Economic – Apokalyps Nu!

Chile, September 11, 1973: The Inauguration of Neoliberalism, “Shock Treatment” and the Instruments of Economic Repression: The Junta’s Deadly “Economic Medicine” – Global Research

Posted by EN-AB in Chile, Economic

11-09-19 12:47:00,

“Workers of my country, I have faith in Chile and its destiny.

Other men will overcome this dark and bitter moment when treason seeks to prevail.

Keep in mind that, much sooner than later, the great avenues will again be opened through which will pass free men to construct a better society.

Long live Chile!

Long live the people! Long live the workers!” President Salvador Allende’s farewell speech, 11 September 1973.

“It’s hard to find someone with the fighting spirit, courage and the story of Allende. He was a man who actually had the branded name in history: democratically the left came to power, and by bombs he was removed from government.” Senador Pedro Simon

Chile: “Shock Treatment” and the Mechanisms of Economic Repression

Immediately following Allende’s election in September 1970 and prior to his inauguration in November 1970:

“Kissinger initiated discussion on the telephone with CIA director Richard Helm’s about a preemptive coup in Chile. “We will not let Chile go down the drain,” Kissinger declared. “I am with you,” Helms responded. Their conversation took place three days before President Nixon, in a 15-minute meeting that included Kissinger, ordered the CIA to “make the economy scream,” and named Kissinger as the supervisor of the covert efforts to keep Allende from being inaugurated. (National Security Archive)

The CIA was the lead organization behind the imposition of a neoliberal economic agenda in Chile. In August 1972, a year prior to the coup, the CIA funded a 300-page economic blueprint to be implemented in the wake of the overthrow of the Allende government.

The ultimate objective of the September 11, 1973 military coup in Chile was the imposition of the neoliberal agenda (aka deadly “economic medicine”) leading to the impoverishment of an entire nation.

Wall Street was behind the coup, working hand in glove with the CIA, the US State Department and Chile’s economic elites. Henry Kissinger was the Go-Between.

After Allende’s election in November Wall Street’s major commercial banks (including Chase Manhattan, Chemical, First National City, Manufacturers Hanover, and Morgan Guaranty),

America’s Economic Collapse. Capitalism is a Plunder Mechanism – Global Research

Posted by EN-AG in America, Economic

01-08-19 06:20:00,

Capitalists have claimed responsibility for America’s past economic success. Let’s begin by setting the record straight. American success had little to do with capitalism. This is not to say that the US would have had more success with something like Soviet central planning.

Prior to 1900 when the frontier was closed, America’s success was a multi-century long success based on the plunder of a pristine environment and abundant natural resources. Individuals and companies were capitalized simply by occupying the land and using the resources present.

As the population grew and resources were depleted, the per capita resource endowment declined.

America got a second wind from World War I, which devastated European powers and permitted the emergence of the US as a budding world power. World War II finished off Europe and put economic and financial supremacy in Washington’s hands. The US dollar seized the world reserve currency role from the British pound, enabling the US to pay its bills by printing money. The world currency role of the dollar, more than nuclear weapons, has been the source of American power. Russia has equal or greater nuclear weapons power, but it is the dollar not the ruble that is the currency in which international payments are settled.

The world currency role made the US the financial hegemon. This power together with the IMF and World Bank enabled the US to plunder foreign resources the way vanishing American resources had been plundered.

We can conclude that plunder of natural resources and the ability to externalize much of the cost have been major contributors right through the present day to the success of American capitalism. Michael Hudson has described the plunder process in his many books and articles (for example, see this), as has John Perkins in Confessions of an Economic Hit Man.

Essentially, capitalism is a plunder mechanism that generates short-run profits by externalizing long-run costs. It exhausts natural resources, including air, land, and water, for temporary profits while imposing most of its costs, such as pollution, on the environment. An example is the destruction of the Amazon rain forest by loggers. The world loses a massive carbon sink that stabilizes the global climate,

Stop the Ongoing U.S. Economic Terrorism against Iran and Help Its People! – Global Research

Posted by EN-AG in Economic, Ongoing

22-04-19 08:41:00,

You have certainly not heard much about this in the West. And it didn’t get a fraction of the media attention (and none of the hundreds of millions of Euro pledges by the perversely rich) that the Notre Dame fire did.

