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The University of Michigan’s gauge of consumer sentiment fell to a record low June reading of 50.2 from a May reading of 58.4.

The GOP, said the Democratic congresswoman, “has only grown more supportive and defending of what happened” on Jan. 6, 2021.

Last week, US Treasury Secretary Janet Yellen told the US Congress that “We now are entering a period of transition from one of historic recovery to one that can be marked by stable and steady growth. Making this shift is a central piece of the President’s plan to get inflation under control without sacrificing the economic gains we’ve made.”

It’s true that the US economy since the depths of the pandemic slump, (which remember in terms of national output, incomes and investment was the worst since the 1930s – even worse that the Great Recession of 2008-9) has made a recovery.  But it could hardly be described as ‘historic’.  And as for the claim that the US economy, the best performing of the major economies in the last year, is heading towards ‘stable and steady growth’, that is not supported by reality. 

Yes, there is ‘full employment’ of sorts ie the official unemployment rate is near ‘historic’ lows, but many of these jobs are part-time, temporary or on contracts.  And many pay poorly.  The employment participation rate, which measures the number of people working out of those of working age, remains well below pre-pandemic levels, levels which were already in decline.

At the same time, productivity growth has been appalling.  More Americans have gone back to work since the pandemic but national output is not matching the increase in employment, so productivity per worker has collapsed – from growth rates that were already weak.  As a result, unit labour costs (wage costs per unit of output) have shot up, which is shrinking profit margins.

And despite Yellen’s assurances, the prospects for the US economy during the rest of this year and into the next are not promising, even dismal.  According to the Atlanta Fed’s GDP forecasting model, the US economy, after contracting in the first quarter of this year, is likely to grow at less than 1% in this current quarter.

Even more contrary to Yellen’s view are the latest reports from the World Bank and OECD economists on prospects for the world economy, including the US.  The World Bank’s Global Economic Prospects for June was entitled as Stagflation Risk Rises Amid Sharp Slowdown in Growth.

The World Bank economic forecasts were shocking.  “Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January.  It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend.”

Growth in advanced economies is projected to sharply decelerate from 5.1 percent in 2021 to 2.6 percent in 2022—1.2 percentage point below projections in January. Growth is expected to further moderate to 2.2 percent in 2023, largely reflecting the further unwinding of the fiscal and monetary policy support provided during the pandemic. Among emerging market and developing economies, growth is also projected to fall from 6.6 percent in 2021 to 3.4 percent in 2022—well below the annual average of 4.8 percent over 2011-2019.

“The negative spillovers from the war will more than offset any near-term boost to some commodity exporters from higher energy prices. Forecasts for 2022 growth have been revised down in nearly 70 percent of EMDEs, including most commodity importing countries as well as four-fifths of low-income countries.”  So the World Bank forecasts stagnation in output with inflation still present.

As for the US, the World Bank forecasts just 2.5% growth in national output this year, 2.4% in 2023 and then just 2% in 2024 – a ‘stable and steady’ growth, you might say, but only at the low levels that the US economy has experienced in the long depression since 2009.  And the US performance is forecast to be the best among the advanced capitalist economies: the Eurozone area will manage only 1.9% by 2024 and Japan just 0.6%.

World Bank economists reckon that the combined impact of the pandemic and the war would leave global economic output in the five years from 2020 to 2024 more than 20 percent below the level implied by trend growth between 2010 and 2019.  The impact on poor countries will be much greater with developing economies a third less than expected and output in commodity-importing developing countries — especially badly hit by the sharp rise in food and fuel prices provoked by Russia’s invasion — more than 40 per cent less than expected!

The view of the OECD economists is, if anything, even more pessimistic.  In June’s Economic Outlook, called The Price of War. OECD economists emphasise the cost of the Russia-Ukraine war.  “The world is paying a heavy price for Russia’s war in Ukraine. It is a humanitarian disaster, killing thousands and forcing millions from their homes. The war has also triggered a cost-of-living crisis, affecting people worldwide. When coupled with China’s zero-COVID policy, the war has set the global economy on a course of slower growth and rising inflation – a situation not seen since the 1970s. Rising inflation, largely driven by steep increases in the price of energy and food, is causing hardship for low-income people and raising serious food security risks in the world’s poorest economies.”

