Gaining momentum?

At its semi-annual meeting that started this week, IMF economists announced an upgrade in their forecast for global economic growth.  This is the first upgrade that the IMF has made for six years.  It was only a slight increase in its previous forecast of growth made in January. The IMF now expects world real GDP to rise 3.5% this year (compared to 3.4% before) and 3.6% next year (unchanged).

As the IMF chief, Christine Lagarde put it, “The good news is that, after six years of disappointing growth, the world economy is gaining momentum as a cyclical recovery holds out the promise of more jobs, higher incomes, and greater prosperity going forward.”

But the IMF also warns that: “the world economy may be gaining momentum, but we cannot be sure that we are out of the woods.”

Nevertheless, there is a growing confidence among mainstream economists and official international agencies that the world capitalist economy is finally coming out of its slow and weak recovery since the Great Recession of 2008-9.  Below trend growth, weak investment and hardly any uptick in real incomes in most major economies since 2009 has been described variously as ‘secular stagnation’ or in my case as The Long Depression, similar to that of the 1930s and 1880s.

But maybe it is all over.  Only this week, the FT’s economic forecaster model was showing a sharp pickup.  The Brookings-FT Tiger index — tracking indices for the global economy — suggests growth has picked up sharply in both advanced economies and emerging markets in recent months. The index, which covers all major advanced and developing economies, compares many separate indicators of real activity, financial markets and investor confidence with their historical averages for the global economy and for each country separately. The Tiger index suggests growth in emerging markets has picked up sharply since the oil price fall hit output in 2015. Having languished well below historic average levels this time last year, the index for emerging market growth has climbed to a level not seen since early 2013. China and India appear to have weathered recent rocky periods and indicators for growth are back above historic averages for both countries.

And the main economic indicators in the US and global economy have been picking up.  The purchasing managers’ indexes (PMI) are surveys of companies in various countries on their likely spending, sales and investments.  And the PMIs everywhere are well above 50, meaning that more than 50% of the respondents are seeing improvement.  The global PMI now stands at its highest level (54) for three years and, according to JP Morgan economists, it suggests that global manufacturing output is now rising at a 4% pace compared to just 1% this time last year.

Things are also looking better in the so-called emerging economies.  China has not crashed as many expected this time last year.  On the contrary, the Chinese economy has picked up and, as a result, there has been increased demand for raw materials.  The Chinese economy expanded 6.9% year-on-year in the first quarter of this year that ended in March, slightly up from 6.8% growth in the fourth quarter of last year.  Investment and industrial production also had a slight uptick.

Gavyn Davies, former chief economist at Goldman Sachs and now a columnist for the Financial Times in London, pointed out that “Global activity growth has rebounded sharply, and recession risks have plummeted. Growth in real output is now running at higher levels than anything seen since the temporary rebound from the financial crash in 2009/10. Importantly, recent data suggest that the growth rate of fixed investment is beginning to recover, which is a body blow to one of the central tenets of the secular stagnation school.

Behind this apparent recovery is a small recovery in corporate profits, which up to the middle of 2016 had been falling quarterly.  Since then, corporate profits have recovered somewhat around the world and, according to JP Morgan, business investment has reversed its decline of the last year.

All this sounds promising, even convincing.  But as the IMF warned, maybe these optimists are jumping the gun.  The US economy remains the key driver of global growth, not Europe or China and there seems little sign of any uptick from the sluggish growth of 2% a year that the US economy has achieved over the last six years on average.

The stock market has been booming (until recently) on the expectation that President Trump would boost profits and investment through corporate profits tax reductions and a programme of infrastructure spending by the federal and state governments.  But so far, nothing has happened.  And anyway, in a previous post I showed that the impact of such measures on overall investment and growth would be minimal.

Indeed, what has happened is a growing divergence between economic data based on surveys of opinions about the US economy (‘soft data’) and actual figures (‘hard data’).  According to Morgan Stanley economists, “the divergence is stunning.” In other words, everybody is very optimistic about the prospects for the US economy over the next 12 months but the current data don’t show it.

This divergence is revealed by the huge differences in forecast US economic growth by the main economic forecasting agencies. The New York Federal Reserve reckons US real GDP will be up 2.6% in the first quarter that ended in March, while the widely respected Atlanta Fed forecast has dropped to just 0.5% for the same quarter. The difference is caused by New York including more ‘soft’ data and Atlanta excluding it.

Also investment analysts are now forecasting huge rises in corporate profits or earnings. First-quarter earnings are expected to rise 15% yoy for European companies, 9% for those in the US and 16% for Japanese firms – a complete turnaround from previous forecasts that predicted a slowdown in 2017 to follow the slowdown of 2016.  Yet the very earliest profits results for the top US companies released this week were very disappointing.