However, if disastrous floods had hit 28 out of 31 provinces and affected 10 million people in some European country or in the US, I believe you would have heard about it from Day One.

But now it is Iran. Only the Iranians.

The situation is disastrous but not so much because thousands have died. Rather, because floods of this magnitude are likely to have terrible long-term consequences for agricultural and other production, infrastructure, energy production, transport and daily lives (see pictures below and on the links).

The basic facts about 3 weeks into the disaster are:

28 of 31 provinces affected, the area around Shiraz the most. 78 people have died and 1076 have been injured. 10 million Iranians have been affected and 2 million seem to be in direct need of assistance. More can be studied at the UN OCHA’s Reliefweb.

Please enlighten yourself also by some Iranian media sources and Iranian foreign minister Javad Zarif’s statements here. And here.

This comes on top of economic sanctions that have already hit virtually every single Iranian very hard when going about their daily lives. The author has seen how this was already bad in 2012-2016 – since then, everything has grown worse.

Here some data by the IMF.

Yes, the corruption is everywhere in Iran but the US sanctions are extremely tight, the loss of oil export income is severe (to benefit Saudi Arabia and others).

And now this flood disaster on top of it all (more background and pictures from Iran’s Fars News Agency here).

The cruelty of not helping in this situation can only be condemned from a humanitarian, human rights and moral perspective no matter what one may otherwise think about Iranian politics and leadership.

Sanctions make humanitarian aid much more difficult

It is well known that the Trump administration wants others to think about Iran and how it puts pressure and threats to bear on other countries to prevent them from cooperating with Iran and bringing humanitarian aid in violation of these US sanctions.

Economic Data Weakens, Markets Soar. Are We Repeating 2008?

Posted by EN-AB in Economic, Weakens

01-04-19 08:21:00,

Authored by Daniel Lacalle,

Liquidity injections and zero interest rate policies disguise risk and may give a false sense of security…

This risk could not be more evident today. Not only have we seen large downgrades to consensus growth estimates and central banks’ expectations of GDP and inflation, leading indicators also point to a much weaker economy ahead.

There are similarities with 2008 that we should not ignore.

A massive China stimulus inflates risky assets and commodities.
Poor macro and earnings data is ignored by markets assuming that all will improve in the second half of the year.
Yield curves invert. 15 economies now have 30-year yields lower than LIBOR overnight rates.
The figure of negative yield debt rises to $11 trillion.

Financial repression is at all-time highs while leading indicators point to a growing risk of recession.

In the first quarter of 2019, stocks have added $9.3 trillion in market capitalization, bonds have gained almost $2 trillion in value. Meanwhile, the Conference Board Index of leading indicators has plummeted for the major economies. The Citi Economic Surprise Index has also fallen, particularly in March, despite a small bounce in the Eurozone at the beginning of the year. Global trade growth, machine equipment orders and manufacturing indices remain poor… while debt soars to another record-high of $244 trillion according to the Bank of International Settlements and the IIF.

The difference with the Asian or the 2008 crisis is that this time the excess risk is hidden under central banks’ balance sheets and will continue to do so.

So, if risk is hidden under a perennial money supply-growth carpet, why should we worry? Because the endgame is not likely to be a 2008-style bang, but a slow, painful and unstoppable zombification of the global economy. As the evidence of stagnation rises, governments get more nervous. What do they do? Stop the monetary madness? Allow high productivity sectors to thrive? Promote deleveraging and prudent investment? No. More white elephants, massive unproductive spending at the expense of taxpayers and savers in what is likely to be yet another massive transfer of wealth from salaries and savers to governments with fancy names.

