These same Wall Street banks are allowed to charge upwards of 17 percent or more on consumer credit cards while paying 1 percent or less to their depositors. Simply put, Clinton launched a massive wealth transfer system in America.

Clinton said this at the signing ceremony:

“The Gramm-Leach-Bliley Act makes the most important legislative changes to the structure of the U.S. financial system since the 1930s. Financial services firms will be authorized to conduct a wide range of financial activities, allowing them freedom to innovate in the new economy. The Act repeals provisions of the Glass-Steagall Act that, since the Great Depression, have restricted affiliations between banks and securities firms. It also amends the Bank Holding Company Act to remove restrictions on affiliations between banks and insurance companies. It grants banks significant new authority to conduct most newly authorized activities through financial subsidiaries. Removal of barriers to competition will enhance the stability of our financial services system.”

Nine years later, the U.S. financial system collapsed along with iconic, century old names on Wall Street as the U.S. entered the worst economic collapse since the Great Depression. This is round II.

Thursday, April 16, 2020

Tuesday, April 14, 2020

Confucius is winning the Covid-19 war | Pepe Escobar in The Vineyard of the Saker

Confucius is winning the Covid-19 war | The Vineyard of the Saker:


I offer, as a working hypothesis, that the Asia triad of Confucius, Buddha and Lao Tzu has been absolutely essential in shaping the perception and serene response of hundreds of millions of people across various Asian nations to Covid-19. Compare this with the prevalent fear, panic and hysteria mostly fed by the corporate media across the West.

The Tao (“the way”) as configured by Lao Tzu is about how to live in harmony with the world. Being confined necessarily leads to delving into yin instead of yang, slowing down and embarking on a great deal of reflection.

Yes, it’s all about culture, but culture rooted in ancient philosophy, and practiced in everyday life. That’s how we can see wu wei – “action of non-action” – applied to how to deal with a quarantine. “Action of non-action” means action without intent. Rather than fighting against the vicissitudes of life, as in confronting a pandemic, we should allow things to take their natural course.

That’s much easier when we know this teaching of the Tao: “Health is the greatest possession. Contentment is the greatest treasure. Confidence is the greatest friend. Non-being is the greatest joy.”
It also helps to know that “life is a series of natural and spontaneous choices. Don’t resist them – that only creates sorrow. Let reality be reality. Let things flow naturally forward in whatever way they like.”

Buddhism runs in parallel to the Tao: “All conditioned things are impermanent. When one sees this with wisdom, one turns away from suffering.”

And to keep our vicissitudes in perspective, it helps to know: “Better it is to live one day seeing the rise and fall of things than to live a hundred years without ever seeing the rise and fall of things.”

As far as keeping much-needed perspective, nothing beats, “the root of suffering is attachment.”

And then, there’s the ultimate perspective: “Some do not understand that we must die. But those who do realize this settle their quarrels.”

Confucius has been an overarching presence across the Covid-19 frontline, as an astonishing 700 million Chinese citizens were kept for  weeks under different forms of quarantine.

We can easily imagine them clinging to a few pearls of wisdom, such as: “Death and life have their determined appointments; riches and honors depend upon heaven.” Or “he who learns, but does not think, is lost. He who thinks, but does not learn, is in great danger.”

Most of all, in an hour of extreme turbulence, it brings comfort to know that, “the strength of a nation derives from the integrity of the home.”

And in terms of fighting a dangerous and invisible enemy on the ground, it helps to know this rule of thumb: “When it is obvious that the goals cannot be reached, don’t adjust the goals, adjust the action steps.”

So what would be the ultimate insight a serene East can offer to the West in such hard times? It’s so simple, and it’s all in the Tao: “From caring comes courage.”

Friday, April 10, 2020

Thursday, April 09, 2020

Sunday, April 05, 2020

Episode 12 - 4/4/2020 - With Afshin Rattansi by Live on the Fly

Episode 12 - 4/4/2020 - With Afshin Rattansi by Live on the Fly:

Episode 12 - 4/4/2020 - With Afshin Rattansi by Live on the Fly

Taking about the virus, Yemen, Julian Assange and more.

Saturday, April 04, 2020

Friday, April 03, 2020

Sanders Voted for the Latest Corporate Bailout: What This Reveals for Socialists | Left Voice

Sanders Voted for the Latest Corporate Bailout: What This Reveals for Socialists | Left Voice:

The U.S. Congress recently passed a $2 trillion bailout package, the largest in U.S. history. Most of the money will go to the wealthiest individuals and corporations. Even though he originally spoke out against it, Bernie Sanders voted for the deal.

The U.S. death toll from COVID-19 is
already 4,000, with the number rising quickly and hospitals bursting at
the seams. Healthcare workers do not have the necessary personal
protective equipment and areas that are being hit the hardest by
coronavrius, such as New York City, are quickly running out of
ventilators and ICU beds. Meanwhile, the number of people in the United
States who are unemployed has reached 10 million, and those are just the
official statistics that exclude undocumented and gig workers.