Global GDP growth is now projected to slow sharply this year to around 3%. This is well below the pace of recovery projected last December. Growth is set to be markedly weaker than expected in almost all economies. Many of the hardest-hit countries are in Europe, which is highly exposed to the war through energy imports and refugee flows.  Global growth will slow further to 2.8% in 2023 – that’s near ‘stall speed’, with the UK having no growth at all, the worst result in the G20 (apart from Russia). Even the US will slow to just 1.2%. 

And inflation of the prices of goods and services in the major economies does not look like abating during the rest of this year.  Crude oil prices could go even higher than the current $120/b.  Jeremy Weir, chief executive of the commodity trade Trafigura, said that energy markets were in a “critical” state as sanctions on Russia’s oil exports following its invasion of Ukraine had exacerbated already tight supplies created by years of underinvestment.  “We have got a critical situation.  I really think we have a problem for the next six months . . . once it gets to these parabolic states, markets can move and they can spike quite a lot.” A parabolic move in markets is generally defined as when a price that has been rising suddenly surges to hitherto unseen levels, mimicking the right side of a parabolic curve. Weir added it was highly probable that oil prices could rise to $150 a barrel or higher in the coming months, with supply chains strained as Russia tries to redirect its oil exports away from Europe.

Energy prices are not rising because of ‘excessive demand’ or even because of ‘price-gouging’, but simply because supply is being restricted.  Supply dropped during the pandemic and now Russian exports are sanctioned and cannot be replaced by Saudi oil or US supply.

The global supply chain breakdown since the pandemic continues, particularly since the start of the Russia-Ukraine conflict but even before – see the NY Fed measure of supply squeeze below.

Of the major economies, the UK is set for highest inflation among G7 until 2024 and the lowest growth.  A combination of higher energy prices, a slumping pound, faltering economic growth, a deteriorating environment for small businesses, weak households, trade restrictions on Russia, a central bank that is tightening, and overall inflation at four-decade highs have all produced a toxic environment for the UK economy.   The so-called ‘misery index’ which measures the unemployment rate plus the inflation rate as an indicator of ‘misery’ for working-class households, is heading back towards levels not seen since the Thatcher era.

The nexus between rising prices and wages has led to sharp fall in real incomes as a result.  Price rises are outstripping wage growth nearly everywhere and households are seeing a loss of disposable income (ie after price rises and taxes) and so are forced to run down savings (some of which was built up during the pandemic lockdowns) to make ends meet.

As I have shown before in previous posts in some detail, that, contrary to claims by mainstream politicians, central bank governors and economists, there is no ‘wage-price’ spiral.  Wages are not driving prices up.  Indeed, it’s profits that have risen sharply as a share of value since the pandemic. However, rising unit labour costs (as shown above) because of low productivity growth, are beginning to eat into profit margins.

Falling profit margins will eventually lead to lower profitability and even a falling mass of profit.  That would be the signal for a new slump, especially if the costs of borrowing to invest rise as central banks hike interest rates in a vain attempt to ‘control’ inflation.  Falling profits is the formula for an eventual investment and production slump.  That’s one blade of the scissors of slump.

The other blade is debt.  As I have outlined on many occasions, I reckon this next major slump will be triggered by a corporate debt meltdown. In particular, remember the size of what are called ‘zombie companies’ that do not get enough profit to cover even their debt servicing commitments; and ‘fallen angels’, those companies which have borrowed too much to invest in risky assets that now face blowing up.  And corporations that are debt-loaded are heading for trouble as borrowing costs rise and banks tighten liquidity.  Already the Federal Reserve has raised its policy rate and moved from ‘quantitative easing’ to ‘quantitative tightening’, taking stock market prices down as a result.

The World Bank economists are worried.  “The faster-than-expected tightening of financial conditions worldwide could push countries into the kind of debt crisis we saw in the 1980s. That is a real threat and something we are worried about. Even quite small increases in borrowing costs will be a problem,” said Franziska Ohnsorge, a lead author of World Bank report.

