Thread: Next capitalist economic crisis incoming?

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  1. #21
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    Default Ongoing investment plunge in Australia

    http://www.wsws.org/en/articles/2017.../econ-f25.html


    Ongoing investment plunge in Australia

    By Mike Head

    25 February 2017

    Australia’s precipitous four-year slump in corporate investment is set to continue, according to official statistics released this week. This has serious consequences for jobs, as well as economic growth and the Liberal-National government’s already large budget deficit.

    Spending by companies on new buildings, equipment and machinery fell for a fourth straight quarter in the three months to December, sliding 2.1 percent from the previous three months—double the contraction forecast by business economists.

    This extends a collapse that began when the country’s mining boom began to implode in 2012. New capital expenditure, seasonally adjusted, fell 15.5 percent during 2016. It has declined overall from about $42 billion a quarter in 2012 to $27 billion per quarter in 2016, a drop of 36 percent.

    There was also another slide in investment intentions for 2017–18. Companies told the Australian Bureau of Statistics (ABS) they would spend just $80.6 billion, or about $20 billion a quarter, in the next financial year. That is 3.9 percent less than they forecast a year ago for the current financial year.

    These indicators have ominous implications, because capital investment is the key driver of economic activity under the capitalist profit system. Workers and young people are already paying for the crash. Unemployment and under-employment now affects more than 2.4 million workers, or nearly 18 percent of the workforce, according Roy Morgan polling company surveys. Of these, 1.3 million are jobless and 1.1 million are under-employed, that is, they want more working hours.

    Despite the government’s claims of delivering a “transition” to a new economy based on being “agile” and “innovative,” the slump extends beyond mining. Mining investment has plunged almost 60 percent since its peak in 2012, and is expected to fall by another 27 percent in 2016-17, but there has been no overall rise in non-mining investment.

    Instead, the mining plunge has flowed onto other areas of the economy, especially in the former mining-dependent states of Western Australia, South Australia and Queensland. This trend is far from over. Plans for mining investment in 2017–18 are down by another 20 percent, and those for manufacturing investment by 1.2 percent. Plans for unspecified “other selected industries” are up 8.3 percent, but nowhere near enough to offset the overall slide.

    The ABS figures are bleaker than those given by the government of Prime Minister Malcolm Turnbull in its December budget update, which forecast a decline of just 12 percent in mining investment, offset by an increase of 4.5 percent in non-mining investment.

    The investment freeze-up highlights how reliant Australian capitalism has become on mining and mining-related financial activity since the turn of the century, primarily driven by China’s economic expansion.

    Mining investment in Australia soared from 2 percent of gross domestic product (GDP) in the early 2000s to 9 percent in 2012, and has now plunged back to just above 3 percent. Over the same period, non-mining investment dropped as a share of GDP from about 12 percent to around 9 percent.

    In a speech on Wednesday, Reserve Bank of Australia governor Philip Lowe conceded that non-mining investment has suffered “significant spill-over effects” from the mining slump. The results undercut his previous claim that “economic headwinds” from the unwinding of the mining boom would soon “blow themselves out.” The central bank chief told international investors in February that 90 percent of the slide had already happened.

    Capital Economics chief economist Paul Dales said the new statistics left “question marks hanging over hopes that non-mining investment will soon rise significantly.” Dales said the figures were disappointing because iron ore and coal prices recovered somewhat during 2016. The results suggested that even if prices remain higher, businesses would “pocket the money rather than boost capex (capital expenditure).”

    Dales further noted that the Reserve Bank has also counted on higher wages growth to boost the economy. But this week’s wages figures showed continued record low growth. Average weekly earnings rose just 1.6 percent in 2016, barely above the official consumer price index rise of 1.5 percent.

    These results indicate that the recession gripping much of the country, outside the financial centres of Sydney and Melbourne, will persist. Despite record low official interest rates of 1.5 percent, the economy contracted by 0.5 percent in last year’s September quarter, and the result would have been worse except for a housing market bubble in these cities.

    The latest fall in investment prompted global financial services firm UBS to cut its growth estimate for the December quarter from 1 percent to 0.7 percent, implying an annual growth rate of just 1.9 percent for 2016. This is far below the 3 percent forecasts on which the government has based its budget calculations.