April 1 has just passed and we’re all still expected to pay our rent.
For the millions of people who live
paycheck to paycheck, there won’t be enough money for that. In fact,
there won’t be enough money for food. The markets had their biggest drop
in history, the capitalist suffering losses there are going to push
them onto working people, and now it is undeniable that we are heading
for a global recession.

The situation is catastrophic and getting worse — and this in the wealthiest country in the world. 

In an attempt to stimulate the
flailing economy, the U.S. Congress recently passed a massive $2
trillion stimulus bill. In fact, it’s the biggest bailout the
capitalists have gotten in all of U.S. history. Here are some of the
bill’s highlights (or lowlights):

  • $500 billion in loans to corporations. 
  • $367 billion in small business loans
  • $454 billion for the Federal Reserve to inject liquidity into flailing markets
  • $170 billion tax break for real estate investors (like Trump)
  • $25 billion for the airline industry
  • $17 billion for defense contractors
Simply put, in the midst of the
most catastrophic situation in any of our lifetimes, the United States
government will transfer an unprecedented amount of money to businesses,
specifically Big Business. And even with this huge bailout, companies
such as United Airlines
still plan to layoff workers. 

What is called the CARES Act has two
important provisions for some working class people: an extension of
unemployment benefits, along with an important change — a
$600 weekly increase, for four months, which would also include gig and tipped workers;
and a one-time $1,200 check to people who filed taxes last year and
make less than $75,000 a year. For those who make up to $99,000,
payments are still available but will be less. But it may take up to 5
months for some people to receive their one-time payments. 

Given the scale of the crisis, this
is insufficient: $1,200 is hardly enough to cover rent for one month,
much less food, bills, and other essentials. With at least 6.6 million
out of work and more layoffs on the horizon, we needed massive aid for
the working class.

What’s worse is that millions of
people will have no access to these unemployment benefits or the checks.
To begin with, there’s not a penny for the 12 million undocumented
immigrants, and
not even mixed status families will
receive these $1,200 payment. Likewise, people who work off the books —
nannies, sex workers, and other gig workers, for instance — won’t get
these checks. People over age 18 who were still claimed as a dependent
by parents won’t get a check.

In other words, massive swaths of the working class won’t have access to an already woefully insufficient amount of help.


Representatives of the Capitalist Class 

Few are surprised that the
Republicans, who make no secret of who they represent, are using the
crisis to increase corporate profits; after all, the Trump tax cuts in 
2017 were a gigantic handout to the wealthiest. 

People also shouldn’t be surprised
that the Democrats have acted to bail out the corporations; after all,
the Obama administration did that in 2008 with the massive Wall Street
bailout. The two parties of capitalism have joined forces once again.

Sure, the Democrats made a spectacle
of opposing this most recent giveaway after Elizabeth Warren began
publicly denouncing it. That halted the first draft of the bill and gave
the Democrats some time to pretend they’re on the side of working-class
people. But despite their posturing, the Democrats didn’t touch the
corporate slush fund; they just added some minimal federal oversight to
the bill — oversight Donald Trump has already said he intends to ignore.
They weren’t opposed to the corporate bailout, just some of the small

Passage of this bill unmasks both parties once again. The Republicans and the
Democrats represent the capitalists. They’re more than willing to leave
behind the working class, even in the midst of a pandemic. They could
have passed sweeping protections, canceled rent and student loan
payments, frozen layoffs, created and fully funded universal health
care, and given everyone a quarantine wage. But instead they spent $2
trillion mostly bailing out the rich.

Don’t forget that the government doesn’t actually have its own money. Every cent of that $2 trillion comes from us.

Nevertheless, the next time we demand public health care, they will
have the gall to claim there isn’t enough money to pay for it. But what
this bailout shows is that there is always money — our money — they’re
ready to dole out to the capitalists, just like there is always money
for war. It isn’t that there isn’t money for progressive reforms, it’s
that the government and the capitalists they work for don’t want to
spend it on working class people. 


What About Bernie? 

Over the past few weeks, Bernie
Sanders has been putting forward a more progressive agenda in relation
to the coronavirus crisis, including a call for sending $2,000 every
month during the crisis to every person living in the United States.
He’s had many livestreams with Alexandria Ocasio-Cortez, Ilhan Omar, and
Rashida Tlaib, denouncing some of the most terrible aspects of this
crisis, such as people incarcerated on Rikers Island in New York City
and in immigrant concentration camps being left to die, water shutoffs
in Detroit, and more. 