World Bank data show that foreign debt in low-income countries rose by $15.5bn to about $166bn in 2020. Foreign debt in middle-income countries rose by $423bn to more than $8.5tn, leaving them especially exposed to interest-rate rises.  Central banks are raising rates rapidly in the most widespread tightening of monetary policy for more than two decades. Over the three months to the end of May, monetary authorities announced more than 60 rate rises. More are expected in the months ahead.

Any downturn in profits and rise in borrowing will expose the layers of businesses that are close to going bust.  In the UK, Financial Stability Board chairman Martin McTague, commented “there is still a massive problem with small businesses. They are facing something like twice the rate of inflation for their production prices and it’s a ticking timebomb. They have got literally weeks left before they run out of cash and that will mean hundreds of thousands of businesses, and lots of people losing their jobs.”  McTague referred to the Office for National Statistics (ONS) data, showing that 2 million (or about 40%) of the UK’s small businesses had less than three months of cash in reserves to support operations. He noted that 10% (or 200,000) were in grave danger, and 300,000 only had a few weeks of cash left. “It is a very real possibility because … they don’t have the cash reserves. They don’t have any way they can tackle this problem.”

In Europe, its largest financial asset manager has likened parts of the private equity industry to a “Ponzi scheme” that will face a reckoning soon.  “Some parts of private equity look like a pyramid scheme in a way,” Amundi Asset Management’s chief investment officer Vincent Mortier said. “You know you can sell [assets] to another private equity firm for 20 or 30 times earnings. That’s why you can talk about a Ponzi. It’s a circular thing.”  In other words, private equity companies are buying up companies with huge loans and then selling them onto each other using even bigger loans.  Eventually, somebody will lose out from this ‘pass the parcel’ form of finance. Leverage (borrowing) levels have increased proportionately, with debt levels reaching an all-time high.

The scissor blades between falling profitability and rising debt costs are closing and will eventually cut investment, jobs, prices and wages.

Building Worker Co-op Infrastructure: What Knowledge Does the Field Need?
Josh Davis
June 10, 2022, 4:10 pm

New reporting shows wife of Supreme Court Justice pushed at least 29 Arizona lawmakers to overturn 2020 election results.

Chad declares food emergency during June 2022

By Abayomi Azikiwe

Two of the major agencies affiliated with the United Nations are warning of the potential for widespread hunger and famine in several geo-political regions of the world.

The World Food Program (WFP) and the Food and Agricultural Organization (FAO) have identified numerous states warranting immediate attention as the problems of climate change, internal conflict, economic downturns and the continuing war in Ukraine are exacerbating the current crisis.

In the Sahel region of Africa, the nation of Chad, is challenged by grain supplies which have dropped to dangerous lows forcing the transitional military-dominated government to declare a food emergency requesting that aid be sent into the country to avoid further food deficits. Chad has been severely impacted by drought leaving large areas of farmland unproductive.

A landlocked country in Central Africa consisting of 16.4 million people, historically the former French colony has suffered from political instability engendered by its ongoing dependency on Paris and the United States for economic assistance and military involvement. Successive military regimes have thwarted any semblance of democratic practice despite the country’s leaders being beholden to the imperialist countries in Western Europe and North America.

A decree signed by Chad’s interim President Mahamat Idriss Deby declaring a food and nutrition emergency was issued on June 2. “This decision follows the constant deterioration of the food and nutritional situation this year and taking into account the growing risk to populations if no humanitarian aid…is provided,” the statement said.

Chad, along with neighboring Niger, are facing similar shortages of grain as well as fertilizer which have increased exponentially in prices. These levels of inflation are being experienced throughout the entire world where capitalism remains the dominant mode of production and exchange. Farmers, small business owners and workers are being forced to reduce their food intake on a daily basis. These factors are placing millions in danger of malnutrition, particularly children.

UN officials are saying that 5.5 million people living in Chad, more than one-third of the population, are in need of food assistance. Out of this figure of 5.5 million, 2.1 million have fallen into the category of acute lack of nutrition, imperiling a huge segment of the people inside this country, one of the most underdeveloped states internationally.