    Even that prediction will be shattered if the property market bubble and associated apartment construction boom unravels. In Wednesday’s speech, Reserve Bank governor Lowe warned of a “sobering combination” of record levels of household debt and slow wages growth.

    “It is possible that continuing rises in indebtedness, partly as a result of low interest rates, increase the fragility of household balance sheets,” Lowe said. “If so, then at some point in the future, households, having decided that they had borrowed too much, might cut back consumption sharply, hurting the overall economy and employment.”

    On Wednesday, in another symptom of the deepening destruction of manufacturing jobs, Coca-Cola Amatil, a partly-owned Australian subsidiary of the US giant, announced the closure of its bottling plants in South Australia. About 200 jobs will be eliminated, worsening the toll being produced by the closure of Australia’s auto assembly plants by Ford, General Motors and Toyota.

    The investment statistics compound the perplexity in the ruling class over the fact that annual foreign direct investment inflows halved, to less than $30 billion, between 2013 and 2015. Turnbull’s government recently tried to use the foreign investment plunge to ramp up its campaign to slash the company tax rate from 30 to 25 percent over the next decade, and match the sweeping cuts to US corporate taxes promised by President Donald Trump.

    The financial elite is demanding that Turnbull’s government deliver deep cuts to business taxes and social spending, especially welfare, health and education, as well as to workers’ wages and conditions, in order to stem the haemorrhaging of investment. The implementation of these demands will only fuel the already intense popular discontent and escalate the crisis of the government, which only holds a one-seat parliamentary majority following last July’s federal election.

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  2. #22
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    Default US Fed lifts interest rate and reassures markets

    http://www.wsws.org/en/articles/2017.../fedr-m16.html


    US Fed lifts interest rate and reassures markets

    By Nick Beams

    16 March 2017

    The US Federal Reserve yesterday lifted its base interest rate by 0.25 percentage points and indicated that two further rises were likely this year.

    There had been some belief in financial markets that four rises could occur this year but that now seems unlikely. The “dot plot”—the expectation of members of the Fed’s open market committee (FOMC) as to where interest rates will be over the next period—remained basically unchanged from last December.

    The money markets, which had priced in the 0.25 percent increase, welcomed the decision. All the major indexes ended at just below their record highs after experiencing a rise for the day. The Dow closed near 21,000.

    Bond market yields also fell marginally, as bond prices rose, because of the fading of the prospect of four rate rises this year, rather than three. (Bond prices and yields have an inverse relationship.)

    Markets were reassured by the language of the decision, with most analysts concluding that Fed chairwoman Janet Yellen had “dovish” views on rate rises.

    The FOMC said it expected economic conditions would evolve in a manner that would “warrant gradual increases in the federal funds rate.” That was a slightly more hawkish outlook because its previous statements referred to “only gradual” increases.

    However, the statement indicated that the base interest rate was expected to remain for “some time” below levels that were expected to prevail in the longer run.

    Two other phrases in the FOMC statement boosted the markets. It said the Fed would “carefully monitor” actual and expected inflation developments “relative to its symmetric inflation goal.” This was taken to mean that with inflation now approaching the Fed’s target rate of 2 percent, it would not move too sharply on lifting rates if the inflation rate went above that level.

    The markets also took heart from the FOMC’s statement that the Fed would continue its policy of reinvesting principal payments from its massively expanded holdings of financial assets, including mortgage-backed securities and Treasury security holdings. As a result of its financial asset purchases under its previous “quantitative easing” program, the Fed now holds $4.5 trillion in financial assets, compared to $900 billion before the financial crisis of 2008.

    The statement said the reinvesting policy would continue until “normalization of the federal funds rate is well under way.” Keeping the holdings of longer-term financial assets at “sizable levels” should help maintain “accommodative financial conditions.”

    If the Fed started to sell off its financial holdings, this would push their prices down and lead to a significant rise in market interest rates, with a substantial impact on the stock market.

    The Fed appears to be trying to tread a fine line. It is keeping rates at historically low levels in order to finance the ongoing rise in the stock market. At the same time, it is lifting interest rates in order to improve profit conditions for the banks and other lending institutions.