Indeed, when we consider the hard data, the situation is not so rosy. The final reading of US national output for the fourth quarter of 2016 confirmed that the US economy grew only 1.6% in 2016, the weakest annual rate of growth for five years. The pace of growth did pick up in the second half of 2016 from a near stop in early 2016, but was still growing no more than 2% a year in the fourth quarter.

The bright spot was a significant pick-up in US corporate profits. Between the beginning of 2015 and the second half of 2016, corporate profits had fallen by 9%. However, in the second half of last year profits rose back 6% and in the last quarter were up 9.3% yoy and even more after tax.

Business investment had followed profits down three quarters later in 2015, confirming again my thesis that profits lead investment in the capitalist economic cycle. Business investment fell yoy in every quarter last year and equipment investment, the most important part of business spending, is down 5% from mid-2015. But with profits now rising, investment may pick up in 2017 – we’ll see.  But the latest measures of what will happen to investment and lending in the first quarter made by the St Louis Fed do not suggest any pick-up at all.

Consumer spending also does not seem to be responding to all this optimistic talk.  US personal consumption spending seems to have slowed to just a 1.1% annual rate in the first quarter of 2017 compared to 3.5% in the last quarter of 2016, the weakest rate of expansion in four years and the worst first quarter since the end of the Great Recession in 2009.

And, as I have argued in several previous posts, corporate profitability in the major advanced capitalist economies remains weak and there is a sizeable section of ‘zombie’ firms, those unable to make any more profit than necessary to cover the servicing of their debts, let alone invest in new productive technology to raise productivity and expand.

Confidence may be rising among mainstream economists and official agencies, based on improving surveys of opinion, but that must be balanced against the fact that the current recovery period since the end of the Great Recession is pretty long already.

The IMF report signals the risk of a new recession.  Its indicator suggests that it is still quite low for most economies at around 20-40% as the world economy moves through 2017.  But Lagarde warns that “there are clear downside risks: political uncertainty, including in Europe; the sword of protectionism hanging over global trade; and tighter global financial conditions that could trigger disruptive capital outflows from emerging and developing economies.”

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62 Responses to “Gaining momentum?”

  1. Daniel Rocha Says:

    What is hard data and soft data?

  2. Tony of CA Says:

    Hard data is actual empirical numbers, soft data is just warm fuzzy perceptions. There is not meaningful pick-up in economic activity in the US

  3. ucanbpolitical Says:

    Hard data is actual GDP figures (objective data) while soft data is surveys. The former is the accurate guide, well as accurate as capitalist data goes. Again I disagree that the US is key rather than China. Most mainstream economists conclude that the temporary reflation of the world economy was due to China not the USA. The US figures are dismal and with every new release they get worse. The Trump smelling salts are clearly wearing off. Further, as this is the year the central committee is elected in China, the economy there will be propped up even if debt to GDP exceeds 300% by the time Xi is re-elected later this year. As for US profits, strip away engineered financial profits and non-financial profits have not recovered.

    • Daniel Rocha Says:

      Where do crisis begin? Is it when industries (China) decrease production because retail (USA) is not buying because their stock is full, or when retail (USA) cannot sell anymore due their stock is full? Notice that there are 2 steps in realizing production value here. But which of the steps can buffer a crisis better? Or, which one can realize more of the production value?

  4. S.Artesian Says:

    Most mainstream economists conclude that the temporary reflation of the world economy was due to China not the USA.”

    Exactly what “reflation” are you talking about– China’s massive effort at reflation after the 2008-2009 collapse had little impact on Japan, Europe, and the US– it’s major trading partners.

    It had greater impact on Latin America– with the import of “raw” commodities, but even that was relatively short-lived. And since the 2009 massive loan program, what has happened to China’s growth rate? Since 2013, what has happened not only to the rate of growth of imports and exports, but the absolute growth of imports and exports?

    As for stripping away financial profits, and non-financial profits not improving, the US BEA reports for the period 2009-2014, profits for non-financial domestic corporations increased 81 percent declining by about 9% through 2016.

    Manufacturing concerns follow that same pattern in a more pronounce way, with profits increasing 260 percent 2009-2014 and declining 15 percent to 2016.

    The “reflation” as modest as it is correlates much more closely with the price of oil than with any QE program.

    In reality the recovery has been financed on the backs of the working class and poor, not by China.

    • Daniel Rocha Says:

      But do these domestic companies buy most of its pieces from China (or it is produced by subsidiaries there)? If that is the case, who is taking the burden is the Chinese worker.

      • S.Artesian Says:

        Sure thing. Tell that to unemployed workers in Greece, Spain, Italy, and the US.

