Next capitalist economic crisis incoming?

[CatTrap]

It's clear by now that the austerity economic policies, and the loose credit and money of the central banking system is coming to it's final stage, namely their end. In spite of Fed and central bank policies, the capitalist economy hasn't recovered. Right-wing and even some left-wing governments are unwilling or unable to invest in social planning and Keynesian policies which would help save capitalism from it's crisis, yet the neoliberal zeitgeist is unwilling to budge. As a result, the economic system is grinding quickly to a halt and even more malinvestment and fictitious capital as a result of central bank policy has been created, such that another economic bubble is looming.

This is my analysis of the current capitalist economy. If there is anyone who wants to dispute this, I'd be interested in talking about the global economic system and it's health. Or, if someone agrees with me, I'd like some predictions or critical thinking of what measures and results might occur as a result of, yet another, global economic collapse, given that the Federal Reserve system policies have failed to stimulate economic growth and that governments are completely unwilling to invest in social planning and Keynesian ventures.

[Recuperation]

People have been predicting the next crisis on a bi-monthly basis since 2008. More generally, people have been predicting the impending collapse of the entire economic system on a daily basis for well over a century and a half at this point. Capitalism is more tenacious than people on the left are willing to acknowledge. I would wager that Fascism is more likely than a collapse at this stage but I feel this is less related to the direct economic performance of the west than it will be from mass migration resulting from the effects of climate change.

We can already see the kind of chaos that results from the migration of a few million refugees from a just a handful of countries. Imagine in a decade or two when that number surges to 10s or 100s of millions once crops begin to fail on a wide scale and weather related disasters increase in frequency and intensity.

[ckaihatsu]

I made a thread about a week ago on this, and would also appreciate discussion on the topic:


Market calm shattered: Dow closes down almost 400 points on rate fears

http://www.revleft.com/vb/threads/19...-on-rate-fears


The *difference* about the global economy at this point is that investment has been taking 'safe haven' in sovereign / government debt, like U.S. Treasuries. This is an historically *unprecedented* situation, as far as I can discern, which means that government debt is now acting like a junk-bond bubble, and is massively *overvalued* compared to any foreseeable long-term (normal-type) returns on investment, as through the bond's rate of return (now near zero, or even *negative* in some countries). So all of the economic activity is only on the bond's *price* that it's currently trading at -- sheer speculation in the short-term.

This, effectively, is a *schism* between the nominally public-interest government (political) sphere, and the for-profit market-focused *economic* sphere -- the two aspects of (capitalist) political economy are becoming increasingly *unhinged* from each other, and we know that the market system is unable to function without a political-state authority to act as an arbiter among various competing economic-financial claims.

Also consider:


NAFTA's ISDS: Why Canada Is One of the Most Sued Countries in the World

http://www.commondreams.org/views/20...ountries-world

[LionofTepelenë]

Our system is a lot more rigid than one may think. But given what you posted, I'll say at worst it would cause a recession.

[ckaihatsu]

Our system is a lot more rigid than one may think. But given what you posted, I'll say at worst it would cause a recession.

Yeah, I'm not going to underestimate ruling-class solidarity -- I'm reminded of the 'global protection racket' service that the U.S. supplies internationally to its allies:

[T]he U.S. made a deal with the capitalists of its defeated axis rivals [after WWII]. It agreed to open its home market to German and Japanese capitalists—something it had stubbornly refused to do before World War II—in return for these countries accepting U.S. military occupations that have continued to the present day. In return for access to the U.S. home and other world markets, the defeated axis powers gave up of any attempt to compete with the United States either militarily or politically. In the military and political spheres, America would not share power with its defeated rival imperialists.

https://critiqueofcrisistheory.wordp...netary-system/

[ckaihatsu]

---

The Journal quoted Ian Shepherdson, chief economist at Pantheon Macroeconomics, speaking of the increased pace of monetary tightening. “We’re slightly surprised to see it,” he said, “but it is a welcome development, in our view. We remain very worried that the Fed and markets do not fully appreciate the extent of upside inflation risk for next year via the labor market, where wage growth is on the verge of a rapid acceleration.”