Economic recovery talk is smoke & mirrors as corporate debt bubble ready to bust – Richard Wolff

Posted by EN-AB in Economic, recovery

16-03-19 08:14:00,

Low interest rates allowed companies to borrow money at no cost. But instead of increasing productivity, the financing was used to drive up the cost of shares, setting the stage for imminent collapse, Prof. Richard Wolff told RT.

US private corporate debt stands at a whopping $9 trillion, and that spells major trouble for the overheated economy as soon as recession sets in, Professor Wolff, economist and co-founder of ‘Democracy at Work’, told RT America’s Rick Sanchez.

Wolff said that unprecedentedly low interest rates are a scourge, not a blessing, for the US economy, as they only create the appearance of recovery, rather than contributing to growth in productivity.

“It’s a very dangerous place we’ve come to and that’s why all this talk of ‘recovery, recovery’ hides the fact that the things we did to look like we were recovering created the greater vulnerability than what we had in the first place.”

Also on rt.com
Boom Bust asks if the bubble is bursting as record number of Americans fall behind on car payments

He said that many companies prefer to use the “free money” to load up on debt and buy their own shares or buy each other’s since “many of the corporate executives doing that have pay packages linked to the price of the shares in the market.”

This “manipulation” has “buried us in a corporate debt problem,” and “we’ve never had this before at this scale,” Wolff argued.

“And if an economic downturn comes, as most economists expect over the next 12 to 24 months, nobody can guess what will happen when the companies that go down can’t pay back the debts they’ve taken out.”

Wolff said that the looming economic problems will have fairly similar causes to the 2008 financial crisis, the worst since the Great Depression.

“And let’s not forget, what led to the crisis of 2008 was the inability of people who couldn’t afford it to pay back the mortgages they had taken out, and then the system fell apart based on that failure of the debt to be repayable.”

Watch Wolffs’ full interview below:

Think your friends would be interested?

Economic Sanctions: Washington’s Best Tool to Control the World

Posted by EN-AB in Economic, Sanctions

14-03-19 08:28:00,

For decades, Washington’s favourite means of punishing nations that do not subscribe to its narrative has been through the imposition of economic sanctions. This has become particularly apparent with the ongoing and increasing sanctions against Iran, Russia and North Korea. While sanctions against these governments have garnered headlines for the past few years, in fact, there are far more sanctions that we rarely hear about.

In 1950, the Office of Foreign Assets Control was formed as part of the United States Department of the Treasury. OFAC administers and enforces economic and trade sanctions that are based on U.S. foreign policy and national security goals. Sanctions have been imposed for the following reasons:

1.) terrorism

2.) international narcotics trade

3.) proliferation of weapons of mass destruction

4.) threats to national security, foreign policy and/or economy of the United States

Economic sanctions, in their most basic form, are defined as the withdrawal of trade and financial relations with a targeted nation for foreign and security policy purposes. Economic sanctions can take many forms including freezing of assets, arms embargoes, trade restrictions and bans, capital restraints, foreign aid reductions and travel bans. According to the Council on Foreign Relations, the United States uses economic and financial sanctions more than any other nation.

In the United States, sanctions can originate in either the Executive or Legislative branches of government. Presidents begin the process by issuing an Executive Order or EO which affords the president social powers to regulate commerce with a given entity. Under the EO, the president declares that there is a national emergency in response to “unusual and extraordinary” foreign threats, for instance, the proliferation of weapons of mass destruction and the September 11, 2001 attack on the United States. In addition to Executive actions, Congress can also pass legislation to both modify and impose sanctions. Most sanctions programs are administered by the previously mentioned OFAC, however, other government departments may be involved including Homeland Security, Justice, State and Commerce.

On the OFAC website interested parties can search for information on federally mandated sanctions programs. Under each sanctions program there is an exhaustive listing of changes to the programs, guidelines that must be followed under penalty of law.