      • Daniel Rocha Says:

        I did tell that. But it was a waste of time, since I just satisfaction as a way of trolling. Greece, Spain, maybe Italy is a worst case since they don`t have many to suck their surplus. Germany, UK and USA are much better on this regard.

        Nordic countries are the most imperialist countries, in terms of using cheap labor abroad, weapon sales, bombings of foreign countries for resources, considering their population size. Sweden perhaps may surpass even Israel in terms of bloods in their hands. That`s how they get their life quality, to get the demands of their high unionized society. This is why social democracy is the worst thing that could happen to the world in case USA mobilized for that.

      • S.Artesian Says:

        “Nordic countries are the most imperialist countries, in terms of using cheap labor abroad, weapon sales, bombings of foreign countries for resources, considering their population size. Sweden perhaps may surpass even Israel in terms of bloods in their hands. That`s how they get their life quality, to get the demands of their high unionized society. This is why social democracy is the worst thing that could happen to the world in case USA mobilized for that.”

        Complete and utter nonsense. Got some data to back up those assertions? Like where is Sweden’s air force deployed outside its borders? Like who ranks where in the top 10 of weapon sales exporters (2012-2016: in descending order– US, Russia, China, France, Germany, UK, Spain, Italy, Ukraine, Israel)? Like who ranks where in the PURCHASES of weapon systems from the these exporting countries (2012-2016: India, Saudi Arabia, UAE, Algeria, Turkey, Australia, Pakistan, Iraq, Vietnam)?

        Or like how many combat strike aircraft Denmark has assigned to missions in Libya, Iraq, and Afghanistan? Answer– literally a handful– less than 10.

        Norway has 4 combat aircraft assigned to operations in Afghanistan. Finland, none.

        The US force has over 1000 planes assigned to combat in the Persian Gulf, Afghanistan, and the Mediterranean, and has accumulated many more thousands of combat strikes. An no, the US population is not 250X that of Denmark or Norway

        No Nordic country, including Sweden makes into the top 10 of weapons suppliers for the 2012-2016 period.

        As for “social democracy is the worst thing,” great, welcome to the 3rd period where social democracy = social fascism. How’d that work out the first time it was floated? Good you think? And of course it led precisely to its mirror image– the popular front, another strategy for defeat.

        Precision, comrade, precision. We have to know what we are talking about.

    • marthajpc Says:

      posting as Murray Cohen: I agree that it oversimplifies to call social democracy the worst thing. Some things take too long to go through that have to be gone through … But you oversimplify too. The post-war imperial arrangement that has led to the super-exploitation of workers in peripheral states has benefited all European social democracies, but indirectly–mainly (as you accurately describe) in that they have not had to bear the high military costs of killing so many millions of people in maintaining that arrangement. The United States (tempered by the imperial dollar and arms sales to their Arab oil kings) has, or rather its working class has and is paying. The arrangement seems to be falling apart. …By the way, didn’t Kautsky view imperialism positively, and many social democrats proudly proclaim themselves social imperialists? Didn’t Marx write the Gotha program? and worry about the racism among many English workers against their Irish comrades? I see an awakening of a long dormant class consciousness everywhere, even here, in the socially unconscious, deeply racist US. What’s wrong with communists encouraging fellow workers, who are half awake enough, but blind enough to vote for Brexit and Trump, to wake up? Does that sound elitist to you?

  5. Mike Ballard Says:

    If real GDP is rising, real wealth is rising and the working class is ever and more productive. The gap between what the producers of the wealth of nations receive and the appropriation of that wealth by the capitalist and landlord classes is the key to understanding how the problems associated with the tendency of the rate of profit to fall are being solved by the ruling class and their political lickspittles.

  6. Boffy Says:

    However you phrase it, increasing global growth is a strange kind of depression, or the long prophesied crisis, from the posts of last year, the year before, the year before that, the year before that………

    • S.Artesian Says:

      Keep that in mind, Boffy, when the current growth runs headlong into the obstruction that is itself, and the next recession takes hold.

  7. Simon H Says:

    Boffy: Things are down, no problem, things are temporarily up? Woohoo I win!

  8. S.Artesian Says:

    I took exception specifically to Daniel’s arguments…using mis- or lack of information about Scandinavia to make arguments that are just untenable. Of the Nordic countries, only Sweden has a social democratic government, and that is a coalition with the greens. Finland, Norway, Denmark are all governed by conservative parties, or coalitions of conservative parties.

    Daniel said the “worst thing” that could happen is if the US had a social democratic government.” Somehow, I don’t think so. Let’s say Bernie Sanders, the closest the US has come since Norman Thomas to producing a social democrat– was president.