In other words, interest rates must be raised to undercut a possible push by workers for higher wages.

http://www.wsws.org/en/articles/2016.../rate-d15.html

[JAC0BIN]

The EU has already said that if we abandon our environmental agreements they will impose a carbon tax on our products =

IF Drumpf's protectionist stances are fulfilled that will make imports more expensive = lower USA economy, inflation

IF Drumpf's angers China (as he has already done) and they begin selling our bonds = lower USA economy, higher interest rates, inflation

IF Drumpf's plans to use more fossil fuels goes through = likely minor positive economic growth at expense of higher utilities, inflation

ETC. ETC. ETC. ETC.

There is already a pending 'retail space' bubble across America. Look at the those empty malls and buildings. Nobody's is moving in anytime soon.

Quote from a mainstream economic publication:

"According to the TIC data (market price adjusted), China was the largest seller in October, unloading $41 billion. Over the last six months, it unloaded $128 billion. This slashed its holdings of Treasury securities to $1.116 trillion, below the holdings of Japan. Japan, now the largest holder of Treasury securities, reduced its holdings by $4.5 billion in October to $1.132 trillion.
Japan and China are by far the largest two creditors of the US – the US still owes them $2.25 trillion – and they’re cutting back their lending."

[ckaihatsu]

The EU has already said that if we abandon our environmental agreements they will impose a carbon tax on our products =

IF Drumpf's protectionist stances are fulfilled that will make imports more expensive = lower USA economy, inflation

IF Drumpf's angers China (as he has already done) and they begin selling our bonds = lower USA economy, higher interest rates, inflation

IF Drumpf's plans to use more fossil fuels goes through = likely minor positive economic growth at expense of higher utilities, inflation

ETC. ETC. ETC. ETC.

There is already a pending 'retail space' bubble across America. Look at the those empty malls and buildings. Nobody's is moving in anytime soon.

Quote from a mainstream economic publication:

"According to the TIC data (market price adjusted), China was the largest seller in October, unloading $41 billion. Over the last six months, it unloaded $128 billion. This slashed its holdings of Treasury securities to $1.116 trillion, below the holdings of Japan. Japan, now the largest holder of Treasury securities, reduced its holdings by $4.5 billion in October to $1.132 trillion.
Japan and China are by far the largest two creditors of the US – the US still owes them $2.25 trillion – and they’re cutting back their lending."

These international trade factors *can't* be nearly as impacting as the concern over *wages* is, as reproduced in the excerpt at post #6.

The prevailing economic environment is one of *deflation*, with a current regime of rock-bottom interest rates -- meaning *plenty* of capital goods available, but with no incentives for actual, tangible, real-world production (an economic *standstill*).

The point here is that, in this context of historic amounts of non-performing corporate cash, there are *zero* reasons for the management class to say 'We need more cash, from higher returns (interest) on the cash we're sitting on.' This position can only be explained in terms of *class warfare*, because it's from *wages* that a larger diversion would be made to reward those who already have over-valued funds.

Recall that capital is *useless* if it's not being actively invested to activate labor, for actual production -- the M-C-M' cycle. So why should the U.S. suddenly, arbitrarily give greater returns to non-performing capital through a raise in interest rates -- ? This is just rentiership without productive investment -- taken to the logical extreme it would be a ceaselessly *shrinking* economy (for the sake of non-circulating valuations), and a return to feudalism / slavery.

Any expressed concerns about "inflation" is siding with the interests of *wealth*, in its concern about the erosion of its purchasing power. This *isn't* nearly as much a concern for laborers since working class interests don't run parallel to the interests of wealth. (Usually the price of labor, in wages, tends to correlate to the overall regime of prices for goods and services in the economy, so if prices do go up -- which they're not -- then wages would go up as well, and vice-versa.)

[JAC0BIN]

Im not worried about the inflation rate one bit BUT in fact I believe that it will be the mechanism that throws the hollow capitalist economy into the next crisis, which is what the OP was asking. The reality is that interest rates have been at historically, artificially low rates, which cannot be sustained much longer. As these China/Japan sell US bonds (as they are) this will push rates higher, inevitably in this finance-baron economy, this will not 'grow' the economy as you said.

So now we'll have low stagnant wages coupled with inflation, and an economy that couldnt produce to save itself. There is no question there is a classwar ongoing and likely to swell in the coming years.

[ckaihatsu]

Im not worried about the inflation rate one bit BUT in fact I believe that it will be the mechanism that throws the hollow capitalist economy into the next crisis, which is what the OP was asking.

