Flimsy House of Cards Economy Praised by Investment Bankers
Hmmm…. Trillions in junk debt categorized as “not junk” by for-profit debt rating agencies? Where have a heard that before?
Chris Lehmann at The Baffler writes—Junk Merchants:
WITH AMERICA’S POLITICAL ORDER settling into a seemingly permanent state of crisis-on-autopilot, it is just a matter of time before the paper economy follows suit. Last week’s dramatic Wall Street selloffs saw the Dow Jones roster shed around 4 percent of its collective value. Tech stocks, always at the frothiest tip of investment bubbles, took an especially pronounced beating. Jeff Bezos, the Amazon impresario, lost (as of last Wednesday) a cool $9.1 billion in net worth, more than triple Mark Zuckerberg’s bracing $2.5 billion market bath.
But just as reliably as investors clamor to a stampede of wealth destruction, market savants and the shills of the business press adjourn to their Bloomberg terminals and CNBC podiums to issue reassuring directives about the soundness of the market’s overall direction, bumpy selloffs and localized panics notwithstanding. When a similar downturn wracked Wall Street in February, Bloomberg editor Robert Burgess insisted that all was well, so far as underlying fundamentals and such were concerned: corporate profits were outperforming expectations, the WTO had revised its global growth forecasts upward, and traditional shelters against panic such as Treasury bonds were not seeing appreciable gains.
All of which proved true enough—until it didn’t. The October market swoon has, in fact, already seen boosts in Treasuries and gold prices, suggesting that this bout of jitters might have some basis in broader economic conditions. More worrying still is the massive over-leveraging of the corporate economy, which according to a recent report by Burgess’s employer, has seen more than $1 trillion in investment money careening toward junk-bond status. Indeed, the main reason all this merger-driven debt hasn’t received a forthright junk rating is due to the reliably corrupt practices of the industry-captive debt-rating racket. In their survey of the fifty largest mergers-and-acquisition deals of the past year, Bloomberg’s Molly Smith and Christopher Cannon noted that “by one key measure, more than half of the acquiring companies pushed their leverage to levels typical of junk-rated peers. But those companies . . . have been allowed to maintain investment-grade ratings by Moody’s Investors Service and S&P Global Ratings.”
But of course, few economic commentators are talking about the sink hole of shitty debt opening up beneath the Dow Jones trading floor—any more than they were inclined, circa 2007, to wonder whether housing prices would succumb to the laws of gravity. No, the flight of investment capital merely marks the onset of a fresh round of inflation jitters among our titans of finance, as the Fed prepares to further nudge up interest rates. After operating with a virtually unlimited supply of free money over the past decade, the masters of our financial universe are adapting to a reconfigured investment environment the best way they know how—by hoovering up all available cash and going home to count their T-bills. Market watchers also claim that investment headwinds are stirring up from political quarters, with President Trump’s trade war with China and the likelihood of a Democratic takeover of the House heading up this impressionistic list of possible culprits. […]
Nothing to see here folks… the DJIA closed up a point yesterday, so all is well…move along, now.
Trump Attacks Fed Chair Over Interest Rate Rise
Check the Dow close today
NASDAQ too.
By the way when all of this comes crashing down and the modest sums working people have been able to put in their 401ks turns in to Confederate script overnight, remember that Tom Carper has been on the banking committee this whole time and has heartily voted for our return to this cruel pantomime posing as an economy.
Awaiting the crash myself for awhile now and remembering what goes up must come down. I’ve been a market watcher since childhood, my relatives all bought and owned stocks, more than a few of them worthless. Once again we’ve let the crooks and creeps on Wall St.run rampant, once again at some point we pay the price. No, the market and the economy are not the same thing, but it makes a good bellwether of what is going to happen.
The end is nigh. When Dems take the house bankers will get the green light to call in debt and the crash will be the “Democrat Party Tax Increase Crash” will be on.
Lather, rinse, repeat.
Lowest overall unemployment in sixteen years. Lowest African American unemployment ever. Lowest Hispanic unemployment ever. Gap between white and African American unemployment “narrowest ever measured”.
The Special Envoy to Mega City has spoken. He knows all the Trump talking points! Good boy.
These are facts that have been out there for some time now, but if you only get your information from the lemming stream media (just made that up), it’s understandable how you may have missed this.
If I missed them how would I know that they are regular Trump talking points that, as usual, misrepresent the health of the economy and the actual material circumstances of real people?
Get the fuck out of here, Ambassador.
40% of Americans cannot afford a $400 emergency, but this fucker is parroting meaningless Trump talking points.
https://www.forbes.com/sites/zackfriedman/2018/05/24/money-retirement-student-loans/#2c77aeb51059
Notice how the Trump taking points are focused on “race” as a deflection too.
The reactionary right loves identity politics.
To be fair they are Trump/Carper talking points.
Fair point .
“Lowest overall unemployment in sixteen years. ”
Sixteen years ago we had budget surpluses.
When wages are stagnate while productivity increases the material situation in reality very bad.
Also, the value of the productivity increase are wholly absorbed by whom do you think?
Unemployment figures are based on people looking for work. If you look at the actual number of jobs created it’s nothing out of the ordinary. What’s actually happening is that eight years’ worth of baby boomers have reached 65 and are leaving the workforce.
From a political standpoint, it should be noted that no Republican is actually running on the economy, which ought to tell you how hollow those “accomplishments” are to the public. They tried to sell it and lost, so they’ve stopped trying to sell it. Who are people going to believe, Republicans or their lying paychecks?
Ya know what sucks? I hate Carper and his corporate owned policies and I would rather vote for anyone else except the little 45 weasel who is running against him.
Yep. Carper is no greenhorn. He creates these breaks for himself.