Chad remains a largely rural country dependent upon agricultural and livestock production which includes cotton for export to western countries. Natron, a mineral utilized in the manufacturing of soap and medicine, is also a source of economic livelihood. With the drought worsening, larger swaths of land utilized for planting, harvesting and animal husbandry are no longer suitable for production.

Over the last two decades, the discovery and exploitation of oil resources has become the largest source of national income. The oil resources are located in areas north of Lake Chad and are estimated to be the tenth largest reserve on the African continent totalling 1.5 billion barrels of proven supply as of 2018.  In excess of 140,000 barrels per day were being generated as of 2020. Although oil is the mainstay of the economy, around 90 percent of production is exported.

G5 Sahel founding meeting in Paris during 2017

Nonetheless, the existence of the G5 Sahel Joint Force since 2017 has not curbed the internal security problems in the West and Central Africa regions. This grouping consists of five African states: Chad, Burkina Faso, Mali, Niger and Mauritania. Operation Barkhane, which overlaps with the G5 Sahel Joint Force, is largely coordinated by France with the assistance of Washington and other NATO states. At the founding meeting of the G5, the U.S. pledged $60 million under the guise of providing support for the military conflicts with Islamic jihadist organizations which have escalated their attacks throughout Mali, Niger and Burkina Faso.

G5 Sahel Joint Force map

With the links between the NATO countries and the jihadist armed groups such as al-Qaeda and ISIS long confirmed, there is a growing awareness in Mali and other member countries of the inability of the western states to effectively curb deadly attacks against governments and civilians in the West Africa region. Mali, which has undergone two military coups since 2020, announced its withdrawal from the G5 Sahel Joint Force in early 2022 placing the future of this tenuous alliance in jeopardy. Relations between Mali and France have deteriorated over the last two years prompting Bamako to demand the departure of all military and diplomatic personnel from the former colonial power to leave the country with immediate effect.

Chad, the Sahel and the World Food Crisis

The WFP website published an article on June 6 saying of the international threat of food insecurity and famine that:

“According to the May 2022 Hunger Hotspots report, Ethiopia, Nigeria, South Sudan, and Yemen remain at ‘highest alert’ as hotspots with catastrophic conditions, and Afghanistan and Somalia are new entries to this worrisome class since the previous hotspots report in January 2022. These countries all have segments of the population facing IPC phase 5 ‘Catastrophe’ – or at risk of deterioration towards catastrophic conditions, with a total of 750,000 people already facing starvation and death in Ethiopia, Yemen, South Sudan, Somalia and Afghanistan.”

Food insecurity global map

Although this UN humanitarian agency issued this most recent warning, most of the focus within the western corporate and government-controlled media is on the crisis in Ukraine where the Russian Federation has engaged in a special military operation aimed at de-militarizing Kiev, removing the far-right Neo-Nazi elements from authority and protecting the Russian-speaking minority in the eastern Donbass region. Almost all of the news reports emanating from “official” sources within the capitalist states categorically blames the Russian government for the war in Ukraine as well as the burgeoning global food insecurity impacting billions within Africa and Asia.

Unprecedented sanctions leveled against the government of Russia has hampered the capacity of Ukraine and Moscow, two of the world largest producers of grain, wheat and other agricultural products along with inputs such as fertilizer, to conduct trade in countries in Africa and Asia. Previous methods of payment and shipping are being blocked due to the sanctions implemented by the administration of President Joe Biden and the European Union (EU). Russia has denied that the problems of ports being closed in southern Ukraine is at the aegis of its government. Turkey has recently expressed an interest in mediating some type of humanitarian corridor to facilitate the export of food.

The same WFP report issued on June 6 goes on to note:

“The Democratic Republic of the Congo, Haiti, the Sahel region, the Sudan, and Syria remain ‘countries of very high concern’ with deteriorating critical conditions, as in the previous edition of this report – with Kenya a new entry to the list. The report finds that – alongside conflict – climate shocks will continue to drive acute hunger in the outlook period from June to September 2022 and we have entered a ‘new normal’ where frequent and recurring droughts, flooding, hurricanes and cyclones decimate farming, drive displacement and push millions to the brink in countries across the world. Sri Lanka, West African coastal countries (Benin, Cabo Verde, and Guinea), Ukraine and Zimbabwe have been added to the list of hotspots countries, joining Angola, Lebanon, Madagascar, and Mozambique which continue to be hunger hotspots.”