If there's a selloff in bonds that would mean a decisive 'popping' of that bond bubble. Prices for them in the market would go down, while their yield rates would go up somewhat, in an inherent 'attracting back' of capital investment that quit the scene.

I don't think this, though, would have an overall effect on inflation / 'growth' in the larger economy, though a large withdrawal of participation would signify conditions of 'crisis', or at least investors would be looking for the next commodity to actively fetishize into a new bubble (besides real estate and stocks).

The reality is that interest rates have been at historically, artificially low rates, which cannot be sustained much longer. As these China/Japan sell US bonds (as they are) this will push rates higher, inevitably in this finance-baron economy, this will not 'grow' the economy as you said.

I never said anything about 'growing the economy' -- you won't be able to find any of my words that indicate this purported direction.

So now we'll have low stagnant wages coupled with inflation, and an economy that couldnt produce to save itself. There is no question there is a classwar ongoing and likely to swell in the coming years.

It seems like the default economic stance is to worry about 'inflation', when that's really not the way things are headed. The bourgeois establishment *wishes* there was some inflation, which would actually indicate nominal directions of economic growth (see Japan over the past few decades, for instance).

'Low stagnant wages' is synonymous with 'low prices for labor' -- the only thing *left* is the class war, where laborers have no incentive to go off on their own to be competitive for higher wages, over a varying terrain, but rather to be *solidified* in an economic environment of prevailing *low wages*.

As long as conditions of *overproduction* are the norm there won't be any dynamics towards *inflation*, but rather *deflation*, or low prices, since produced products are chasing demand rather than the other way around.

[JAC0BIN]

It seems like the default economic stance is to worry about 'inflation', when that's really not the way things are headed. The bourgeois establishment *wishes* there was some inflation, which would actually indicate nominal directions of economic growth (see Japan over the past few decades, for instance).

'Low stagnant wages' is synonymous with 'low prices for labor' -- the only thing *left* is the class war, where laborers have no incentive to go off on their own to be competitive for higher wages, over a varying terrain, but rather to be *solidified* in an economic environment of prevailing *low wages*.

As long as conditions of *overproduction* are the norm there won't be any dynamics towards *inflation*, but rather *deflation*, or low prices, since produced products are chasing demand rather than the other way around.

Well growing the economy is the same as increasing 'real-world' production but semantics right?

The default now is not to worry of inflation (which is likely down the road) but rather the impending retail space bubble that currently exceeds that of the toxic mortgages that wrecked the capitalist financial markets in 2008. However, again the OP asked where the next capitalist crisis will come from, hence my answers. Chances are tho that neither you nor I will actually predict the next existential crisis in capitalism; given its profound contradictions. It may already be here.

[ckaihatsu]

Well growing the economy is the same as increasing 'real-world' production but semantics right?

I never said anything about 'growing the economy', though -- in empirical terms the capitalist economy *does* need to keep pace with population growth, so that's a 'thing', but I'm certainly not cheerleading a 'growth' of the economy for its own sake:

The prevailing economic environment is one of *deflation*, with a current regime of rock-bottom interest rates -- meaning *plenty* of capital goods available, but with no incentives for actual, tangible, real-world production (an economic *standstill*).

---

The default now is not to worry of inflation (which is likely down the road)

As far as the U.S. is concerned (and still with several other national currencies in-tow), I can't see where inflation could possibly come from -- at this point more disinvestment isn't going to *cripple* whatever production does exist, because all of that stuff is already in overproduction, in material terms, anyway. Without better wages most people just don't have the discretionary income to make more purchases -- if they *did* then we could talk about inflation, but it's just not here.

The U.S. dollar will continue to be the international reserve-currency standard, so it will maintain relative stability due to being a 'safe haven' for parking international capital.

but rather the impending retail space bubble that currently exceeds that of the toxic mortgages that wrecked the capitalist financial markets in 2008.

Okay. (Commercial property.)

However, again the OP asked where the next capitalist crisis will come from, hence my answers. Chances are tho that neither you nor I will actually predict the next existential crisis in capitalism; given its profound contradictions. It may already be here.

I say keep an eye on GDP.

[ckaihatsu]

http://www.wsws.org/en/articles/2017.../davo-j14.html

[ckaihatsu]

---

"The market is looking for direction from the White House on policy," said Albert Brenner, director of asset allocation strategy at People's United Wealth Management in Bridgeport, Connecticut.