The Global Economic Reset Begins With An Engineered Crash

Posted by EN-AG in Economic, Global

13-03-19 10:39:00,

Authored by Brandon Smith via Alt-Market.com,

For a few years now, since at least 2014, the phrase “global economic reset” has been circulating in the financial world. This phrase is used primarily by globalist institutions like the International Monetary Fund (IMF) to describe an event in which the current system as we know it will either die out or evolve into a new system where “multilateralism” will become the norm. The reset is often described in an ambiguous way. IMF banking elites will usually mention the end results of the shift, but they say little about the process to get there.

What we do know is that the intent of the globalists is to use this reset to create a more centralized monetary system and micro-managed global economy. At the core of this new structure would be the IMF along with perhaps the BIS and World Bank. It is a plan that has been supported openly by both western and eastern governments, including Russia and China.

As noted, the details are few and far between, but the IMF describes the use of open borders and human migrations during the reset as a means to transfer capital from various parts of the world. It is a novel if not utterly insane way to transfer wealth that only makes sense if you understand that the globalist goal is to deliberately conjure a geopolitical catastrophe.

The IMF also asserts that blockchain technology will make capital transfer easier and more efficient in this future environment, which explains the enthusiastic globalist support for developments in blockchain technology and cryptocurrencies despite the notion in cryptocurrency circles that blockchain would somehow make the bankers “obsolete”.

The IMF also acknowledges that in the meantime a slowdown in capital flows has occurred, and that this slowdown is ongoing since the crash of 2008. What they do not explicitly admit is that the crash of 2008 never ended, and that the decline we are witnessing today is merely an extension of the recession/depression that started ten years ago.

Certain facts have become obvious to anyone with any sense over the past year. First, as the Federal Reserve began tightening stimulus policies by raising interest rates and cutting assets from their balance sheet,

The China-Pakistan Economic Corridor (CPEC). Why is the European Union Opposed to It? – Global Research

Posted by EN-AG in China-Pakistan, Economic

25-11-18 03:57:00,

The European Foundation for South Asian Studies (EFSAS) put together a day-long seminar chastising the China–Pakistan Economic Corridor (CPEC). Organised by Jonathan Bullock, a UK Independence Party (UKIP) Member of the European Parliament (MEP), it gathered European critics of China’s rise upon the global stage along with US and European-funded agitators active in undermining Chinese-Pakistani relations.

The CPEC is a keystone project amid Chinese-Pakistani ties and an integral part of Beijing’s One Belt, One Road initiative (OBOR). It includes energy and transportation projects developing and connecting Pakistan’s Baluchistan province along the Arabian Sea with Chinese territory along Pakistan and China’s border.

When completed, the projects will increase both Pakistan’s prospects and China’s influence not only in Pakistan, but across the wider region. Together with other OBOR projects, CPEC will be yet another step toward the rise of Eurasia out from under centuries of European domination.

For MEP Jonathan Bullock of UKIP, it is somewhat perplexing to see a politician supposedly concerned with British independence so eager to interfere in the sovereignty of Pakistan and China, thousands of kilometers from British or indeed, all of Europe’s shores.

The EFSAS website included a summary of the CPEC-oriented event:

A high level panel consisting of Members European Parliament (MEPs), Scholars and Academicians spoke at the event and discussed the construction of the China Pakistan Economic Corridor (CPEC) and its interrelated legal, geo-strategic, economic and environmental issues, which directly impact the stability of South Asia.

Participants claimed that China would assume unwarranted influence over Pakistan over the course of the projects’ construction. Concerns related to Pakistan’s Kashmir region and Baluchistan were also brought up by representatives of separatist groups, many of which are funded by the US and Europe specifically to serve as vectors for Western influence in Pakistan and agents of destabilisation not only within Pakistan, but between Pakistan and its immediate neighbours (Afghanistan, India, Iran and China).

