March 6, 2023

The right-wing (let's call them "liberals" and "conservatives") are coming for your money.

You have paid the government taxes with an expectation that those taxes are going to fund the delivery of needed services. Things like health, education, transport, regulation, and support for those needing assistance.

Well, that's what most people think that they pay taxes for. For liberals and conservatives, taxes are just funds that should be used to finance capitalism.

In the USA, they are not even this sophisticated. They just think that money taken should be given back to rich people and that their policy decisions are not so much consequential as they are a game.

“The fiscal trajectory is unsustainable,” CBO Director Phillip Swagel told reporters Wednesday. “Our spending is outpacing our revenue,” he said after his agency released updated long-term projections. “At some point something has to give.”

The USA exists on budget deficits. It borrows more every year to pay for things it does not tax enough for.

Every year, USA elected folks go through this fight to raise the "borrowing limits" to pay for all the things that they voted to do in the year, but did not finance. And, every year, they complain that they have to pay for those things.

Most of the things that they have to pay for are, as a fluke of they way that budgets are built in the USA, tax cuts to the wealthy.

Oh, and a global health crisis, climate crisis, production crisis, a war, and capital demanding more handouts.

Those things are major costs for the state that the elected folks do not want to pay for. Or, rather, they do not want capitalists to pay for.

This year, it is being made even more difficult because the "independent" central bankers are determined to make borrowing more expensive.

The bankers will do this by raising interest rates (the debate this morning is will the USA Federal Reserve increase rates fast or very fast) trying to put the economy in to a recession. Less money to take in and more expensive debt. For nothing.

The democrats will blame the republican tax cuts, the republicans will blame the democrat undisciplined spending and the poor of the country will have their services cut.

For 50 years it has been this way in the USA. And, because it is the most powerful nation on Earth, other governments try to mimic these debates.

Emerging markets and countries near by (Canada, Europe) are going to be massively affected by this nonsense this year.

[A] paper circulated by the National Bureau of Economic Research. discovered “evidence for a causal link between the US economy and the global financial cycle.”

“We show that US macroeconomic news releases have large and significant effects on global risky asset prices,” the authors said. “Stock price indexes of 27 countries, the VIX, and commodity prices all jump instantaneously upon news releases.”

Indeed, US macroeconomic news explains on average 23 percent of the quarterly variation in foreign stock markets. (BN)

Can you believe that this is news to anyone?

Meanwhile, investors are out for higher rates on emerging market debt, which increases pressure on a program of debt-dependency in those countries. So, instead of focusing on productive investment, it is all focus on paying the private banks their due.

For Canada, this will mean the far-right will say the same things as Republicans (ignoring that the context is completely different) and the Liberal will complain that they need to cut services.

We have all seen this movie so many times, it has become uninteresting to most people.

The only way out of this is to start talking about alternatives. The fact is that none of these money problems are real if we just own-up to the fact we have been giving profit subsidies through cutting services for half a century trying to pretend that everything is going OK.

We have been burning the chairs from the dining car, the food from the pantry, the roof from the sleeper cabins while pushing the train down the track. All the while, we are debating whether mahogany burns faster than pine.

It is all coming to the point we cannot ignore it anymore. Unless we start to present real economic alternatives, the only thing that will be left in the economy is the narrative that an "economy" existed sometime ago.

We all deserve better. But, we must build it.

The return to the office and the not dealing with the mental health crisis caused by people trying to deal with too much has dragged productivity way down.

ChatGPT is not going to save this collapse in productivity. Only having healthy workers and healthy communities will.

The mining sector is complaining about the newly introduced investment rules targeting Chinese capital:

The Canadian government tightened its foreign investment laws in November to clamp down on foreign state-owned enterprises pursuing takeovers or investing in the mining industry. That same month, the government ordered three Chinese firms to divest from a trio of junior lithium explorers.

The new rules create a financial quandary for Canadian miners who’ve relied on China as a reliable source of funding. China has built up stakes in more than two dozen Canadian mining companies, including some of the industry’s biggest names, according to a Bloomberg analysis.

If only some other major financing agent for large needed capital projects existed. Maybe one that was controlled and funded by the population that might benefit from jobs. Maybe a governing state that controlled the area those mining projects would happen in?

Seems bad. And, completely predictable.

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I thought it was interesting that it looks very similar to the decline in industrial production employment per-firm density.