"When you see the markets pause, it signals investors are becoming more rational and are waiting to see some concrete evidence that drove the market higher after the election."

Markets rallied sharply after Trump's election victory in November, riding on hopes that his plans including simpler regulations, higher infrastructure spending and tax cuts will boost the economy.

http://www.reuters.com/article/us-us...KBN15L1CG?il=0

[ckaihatsu]

Terry Lawrence Robert B. Livingston • 4 hours ago

"If I had anything, I would sell now!" Exactly why the Russians and Chinese, and some European countries like Germany have been dumping their US dollar holdings and government bonds and buying up gold. The price of gold is artificially depressed by the US banks through fraudulent Futures trading, while the hyper-inflated US dollar is artificially supported by US nuclear weapons and invasions of any small countries like Libya and Iraq starting to move off it.

The Russians and Chinese are continuing to sell their export products for inflated dollars, and using those overvalued dollars to buy undervalued gold, building up their precious metal reserves and dumping the worthless counterfeit US dollars. Iran is doing the same. The rest of the world is gradually catching on, trading in local currencies, and if the trickle becomes a flood, the Dollar will be worth less than the Peso. Only the use of the US dollar as the world's international trade currency, especially in oil, enables the US to print off worthless paper and receive real goods and services for it from other countries. That scam is ending.

Hence the panic and push for war against Russia and China from Wall Street and the City of London.

1 • Reply•Share ›

http://www.wsws.org/en/articles/2017.../pers-f17.html

[The Intransigent Faction]

I made a thread about a week ago on this, and would also appreciate discussion on the topic:


Market calm shattered: Dow closes down almost 400 points on rate fears

http://www.revleft.com/vb/threads/19...-on-rate-fears


The *difference* about the global economy at this point is that investment has been taking 'safe haven' in sovereign / government debt, like U.S. Treasuries. This is an historically *unprecedented* situation, as far as I can discern, which means that government debt is now acting like a junk-bond bubble, and is massively *overvalued* compared to any foreseeable long-term (normal-type) returns on investment, as through the bond's rate of return (now near zero, or even *negative* in some countries). So all of the economic activity is only on the bond's *price* that it's currently trading at -- sheer speculation in the short-term.

This, effectively, is a *schism* between the nominally public-interest government (political) sphere, and the for-profit market-focused *economic* sphere -- the two aspects of (capitalist) political economy are becoming increasingly *unhinged* from each other, and we know that the market system is unable to function without a political-state authority to act as an arbiter among various competing economic-financial claims.

Also consider:


NAFTA's ISDS: Why Canada Is One of the Most Sued Countries in the World

http://www.commondreams.org/views/20...ountries-world

That article's information shouldn't be surprising, but it is worrying nonetheless.
Also consider that even the setbacks for the TPP don't signal an end or an insurmountable barrier to this trend. I'd be interested if you have any information about how CETA could worsen this problem.

[willowtooth]

That article's information shouldn't be surprising, but it is worrying nonetheless.
Also consider that even the setbacks for the TPP don't signal an end or an insurmountable barrier to this trend. I'd be interested if you have any information about how CETA could worsen this problem.

I wouldn't focus too much in the supposed economic benefits of the trade deals, they usually wont effect the poor or working class involved in either member state, what they will do is setup an investor-state dispute court so that ,major corporations can sue the governments of different countries, and to setup firm patent and trademark laws. So you cant copy their patents and build a fake Iphone store like they have in China, or have medicine that can be produced for less than $1, be sold without the 8000% or so markup the corporate investors that sponsored its creation demand

https://www.wsws.org/en/articles/201.../isds-a03.html

[The Intransigent Faction]

I wouldn't focus too much in the supposed economic benefits of the trade deals, they usually wont effect the poor or working class involved in either member state, what they will do is setup an investor-state dispute court so that ,major corporations can sue the governments of different countries, and to setup firm patent and trademark laws. So you cant copy their patents and build a fake Iphone store like they have in China, or have medicine that can be produced for less than $1, be sold without the 8000% or so markup the corporate investors that sponsored its creation demand

https://www.wsws.org/en/articles/201.../isds-a03.html

...Okay?
Even if all of that wasn't explained in the article, I'm aware of it.
The TPP was stopped. What I'm worried about is the specifics of, for example, how many more such lawsuits Canada could face for environmental regulations. What are the prospects for how bad CETA and other such deals involving Europe could be?