The EFSAS’ statement would claim:

Mr. Fernando Burgés, Programme Manager at the Unrepresented Nations and Peoples Organization (UNPO), provided his perspective on the negative repercussion stemming from the construction of the CPEC, which goes through the disputed territory of Gilgit Baltistan, part of the erstwhile Princely State of Jammu &

Economic Austerity Kills: The Burden of Disease in Greece. Mortality, Tuberculosis, Suicide – Global Research

Posted by EN-AB in Austerity, Economic

19-10-18 08:06:00,

The Metropolitan Community Clinic at Helliniko opened its doors in December of 2011. Since that time, it has become abundantly clear that the austerity measures resulting from the 1st memorandum, signed by the then Prime Minister George Papandreou brought catastrophe to Greek society. Since then we have denounced (and recorded) the effects of austerity on public health and knew that those results would be seen in health indicators. Seven years later and with the 3rd memorandum signed and obligations to the state that will carry on to 2060, a study from the respected British medical journal “The Lancet” shows exactly that. The study is entitled “The burden of disease in Greece, health loss, risk factors, and health financing, 2000–16: an analysis of the Global Burden of Disease Study 2016”

To sum up their findings:

Increased mortality in the general population from 997.8 per 100,000 persons in 2010 to 1,174.9 in 2016 – an increase in mortality by 17.8%
Cases of tuberculosis have increased amongst Greek citizens.
Cases of HIV have almost doubled between 2010 – 2012 because the program of distributing free syringes to drug addicts was abandoned to save the cost.
Increase in cases of severe depression and suicide

The study analyses the increase in deaths in the general population by age (Greece is indicated with blue color) and notes that the increase in deaths “coincided” with the reductions in spending in the public health sector from 2010 onwards.

Additionally there has been an increase in drug side effects, self-harm and many types of cancer found in all ages. New-borns and children less than 5 years of age die from illnesses that are treatable such as neonatal haemolytic disease and neonatal sepsis. There have been significant increases of cases of self-harm among adolescents and young adults. Increased mortality in people aged 15–49 years due to HIV, several treatable neoplasms, all types of cirrhosis, neurological disorders (e.g., multiple sclerosis, motor neuron disease), chronic kidney disease, and most types of cardiovascular disease except for ischemic heart disease and stroke.

To sum up:

Newborns die due to treatable illnesses
Teenagers and young adults have higher rates of suicide
Teenagers and young adults are dying from illnesses related to bad nutrition,

In the Wake of the 2008 Global Economic Crisis: Banking Structures Untouched. How the Financial Lobby Won the Battle in Brussels – Global Research

Posted by EN-AB in Economic, Global

17-09-18 07:41:00,

Despite their responsibility for the 2008 economic crash, the financial sector has successfully avoided major reform in the decade since. Their army of lobbyists has won almost all the major battles, leaving new legislation full of loopholes and conditions similar to those that created the crash in the first place.

Corporate Europe Observatory shows how the past ten years of financial lobbying have kept us vulnerable to future crises and costly bailouts.

Those days in September 2008, watching the proverbial towers of global finance crumbling, were both scary and full of hope. Scary because the financial crash unfolding was bound to create misery and poverty in the coming months and years, yet hopeful because this could have been a unique opportunity to secure much-needed radical reforms of the financial markets. The crisis itself had origins in the light-touch regulation of the preceding years, a fact acknowledged even by some of its architects. Now, in the face of acute and disastrous systemic failure, surely a U-turn would follow.

Yet that reform never materialised. It’s not that nothing has changed. Supervision has been increased and various kinds of ‘emergency brakes’ introduced that allow regulators to step in with more tools if a severe risk is on the rise, say if a big financial corporation is in dire straits. But a decade on, initial hopes that the crisis would lead to a rethink of financial markets appear naïve. Over the past ten years all ambitious ideas have been watered down, delayed almost indefinitely, or simply brushed aside, in no small part due to the power of the financial lobby and the deep bonds between decision-makers and financial corporations.

