The ‘Great Repression’ is here and it will make past downturns look tame, economist says

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The ‘Great Repression’ is here and it will make past downturns look tame, economist says - MarketWatch

US Labor statistics: 6.6 million Americans filed for unemployed benefits last week, bringing the coronavirus total to over 17 million

Economist say the U.S. unemployment rate is now 12 or 13 percent, the worst since the Great Depression. This brings the pandemic total to over 17 million9

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https://www.washingtonpost.com/business/2020/04/09/66-million-americans-filed-unemployed-last-week-bringing-pandemic-total-over-17-million/

The Wall Street Smoke Screen : Will Dow futures point to a nearly 700 point Monday opening gain despite another oil-price drop

U.S. stock futures rose on Sunday night as Wall Street tried to recover from another decline last week. and more problems on the energy (oil) market.

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https://www.cnbc.com/2020/04/05/stock-market-futures-open-to-close-news.html

USA: The Hidden Depression Trump Isn’t Helping - by Nicholas Kristof

The economy may get the president re-elected, but not everyone is sharing in its strength.

Read more at:
https://www.nytimes.com/2020/02/08/opinion/sunday/trump-economy.html

USA: Fed raises interest rates, signals more hikes ahead

After weeks of market volatility and calls by President Donald Trump for the Federal Reserve to stop raising interest rates, the U.S. central bank instead did it again, and stuck by a plan to keep withdrawing support from an economy it views as strong.

U.S. stocks and bond yields fell hard. With the Fed signaling "some further gradual" rate hikes and no break from cutting its massive bond portfolio, traders fretted that policymakers could choke off economic growth.

"Maybe they have already committed their policy error," said Fritz Folts, chief investment strategist at 3Edge Asset Management. "We would be in the camp that they have already raised rates too much."

Interest rate futures show traders are currently betting the Fed won't raise rates at all next year.

Wednesday's rate increase, the fourth of the year, pushed the central bank's key overnight lending rate to a range of 2.25 percent to 2.50 percent.

Note EU-Digest: " In New York, U.S. S&P 500 Index lost 1.54 percent to hit its lowest level since September 2017. U.S. stocks are on pace for their biggest December decline since 1931, the depths of the Great Depression ".

Read more: - by Ann Saphir and Howard SchneiderFed raises interest rates, signals more hikes ahead

Global Economy: Chilling ways the global economy echoes 1930s Great Depression era - by John Coumarianos

One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.

This is the famous thesis of Milton Friedman’s and Anna Schwartz’s A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.

The global economy today resembles that of the 1930s in several ominous ways.

Financial author Edward Chancellor recently called attention to a paper written by Claudio Borio, head economist at the Bank of International Settlements, that provides a fuller picture of the causes of the Great Depression. The paper also draws parallels between global economic conditions that led to the rise of protectionism in the 1930s and our situation now.

Now, as in the 1930s, the global economy is stretched. A low interest-rate regime in the developed world has encouraged lending to emerging markets. Additionally, China’s and Europe’s banking systems are burdened with bad debts.
Moreover, last year, as Chancellor reports, emerging markets experienced their first capital outflows in nearly three decades, and that movement of capital appears to be continuing in 2016. Ratings agencies have downgraded South Africa and Brazil sovereign debt, while commodity prices continue to plunge.
Protectionism is in the air with the European Union and the U.S. imposing tariffs on Chinese steel. Also, anti-immigration sentiment is rising.

Although the additional restrictions imposed by a gold standard don’t exist today, the peg of Chinese yuan to the U.S. dollar DXY, +0.05%  is unsustainable in Chancellor’s opinion, as may be the euro EURUSD, -0.1617%

So much elasticity or the buildup of imbalances can be painful during the process of restoring balance. Therefore, regarding monetary policy, it’s important, according to Borio, to lean “against the build-up of financial imbalances even if near-term inflation remains low and stable.”

Borio’s paper was written in August 2014, so it’s difficult to know what advice he’d have for the Federal Reserve today. But in his paper, he notes that the imbalances that low rates and elasticity produce may “return us to the modern-day equivalent of the divisive competitive devaluations of the interwar years; and, ultimately, [trigger] an epoch-defining seismic rupture in policy regimes, back to an era of trade and financial protectionism and, possibly, stagnation combined with inflation.”

Read more: Chilling ways the global economy echoes 1930s Great Depression era - MarketWatch

Yale Daily News - US Economy - Depression, not recession, looming in America - by Hugh Baran

For the complete report from the Yale Daily News click on this link

Depression, not recession, looming in America - by Hugh Baran

While it seems that the nation’s leaders are still hesitant to use words like “recession,” the grim reality is that they may need to adopt a new word altogether — depression. People no longer trust assurances that fancy financial instruments will function the way they’re supposed to — after all, they know what happened to people who thought their subprime-backed securities were safe, AAA-rated investments.”Many are also pointing to the massive cost of the war — which is approaching $3 trillion, according to a new book by Joseph Stiglitz and Linda Bilmes — as a major cause of this recession. But our problems predate this war. A real similarity between our current moment and the Great Depression is the massive growth in income disparity that has emerged as the dominant feature of the economic and social landscape. In March 2007, two leading economists reported that the top 1 percent of Americans, whose incomes exceed $350,000, received the largest share of the national income since 1928, the eve of the Depression. The income of the top 300,000 Americans nearly matched that of the bottom 150 million combined. Furthermore, the size of this gap has doubled since the 1980s.

Income disparity is no accident. Rather, it is a deliberate result of the increased power and wealth of multinational corporations over the last several decades — the result of deregulation, free trade and globalization, coupled with the vicious attack on organized labor and workers’ rights in our country today. These conditions have allowed corporations and private capital to run amok in our economy, producing outcomes like the subprime disaster that triggered our current economic crisis. They’ve also allowed the elite new and dangerous ways to accumulate capital — particularly through the rise of hedge funds and private equity investing, which are rapidly reshaping the American economy.

The New Deal was, at its core, a response to these same kinds of problems. It represented an understanding that, as long as such enormous income disparity persisted, the economy would be in ruin and working people would remain unable to provide for their basic needs. While the New Deal made major strides in reversing income inequality, the proliferation of right-wing public policies have returned us to a similar economic breaking point.