Central banks have used 2008 bailout funds to inflate a new set of Monster Bubbles

Today, all signs point to a new financial meltdown

No 1295 Posted by fw, March 31, 2015

“All this time, policymakers have tinkered around the edges with half-hearted measures, but none of the structural problems have ever been addressed. Instead, governments bailed out the gamblers as central banks inflated a set of new bubbles to cushion their fall, cover the debris, and delay the final moment of reckoning. Still, down in the real world, blowing bubbles can only take you so far.”Jeremy Roos

Seven years since the bursting of a US housing bubble led to a financial meltdown, investors and policymakers are already well on their way to the next. Click on the following linked title to read Jeremy Roos’ account of events. Alternatively, below is a cross-posting with added subheadings in bold italics, inserted as hanging indents, text highlighting and two added hyperlinks.

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Monster bubbles: by Jerome Roos, telsur, March 30, 2015

The delayed crisis of capitalism resurfaces.

“Bankers never solve their own crises: they merely move them around”

If there’s one lesson from the history of financial manias, panics and crashes, it’s that bankers never solve their own crises: they merely move them around, eternally passing the hot potato of impending catastrophe on to others and systematically displacing the burden of adjustment onto the weaker members of society. As a result, the way in which a particular crisis is “resolved” inevitably ends up laying the seeds for the next one. This time has been no different.

Today, “we find ourselves in the middle of yet another major speculative frenzy”

In recent months, amidst growing enthusiasm about an incipient global recovery, some investors and regulators have been starting to express their concerns over the inflation of a set of large asset bubbles spread across the world economy. Whether it’s skyrocketing property prices in London, a record-breaking bull market on Wall Street, or investors falling over themselves to lend to heavily indebted European governments and flailing energy and tech start-ups in the United States, one thing is clear: we find ourselves in the middle of yet another major speculative frenzy.

We’re now fully engaged in a “central bank-led inflation of a new set of monster bubbles in property, stocks and bonds”

This observation may seem odd to some. Aren’t we supposed to still be in the final stages of the last crisis? Why would anyone want to gamble with their capital if profitable investment opportunities are still so few and far between? Well, that’s precisely the problem: asset prices have now completely decoupled from their underlying fundamentals. In recent years, the crisis of casino capitalism has been successfully delayed through the central bank-led inflation of a new set of monster bubbles in property, stocks and bonds. While the rest of us linger in “secular stagnation,” the speculators are having a field day.

Root causes of 2008 financial crisis remained unresolved, resulting in vast excess of money in financial sector

In other words: the root causes of the 2008 financial crisis were never truly resolved — policymakers simply moved around some of the symptoms (and not even all of them!). Governments bailed out insolvent banks with taxpayer money, heavily indebting themselves in the process, while central banks turned on the printing presses to pump trillions of dollars into the financial system. The result, in simple terms, has been the accumulation of a vast excess of money in the financial sector and an acute shortage of it everywhere else.

We now have an excess of idle money capital side by side with an excess of labor power

What we are dealing with, then, is a classical example of what David Harvey refers to as the capital surplus absorption problem: an excess of idle money capital lies side by side with an excess of labor power — and somehow the system can’t combine the two to bring about productive outcomes. As one banker told the Financial Times, “what’s really driving all this activity is the availability of capital rather than the underlying fundamentals. It just comes down to people needing to deploy capital.”

Excess capital money seeking highest possible returns results in high-risk speculation – It’s déjà vu all over again

Investors have dealt with this problem in the same way that they always have: by scouring the surface of the Earth in a frantic quest for the highest possible yields. As long as demand remains low and growth stagnant, yields in so-called “productive” investments will not be very attractive for the average gambler. And so investors have been turning to the same kind of speculative high-risk/high-return bets that caused the 2008 financial meltdown to begin with.