Commission moves fast to let bankers set the agenda

The European Commission moved fast in the days and weeks after the crisis broke. In September 2008 Commission President Barroso announced he would set up a high-level advisory group to evaluate what reforms to financial regulation would need to be made. In mid-October his group was approved by the EU’s member states. It was a group with deep links to some of the very institutions that caused the crisis. Of a group of only eight, one sitting member of the group had links to the infamous Lehman Brothers,

The Looming Economic Collapse: The $250 Trillion Dollar Worldwide Debt Crisis

Posted by EN-AB in Economic, Looming

17-08-18 07:19:00,

Authored by Mac Slavo via SHTFplan.com,

As governments raise taxes to cope with their unending spending habits, people are increasingly being forced to supplement their own income with loans. And according to most financial experts, this debt problem is so big that it will usher in a global economic collapse of epic proportions.

According to the Institute of International Finance’s latest Global Debt Monitor, the amount of debt held in the world rose by the biggest amount in two years during the first quarter of 2018. It grew by $8 trillion to hit a new all-time high of $247 trillion, up from $238 trillion as of December 31, 2017. And that’s up by $30 trillion from the end of 2016.

Global debt is staggering to the point most of it will never be repaid and as governments continue their spending sprees and the debts keep mounting, the future of the economy looks bleak. There is more than enough economic data out there to show there could be an economic collapse and stock market crash in 2018. Bill Gross stated in 2017 that “our highly levered financial system is like a truckload of nitroglycerin on a bumpy road”. One wrong move and the whole thing could blow sky high, wrote the Epic Economist. Once this bubble pops, it will fling the globe into a financial crisis of epic proportions never before seen.

According to Financial Times, it is becoming clear that the global monetary policy is now caught in a debt trap of its own making. Continuing on the current monetary path is ineffective and increasingly dangerous. But any reversal also involves great risks. It stands to reason that the odds of another crisis blowing up will continue to rise. –Ready Nutrition

The Epic Economist also has a video out detailing how all of this came to pass. It’s easy enough to understand, yet most still can’t get past their own preconceived notions and biases to comprehend that this will be the fault of governments and those who continue to look to rulers or masters to solve their problems.

Pepe Escobar: Economic War On Iran Is War On Eurasian Integration

Posted by EN-AB in Economic, Escobar

16-08-18 10:05:00,

Authored by Pepe Escobar via The Asia Times,

US sanctions on Iran should be interpreted as a piece in a much larger chessboard…

Life carries on in Tehran despite the threat of US sanctions.

Hysteria reigned supreme after the first round of US sanctions were reinstated against Iran over the past week. War scenarios abound, and yet the key aspect of the economic war unleashed by the Trump administration has been overlooked: Iran is a major piece in a much larger chessboard.

The US sanctions offensive, launched after Washington’s unilateral pullout from the Iran nuclear deal, should be interpreted as an advance gambit in the New Great Game at whose center lies China’s New Silk Road – arguably the most important infrastructure project of the 21st century — and overall Eurasia integration.

The Trump administration’s maneuvers are a testament to how China’s New Silk Road, or Belt and Road Initiative (BRI), threaten the US establishment.

Eurasian integration on the rise

Eurasian integration is on display in Astana, where Russia, Iran and Turkey are deciding the fate of Syria, in coordination with Damascus.

Iran’s strategic depth in post-war Syria simply won’t vanish. The challenge of Syrian reconstruction will be met largely by Bashar al-Assad’s allies: China, Russia and Iran.

Echoing the Ancient Silk Road, Syria will be configured as an important BRI node, key to Eurasia integration.

In parallel, the Russia-China strategic partnership – from the intersection between the BRI and the Eurasia Economic Union (EAEU) to the expansion of the Shanghai Cooperation Organization (SCO) and the solidifying of BRICS Plus — has immense economic stakes in the stability of Iran.

The complex interconnection of Iran with both Russia (via the EAEU and the International North-South Transportation Corridor) and China (via BRI and oil/gas supplies) is even tighter than in the case of Syria in the past seven years of civil war.

Iran is absolutely essential for Russia-China for the partnership to allow any “surgical strike” — as floated in Syria — or worse, hot war initiated by Washington.

A case could be made that with his recent overture to President Putin,

Economic Confidence Model & Weather | Armstrong Economics

Posted by EN-AB in Confidence, Economic

15-07-18 07:49:00,

Posted Jul 15, 2018 by Martin Armstrong

QUESTION: Do you have any correlation illustrations between weather and your ECM?