    Despite my opposition to Sanders, and social democrats, I don’t think that would be worse for Palestinians, the people of Syria, Afghanistan, Iraq, Iran, Cuba, Venezuela, Ecuador, Brazil etc etc than Trump.

    And no. Clinton, in whatever version and gender, does not qualify as a social democrat.

    Somehow, somewhere people think that “social democracy” is the default state of European governments. Well that’s just nonsense. Where are social democratic parties in power in Europe? France, with Hollande? Yes. The UK? no. Austria? No. Poland? no. Germany? no. Belgium? no. Italy? no. Greece? Don’t make me laugh. Croatia, Serbia, Montenegro, Bulgaria, Ukraine, Hungary, Slovakia, the Czech Republic, Netherlands, Spain, Portugal, Ireland….? No, no, no….

    So exactly where is social democracy spearheading these “worst that can happen”???

    Precision, comrade. We have to know what we are talking about.

    • Daniel Rocha Says:

      I presented data that I found rather quickly. I can do it more in depth. But if you think that is misinformation, I don`t know what I can do. It seems to me that there is not enough surplus in the world to sustain the whole Europe and USA with Nordic levels of quality of life (which I think comes from high levels of exploitation of poorer countries, even within Europe). Maybe I should had excluded Norway, but the cheap oil is running out. Trying to achieve that will merely increase the levels of debts, which will lead to larger and larger pyramid schemes (fractional banking and inter-bank loans and future tradings do seem to me pyramid schemes).

      By social democracy, I mean the idea of welfare state. Social Democracy main strategies, used for claiming a gradual transition to socialism, were incorporated to the default discourse of humanism, and stopped there (without concern to who were being exploited to achieve that). So, I am not thinking about any particular politician, but what people, at least from the left, think about what is fair to a human being. So, let`s say that stagnated social democracy, for the sake of aristocratic labor (there were many levels of aristocracy in any case).

      Only by breaking the law of value, in which also trade is not based in money, but on value of use, somewhat based on credit, for accounting. Somewhat similar to Asiatic mode of production, where great works are done to the benefit of people instead of the ruler and smaller projects, and\or payments, are dealt instead with credit (instead of metals).

    • marthajpc Says:

      I used the term (social democrat) pejoratively (and, admittedly, sarcastically), but much in the way as Daniel Rocha did. As you know, it’s easy to be flip in Google Land. As far as Sanders goes, his election would have led to policies much the same as Obama’s but with more bomb/asst. He has been consistently imperialist, and is supporting Trump’s bombing right now. Corbin and Melenchon are much better. But neither will nor can push for even social democratic reforms, like nationalizing the banks, because, as things have turned out, that would require a revolution. I admire both for their anti-imperialism. But imperialism is the very heart of modern capitalism.

      • S.Artesian Says:

        we need to stick to the concrete assertions made by Daniet; to wit:

        “Nordic countries are the most imperialist countries, in terms of using cheap labor abroad, weapon sales, bombings of foreign countries for resources, considering their population size. Sweden perhaps may surpass even Israel in terms of bloods in their hands. That`s how they get their life quality, to get the demands of their high unionized society. ”

        I said that’s nonsense. Daniel has provided no evidence that in terms of using cheap labor abroad, weapons sales, bombing of foreign counries for resources, the “Nordic” countries are the most imperialist.

        However you want to measure it– foreign direct investment, trade volumes, the sub-contracting, offshoring, the Scandinavian countries are not the largest “consumers” of the “super-exploited” labor in other countries.

        So where does that leave the claim that “That’s how they get their life quality, to get the demands of their highly unionized society”? Nowhere. Up shit’s creek without a paddle, to put it vulgarly.

        Now if somebody has evidence that contradicts the data freely available at the WTO website, or the World Bank’s, or the IMF’s, or the OECD, then please produce it…. along with the evidence that shows the way that weapon sales abroad, equal to about one-half of one percent of GDP for Scandinavian countries determines the the “quality of life.”

        If you claim that you admire Corbyn and Melanchon for their “anti-imperialism,” and think “imperialism is the very heart of modern capitalism,” then how is it that these two anti-imperialists, these two daggers at the heart of modern capitalism, “can’t even push for social-democratic reforms.”

        Opposing capitalism does not relieve us of the obligation to actually make sense.

      • Daniel Rocha Says:

        I clearly stated that it was per **capita basis**. In the grand scheme of things, that’s a blip in the radar, since they have tiny populations, but that generates a whole lot of propaganda on the left. The links are provided in the links. You just have to divide numbers. There is even a discussion where people analyze the numbers. But you see quite many of the most humane societies in the lists given are among the largest providers per capita of arms. Israel is always in the top or close, but I would discount the military donations from US. They are spoon fed by crucial technology and claim they revolutionize things.

