Stock Market's Collapse

The Stock Market’s Slow Collapse

What it means for the real economy and the fortunes of Democrats

The broad stock market is down nearly 20 percent from its January 2022 peak. Worse is likely to come. What’s going on? The simple explanation is rising inflation and rising interest rates. When interest rates go up, bonds become a more attractive investment than stocks. The Fed is likely to keep raising rates, so stock prices are likely to keep falling. But there is a lot more to it. Until the recent outbreak of inflation, the Federal Reserve kept short-term interest rates at close to zero for much of the past decade to fight lingering effects of the Great Recession. Markets convinced themselves that this would last indefinitely. That’s why banks would lend mortgage money for 30 years at bargain rates of under 4 percent. In this climate, financial engineers could borrow money for next to nothing. To prevent dangerous speculation, the Fed and other regulators should have combined cheap money (which is good for the real economy) with tight regulation. But instead, we got loose money and loose regulation, which always sets markets up for a crash. The past decade was a predators’ picnic—private equity doing takeovers on cheap borrowed money; record corporate mergers and profits for merger and acquisition specialists; stock buybacks to further hype share prices; new gimmicks like crypto. Tightening interest rates abruptly stunned investors. A bear market feeds on itself, as sellers outnumber buyers. The crypto crash is a leading indicator. Crypto was always a kind of pyramid scheme. As super-investor Warren Buffett says, you never know who’s swimming naked until the tide goes out. The market’s current dive has something in common with the epic financial collapse of 2008. Like today’s situation, the 2008 crash was driven by the toxic combination of cheap money and financial speculation. But in that era of unfunded credit default swaps and fraudulent subprime securities, the leverage ratios were almost infinite. Today, thanks to the Dodd-Frank Act (which did not go far enough as anti-speculation), banks at least have more of a cushion. So today’s market crisis is more likely to be a slow-motion crash. Even so, the victims will be the vast majority of Americans who work and live in the real economy and not on Wall Street. Like the supply chain crisis, this financial mess is the result of legacy policies that long antedate the Biden administration, which has embraced good financial regulation more than any since FDR’s. But maybe too late. Just as voters don’t like inflation, they don’t like a collapsing stock market or its spillover effects. And voters, justly or not, have a habit of punishing incumbents for bad economic news. Unless he becomes even more of a populist, another victim could be Joe Biden.

~ ROBERT KUTTNER

 

Who Will Run the Elections in 2024 ?

Who will run the 2024 election? They’re on your ballot in 2022.

The focus on secretaries of State has been magnified by Donald Trump’s conspiracy theories about the 2020 election he lost.

https://www.politico.com/news/2022/04/18/2022-secretary-of-state-elections-00025564

 

Politico. 

Twenty-five states will elect their chief election officers this November — a slate of contests already drawing outsize attention, money and competition as former President Donald Trump continues undermining the results of the last national election.

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The jobs vary from state to state. But many secretaries of State (and a handful of other posts with similar job descriptions) play a role in certifying election results, along with setting policies that govern election procedures in states including a number of closely divided presidential battlegrounds.

All three of Trump’s endorsees — state Rep. Mark Finchem in Arizona, Rep. Jody Hice in Georgia and community college professor Kristina Karamo in Michigan — have wholeheartedly embraced the former president’s lies about the 2020 election.

Arizona is an open-seat race after current Secretary of State Katie Hobbs, a Democrat, opted to run for governor. It is expected to be one of the tightest races in November.

 

  

Elon Musk and the Oligarchs of the ‘Second Gilded Age’

 

Elon Musk and the Oligarchs of the ‘Second Gilded Age’ Nolan Higdon  April 27, 2022 The Conversation ·       Musk’s desire in buying Twitter goes beyond a desire to shape public discourse. Today’s equivalent of the Gilded Age oligarchs, who are gobbling up increasing chunks of the media landscape, also have access to a trove of personal data of users.

 

During the Gilded Age of the late 19th century, and the early decades of the 20th century, U.S. captains of industry such as William Randolph Hearst and Jay Gould used their massive wealth to dominate facets of the economy, including the news media. They were, in many ways, prototype oligarchs – by the dictionary definition, “very rich business leaders with a great deal of political influence.”

 

 

Some have argued that the U.S. is in the midst of a Second Gilded Age defined – like the first – by vast wealth inequality, hyper-partisanship, xenophobia and a new crop of oligarchs using their vast wealth to purchase media and political influence.

Which brings us to the announcement on April 25, 2022, that Tesla billionaire Elon Musk is, barring any last-minute hitches, purchasing the social media platform Twitter. It will put the wealthiest man on the planet in control of one of the most influential means of communications in world today.

As a media scholar, I suspect Musk’s desire in buying Twitter goes beyond a desire to control and shape public discourse. Today’s equivalent of the Gilded Age oligarchs – the handful of super-rich Americans gobbling upincreasing chunks of the media landscape – will have that, but they will also have access to a trove of personal data of users and news consumers.

https://portside.org/2022-04-29/elon-musk-and-oligarchs-second-gilded-age