Central banks are stoking a bond bubble through quantitating easing

The results have been stark. Just three years after Greece concluded the largest sovereign debt restructuring in the history of capitalism, global bond markets are back on fire. In a UK survey, almost four in five fund managers for major bond-trading firms expressed a concern that bonds are currently “more overvalued than ever before and that government bonds are the most overvalued asset class of all.” John Plender of the Financial Times accuses the ECB [European Central Bank] of directly stoking this bond bubble through quantitative easing:

Government bond markets are supposed to be sedate places, devoid of the thrills and spills that characterize equities. Not anymore. Since central banks started enlarging their balance sheets sovereign bonds have become exciting to the point where investors have bought more than $2tn of them on negative yields, mainly in Europe. Even in the Depression of the 1930s interest rates never fell below zero. Is this that rare thing — a bond market bubble?

US companies are busy issuing billions in corporate bonds

It’s not just government debt that’s booming. Last year alone, US companies issued an astonishing $1.43 billion in corporate bonds; 27 percent more than they sold at the peak of the last bubble in 2007.

The “supposed” US recovery has been based entirely on an energy bubble, which has already burst

In fact, a reasonable argument could be made that the supposed US recovery of the past years has been based entirely on an energy bubble — which has already burst due to the oil price collapse — and an even larger tech bubble. Billionaire investor Mark Cuban recently warned that the latter is “worse than the tech bubble of 2000” and is now on the verge of bursting as well.

WHEN – not IF — the US corporate bond market collapses, so will the stock markets

When this over-excited US corporate bond market collapses, it will inevitably take the stock exchange down with it. Stock valuations have been rising steadily ever since they bottomed out, in March 2009, following the last crash. The S&P 500 has shot up an astonishing 200% since then, while the Nasdaq recently breached 5,000 points for the first time since the collapse of the Dotcom bubble. The fact that this six year bull market has coincided with the deepest economic downturn since the Great Depression should suffice to give pause for thought.

As if this scenario is not bad enough, on the near horizon are fears over a new housing bubble

Finally, with memories of the subprime mortgage crisis still fresh, investors are already expressing fears over the build-up of a new housing bubble. The Wall Street Journal points out that UK property prices are now a third above their pre-crisis peak, while property in Australia, Canada, Sweden and Norway is also massively overvalued. Cities like New York, San Francisco, Miami, London, Berlin, Paris and Amsterdam are all experiencing rising real estate prices without any real accompanying improvement in the underlying fundamentals. Even property prices in Spain and Ireland now appear to be rising again.

Central banks have used taxpayer bailout funds to inflate a new set of bubbles

The conclusion is clear: plus ça change, plus c’est la même chose. All this time, policymakers have tinkered around the edges with half-hearted measures, but none of the structural problems have ever been addressed. Instead, governments bailed out the gamblers as central banks inflated a set of new bubbles to cushion their fall, cover the debris, and delay the final moment of reckoning. Still, down in the real world, blowing bubbles can only take you so far.

All the signs point to a new financial meltdown

Nearly seven years since the last financial meltdown, investors and policymakers are already well on their way to the next.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter at @JeromeRoos.

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Game changer? Guardian calls on Gates Foundation and Wellcome Trust to divest $70B from fossil fuel industry

“…it is morally and financially misguided to invest in companies dedicated to finding and burning more oil, gas and coal”

No 1282 Posted by fw, March 16, 2015

FIRST THINGS FIRST —

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Guardian Publicly Challenges World’s Largest Foundations to Divest by Lauren McCauley, Common Dreams, March 16, 2015

Fossil fuel divestment campaign calls on Gates Foundation and Wellcome Trust to remove combined $70 billion from threatening industries

Climate change poses a real threat to all of us,’ charges the Guardian newspaper, ‘and it is morally and financially misguided to invest in companies dedicated to finding and burning more oil, gas and coal.’

Having reached the mainstream with new backing from the United Nations, the global fossil fuel divestment campaign continues to gain momentum. On Monday, the Guardian news agency launched a campaign calling on the world’s two largest charitable foundations, the Bill and Melinda Gates Foundation and the Wellcome Trust, to follow the lead of the Rockefeller Foundation and nearly 200 other prominent universities and institutions by divesting their holdings from the fossil fuel industry.

“We are calling on the Bill and Melinda Gates Foundation and the Wellcome Trust to remove their investments from the top 200 fossil fuel companies and any commingled funds that include fossil fuel public equities and corporate bonds within five years,” the news service announced in a statement.