    By lifting rates it is also signalling that it stands ready to put a clamp on the economy if there is any sign of a movement by workers on wage demands to try to reverse protracted cuts in real pay.

    In her press conference, Yellen tried to give the impression of a US economy returning to “normal” conditions. Near-term risks to the economic outlook, she said, “appear roughly balanced” and the decision to “make another gradual reduction in the amount of policy accommodation reflects the economy’s continued progress.”

    While there has been some improvement in economic conditions—sparking fears of a possible wages movement—the US economy is far from returning to conditions that prevailed before the 2008–09 financial crisis. The long-term growth rate continues to remain at around 2 percent, well below the level experienced in any post-war economic recovery.

    According to the Atlanta Federal Reserve, US annualised gross domestic growth for the first quarter may be as low as 0.9 percent, following growth of only 1.6 percent in 2016, the worst result for five years.

    The stock market, however, is continuing to rise on the expectation of major cuts in corporate and personal tax rates by the Trump administration, the scrapping of regulations that inhibit profit making and an infrastructure spending program which will benefit corporations through massive tax write-offs.

    Since Trump’s election on November 8, the stock market has surged, with the Dow up 17 percent, the S&P 500 14 percent and the tech-based NASDAQ 16 percent.

    According to Yale economist and Nobel Prize winner Robert Shiller, the market is “way over-priced.” He told Bloomberg that investors may be valuing a narrative rather than economic fundamentals, as took place in the dot-com bubble at the turn of the century.

    “They’re both revolutionary eras,” he said. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.” A kind of herd mentality was developing in which everyone piled into the market because the cost of losing out on making gains was greater than staying out.

    Another area of concern is the impact of rising US interest rates on global bond markets. There is now a divergence between the policies of the world’s three major central banks. While the Fed is lifting rates, the European Central Bank (ECB) is still buying €80 billion worth of bonds a month and has kept its base interest rate at minus 0.4 percent. The Bank of Japan is keeping the rate on its 10-year bonds at between zero and 0.1 percent.

    With the rate on the US Treasuries hovering at around 2.6 percent, money is coming into US financial markets from Europe and Japan.

    But that situation could change rapidly, according to long-time bond market trader Bill Gross. In an interview with the business channel CNBC yesterday, he said that “hell could break loose in terms of the bond market on a global basis” once ECB president Mario Draghi began to taper—probably not for a few months—the €80 billion a month purchases were reduced and restrictions on the Japanese rate were eliminated.

    In comments reported by the Financial Times earlier this week, Gross warned that the US economy was like a “truckload of nitroglycerine on a bumpy road.” A mistake could “set off a credit implosion.”

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  3. #23
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    Default Concerns over Trump crisis roil financial markets

    http://www.wsws.org/en/articles/2017.../econ-m23.html


    Concerns over Trump crisis roil financial markets

    By Barry Grey

    23 March 2017

    Mounting concerns in financial circles over the political crisis of the Trump administration intersected with negative economic trends to send US stocks sharply lower on Tuesday. The sell-off on Wall Street, the first drop of more than 1 percent since the giddy rise triggered by the November 8 election of the billionaire real estate speculator, spilled over to the European and Asian exchanges on Wednesday, sending shares substantially lower. The US markets were relatively stable on Wednesday, with minor losses on the Dow accompanied by a slight gain on the S&P 500 index and a bigger uptick on the Nasdaq.

    The Dow Jones Industrial average fell 237 points, or 1.1 percent, on Tuesday, its worst day since September. The S&P 500 dropped 29 points, or 1.2 percent, and the Nasdaq Composite lost 107 points, or 1.8 percent.

    The sell-off hit bank shares, which have led the so-called “Trump Trade” surge since Election Day, the hardest. Bank of America tumbled 5.8 percent, Goldman Sachs fell 3.8 percent, JPMorgan Chase lost 3.1 percent, Wells Fargo declined 3.1 percent and Citigroup was 2.6 percent lower. Despite these losses—the S&P financials index sank 2.9 percent, its biggest daily fall since June—the S&P financial sector is still up 18 percent since Trump’s election and Goldman Sachs has risen by more than 40 percent since the end of September.

