Tag: economy
Americans Are Americans Are Starting a Staggering Number of Businesses During the COVID-19 Pandemic
Rare win for Boris Johnson — but Brexit storm hasn’t passed
“In the very short term, however, it looks like plain sailing for Johnson. The deal, which will be subject to a ratification vote in the U.K. parliament on December 30, is highly likely to pass.
Some Conservative MPs, who have said they will study the deal in depth over the coming days, may quibble over details, but the overall shape of the agreement is — and has been for some time — one that represents a fundamental victory for Brexiteers. The U.K. will leave the EU’s single market and customs union. It will continue to manage its economy under rules similar to those in the EU, but if it wants to change those rules in the future, it has the freedom to (with consequences in the shape of tariffs).
Even on the totemic issue of fisheries, where the U.K. gave ground in the latter stages of the talks, none but the most purist Brexiteer could claim that the final settlement (a five-and-a-half-year transition period to a situation where the U.K. is free to decide who accesses its fishing waters) is not a major change from the status quo.”
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“Johnson’s claim during his announcement that there will be “no non-tariff barriers” to trade is not correct. The deal removes tariffs and quotas. It doesn’t remove mountains of new paperwork for firms looking to trade with the EU, as the government’s own copious sets of instructions for businesses testifies.”
The Economy is Broken, Rent-Seeking Broke it
“We have an economy where wealthy people make money just by having money, not by creating value. We live in an economic system where it is more profitable to invest in lobbying government for favorable regulations and policies than it is to create a valuable, useful product. In fact, in this economy many useless activities are more profitable than innovation, seeking new markets, and creating value, useless things like collusion with competitors and betting on stock performance rather than investing in stocks directly(derivatives). We have an economy where exorbitant sums of money are being made without the contribution of anything of value from those who benefit. In this economic system, less and less real money is in the money supply and it is being replaced by borrowed money. What appears as a student loan, mortgage, and consumer debt in accounts of the many show up as real dollars in the accounts of the few (the top 10%). It seems every bank on the planet is reporting growing debt to GDP ratios. Why are we on this crash course? Because of unrestrained rent-seeking in nearly every aspect of our economy.”
Does Modern Monetary Theory (MMT) Destroy National Debt Concerns? SOURCES.
The Real News Podcast – Modern Monetary Theory – A Debate Between Randall Wray and Gerald Epstein The Real News. 2019. https://www.spreaker.com/user/therealnews/the-real-news-podcast-modern-monetary-th Is MMT “America First” Economics? Gerald Epstein. 3 20 2019. Institute for New Economic Thinking. https://www.ineteconomics.org/perspectives/blog/is-mmt-america-first-economics On Modern Monetary Theory
China gets serious about kicking its export addiction
https://www.politico.eu/article/china-gets-serious-about-kicking-its-export-addiction-trade-tariffs/
Why Trump lost his battle against the trade deficit
“the U.S. trade gap is on track to exceed $600 billion this year. That would be the highest since 2008, just before the global financial crisis.
The monthly deficit in U.S. goods trade with all other countries set a record high in August at more than $83 billion.
Trump has blamed the trade deficit on bad trade deals negotiated by his predecessors and unfair trade practices by other countries, but most economists disagree with that explanation.”
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“A variety of factors contributed to Trump’s failure to eliminate the trade gap, which White House trade adviser Peter Navarro predicted in 2016 could be erased in one or two years.
Overall trade remains depressed compared to year-ago levels because of the coronavirus pandemic.
But the massive U.S. government stimulus payments to businesses and consumers have helped U.S. imports recover faster than U.S. exports. That explains why the monthly goods deficit has increased from the average level of $73.3 billion in 2019.
However, even without the pandemic, Trump’s practice of piling tariffs on China and selected other products like steel and aluminum was never going to turn around the deficit, most economists agree.”
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” The large U.S. trade deficit is fundamentally driven by larger economic factors — like the fact Americans spend more than they save and have to borrow from abroad to finance the difference”
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“Trump’s $1.5 trillion tax cut in 2017 contributed to that problem by running up the U.S. budget deficit.”
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“Looking at trade in 2019, the last full year of data, the overall U.S. trade deficit fell by less than 1 percent from the previous year to $577 billion. However, the bilateral trade deficit with China fell by a much more impressive 17 percent to $345 billion as importers turned to other countries such as Mexico, Vietnam, Taiwan, South Korea, Japan and members of the EU.”
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““We would say one of the big failures of the Trump administration with respect to trade policy is the failure to address currency misalignment in any kind of meaningful way,” said Thea Lee, president of the Economic Policy Institute, a left-leaning think tank aligned with union groups. “Putting a couple of sentences into the deal, but without a clear road map as to how it’s going to be instrumentalized, doesn’t really do very much.””