They even spoke out against the bailout. Bernie Sanders correctly stated,
“We cannot give Trump’s Treasury Department a blank check to bail out
the airlines, cruise ships, hotels, and many other industries, while
providing next to nothing to help the homeless or the most vulnerable
people in this country.”  And Alexandria Ocasio-Cortez
said, “The
option that we have is to either let [our families] suffer with nothing
or to allow this … to contribute to the largest income inequality gap
in our future. There should be shame about what was fought for in this

But in the period leading up to the
final bill that was passed, it wasn’t Sanders who halted the vote in the
Senate and forced legislators to go back to the drawing board to
include a few more protections for the working class. That was Elizabeth
Warren. And when it was finally time to vote, the bill passed the
unanimously and was opposed in the House by a lone libertarian Republican, Thomas Massie. Sanders and the Squad voted “yes.”

For all of their protestations and
rhetorical defense of working people, Sanders and the Squad folded. They
didn’t call us all to protest, even if that meant doing so from our
homes, via twitter or facebook. They didn’t organize working people to
demand something different. Instead, they voted for a bill they claimed
to disagree with profoundly. They voted to bail out the rich and screw
the poor. They voted for one-time checks they themselves said weren’t
enough. They voted for a corporate slush fund. 

When all is said and done, Bernie
Sanders, AOC, Tlaib, Omar, and every other progressive Democrat voted
for a bill that they knew was insufficient and benefited the rich.


The Sanderist Strategy is a Dead End 

Throughout his career, Bernie Sanders
has been attempting to pressure the Democratic Party from the left and
perhaps even remake the party as a way to win more concessions for the
working class. There was even one point in this year’s presidential
campaign when it seemed he might be able to win the Democratic
nomination, but he was no match for the opposition organized by the
establishment led by Barack Obama and the corporate media. Now he is
back to pressuring from the left — and, as his vote demonstrates,
pressure that is not all that effective. 

Bernie Sanders is the face of the
un-resolvable contradiction of trying to pressure the Democratic Party
from within: in the end, the party will be more of a force on you than
you will be a force on them. Sanders and his allies want to push the
Democratic Party to the left and convince them to support progressive
measures such Medicare for All. What they’re actually doing is helping
keep the Democratic Party alive. In their frequent livestreams, Sanders
and the Squad condemn the Trump Administration’s favoring of the rich
and talk of the need for protections for the working class, but they
never address the Democratic Party’s own categorical failures when it
comes to addressing the crisis. 

Sanders is serving the interests of
the ruling class, even if it’s not his specific intent. He’s like a
relief valve for the Democratic Party, providing an “acceptable” outlet
for working-class rage in the halls of power. If he wasn’t in the race,
all the media focus would be on Biden’s silence, and that of Biden’s
party. But instead, Sanders’ fiery speeches about the inadequacies of
the government response create an illusion that working-class people can
feel represented. 

Then Sanders turns around and votes for bailing out the rich. 

This has always been Bernie Sanders’ strategy. But it shouldn’t be socialists’ strategy. 

Nevertheless, the DSA has attempted
to separate the unemployment package from the rest of the bill and call
it a victory. In its  “DSA Covid-19 Bulletin #5”(March 27), under
“Bernie Fights for Us,” the DSA leaders write, “One giant win in the
bill is
Bernie Sanders’s amendment
— a $600 weekly increase in unemployment benefits that includes gig and
tipped workers for four months — which passed against a last-minute
attack from GOP senators largely because of Bernie’s ferocious defense.
Bernie’s influence and power in this particular fight were outsized, and
it’s hard to imagine
anyone else in the Senate speak so powerfully for the working class.” 

There’s not one word of criticism for actually voting for the bill. 

Let’s be real and honest with each
other, comrades: this deal sucks. Let’s be clear: this bill is not a
victory. It’s a loss for the working class. The unemployment benefits
don’t make up for the massive corporate bailout. This bill shouldn’t be

Left pressure within the Democratic Party isn’t how we are going to win the kind sof reforms we urgently need to save lives. And it’s certainly not the way to achieve socialism. It is the way to get terrible corporate bailouts with a few crumbs for some of the working class.

right now are showing an alternative way forward: just this week,
workers at Amazon, Whole Foods, and Instacart walked off their jobs,
demanding safer working conditions. At a General Electric factory
outside Boston, workers staged protests demanding that the facility be
shifted from making airplane engines to making much-needed ventilators.
Nurses and other frontline workers in New York 

City are staging actions
to demand better conditions and the equipment they desperately need to
fight the virus.

The working class has the power to solve the crisis that capitalism created but has shown itself incapable of solving. 

The Bernie Sanders strategy shifts
the fight from the streets to the halls of power. All that does is build
the Democratic Party, perhaps push it ever so slightly to the left on
this or that particular issue, and continue to sow big illusions about
how we will actually change this miserable capitalist system. That
strategy has brought  us to where we are right now. If ever there was a
time to reject that strategy, that time is also now. It is a dead end
and we can do better. 

The central task of socialists is to
unite the working class and push for a break with bipartisan capitalist
misery. We need our own party. We need our own political representation.
We need to crush this system. Now is the time to fight and unify the
working class against the capitalists who, quite literally, are going to
kill us if we don’t resolve this crisis on our own.