    Whatever the short-term trend on the financial markets, Tuesday’s downturn reflected the underlying unsustainability of the massively inflated stock valuations—a defining feature of the so-called “recovery” from the Wall Street crash of 2008. The Obama administration systematically fed the record rise on the stock market with trillions of dollars in bank bailouts and trillions more in super-cheap credit and cash pumped into the financial system by the Federal Reserve, combined with austerity and wage-cutting imposed on the working class.

    The post-election surge to new record highs was entirely based on the anticipation of an unprecedented profit windfall from Trump’s policies of corporate deregulation, corporate tax cuts and corporate-friendly infrastructure spending, alongside an historic attack on social programs, from health care, to education, to housing.

    The underlying economy, however, remains stagnant, and Trump’s policies of economic nationalism and trade war threaten to intensify the tendencies toward a new financial crash and full-scale depression.

    The immediate cause of Tuesday’s sell-off appears to have been rising uncertainty over Trump’s ability to carry through his pro-corporate pledges. The doubts in boardrooms and bankers’ retreats were focused on the mounting political warfare over allegations of Trump administration connections to Russian officials and the murky prospects for the Republican-controlled House of Representatives to pass Trump’s health care overhaul in a floor vote scheduled for Thursday.

    As the Financial Times put it, the “deepening political tussle in Washington over an overhaul of the health care industry prompted fears over whether Donald Trump will be able to drive through the economic stimulus he has promised.”

    The newspaper cited Jerry Lucas of UBS Wealth Management as saying, “The current valuation of the S&P 500 is very much dependent on Trump getting his economic agenda through. If Trump runs into problems with health care, it could make tax reform harder… and passage of tax reform is critical.”

    Reuters wrote, “Bank lobbyists who opened the Trump era with great expectations for sweeping regulatory reform are privately striking an increasingly dismal tone as hopes for a quick and thorough rewrite of Dodd-Frank legislation dim.”

    The BBC quoted R. J. Grant, head of trading at Keefe, Bruyette & Woods in New York, as complaining, “The market is starting to get a little fed up with the lack of progress in health care because everything else is being put on the back burner.”

    These fears are compounded by unstated concerns over the growth of social discontent and popular opposition to the Trump administration’s assault on social benefits, as well as its police-state vendetta against immigrants.

    Without the massive stimulus to corporate profits from Trump’s promised program of social reaction, there is no basis for sustaining the record bull market. Hopes of a boost to economic growth are dwindling. A running projection for first-quarter economic growth from the Atlanta Federal Reserve has fallen to 0.9 percent.

    The stagnant pace of economic growth and world trade has been reflected in declining prices for basic commodities such as oil, copper and iron ore. Oil prices fell to almost four-month lows on Wednesday after data showed US crude inventories rising faster than expected, adding to already bulging global stockpiles.

    The dollar has continued to fall, raising fears of a new eruption of inflation, despite the Fed’s decision last week to raise its benchmark interest rate another 0.25 percent. The markets interpreted the Fed’s move as “dovish” because the central bank indicated it had no plans to raise rates this year more than the two additional times it had previously signaled.

    The starkest measure of growing nervousness in financial markets is the continuing rise in gold, the most basic of all investment safe havens. Gold rose 1 percent to $1,247 a troy ounce on Wednesday, its highest level in almost three weeks. It is up nearly 7 percent since the start of the year, and Bank of America is predicting it will jump $200 by the end of the year to surpass $1,400 per troy ounce.

    At the same time, the short-term prospects for US corporate profits are weakening. As the Financial Times reported Monday: “The US corporate profit outlook has dimmed in recent weeks, with analysts paring back their forecasts in a fresh sign of the risks facing the Wall Street rally that has powered equities to peaks.”

    The newspaper noted recent data showing earnings of companies in the S&P 500 index rising by 9 percent in the first quarter of this year, significantly lower than the 12.3 percent increase predicted at the start of the year. The smaller-than-expected rise in profits will intensify concerns over the extraordinarily high price-to-earnings ratio that already prevails on US financial markets. According to a measure developed by Yale economist Robert Shiller, the cyclically adjusted PE ratio hit its highest point in 15 years this month.

