I. Ben Bernanke's smile
Moody's lowered the Cyprus credit ceiling to Caa2, and the main reason for the decrease was the risk of Cyprus’s withdrawal from the eurozone. Investors are worried about the safety of funds on bank deposits. Against the background of this information, reports RBC, quotes of large American banks were trading in the "red" field.
For example, Citigroup shares shrank by 0,8%, Bank of America - by 0,5%, and JP Morgan Chase - even by 1,8%. The Dow Jones index dropped to 33,49 point - to 14526,16 p.
And while Ben Bernanke, who always has fake trumps up his sleeve, smiles radiantly, economists behind his back are counting future losses from the global recession.
According to "RT", "Stress tests" showed that, if the crisis recurs, US banks will lose 460 billion dollars overnight. A wave of recession will cover even giants like Morgan Stanley and Goldman Sachs. The last shine losses in 20,5 billion. $. In general, the US banking system may lose the amount of half a trillion dollars. This is not a rumor or speculation propagandists-comedians. Such information the Fed has published at the end of the audit of the eighteen largest banks in the country. That is, while Ben comforted a gullible public, his people were engaged in a completely different affair: they mined by sweat
Fed analysts have modeled a situation in which the level of American unemployment will rise to 12%, GDP will fall by 5%, and real estate prices - by 21%. Then, after seeing the smile of their boss, experts hastily declared: our banks look much stronger than before the 2008 crisis of the year.
Nouriel Roubini, Chairman of the Board of Roubini Global Economic, Professor of the Stern Business School at New York University, in the article “Ten Questions on Quantitative Easing” рассказал about the pitfalls of the current unconventional American methods of monetary policy. He explained that quantitative easing (quantitative easing, QE) is such an extraordinary measure of monetary policy that is used as a last resort, since all the standard measures turned out to be ineffective. The essence of QE is that the central bank of the state begins to buy long-term government bonds, thus injecting money into the market. This allows for some time to alleviate the shortage of funds, but does not lead to a real growth of the economy.
Today, the Fed's financial policy is becoming more and more unconventional, Comrade Rubini writes. There is little clarity about unintended consequences and long-term effects. QE has short-term benefits, but in the long run, side effects can be very serious.
Rubini counted a dozen minuses for the US economy. Here are some of them.
The likely depression of the economy is down to the abandonment of assets and credit “bubbles” and the transformation of living institutions and firms into “zombies”. After all, the specificity of QE is that mitigation permanently postpones the reduction in the share of borrowed funds in the private and public sectors. Stretching debt in time will create an army of zombies: financial institutions, households and firms, and eventually a dead government.
Repeating QE, not to mention inflation, may become ineffective. Those who can borrow funds (for example, full-fledged firms) do not want to do this, and those who need it (firms with a high proportion of borrowed funds) cannot borrow them. Quite a revolutionary situation: some can not, others do not want.
Quantitative easing can cause problems with the government, which sees no incentive for economic reform. It can postpone the need for austerity budget. This will provoke a market crisis due to the monetization of existing deficits and maintaining low interest rates.
It seems that Comrade Rubini saw the light of truth. US President the other day signed law extending the term of financing the federal government. The document upheld automatic budget cuts in the amount of 85 billion dollars, but limited the impact of sequestration on various areas of the administration’s activities and allows us to allocate as much as 87 billion dollars to foreign military operations.
Where is Obama going to fight for this money? In Syria? In Iran? After all, troops are leaving Afghanistan at an accelerated pace. One thing is clear: the US financial machine is rolling by inertia: QE1 has changed to QE2, now QE3 is being implemented. Each subsequent president accepts from the previous growing debt and the smile of the Fed boss, and in the country the debts of the states, the debts of the cities swell, and the unemployment increases.
Ii. Chicago democracy and non-ferrous in Detroit
Vladislav Vorobyov ("Russian newspaper") writes that the US economy is being pulled into the abyss of federal debt.
For example, the Chicago authorities decided to close 54 city schools: there is no money in the budget. The elimination of 54 schools will save almost 10 millions of dollars over 600 years. Thousands of people took part in a demonstration, but Mayor Rahm Emanuel has nothing to do with them. He frankly stated that, despite protests from the trade union of teachers and parents, the schools would be closed. And then: why should the Americans study? No work anyway. 127 protesters were detained on the streets of Chicago, and they all were carefully written out large fines that just fill up the budget.
Wall Street analyst Meredith Whitney has calculated that several dozen American regional borrowers may declare a "default" on their debts of hundreds of billions of dollars, and this will undermine all the anti-crisis efforts of the US administration. In fact, a new crisis will begin. Where do such debts come from?
And here it is appropriate to recall the warnings of Comrade Rubini.
So it is: Meredith Whitney explained that municipal governments finance their huge expenses with new and new loans: “They are now borrowing for current needs, thereby shifting the burden of repayment of loans to future generations. This concerns practically loans for any purpose. ” According to her data, cumulative state spending exceeds their budget revenues by half a trillion dollars!
