The highs (and lows) of the past week
Shell and Chevron both announced record earnings this last week. Workers’ wages decline relative to inflation. How does it make sense to blame wages for inflation?
Kevin McCarthy has demonstrated that he is willing to destroy this country, even the world, to obtain and maintain the speakership for himself. Maybe he is being paid by AIPAC, which has generously funded efforts, recently extending to Democratic Party primaries, to effect the election of reliably pro-Israel candidates. Interestingly, my Republican former (due to redistricting) congresswoman, who is an immigrant from Ukraine, was at first opposed to removing Ilhan Omar from the foreign affairs committee, but ultimately voted with her party. Now, she has announced that she will not run for reelection in 2024, ostensibly to spend more time with her family. I'd like to believe that she has felt a twinge of conscience at what the Republican leadership is demanding that she do.
I would like Biden to address corporate profiteering and abuse of workers in his State of the Union address, to communicate to the public what you have said in this coffee klatch and your essays.
How one can support the Palestinian cause and be called anti semetic, while the other side cavorts with Nazis and proclaims love for Israel is astounding.
I replied “other” because all universal norms are being breached. One has no clue from one day to the next what the next crisis will be. For me, it has to with escalating as usual, (sorry, I lied) ....gun violence and a court decision that rewards domestic abusers with more guns to kill more domestic partners and instigate more mass shootings. And now? Congresspeople wearing AR-15 lapel or tie pins instead of the American Flag 🇺🇸 bejeweling clothing. Watching those four days in the House agonizing over the Speakership with 15 votes; each one after McCarthy sold out another piece of his soul? Along with the American Dream. We’re left with the MAGA’S worst offenders playing games with governance, “revenge politics.” Will not one House representative call into question his leadership? (His rules, his loss!) We’re losing our Democracy and have no 💵💵💵 to fight with. It’s all going into the pockets of those who manipulate the tax codes to their advantage (billionaires) and corporations exploiting chaos, supply chain issues, inflating prices, while paying executives outrageous salaries. FDR and his NEW DEAL being brought to its knees, along with my paid Social Security. I see no reason for optimism on any front. Too many lobbyists, too many opinions, too much speculation, too many global and national unknowns. 🥲
When I read Powell's remarks, it almost seemed like the equivalent of economic blood letting with leeches. The goal seems to be to push interest rates to the point that there is higher unemployment and suffering by the common person who works for a living and would be devastated by unemployment.
Perhaps policy responses need to move on to a more evidence-based approach?
I'm waiting for a thunderous avalanche of shoes .... waiting, not very patiently.
Heather - let us know about the axe throwing.
I don't really have an opinion on where the economy is going--not trained in economics, so don't have enough knowledge or data to have an intelligent opinion--but I do have a question that perhaps Robert would address in a future newsletter. I get that the only tool that central bankers seem to have is interest rates, so they use it. Supposedly, raising interest rates fights inflation. But, aren't higher interest rates themselves a form of inflation? Our paper this morning reported that average price of a detached (single family) house is down an average of $244,000 CDN over a year ago. OK, that is deflation. But the Bank of Canada rate is 4.25 % higher than a year ago and mortgage rates are also higher such that people who are up for renewal find that their monthly payments are now significantly higher than they were. That is inflation. So, if raising interest rates causes high inflation for many households (those not currently buying a house), how does raising interest rates cut overall inflation? I get that raising the price of mortgages reduces the number of people who decide to buy a house, so the average price of houses goes down, but it would seem that would be significantly fewer people than those currently paying off a mortgage for a house that they bought in the last 25 years. And, at least locally, landlords use higher interest rates as an excuse to raise rents, so many renters face inflation of rent. What am I misunderstanding here? Please, Robert, could you explain this so that those of us who have no formal education in economics can understand? I for one would be very grateful.
The next 2 years won't see much coming out of Congress. Except for Republican nonsense. But that means the Democrats have a lot to run on, showing what happens when you give the majority to a party that has no intention of doing anything but cut taxes for the rich. We should have healthy majorities in both Houses in 2024, plus Biden in the White House.