        The US is a different type of beast.It is a lender of last resort, it captures surplussed throughout the world to feed its pyramid schemes from collapsing. So, it is not trivial to make a more “humane” capitalism there, without breaking down wall street and equalize distribution of wealth. It’d have to straight to a military campaign and colonize, in the old style, the whole world. It would move the gains from financial operations to usual trade operations (for example Apple would directly own Chinese factories, the creation of surplus would be made entirely within that company and the US citizens would only work in retail). There would be no need ot “breed” many powerful man in the colonies. So, more surplus available for the colonizer. Speculation would be greatly reduced, planning the economy would be possible in a longer time depth and thus provide a higher quality of life.

        The most militarized armies in the world on a per capita basis, in terms of man power, are Cuba, South Korea, North Korea. The latter has, by far, the best best prepared and most numerous army on a per capita basis. Invading nk it is like an uphill fight, like the battle of Berlin, Leningrad and Stalingrad. 1/5 people (not only adults, the general) are trained for over 2 years in the army. So, every small village is like a corner in Leningrad and Stalingrad. But NK is way larger. But on a world scale, they are also kind of bliips.

      • S.Artesian Says:

        What links? You provided no links. And no, even on a per capita basis, “bombing missions,” weapons sales are not greater for Scandinavian countries.

      • Daniel Rocha Says:

        WTF!!! I guess it got blocked automatically!!! I cannot see them.

      • S.Artesian Says:

        The major trading partners of Norway, Sweden, Denmark and Finland are besides each other, the EU, the US, and Russia. These three, plus Norway (which is external to the EU) in the cases of Sweden, Denmark, Finland, account for 70-80% of the 4 countries’ exports, and 70% of the imports.

        We can go through the same exercise regarding outward foreign direct investment…

        If the bulk of the trade is not with countries were labor is supposedly super-exploited; if the bulk of FDI is not located in those countries, then exactly what is the mechanism for “transferring the surplus”??

      • Daniel Rocha Says:

        https://rwer.wordpress.com/2016/01/12/the-15-largest-arms-exporters-per-capita/
        https://www.pri.org/stories/2014-05-23/peace-loving-sweden-and-switzerland-are-among-top-arms-exporters-capita-world
        http://www.businessinsider.com/swedens-dirty-secret-they-arm-dictators-2014-5
        http://www.iansa.org/news/2012/02/sweden-arms-exports-reach-record-level

        The per capíta levels vary, but it ranks really high.There were other posts regarding oil exploration, but it took a long time before… but you get the lack of “humanism” when it comes to deal with other countries.

      • Daniel Rocha Says:

        It doesn’t really always matter who is the main trade partner. A random example, if the external trade partner get 9/10 of the surplus for import and makes 70% of the market while another one that makes 30% of the market but gets 1/10 of the surplus, the 30% partner will be the most important one when it comes to realization of profit.

      • Daniel Rocha Says:

        You can also extend the reasoning if minor partners do not also add a lot of labor time for the total amount of socially necessary labor time necessary for the realization of profit, and say that super exploitation happens to the trade partners of the trade partners. So, let’s say that the 30% traded partners adds only 10% of the total in relation to the value of the commodities, imported from other countries, e.g., US importing from Mexico or China, which are super-exploited for a given commodity. So, in this case, Sweden super-exploits Mexico and China.

        The order of factors can be changed, the primary producer may export advanced chips to a less advanced country where the computer will be assembled, say Malaysia. Given that assembly is more labor intense, the bulk of super-exploitation and value accretion happens in the latter where it will be sold back to where the chip was made or to any other country.

      • S.Artesian Says:

        Daniel,

        You are using data from one country from one year about one area– weapons exports per capita– to categorize 4 countries in several categories over several years.

        Nothing in these links confirms your assertion that the Nordic countries are the “most imperialist,” and you’ve provided exactly zero data about any Scandinavian country’s “super-exploitation” of labor power in less developed countries.

        Moreover, you stated that the Scandinavian countries’ general level of welfare depends on this hypothesized super-exploitation, yet you have provided exactly zero data on how that is actually occurring in the real world, in Sweden, or Denmark, or Norway, or Finland’s real relations with China or Mexico.

        You can hypothesize anything you want– and that’s the whole point of hypothesis– it doesn’t have any necessary connection to the real world.