Imperialism Remains at the Core of the Global Food Crisis

Leading up to the February 24 Russian intervention in Ukraine and over more than three months since the war began, the Biden administration has not only instigated and expanded the fighting, they have systematically sabotaged efforts to reach a ceasefire and peace settlement. The western media has conveyed that at least $55 billion in direct assistance to Ukraine has been awarded by Washington to continue the clashes in a failed attempt to weaken Russia and its current government headed by President Vladimir Putin.

This sponsoring of a conventional war in Eastern Europe has aggravated the already economic difficulties engendered by the COVID-19 pandemic. Runaway inflation is not only negatively affecting states in Africa, Asia and Latin America. The working-class people in western capitalist countries are also suffering from ever-increasing prices for fuel, food, rents and other commodities.

The governments of the UK and the U.S. are losing the confidence of their electorates. In Britain, the government of Prime Minister Boris Johnson was subjected to a vote of no-confidence on June 6 where a sizable minority of the Conservative Party wanted to eject the current leader from office.

In the U.S., President Biden and the Congressional Representatives of both ruling parties, the Democrats and Republicans, are polling very low among the electorate. A Gallup Poll result for May rated Biden at only 41% of approval from U.S. voters. The president has not articulated any policy initiatives that would curb inflation and provide a road to economic recovery for the workers, oppressed and impoverished masses inside the country.

The basis for unity within the U.S. Congress and the administration is to continue and intensify the war in Ukraine. Once the people realize that the Pentagon budget and imperialist war can only lower their living standards while placing the globe under threat of famine along with a nuclear conflagration, a genuine antiwar movement can arise which could force the government to end its imperialist agenda and place the needs of the majority of people at the center of domestic and foreign policies.

Look, who knows what the upshot of the January 6 Committee hearings will be. That Trump and his cronies tried to overthrow election results has been clear for more than a year to those who are paying attention.

But what if you haven’t been?

Well, the January 6 Committee has made a deft play to get your attention, and they’re doing it by deploying all the tricks of a limited-run HBO series or podcast. First, they use structure—a “seven-part plan” to overthrow a free and fair election, as Reps. Bennie Thompson (D-Miss.) and Liz Cheney (R-Wyo.) told us, and they’re going to devote an episode to each part of that plan. Care to see which members of Congress begged for a presidential pardon for their role in the coup? Tune in to episode 4!

“While the violence was underway, President Trump failed to take immediate action to stop the violence and instruct his supporters to leave the Capitol,” says Rep. Liz Cheney in her opening statement for the Jan. 6 hearing.

More: https://t.co/RSSQwb8trE pic.twitter.com/4pSthhzHt5

— NewsNation (@NewsNation) June 10, 2022

In the prologue, they laid out where they’re going to go, and which night you can tune in for what part. They’re dropping little previews of the juicy depositions (I especially appreciated the way they let Jared show himself to be the callous traitor he is) and other evidence to come. And then they cut to a film, a timeline of sorts, of what went down that day—maybe 10 minutes of how the rioters talked of their plans, how they started to breach the Capitol, how Trump egged them on from the bandstands and then via Twitter, how the police fought for their lives and the lives of members of Congress.

By the end of the ransacking clip, my pulse was racing. I had a bit of a PTSD reaction. Then they dropped the mic and went to a 10-minute recess, allowing room for the TV pundits to express how they, too, were blown away by the storytelling.

Maybe it’ll bog down. Maybe none of it will matter. But one thing is for sure: Lawyers, TV producers, and storytellers of all stripes will be coming back to this first hour for years to come.

I can’t be the only Black girl who’s sat in a room with a group of white people and thought you know what, I’m not sure why this is racist, but something about this feels pretty damn racist.

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Jim O’Neill, a former economist at Goldman Sachs famous for coining the term “BRICs” in emerging markets, sees reason for worry in the surging dollar.