Despite the fact that both foundations consider climate change a serious threat, their combined $70 billion endowments invest millions in funding new fossil fuel exploration and extraction.

In 2013 alone, the Gates Foundation invested at least $1 billion of its holdings in 35 of the top 200 carbon reserve companies, the Guardian notes, while in 2014 the Wellcome Trust invested £564 million (roughly $834 million) in Shell, BP, Schlumberger, Rio Tinto and BHP Billiton.

“Climate change poses a real threat to all of us, and it is morally and financially misguided to invest in companies dedicated to finding and burning more oil, gas and coal,” reads a petition circulated by the Guardian in partnership with climate group 350.org.

In a Monday op-ed, Alan Rusbridger, Guardian editor-in-chief, explained the thinking behind the campaign.

“If journalism has so far failed to animate the public to exert sufficient pressure on politics through reporting and analysis, it seemed doubtful whether many people would be motivated by the idea of campaigning for a paragraph to be inserted into the negotiating text at the UN climate talks in Paris this December,” Rusbridger wrote. “So we turned to an area where campaigners have recently begun to have marked successes: divestment.”

The Guardian’s campaign is being launched with “the firm belief that it will force the issue now into the boardrooms and inboxes of people who have billions of dollars at their disposal.” —Alan Rusbridger, Guardian editor-in-chief

The campaign, Rusbridger continues, is being launched with “the firm belief that it will force the issue now into the boardrooms and inboxes of people who have billions of dollars at their disposal.” Divestment, he adds, “is a small but crucial step in the economic transition away from a global economy run on fossil fuels.”

“The usual rule of newspaper campaigns is that you don’t start one unless you know you’re going to win it,” he continued. “This one will almost certainly be won in time: the physics is unarguable.”

The Guardian campaign was launched a day after the UN Framework Convention on Climate Change (UNFCCC) announced its support for the growing fossil fuel divestment campaign.

Also Monday, the Oxford University Council met to discuss whether they will also commit to divest their $3 billion endowment from fossil fuel funds.

Since the campaign’s inception in 2010, 180 institutions worth a combined $50 billion have committed to divest.

Launched by 350.org, the fossil fuel divestment campaign was modeled after similar efforts to target corrupt industries, such as tobacco, and governments accused of human rights violations. The divestment campaign against the apartheid regime in South Africa is perhaps the most well-known example, while the ongoing Boycott, Divestment, and Sanctions (or BDS) movement continues to press Israel for their violations of international law and Palestinian rights.

As part of their new campaign, the Guardian has released this video:

 

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BC activists send BDS message to Air Canada and Harper government – Palestinian Lives Matter!

BDS action against Air Canada for signing maintenance agreement with Israeli drone manufacturer

No 1275 Posted by fw, March 7, 2015

“A recent study entitled Sleepless in Gaza by Dr. Atef Abu Saif, Al-Azhar University in Gaza, has detailed the terrifying impact of drone warfare on the Gaza Strip, especially on children, and states – ‘Since their first use in 2000, drones have led to the death of hundreds of Palestinians and have injured thousands more. In addition, they have directly negatively impacted Palestinian psychological and social life, as well as causing a grossly negative impact on education.’ ”Mondoweiss

The morally challenged, willfully ignorant Harper and Israeli governments just don’t get it. But Canadians do. That’s why so many of us are standing up for Palestinian rights and lives.

To read the Mondoweiss account of the BDS Vancouver-Coast Salish campaign against Air Canada, click on the following linked title. Alternatively, below is a cross-posting of the article, featuring added subheadings in bold italics, inserted as hanging indents, and added text highlighting. Skimming the subheadings alone provides an excellent overview of the piece.

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Canadian activists call for global boycott of Air Canada over its outsourcing to Israel Aerospace Industries by Marion Kawas, Mondoweiss, March 6, 2015

Harper government and Israel coordinating initiatives to oppose Palestinian BDS campaign

It’s not just the Canadian government that is complicit with Israeli apartheid . . .