    The Financial Times reported Tuesday that a recent Bank of America Merrill Lynch survey showed more investors saying stocks are overvalued than undervalued than at any point since 2001. The New York Times on Wednesday noted that US stock prices relative to earnings have been higher than today only in 1929 and 1999, on the eve of major stock market crises followed by economic slumps.

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    Default Subprime auto loans threaten new crisis

    http://www.wsws.org/en/articles/2017.../loan-a11.html


    Subprime auto loans threaten new crisis

    By J. Cooper

    11 April 2017

    On April 3, the Detroit Free Press reported the liquidation of Valley State Credit Union, a small community credit union serving state employees in Saginaw, Michigan. The collapse of the credit union highlights the growing problem of ballooning auto debt and subprime vehicle loans that are rattling the banking and finance markets. This growth of auto loan debt is also an indication that the auto sales surge of recent years is heading for a collapse, threatening further layoffs in the industry.

    The Saginaw credit union was acquired by ELGA Credit Union of Burton. Valley State had been taken into conservatorship last August, as it became clear that delinquent used-vehicle loans had caused it to be “operating in an unsafe and unsound condition.” In July 2015, delinquent vehicle loans between 30 and 59 days overdue at Valley State had mushroomed to $1.59 million from $57,222 the year prior.

    Automotive industry analysts are expressing concern that the mushrooming of auto-related debt and the preponderance of subprime vehicle loans, fueled by investors looking for high yields, could be the next financial bubble. As of the fourth quarter of 2016, auto loan debt in the United States had reached $1.16 trillion—an increase of $93 billion over 2015—rivaling the enormous sums of student loan debt that now stands at $1.31 trillion.

    Following the financial crash of 2008 and the subsequent recession, auto sales plummeted. But with the government bailout of Wall Street and interest rates near zero, by 2012 the banking industry saw their opportunity in the unregulated field of auto financing. The subprime mortgage debacle brought mortgage lending under federal regulation, but no one was looking at vehicle financing. Bankers seeking quick profits began offering products to less-qualified borrowers, much as they had done with mortgages prior to 2007. Sales of both new and used vehicles hit record numbers in 2016 for the seventh straight year. However, since the beginning of this year, sales are tumbling, heading for an annual decrease of more than 12 percent.

    Additionally, auto leasing has reached record numbers, from 13.2 percent of the market in 2009, to 28 percent in 2015. While this has helped boost the sales and profits of the car manufacturers, those leased vehicles have begun flooding the used-car market, as most leases are between two and four years. The market glut is expected to drive down used car prices, cutting into new-car sales and corporate profits.

    For both manufacturers as well as lenders, the future looks grim. According to the April 7 Automotive News, “With both bad loans and interest rates on the rise, financial institutions are becoming more selective in doling out credit for new-car purchases, adding to the pressure for automakers already up against the wall with sliding sales, swelling inventories and a used-car glut. ‘We’ve been having a party for a few years and it was fun,’ said Maryann Keller, an industry consultant in Stamford, Connecticut. ‘Now lenders are getting back to basics.’”

    Wall Street is concerned that what happened to Valley State Credit Union could spread throughout the banking industry. Delinquencies on car loans over 30 days were up in December by 14 percent over 2015. By the end of 2016, over 6 million borrowers were more than 90 days late with their vehicle payments, also a new record.

    Auto loan delinquencies of 30 days or more reached $23.27 billion in the fourth quarter of 2016, or 3.8 percent of all auto loan debt. The seriously delinquent portion, those more than 90 days past due, reached $8.4 billion.

    Predatory lending practices relating to auto loans are now coming under some scrutiny. Santander Bank, known as the largest packager of subprime auto loans, just agreed to a settlement of $26 million with the states of Massachusetts and Delaware for issuing “unfair and unaffordable” loans, knowing the borrowers would default. According to AP, Massachusetts Attorney General Maura Healey said, “These predatory practices are almost identical to what we saw in the mortgage industry a few years ago.”

