– Powell’s .75% increase: ain’t Volcker, but it’s somethin’
– Europe deploys “anti-fragmentation” grenade
– China & Empire… Rolls out third aircraft carrier
“…the global lockdowns of 2020 and 2021 caused a collapse of global supply chains in durable goods and industrial components, as well as of cheap, flexible and abundant labour in low and middle-income countries. These foreign supply-side bottlenecks, which in turn were exacerbated in several countries by domestic supply-side bottlenecks — such as a shortage of long-haul truck drivers and dock workers in the US and UK — are the reason prices were on the rise well before the outbreak of the conflict in Ukraine. In other words, lockdowns are to blame — not the fiscal measures adopted to dampen their effects. This is what we might call lockdown inflation, which is now flaring up once again due to the recent Chinese lockdowns. In recent months, the Ukraine war and the sanctions on Russia have caused inflation, especially energy and food prices, to grow at an even faster pace. These price rises have several self-reinforcing causes. On the one hand, the conflict has directly disrupted exports of crude oil, natural gas, grains, fertiliser and metals, pushing up energy, food and commodity prices. These supply-side problems have been further exacerbated by the West’s utterly self-defeating sanctions against Russia, which have left European countries scrambling for more expensive alternatives to Russian oil from America and Africa — as well as by speculation in commodity (futures) markets.”
This week, the S&P 500 entered what analysts refer to as a bear market. The index has plunged around 22 percent from its most recent peak in January. Many growth stocks and crypto assets have crashed double or triple that amount.
New home sales declined 17 percent in April, causing some analysts to argue that the housing market has peaked. And, in response to rising inflation, the Federal Reserve just approved its largest interest rate increase since 1994, meaning asset prices could dip even lower.
To understand what’s happening in the stock market right now, you have to understand the era that preceded it. Rana Foroohar is a columnist at The Financial Times, and the author of several books on the economy including “Makers and Takers” and “Don’t Be Evil.” Her view is that a decade-plus of loose monetary policy has been the economic equivalent of a “sugar high,” which kept the prices of stocks, housing and other assets going up and up and up, even as the fundamentals of the economy have been eroding. This “everything bubble,” as she calls it, was bound to burst — and that’s exactly what she thinks is happening right now.
So I wanted to have her on the show to discuss the economic choices — and lack thereof — that led to this point. We also discuss why the increasing power of the financial sector hasn’t resulted a stronger economy, whether the housing market has indeed hit its peak, the massive missed opportunity for public investment while interest rates were low, why policymakers treat asset price inflation so differently from other types of inflation, the true costs of the meat we eat and clothes we wear, why crypto represents the apotheosis of hyper-financialized capitalism, why I’m skeptical of the argument that we’re moving rapidly toward a less globalized world and more.
“…distributism has a conservative aspect: it posits as a laudable end not some utopian experiment in untested social arrangements but a socio-economic system that we already know is workable, from both historical and contemporary evidence. Furthermore, because workers themselves are the owners of capital goods, they are less likely to be forced to abandon their communities and extended families in order to keep a good job. There of course may be efficiency trade-offs in choosing to stay put rather than moving to some distant but more profitable location to find some work. But under distributism, workers would evaluate these trade-offs for themselves, rather than having some global corporate entity send them, willy-nilly, thousands of miles from their family and community—or finding themselves suddenly unemployed, as the modern corporation is loath to give its workers even a moment’s notice before they are escorted out of their workplace and onto the street by corporate security.”
The United States is – perhaps now more than ever before – a global energy powerhouse. From oil and gas production to the expansion of new energy technologies, the United States has made gains in achieving long-heralded calls for energy independence and energy security, while also reducing environmental impacts associated with energy production, generation, transportation, and use. Many are calling for even more accelerated environmental progress, particularly on the climate front. While rapidly changing geopolitical dynamics – in Europe and elsewhere – are placing the United States’ energy sector and its capabilities to meet global energy needs at the forefront, a host of federal and state environmental regulatory regimes continue to pose substantial hurdles to energy-related goals and priorities. Energy pipelines, export facilities, oil and gas production, mining projects, transmission systems, and a host of other energy projects must navigate a labyrinth of regulatory reviews and approvals – from NEPA to the Clean Water Act to the Endangered Species Act and beyond. This panel of distinguished legal and policy experts will debate the goals and priorities of U.S. energy and environmental policy, administrative law dynamics affecting the energy sector, the role of climate policy and energy technologies, and the implications of these factors for our Nation’s national security in light of the war in Ukraine and other recent geopolitical events.
Something beyond rising energy and labor costs is leading to sticker shock on once-cheap urban amenities.