In recent months, Canadian government officials have been working overtime to further cement their outrageous and biased support of Israeli policies. One example is the January 18, 2015 Memorandum of Understanding between the two countries that committed to develop  “a coordinated, public diplomacy initiative both bilaterally and in international and multilateral fora to oppose boycotts of Israel, its institutions, and its people within three to six months”.

Harper minister issues UN statement of Canada’s zero-tolerance approach to all forms of discrimination against Israel

This was quickly followed with the Canadian ‘Public Safety’ minister stating at the United Nations that “Canada has taken a zero-tolerance approach to anti-Semitism and all forms of discrimination including rhetoric towards Israel, and attempts to delegitimize Israel such as the Boycott, Divestment and Sanctions movement”. And the controversial and draconian Bill C-51 now making its way through the Canadian parliament is another ominous sign on the horizon; pro-Palestinian activists are fully aware that all of this will require increased determination in order to continue promoting the Palestinian struggle for human and national rights.

Activists from BDS Vancouver-Coast Salish started campaign to boycott Air Canada for serving Sabra Hummus

In this context, activists from BDS Vancouver-Coast Salish started a campaign last month to boycott Air Canada, the leading airline in the country. The original impetus was reports from supporters that Sabra Hummus was being served on Air Canada flights. Sabra Hummus has already been an issue of controversy on university campuses in the U.S. and Canada (University of Ottawa) because of the deplorable human rights record of one of its partner companies, Strauss Group. Strauss is the second largest Israeli food and beverage company and is known for supporting two Israeli military units implicated in human rights abuses, the Golani and Givati brigades.

Further research revealed Air Canada’s maintenance agreement with Israeli drone manufacturer

However, further research (like peeling the layers of an onion) revealed that the links between Canadian business leaders and Israeli apartheid run deep. In fact, Air Canada recently signed a maintenance agreement for its B787 jets with Israel Aerospace Industries IAI, a military defense company wholly owned by the government of Israel. IAI is the subject of boycotts across Europe and is well-known for its drone technology and production.

Corporate Watch in the UK says that “IAI was one of the earliest developers of drone technology and launched its first surveillance drone, the IAI Scout, in 1979…IAI writes on its website of its drones ‘unsurpassed track record of over 1,200,000 operational flight hours for over 50 users on five continents’. According to Drone Wars UK, IAI has exported their UAVs, sometimes through joint venture agreements, to various European countries as well as South America, Australia, Canada and India and the company has a growing market in Africa.”

Terrifying impact of drone warfare on Gaza Strip revealed in recent research study

And a recent study entitled Sleepless in Gaza by Dr. Atef Abu Saif, Al-Azhar University in Gaza, has detailed the terrifying impact of drone warfare on the Gaza Strip, especially on children, and states – “Since their first use in 2000, drones have led to the death of hundreds of Palestinians and have injured thousands more. In addition, they have directly negatively impacted Palestinian psychological and social life, as well as causing a grossly negative impact on education.”

Other top Canadian business moguls offer financial support to “Lone Soldiers” in Israel’s “army of occupation”

Calin Rovinescu, Air Canada’s CEO, was part of PM Stephen Harper’s delegation to Israel early last year, along with other top Canadian business moguls. Of course, there is plenty of precedent here, most notably with the Heseg Foundation program created and sponsored by Indigo-Chapter’s CEO, Heather Reisman. Heseg (also known as the Lone Soldier program) offers financial support and scholarships to individuals who have no family in Israel but decide nonetheless to join the Israeli army – an army of occupation.

BDS Vancouver campaign sends message that Palestinian lives matter, that Israeli government violates international law

It is truly shameful that Air Canada is “outsourcing” its maintenance work to this Israeli defense company that is directly responsible for the deaths of Palestinian civilians and has the blood of Palestinian children on its hands. BDS Vancouver called on supporters in its recent fact sheet, done up for Israel Apartheid Week at local campuses, to send the message that Palestinian rights and lives matter & Israeli government abuses of international law will not be rewarded with our travel dollars!

More info at: Boycott Air Canada: Tell Them We are not On-Board with Human Rights Violations

Marion Kawas is a long-time pro-Palestinian activist, a member of BDS Vancouver-Coast Salish and co-host of Voice of Palestine.

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