    Recognizing that millions of auto loans may default this year, lenders are now looking to cast a wider net for struggling borrowers. According to a recent New York Times article, the credit bureaus that provide the scores that determine a borrower’s interest rate and credit limits are now looking at “alternative” criteria, such as cell phone payments, to entice those who have no credit history, or have previously defaulted on loans, to become the new victims of the predatory banks.

    Auto finance companies are alarmed about looming defaults, but not to the extent they were with the collapse of mortgages in 2007 and 2008. The vehicles of borrowers with low credit scores and higher risk are often fitted with GPS technology and “kill switches” that can be activated if a loan is even one day past due. There are more than 2 million of these devices on the roads. The practice of “ignition interruption” has now become so widespread that the Federal Trade Commission is investigating the abuse of these tracking devices relating to privacy violations.

    Tightening credit, swelling inventories and the glut in the used-car market point to more plant closures and layoffs on the horizon. Ford has already threatened layoffs in both Michigan and Mexico, while General Motors has announced 4,600 permanent job cuts since December.

    Sales for Detroit-based US automakers made a weak showing in March. Fiat Chrysler sales were down 5 percent while Ford showed a 7.2 percent decline. GM sales were up just 1.6 percent. Meanwhile, Nissan sales rose 3 percent while Toyota sales fell 2.1 percent. Overall auto sales increased at an adjusted annual rate of 16.63 billion, lower than projections of 17.3 billion.

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    Default Toshiba warns it may not survive crisis

    https://news.google.com/

    http://money.cnn.com/2017/04/11/inve...ghouse-crisis/


    Toshiba warns it may not survive crisis

    by Sherisse Pham @Sherisse

    April 11, 2017: 8:28 AM ET

    Your video will play in 00:25

    Toshiba may not survive its deepening crisis.

    The Japanese conglomerate said Tuesday that there is "substantial doubt" about its ability to continue as a going concern after it reported huge losses.

    Toshiba has been hammered by the collapse of its American nuclear business, Westinghouse Electric, which filed for bankruptcy protection in the U.S. last month.

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    After twice missing deadlines, Toshiba (TOSBF) reported a net loss of 648 billion yen ($5.9 billion) for the quarter ended in December. But in an unprecedented move for a major Japanese company, Toshiba filed the report without the approval of its auditors.

    Japanese regulators must now decide whether to accept Toshiba's earnings report. If not, shares in the ailing company could be delisted from the Tokyo Stock Exchange.

    Here's where things stand:

    Delayed earnings and delisting threat

    The refusal by auditor PwC Aarata to give its seal of approval is another embarrassing blow for Toshiba as it tries to persuade investors that it can find a way out of its crisis.

    Westinghouse suffered billions of dollars in losses due to cost overruns and construction delays at nuclear plant projects in Georgia and South Carolina.

    The unit's bankruptcy means Toshiba will eventually be able to remove it from its accounts. But dumping Westinghouse could drag Toshiba to a net loss of 1 trillion yen ($9 billion) for the fiscal year that ended in March.

    Related: Westinghouse Electric is filing for bankruptcy

    PwC refused to sign off on the earnings report because it is still studying the results of investigations into Westinghouse's takeover of nuclear construction company CB&I Stone & Webster in 2015, Toshiba said Tuesday.

    But the company says it has no reason to believe that losses tied to Westinghouse will have any financial impact beyond fiscal year 2016. Toshiba CEO Satoshi Tsunakawa said he considers the investigation to be over.

    Regulators in Japan will have to decide if the disarray means Toshiba, one of the country's best known multinational corporations, should suffer the humiliation of having its shares taken off the stock exchange.

    Selling off the crown jewels

    To try to repair its balance sheet, Toshiba is now selling a majority stake in its prized computer chip business. Tsunakawa has said he expects the unit to fetch at least 2 trillion yen ($18 billion).

    Taiwan-based Foxconn, one of Apple (AAPL, Tech30)'s biggest suppliers, has offered as much as 3 trillion yen ($27 billion), according to The Wall Street Journal and Bloomberg. Toshiba declined to comment on the reports, and Foxconn didn't respond to a request for comment.

    Related: Toshiba chairman steps down as company takes $6.3B hit from nuclear business

    But the Japanese government is keen to keep the memory chip business in the country, according to local media, and has called on Japanese companies to club together to buy a stake.