      • Daniel Rocha Says:

        Whoever has got the guns, and sell tons of them for their size, will get to use them. Indeed, I did not provide proof, but evidence. In order to provide welfare, you have to have money, it must come by realization of surplus. Sweden has a large service sector and a small industrial level, in terms of output to the overall. I doubt that this is labor intensive in most , so the value must come from somewhere else.

        https://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

      • Daniel Rocha Says:

        But they are a mere bleep in the total scheme of things, so, and are not in a delicate place in the geopolitical scene, like Israel, so they can do dirty things abroad without being noticed, like this. And be agressive at it.

        https://www.theguardian.com/business/2016/aug/21/hm-factories-myanmar-employed-14-year-old-workers

        USA is even less industrialized, though its output is enormous. But, as I mentioned, they are a lender of last resort and have an enormous population, unlike Sweden. But, they are in the forth or fifth place in terms of social inequality, if you measure the gains of the upper 1% in relation to the total population. These people probably are blue collar works in highly financialized companies, that are mostly valued in fictitious capital. These are sensitive to taxation, so a welfare model would have to push USA to be much more imperialist, like the British in the XIX century, but to a much large extent, so that the economy could absorb surplus without the use of financial instruments.

  9. Daniel Rocha Says:

    The degree of international division of labor makes it nearly impossible a revolution that it is not international. And there is another problem. In the great revolutions, the armies were built out of the total discredit of the people towards the rulers, and they grow. In the case of Russia, from a useless war where millions died, in the case of China, Vietnam, Korea, Cuba and East Europe against the worst cruel and humiliating foreign occupiers.

    It was not a matter of organizing workers. Capitalism itself was showing its ugliest face, without bothering to build a buyer class (a pseudo middle class) in poorer countries. There was barely no ideological shock absorber. The decolonization process and the decay of socialist system created that layer.

  10. marthajpc Says:

    Social democracy in the West was the human face of the post world war 2 imperial arrangement. That countervailing strategy to increase profits is unraveling, revealing the very ugly inhuman side of that face for even us in the West to see. Therefore, pushing for the restoration of social reforms today amounts to a revolutionary act, but is at best, fatuous, if not coupled with leaving NAT0. Is that possible? or likely? It surprises me that it is even discussed by public men like Melenchon in France. But the US will continue lead the world to hell unless it is challenged by its allies.

    • S.Artesian Says:

      We must live in different worlds, since Social Democracy as a “countervailing strategy” unraveled long ago– about 38 years ago– remember? Reagan, Thatcher, Mitterand’s about face? Helmut Kohl?

  11. ucanbpolitical Says:

    I am referring to current profitability provided by the BEA Table 1.12
    and for non-financial ttps://fred.stlouisfed.org/series/A464RC1Q027SBEA. If you graph the five year trend on the aforementioned FRED link which includes Q4 2016 you will see the fall. Things look a bit better for Q1 2017 but worse for q2 2017. What is really interesting is that financial profits on the other hand are up 10% over the 2014 peak compared to a similar fall in nonfinancial profits
    https://fred.stlouisfed.org/series/A392RC1Q027SBEA
    Given the incidence of low interest rates this speaks volumes for the creative geniuses in the banking world.

    • S.Artesian Says:

      And the FRED graph you refer to:

      //fred.stlouisfed.org/series/A464RC1Q027SBEA, shows exactly the same trend as the BEA reports– a recovery in profits for non-financial corporations to 2014, the exceeds the previous high in 2007, and then declines about 15 % from the 2014 peak, but is still 20% above the 2007 level. That’s not “dismal.” 2008-2009 was dismal, 2015-2016 was a decline. 2009-2016 ranks as a recovery, and not “reflated” by China, that’s for sure.

  12. marthajpc Says:

    …S.Artesian, I inhabit the same world as you: the global order centered on the imperial dollar and US war machine, but sans the social democratic bone–or about 80% of it–thrown to the privileged sections of western working class…

  13. S.Artesian Says:

    The point being, comrade, that the “social-democratic” privilege has been under attack for 30 years, with sometimes greater, sometimes lesser success– BUT since 2007 that attack has taken a pretty steep toll particularly in Europe– the numbers of those “at risk” of poverty have increased by 20-40% depending on the level of education in the Eurozone.

    Daniel has not provided any evidence for his claims that the Scandinavian countries are the “most imperialist” on a per-capita basis, as if such a bizarre metric is even realistic; nor that living standards in those countries are dependent on this “accentuated imperialism,” which hasn’t even been shown to exist.

    But please have the last word on this. I have yet to read any analysis, from Lenin to John Smith, that has shown how the “imperialist privilege” transfers wealth from the workers of the “oppressed countries” “Global South” etc to the workers of the advanced countries.