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“Trump’s revised NAFTA agreement with Mexico and Canada does include strong protections for workers rights, which helped the pact win overwhelming approval in the Democratic-controlled House. But the fact that labor concerns were not addressed in the China agreement “just shows that the Trump administration is not driven by any principles in this area, but simply by political expediency,” Lee said.
The administration hails China’s agreement as part of the phase one trade deal to purchase $200 billion more of U.S. goods and services in 2020 and 2021, compared with the record it set in 2017.
But the data released on Tuesday shows that China is well behind on that goal. During the first eight months of this year, it had imported just $69.5 billion worth of U.S. farm and manufactured goods, compared to $80.2 billion in the same period in 2017.
U.S. farmers were hit so hard by Trump’s tariff war with China that his administration doled out more than $20 billion in emergency aid payments to help cushion the blow.
U.S. farm exports to China had reached as high as $25 billion annually a few years before Trump was elected. But they plummeted to $6.8 billion in fiscal 2019 after Beijing retaliated against Trump’s tariffs by raising its own duties on U.S. farm exports.”
Biggest U.S. Banks Seen Adding to Reserves for Pain Yet to Come
“When it comes to loan losses sparked by the Covid-19 pandemic, U.S. banks aren’t taking any chances.
The nation’s four biggest lenders probably set aside about another $10 billion for bad loans in the third quarter, according to analysts’ estimates compiled by Bloomberg, even though stimulus moves by the government and Federal Reserve have so far staved off a spike in missed payments.
While the third quarter’s tally is well below the pace of the first half, it means that the banks will not only have covered the losses they’ve seen since the start of the pandemic, but also added almost $50 billion to reserves for future pain. Investors’ big question will be whether that comes from typical caution, or if the banks are seeing worrying signs as forbearance programs wind down and stimulus efforts get bogged down in a partisan fight.”
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“Banks may be setting aside more than they need for loan losses to take advantage of strong trading revenue and the fact that they can’t return excess capital to shareholders. The Fed this month extended through the rest of the year its unprecedented constraints on dividend payments and share buybacks for the biggest U.S. lenders.”
Democrats and the White House Were Nearing an Agreement on Renter, Homeowner Assistance. Then Trump Tweeted.
“House Democrats passed a $2.2 trillion HEROES Act, which includes $50 billion for emergency rental assistance, and $21 billion in funding for states and territories to spend assisting homeowners.
Of that $50 billion in rental assistance, at least 40 percent would have to go to tenants making 30 percent or less of their area’s median income, and 70 percent of it would have to be spent on those making less than half their area’s median income. Tenants making up to 120 percent of area median income would be eligible for assistance.
These income restrictions are identical to those found in the enlarged $3.5 trillion HEROES Act back in May, which earmarked $175 billion to renter and homeowner assistance. The $71 billion in renter and homeowner assistance proposed by Democrats now is still too rich for many congressional Republicans but is much closer to the $60 billion that Treasury Secretary Steve Mnuchin said the White House could accept.”
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“Eviction filings are below historic averages in 15 of 17 cities tracked by Princeton University’s Eviction Lab. Places like Boston and Austin—both of which have local eviction moratoriums in addition to the CDC’s policy—have seen evictions drop close to zero. The two exceptions are Columbus, Ohio, and Richmond, Virginia, where evictions are above historic averages by 48 and 300 percent respectively.
With eviction rates below historic averages in most cities and rental payment rates staying pretty steady throughout the pandemic, a massive new federal program to bail out tenants and rental property owners seems excessive.
That’s particularly true when most of the stimulus proposals on offer include expanded unemployment benefits and another round of $1,200 stimulus payments. Renters report using those types of benefits, which were included in the March coronavirus relief bill, to cover their housing costs earlier in the pandemic.
Whether the mercurial Trump will stick to his decision to walk away from stimulus talks remains to be seen. After tweeting that he was done negotiating, the president again took to Twitter to urge the passage of a bailout for the airlines and another round of stimulus checks.
It’s possible renters and homeowners will also benefit from Trump’s backtracking. If they don’t, they’ll have to wait until 2021 for more help from the feds.”
Poll: Half of Americans who lost their job during the pandemic still don’t have one
“The study, which surveyed 13,200 US adults in the first two weeks of August, found some limited recovery with respect to employment: Of all those who said they had lost a job, a third have returned to their old job, and 15 percent say they have a new job.”
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“while 58 percent of upper- and middle-income adults who lost a job due to the coronavirus have returned to their old job or gotten a new one, only 43 percent of lower-income adults have been able to do the same.”
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“reason for concern. The jobs report signaled a slowdown from earlier in the summer: the economy added 4.8 million jobs in June, and 1.7 million in July.”