    Toshiba said Tuesday that the sale of the chip business and other assets would enable it to stay financially sound.

    What happens to Westinghouse?

    Westinghouse's bankruptcy filing has raised questions about what will happen to the storied U.S. company.

    Toshiba's majority stake in Westinghouse will be sold. That will happen under the supervision of the bankruptcy court "and we will not be involved in that," Tsunakawa told reporters last month.

    The sale process could fuel concerns in the U.S. government, which reportedly wants to ensure domestic nuclear capabilities don't end up being bought by a Chinese firm.

    Westinghouse is already building reactors in China. Buying the struggling American company could provide China with technology it needs to become a leading player in nuclear power.

    -- Yoko Wakatsuki in Tokyo contributed to this article.

    CNNMoney (Hong Kong)

    First published April 11, 2017: 6:31 AM ET

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  6. #26
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    Hi, I agree with your comments 100%. Most governments of the whole world (even social-democrat govs.) are evil and are privatizing the medical care sectors, destroying the subsidies for electricity (electricity investment subsidies funded by the state which are able for low income people to fight extreme hot temperatures in summer and extreme cold temperatures in winter). Being able to control the weather (with air conditioners in hot months and with heaters in cold months) is very very very important. People can't even sleep well, can't study, young people can't study if they are not able to turn their heaters on winter and their aird conditioners on summers)

    But the problem I see is more complicated than just blaming the evil right-wing and even social-democrat governments. The problem I see exists, the problem lies in a sort of global psychosis, a sort of global crazyness in the majority of people, of all people, which blocks people from thinking rationally. I read some years ago an article in a psychology alternative knowledge magazine "New Dawn Magazine" about a sort of global crazyness, alledging, claiming that most humans are crazy. And I think that article is right, because you can tell poor low income american families that under a socialist government, they will get free medical care, free dental care (for the 100% of the US population (universal, to the 320 millions citizens), free housing if they are not able to pay their monthly rents and normal house payments on time, cheaper lower-priced electricity, cheaper lower priced telephone services, and lower priced internet services at 10 dollars or 20 dollars (Unlike the current scam of AT&T, Verizon, Sprint, Xfinity, Comcast) and the other internet-thieves who charge about almost 90 dollars to 100 dollars per month for internet, 100 dollars per month for dish TV services. And housing at almost 1000 dollars per month in most cities of USA.

    I don't know what will i do in the USA in the future, because from my own point of view (without being a Nostradamus futurist specialist), i sense that the USA will keep being a capitalist country for many years to come. Because The Democratic Party and The Republican Party are social-democratic parties (when they are out of the government, promoting a sort of populist social-democrat and even socialism policies to the stupid mind-controlled masses, and becasuse they use a social-democrat and even social-democrat language when they are out of government, and then right after they rise to power, they morph into their nature (capitalist-imperialist parties). But since most US citizens suffer from automatic amnesia, and live in the present all the time, they are not able to be aware of these tricks of Democrats and Republicans (of being socialists when they are out of power, and capitalists once they are in power)

    And on top of that, the left-leaning governments of the world (the government of Dilma Rousseuf of Brazil, of Nicolas Maduro of Venezuela, of Cristina Kirshner of Argentina, of Tavare Vasquez of Uruguay, failed because they applied a "capitalism with a human face" (capitalism with social programs), and because (capitalism with social programs) is not a solution for poverty (only 100% socialism is workers-dictatorships), the majority of people of the world, will think that socialism failed in Brazil, in Venezuela, in uruguay and in the other nations where capitalism with human face has been applied by left-leaning governments. And social-democrat welfare capitalism with human face has been giving a bad reputation to the ideology of marxism, socialism. And that's another reason of why we will see capitalism for many years in USA.