    • Daniel Rocha Says:

      You won`t get anything from Lenin from John Smith. The working conditions improved a lot after the 2nd world war in the first world. They are so much better than even what is called poverty line in the Eurozone is still bordering high middle class in Latin America in general. In Asia, that is upper middle class.

      So, the depth of attacks that people in the 1st world may sustain is very, very deep. The quality of life is really, tremendously superior. I dare you show evidence of the contrary. I mean, even ghettos of black people in USA are way superior to what is called lower middle class in my city. My cousin, who married a guy from Netherlands usually says the social problems complains from the left there are laughable.

    • marthajpc Says:

      I’m waiting for that study also, not being an economist myself. But living in the US, the primal capital accumulation of which was built on genocide and African slavery, and where the underpriced food basket is produced by millions of Mexican, forced to find work here (NAFTA) and earning wages (don’t believe the official figures) below our ridiculously low minimum wage, I’d have to be blind not to see the relationship between the superior standard of living for the miserably paid American working and even non-working poor, and super-exploited “3rd world” labor (here and in the periphery).

      Capitalism evolved along with it colonial conquests, and as Marx has said, came drenched in blood. I think Lenin, Luxemburg, Amin, Smith, et al. are correct regarding the transfer of wealth (use values) from the old colonies to the imperial centers as occurring outside the normal accounting procedures of capitalism’s honest brokers. So maybe the book we want can’t be written.The labor theory of value is not universal. It is a an analytical tool specific to capitalist mode of production, and mature capitalism at that. But the ocular proof of this transfer/teft of wealth is there for all but the blind to behold.

      The problem is imperialism and war. Not the complicity of the worse elements in the western working class. Most working people, even here, are not racists, but massively miseducated anti-communists and anti-terrorists. We are moving slowly but surely from neoliberalism to neofascism while some “marxists” continue to debate about whether the Kaddafis and Assads (and even Lenin!) are good guys or bad guys. …Well, that’s a lot of last words, thanks.

  14. Daniel Rocha Says:

    It seems some posts of mine are being lost here. One of them is still not approved, from 3 days ago. So you people are not seeing all my answers.

  15. Daniel Rocha Says:

    From now on, I will do 1 link per post. I parsed in 2 parts one I did 3 days ago.

  16. Daniel Rocha Says:

    I recommend this book
    https://www.prisoncensorship.info/archive/books/Economics/DividedWorldDividedClass_ZakCope.pdf

  17. Daniel Rocha Says:

    As I was reading The Capital, 4 years ago, since I found in a pile of trash in my parents building, when I went to visit them, and I was curious to know what was about it, I tried to see how would it work if all the globe was under 1 system, not a tiny percentage of the globe, as it was during Marx Time. I got to the same conclusion as 3rd worldists. Except that 1st world people do not act due priviledge and 3rd world people do not react due extreme police oppression and that gangs are much more powerful. There is not money to send those many people to jail, like in USA, jail is people`s neighborhood. So, there is a lot of lumpen around.

    Urbanization in Latin America is much higher in general than in first world. So, people live under, for the lack of a good word, a surreal life. The same should happen in South and SE Asian countries, in cluttered, huge and dense cities. You cannot just surround people from the countryside, like in revolutionary China, since the huge urban sides are mostly against rivers and coast lines, continuously. So, the prospects of revolution anywhere are dim. The only hope I see is by the use of nuclear warfare in terms of guerrillas (not using rocktes, but carrying h-bombs), and try to attack US military nany. They are tiny nowadays (size of large cannon shell). The problem it is that Russian military, or part of it, should mutiny and send these h-bombs to rogue, stateless groups. Also, it`s possible to select the explosive power, so that, if it were the case of destroying stuff close to cities, innocents would be mostly spared.

  18. Daniel Rocha Says:

    Any major country that would go through a revolution are likely to be terminated. There is no way to compete with USA army (and their sattelites), without going nuclear. This is serious.

    And in no way this is my idea. You can check that in Message to Tricontinental and Tactics and Strategies for Latin America, from Che Guevara.

  19. Daniel Rocha Says:

    Message to intercontinental. https://www.marxists.org/archive/guevara/1967/04/16.htm

    “We must carry the war into every corner the enemy happens to carry it: to his home, to his centers of entertainment; a total war. It is necessary to prevent him from having a moment of peace, a quiet moment outside his barracks or even inside; we must attack him wherever he may be; make him feel like a cornered beast wherever he may move. Then his moral fiber shall begin to decline. He will even become more beastly, but we shall notice how the signs of decadence begin to appear.”