Half a billion is generally a running sum in the modern American crisis. Soon the banks, according to forecasts (see above), will lose half a trillion, now it turns out that the states also trump the same amount.
The former symbol of American industry, Detroit has already become completely bankrupt. 15 March, the city came under the control of an external manager appointed by the authorities of Michigan. Detroit’s budget deficit is 300 million dollars, and the city’s external debt is about $ 14 billion.
The site digitalmetro.us write about this:
“Obama proclaims the development of the US economy, but at the same time Detroit is already in places like an abandoned quarry, the gangs operating there cut the wires for non-ferrous scrap metal. Doesn't this remind you of anything? The city is fixed to 6 firearms per day. Does it seem to President Obama that everything is going well? It seems that what was said all the time was not something that could not be avoided, but it just hung over us all. ”
Iii. "Young blood": a catastrophe of several decades
Dr. Margaret Jullet, whose article was recently published on Al-Jazeera, spoke about the hard tread of American unemployment.
In the US economy, she writes, in contrast to the European one, the long-term intractable crisis of jobs for middle-aged and older people is often overlooked. This crisis originates from the time of the Great Depression.
Men and women older than 55 have the highest unemployment rate in the USA. According to the Bureau of Labor Statistics, the average job search time for women aged from 25 to 34 years was 2011 36 weeks (about 9 months) in 45 years, while 54-XNUMX women took two and a half months more .
Margaret Julett notes that the figures for people aged 45-54 have worsened since 2000, when only 16 percent have been unemployed for more than 6 months, and in 2011, half already.
The unemployment rate from the crisis year 2008 has already hit all ages. However, people older than 45 have almost no chance of finding a job. If an American at this age for some time was without work, then other employers will not even look at his resume. This unemployed person will not be invited for an interview. If in the same case, the applicant has not yet turned 40, then the probability of receiving an invitation for an interview with him is 40 higher.
If middle-aged people end up finding a job, then usually with a demotion and, accordingly, wages. They are in the United States classified as "underemployed" (not fully employed). These people lose their social status.
Dr. Jullett gives this example. In 2009, the old-time workers at the Hyatt Hotel in Boston were asked to train their successors. Then they were fired. Most of the 99 laid-offs were immigrants, many came from Latin America at the time. Some have worked in the hotel from 20 to 24 years. Only some of them have found a similar job today, many of them now work less hours and work for lower wages.
Part-time employment truly destroys middle-aged people, pushing them off the social ladder, writes Julett. A study conducted by Rutgers concluded that out of an estimated 10 of millions of workers reduced from 2008, 28% were between 45 and 59 years. By the end of 2011, only 22 percent of them fully restored their former position - that is, these people found new, well-paid jobs and restored their previous standard of living. What is the remaining 78 percent? In the United States, they are considered not just old, but “too old.”
Why is this happening? - asks Dr. Julett.
Much is due to ordinary age discrimination. Call her, she writes, "average aging." In one typical case, then analyzed in the Equal Employment Opportunity Commission, the employer said to his subordinates: “We need young blood.”
However, the assumption that the "middle-aged" can no longer re-learn, or get new technical skills, unfounded. There is a purely economic calculation. If we, says Dr. Julett, lose our car keys, the employer may announce to us with a grin that we are old. If the employer does not fire us, then he starts paying us less - for example, he transfers us to part-time work.
If you are over forty, you are entitled to protection by the Equal Employment Opportunity Commission. But do not rely on a lot if you are suing because of age.
The percentage of complaints depending on age increased from 20 percent in 1997 year to 25 percent in 2008 year. However, the plaintiffs rarely win: only 1 percent of all cases can be called a victory.
Researchers believe that with a consistently high level of unemployment, the number of suicides is increasing. Families break up, the risk of heart attacks increases. People are deprived of work at a time when they are in their prime in terms of skills and experience. Job seekers in the US are called “boomers”. They are forced to cease to exist as labor; they lose their human capital.
The loss of middle-aged jobs, according to M. Julett, is not just an endless recession as a given. This is a long-term fact of the American economy. The reduction of middle-aged workers has become a silent reception of business practices and at the same time a catastrophic social and economic trend that has developed over the course of several decades.
Any society that sets itself the goal of moving forward should understand historical the purpose of man. With the degradation of middle age, people lose the meaning of their whole lives: age-related growth, benefits for old age, hopes for a better life in the future. Such trends should terrify young people: in fact, in the future they are guaranteed impoverishment.
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So while the Americans are smiling happy Ben Bernanke, the Dow Jones index and the shares of Citigroup, Bank of America, JP Morgan Chase and other major financial projects of the USA are falling, Detroit, spreading over the color, declares itself bankrupt, and those residents Countries that have been knocked out by 40 may lose their jobs at any time, because the hungry “young blood” is not as demanding as old-timed men of forty are knocking on the doors of offices.
Observed and translated by Oleg Chuvakin
- especially for topwar.ru
- especially for topwar.ru