CG

ANSWER: Yes. Here they are on a grand scale.

« Russian Summit Lining Up with ECM

The Biggest Economic Problem You’re Hearing Almost Nothing About (Video)

Posted by EN-AG in Biggest, Economic

07-05-18 03:24:00,

Not long ago I visited some farmers in Missouri whose profits are disappearing. Why? Monsanto alone owns the key genetic traits to more than 90 percent of the soybeans planted by farmers in the United States, and 80 percent of the corn. Which means Monsanto can charge farmers much higher prices.

Farmers are getting squeezed from the other side, too, because the food processors they sell their produce to are also consolidating into mega companies that have so much market power they can cut the prices they pay to farmers.

This doesn’t mean lower food prices to you. It means more profits to the monopolists.

Monopolies All Around

America used to have antitrust laws that stopped corporations from monopolizing markets, and often broke up the biggest culprits. No longer. It’s a hidden upward redistribution of money and power from the majority of Americans to corporate executives and wealthy shareholders.

You may think you have lots of choices, but take a closer look:

1. The four largest food companies control 82 percent of beef packing, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of chicken processing.

2. There are many brands of toothpaste, but 70 percent of all of it comes from just two companies.

3. You may think you have your choice of sunglasses, but they’re almost all from one company: Luxottica – which also owns nearly all the eyeglass retail outlets.

4. Practically every plastic hanger in America is now made by one company, Mainetti.

5. What brand of cat food should you buy? Looks like lots of brands but behind them are basically just two companies.

6. What about your pharmaceuticals? Yes, you can get low-cost generic versions. But drug companies are in effect paying the makers of generic drugs to delay cheaper versions. Such “pay for delay” agreements are illegal in other advanced economies, but antitrust enforcement hasn’t laid a finger on them in America. They cost you and me an estimated $3.5 billion a year.

7. You think your health insurance will cover the costs? Health insurers are consolidating, too. Which is one reason your health insurance premiums, copayments, and deductibles are soaring.

Polleit: “The Economic Upswing Shows The Devils’s Footprints”

Posted by EN-AG in Economic, Polleit

29-01-18 09:55:00,

Authored by Thorstein Polleit via The Mises Institute,

Most early business cycle indicators suggest that the global economy is pretty much roaring ahead. Production and employment are rising. Firms keep investing and show decent profits. International trade is expanding. Credit is easy to obtain. Stock prices keep moving up to ever higher levels. All seems to be well. Or does it?

Unfortunately, the economic upswing shows the devil’s footprints: central banks have set it in motion with their extremely low, and in some countries even negative, interest rate policy and rampant monetary expansion.

Artificially depressed borrowing costs are fueling a “boom.” Consumer loans are as cheap as ever before, seducing people to spend increasingly beyond their means. Low interest rates push down companies’ cost of capital, encouraging additional, and in particular risky investments – they would not have entered into under “normal” interest rate conditions. Financially strained borrowers – in particular states and banks – can refinance their maturing debt load at extremely low interest rates and even take on new debt easily.

By no means less important is the fact that central banks have effectively spread a “safety net” under financial markets: Investors feel assured that monetary authorities will, in case things turning sour, step in and fend off any crisis. The central banks’ safety net has lowered investors’ risk concern. Investors are willing to lend even to borrowers with relatively poor financial strength. Furthermore, it has suppressed risk premia in credit yields, having lowered firms’ cost of debt, which encourages them to run up their leverage to increase return on equity.

The boom stands and falls with persisting low interest rates. Higher interest rates make it increasingly difficult for borrowers to service their debt. If borrowers’ credit quality deteriorates, banks reign in their loan supply, putting even more pressure on struggling debtors. Also, higher interest rates cause asset prices – stock and real estate market prices in particular – to come down, putting the banking system under massive strain. In fact, higher rates have the potential to turn the boom into bust.

The US Federal Reserve (Fed), at the beginning of the 21st century,