The only investment in the stock market that effected my financial health was through pensions. Our original pension which was figured according to time worked and age of retirement was frozen. after I had worked more than 20 years. The pension was a big reason why I had continued to work there. In its place, we were given a 403B which we contributed to and our contributions were matched (at least some of the time) by our company. Initially, those of us who had been employees for many years, were given a small deposit into our 403B. They had paid many of such low, and sometimes, no, raises that the cost of living was more than we were making, much less to invest. One year our raise was one half a percent in January and another half a percent in June. One year we got a raise, substantial only in comparison with past “raises” and they took it back in higher medical insurance premiums, higher deductibles, higher copays, coinsurance. (This also happened one year with a social security “”raise.” Every year the CEO cried impending poverty and then came out in the green the next year. This is NOT an exaggeration. The CEO received large financial gains for his “achievement.” My employer was a “non-profit” hospital. Profits can be negated by buying properties to be used for “hospital office space,” etc. Eventually they merged with a hospital that was doing poorly financially, (it had bought up lots of properties leaving it with a low credit raising) opening the door even wider for profits for my hospital. The CEO appeared to know nothing about healthcare, nor was he inclined to concern himself with it. They took advantage of people who worked because they wanted to provide good care to their patients. Many of these long-term people were let go “for any reason or no reason.” NO CONTRACT. Many of these were people had worked themselves up to good pay and benefits. They were great employees who had skill, experience and were dedicated to their jobs. DO NOT WORK WITHOUT A UNION.
If you think this is not your problem listen to this. Now the hospital is short of healthcare workers, especially nurses. In the emergency department, people are lined up along the hallways head to foot. Some get their care in the hallway. Some get ER beds. Some in ER beds are waiting for inpatient rooms to open up, so they can be admitted. I can speak from personal experience with a relative the care is haphazard. IF YOU NEED EMERGENCY CARE TAKE AN ADVOCATE WITH YOU., if at all possible. Traveling nurses may not be proficient in finding your medications in the computer. Medications may be overlooked and not given. You may not get more than even the scantiest information from ER doctors, patient aides, and nurses. Nurses change with shifts. When I called from home at midnight and asked if my elderly relative, whose blood pressure was very high and had high levels of carbon dioxide in his blood, due to breathing issues, was being checked on, her response was that she had just started her shift and had five patients assigned to her. Finally after 24 hours he was seen by a hospitalist, who gave him the care and concern he needed. Of course she had other patients to care for. In my opinion, if we can take health insurance out of healthcare and take profit out of healthcare we will all get better healthcare. At this point, what have we got to lose?
I don't believe the debt ceiling was mentioned. Regarding "Florida Man," the news came this week that the state's school athletics boards were going to require students to submit regular menstrual cycle reports. Plenty of stuff to feel queasy about.
Being a member/supporter of DiEM25 (Democracy in Europe Movement), I can report that things are very pessimistic there too. The same battle against the same corrupt power structure. But I also get the feeling that forces are building up like a spring that is being put under great pressure. The pandemic -- which is by no means over -- revealed how much latent power lies in the hands of "essential workers." And it will remain latent until it's organized.
A quick stress reliever for me -- being a child of the 50s and 60s -- "discovering" gems of old garage and psych tunes that I'd never heard before. YouTube has provided a seemingly unlimited universal jukebox. Just this week I heard for the first time Bessie Banks' original (1963) recording of "Go Now" -- the song that was later the Moody Blues first giant hit.
And the press, even the liberal press, will report Republican hypocrisy as if it's truth.
The "American" myth says wages do not matter if you "work your way up" the pay scale. Show me a pyramid that doesn't narrow to the top.
I said recession because the only tool the Fed sees is interest rate manipulation. The cause for inflation is unbridled greed of large corporations and financial institutions.
I expected at least some would say the Fed will bring on a recession (Powell is certainly trying).
But we must mostly be optimists.
And that makes me happy.
I recently heard an eye-opening interview with constitutional scholar Eric Foner, around his NYT OpEd “The Constitution Has a 155-Year Old Answer to the Debt-Ceiling”. He describes the various provisions of the 14th Amendment.
I did not realize how CLEARLY the 14th Amendment addresses several of the crises we are grappling with — and provides clear recourse.
Quoting from the article:
“Section 3 bars from public office anyone who took an oath to support the Constitution and subsequently participated in or encouraged “insurrection.” The events of Jan. 6, 2021, have focused new attention on this stipulation, which could be applied to participants in the uprising who previously held military, political, or judicial positions, including former President Donald Trump.”
Further, Section 2 apparently provides for a reduction in the number of representatives for states that deny citizens the right to vote.
Now we’ve seen Marjorie Taylor Greene bragging on camera that if she and Steve Bannon had run the January 6th event, “we would have brought guns and we would have won!”
WHY THE HELL IS THIS AMENDMENT NOT BEING ENFORCED?!? Whether or not there is criminal liability, at the least the insurrectionists should not be allowed within a mile of any government facility. Instead, they’re welcomed in and allowed to run the show while we wring our hands and fret like arthritic old ladies (“Oh dear! Oh dear! Isn’t it awful?”)
It’s looking more and more like Washington is club whose members are untouchable no matter what — while “The Law” is simply a means to repress and control the masses.
Dire as this all appears, it could be turned around with one discrete change, as stated by former Justice Louis Brandeis almost a century ago:
“We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.”