  20. marthajpc Says:

    Che comes off better on tee shirts than in your out of context quote. …Seriously, Daniel, if you want to wage jihad against the “empire” as such, the best place to go for weapons of mass destruction is not the to the Russians, but to the Emirates, the Saudis, or to the sacred source of jihad against the empire, the empire’s CIA. You’ll get sophisticated guns, tanks, poison gas (probably not little hydrogen bombs) to use against real struggles for freedom (which you will pretend to join) in Venezuela, Ecuador, Brazil, etc.

    • Daniel Rocha Says:

      A nuke is required because it is a very powerful explosive, that can sink carriers for example. Anything else is meaningless, either because it is just about killing people or require armies, not a small group. And asking friends of US, like the gulf states is even more meaningless.

      Any struggle nowadays won`t be able succeed in large because of the intense financial dependence and the abyss in conventional power with the Empire.

    • S.Artesian Says:

      Right, nukes for everyone. I mean the 2nd Amendment to the US Constitution guarantees the right to bear arms, so I don’t see the problem. We start the kids of young, with a course in nuke safety, and then we take them out hunting with small, fist sized, nuclear devices that can be launched by slingshot. Of course, you only get to use one… and then there’s nothing left. Brilliant.

      Create 2,3, many Hiroshimas, or Chernobyls.

      And I thought Boffy was out of his mind…………..

      • Daniel Rocha Says:

        I don`t get your point. I know you are being ironic, but it doesn`t relate to anything I mentioned.

      • marthajpc Says:

        We’ve both been had. This guy writes idiomatic English when he or they want.

      • Daniel Rocha Says:

        I don’t get this either. I am using orthographic correction.

      • S.Artesian Says:

        You’ve been had? Only by yourselves, and your posturing about “small scale” nuclear attacks. You’re thinking what? Suicide nuclear bombers showing up at the 800+ military bases the US maintains worldwide? You think that’s possible without “collateral damage” to the surrounding civilian populations? You think 800+ “low yield” nuclear devices aren’t going to poison the planet?

        You’re out of your minds, regardless of your understanding of idiomatic, colloquial, or the King’s, english.

        Anybody suggesting such a thing is quite simply bat-shit crazy.

      • Daniel Rocha Says:

        More like 400kT, at the extreme end. 800kT are being phased out… And I am not thinking about 800 bases. That would require a powerful military state. I am thinking more in ocean strikes. Taking out carriers and such. All of them together would likely sum way less power than Castle Bravo. If there was need to bombing to a large base, with a population surrounding, that would be far less harmful than a conventional war could make. A conventional army, no matter its origin, has a large number,around 5% of psychopaths. So you can expect torture and rape in large numbers.

        The energy released by Chernoby>

        Compared with other nuclear events: The Chernobyl
        explosion put 400 times more radioactive material
        into the Earth’s atmosphere than the atomic bomb
        dropped on Hiroshima; atomic weapons tests conducted
        in the 1950s and 1960s all together are estimated
        to have put some 100 to 1,000 times more
        radioactive material into the atmosphere than the
        Chernobyl accident

        http://www.iaea.org/inis/collection/NCLCollectionStore/_Public/28/058/28058918.pdf

        Most of these tests were on the ocean, like the attacks I mentioned. While bombs of the magnitude I alluded would be 1/10 of Chernobyl.

      • michael roberts Says:

        No more on this line of discussion – cease.

  21. Daniel Rocha Says:

    Note, I am note saying to explode something in the middle of New York or in the middle of a city. It doesn’t make sense. I am referring about viable way to deal with a very high tech military in a world where the bourgeoisie (or the surrounding neighbors) has national roots, besides a large support, and can call the “great police” when it feels threatened. This is not anymore the world where the national spirit can unite people against the colonial invader.

    • Daniel Rocha Says:

      I mean, a large popular support. People, even the poorest, are flooded in anti communist propaganda due the power of computer and internet. And to that sum the extreme police violence and lumpen activity, supported by local politicians.

  22. S.Artesian Says:

    In case you missed it. let me repeat– bat-shit crazy, worse than nonsense.

    A “conventional army” has 5% psychopaths? Tell me about it. That’s why tactical nuclear weapons should never be issue to an infantry unit. Would nuke everything and anything just to avoid a firefight.

    What percentage of psychopaths are found among those advocating “suitcase nukes” as a substitute for mass-based social revolution?

    Only types to advocate this are psychopaths….or cops. You decide.

    Maybe Michael’s OK with somebody arguing for “suitcase nukes” on his blog. I’m not.

    • michael roberts Says:

      No I’m also very uncomfortable with somebody arguing for nuking anybody. This discussion must stop. It has been exhausted and raising this issue anyway is highly disturbing. No more. Any further comments along these lines will be blocked. If that happens, it will be only the second time that I have done it – the first and only time was to a racist and anti-semitic commentator.’

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