[willowtooth]

...Okay?
Even if all of that wasn't explained in the article, I'm aware of it.
The TPP was stopped. What I'm worried about is the specifics of, for example, how many more such lawsuits Canada could face for environmental regulations. What are the prospects for how bad CETA and other such deals involving Europe could be?

CETA specifically? I'm not sure I'm hesitant to say details because I might be wrong. This stuff is very complicated, even in america TPP divides both democrats and republicans. Alot of it is decided behind closed doors, so transparency is an issue. Even if I could tell you something specifically wrong with it, or the worst thing wrong with it, I might be getting that information from someone who is misinformed, or worse yet they may be talking about something they already changed.

I could even turn this into an ML vs trot argument, however there are plenty of far right wingers against deals like NAFTA CETA and TPP. And they have spread tons of nonsense about it over the years. Its become more of a symbol against internationalism, an excuse as to why the stock market can be at record highs but the poor and middle class are still getting screwed and why "trickle down" is working, but its trickling down somewhere else. They cant blame the good honest white christian capitalists for this, so it must "the other" its the foreigners fault for stealing all the money and the leftists are covering it up, because America is so charitable to everyone that were just being taken advantage of, because we're so nice. So much so, that Trump regularly lambastes them, although he says he will re-negotiate because ya know "he makes the best deals, nobody makes better deals than him, and America is getting a bad deal the worst deal, and whatever fuck you" lol.

Under enormous pressure to back down, the Walloons appear to have managed to at least secure the concession from the Belgian government not only to assess the economic and environmental impact of CETA, but also to insist on the right to go to the European Court of Justice to determine whether the decisions of the new investment court system were compatible with EU law. But even as the Belgian government joins the other twenty-seven European governments in signing CETA, its ratification by all their parliaments is far from assured, since the broad coalition in Wallonia that stood up to CETA — encompassing Christian Democrats and Socialists as well as Marxists — is reflective of the breadth of the opposition across Europe.The social attitudes of those opposing CETA are quite different from those of the xenophobic far-right parties which have made such gains in Europe. The rejection of CETA as well as the TTIP would not have anything to do with rejecting the values of diversity and democracy, as Freeland’s comments implied. If anything, it has been the failure of the mainstream parties to articulate in a progressive manner the discontent with what has come with state promotion of “free trade” over the last three decades that has opened so much political space for the Le Pens, on one side of the Atlantic, and for the Trumps, on the other

https://www.jacobinmag.com/2016/10/f...gium-wallonia/

[The Intransigent Faction]

CETA specifically? I'm not sure I'm hesitant to say details because I might be wrong. This stuff is very complicated, even in america TPP divides both democrats and republicans. Alot of it is decided behind closed doors, so transparency is an issue. Even if I could tell you something specifically wrong with it, or the worst thing wrong with it, I might be getting that information from someone who is misinformed, or worse yet they may be talking about something they already changed.

I could even turn this into an ML vs trot argument, however there are plenty of far right wingers against deals like NAFTA CETA and TPP. And they have spread tons of nonsense about it over the years. Its become more of a symbol against internationalism, an excuse as to why the stock market can be at record highs but the poor and middle class are still getting screwed and why "trickle down" is working, but its trickling down somewhere else. They cant blame the good honest white christian capitalists for this, so it must "the other" its the foreigners fault for stealing all the money and the leftists are covering it up, because America is so charitable to everyone that were just being taken advantage of, because we're so nice. So much so, that Trump regularly lambastes them, although he says he will re-negotiate because ya know "he makes the best deals, nobody makes better deals than him, and America is getting a bad deal the worst deal, and whatever fuck you" lol.


https://www.jacobinmag.com/2016/10/f...gium-wallonia/

No question, the far-right has its own reasons for opposing "free trade", but that in itself is no reason to support it. Certainly, a free trade deal of the sort that opens up more opportunities for ISDS has worrisome implications for the future of the most modest environmental regulations.

The kind of "free trade" the left seeks is not the kind liberals seek. We want to see goods and services provided on a global scale for the needs of a global community, not the enrichment of capital unencumbered even by legal restrictions of bourgeois states for environmental and other purposes.