    Another cause of why the capitalist class of USA has been able to be in power. Is that the capitalist ruling class of USA fund many social-democrat (fake socialist organizations) like Democracy Now of Amy Goodman, The Nation Magazine, International Socialist Organization, The Green Party, Commondreams.org, The Communist Party of USA, Russia Today, Southern Poverty Center, Moveon, Thinkprogress, The Young Turks, and many many other progressive social-democrat organizations that have a lot more money than the ultraleftists, real leftist, real marxists, real workers parties (who have very little resources at all, to get out of invisibility and to be known by the general low-income population)

    So, the lazy, abulic conformist masses will probably keep voting for fake-socialists Republican Party politicians like Marco Rubio and fake-socialist politicians of the democratic party like Michelle Obama, and fake-socialist politicians of the social-democratic parties (Like Jill Stein, and even Jill Stein is too extremist, too radical, too anti-USA, too communist for the mind-controlled brains of the adult voting population of United States



    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.
  7. #27
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    Default US economic growth slumps to slowest pace in three years

    http://www.wsws.org/en/articles/2017.../econ-a29.html


    US economic growth slumps to slowest pace in three years

    By Barry Grey

    29 April 2017

    The US gross domestic product barely rose in the first three months of 2017, increasing by an annual rate of only 0.7 percent from the last quarter of 2016, according to a report released Friday by the Commerce Department. It was the slowest rate of economic growth since the first quarter of 2014.

    The figure fell short of the already low consensus estimate of economists, who had predicted a 1 percent rise in the GDP. The first quarter performance was sharply lower than the final three months of 2016, when the economy grew by 2.1 percent.

    The most important factor depressing economic growth was a virtual collapse in the growth of consumption, which tumbled to 0.3 percent from 3.5 percent in the previous quarter. Consumption accounts for some 70 percent of GDP in the United States. The first quarter consumption figure was the weakest since the end of 2009, when the official recovery from the severe recession that followed the 2008 Wall Street crash was just getting underway.

    Just two months ago, economists were predicting that the first quarter output figure would be 2 percent, but recent months have seen a marked slowdown in consumer purchases, particularly of cars. The BBC quoted Paul Ashworth, chief US economist at Capital Economics, as saying, “Household spending was held down by a drop in motor vehicle sales from the near-record high at the end of last year and the unseasonably warm winter weather, which depressed utilities spending.”

    While many economists brushed off the miserable GDP report as a fluke, the result mainly of temporary factors such as unusually warm weather, Carl R. Tannenbaum, chief economist at Northern Trust in Chicago, told the New York Times, “I have to be honest: The hard data just wasn’t very good last quarter. The retail retreat, especially in autos, was greater than many people anticipated.”

    There have been other signs of stagnation, including the Labor Department’s employment report for March, which showed an expansion in payrolls of only 98,000 new jobs, less than half the pace of previous months.

    The economic growth report took on added political significance coming as it did on the eve of Donald Trump’s first 100 days in office. Trump’s pledge to dramatically slash taxes for corporations and the rich, gut business regulations and launch a pro-corporate infrastructure program has fueled a euphoric rise on the stock market and a spurt in business confidence and investment, as the financial elite anticipates an enormous increase in profits and personal wealth.

    But Friday’s report underscores the disconnect between the rising fortunes of the corporate oligarchy on the one hand, and the depressed state of the real economy and the fall in living standards for broad sections of the population on the other.

    Just two days before the release of the Commerce Department report, Trump’s two top economic advisers, Treasury Secretary Steven Mnuchin and Gary Cohn, the director of the White House National Economic Council, released an outline of the administration's plans for a multi-trillion-dollar tax cut for corporations and the rich.

    The two multi-millionaire former Goldman Sachs bankers insisted that the plan would not add to the national debt and require major social cuts because it would boost the growth rate to a sustainable 3 percent from the current average of around 2 percent, adding sufficient tax revenues to offset the impact of lower tax rates.

    This lie is part of the attempt to present the wholesale redistribution of wealth from the bottom to the top as a boon to workers, driven by the desire to create “American jobs.” The dismal GDP figure for the first quarter of the year has underscored the fraudulent character of these claims.

    This will not in any way deter the government from implementing the demands of the financial oligarchy. On the contrary, the poor first quarter report will be cited as proof of the necessity for a tax boondoggle for the rich. As Republican Kevin Brady, chairman of the House Ways and Means Committee, put it, “This report underscores the urgent need for pro-growth tax reform.”

    The author also recommends:

    The Trump tax plan: More money for the oligarchs

    [28 April 2017]

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