Bulletins and News Discussion from October 21st to October 27th, 2024 - Swimming Back To The Titanic - COTW: Moldova

not xiaohongshu but

• those who hold financial assets are in the top percentiles & corps. poor people are in debt and have negative assets.

• typically the increased interest payments increases the demand for imports, which can be good for exporting countries

• however, higher interest rates also result in capital outflows from the global south (and to a lesser extent from developed countries) to the US dollars.

• the capital outflows puts pressure on their exchange rate of global south countries. this applies to both domestic currency external and foreign currency debt to different extent. for example if you are Sri Lanka and you issue Rupee denominated debt which rest of the world buys, when you pay back the debt, the foreigners exchange it for their currency, this is fine, the Sri Lankan Government can always pay in Rupees and any loss from exchange rate depreciation has to be borne by whoever bought the debt.

• but, if the exchange rate is fixed, the Government starts to drain its foreign currency reserves to pay off the debt while foreigners get the advantage. if the rate is floating, it can still be damaging because essential imports will be costlier.

• if the debt is denominated in Dollars, you are in much more trouble. you could try paying it back by creating money and going to the forex market, but that would rapidly depreciate your currency and possibly result in high inflation. there are other ways, like selling domestic state assets to foreigners who then provide foreign currencies.

• and the more money Government injects into the economy (through interest payments or deficit spending) the higher the profits as a whole will be, its how the MIC functions. Kalecki talks about it here, page 45

Here and here

This was last year but in short.

COVID high interest rates crushed the global south and created a new debt crisis(IMF smiles with a smug face). For these global south countries its the same old austerity as the only natural consequence.

“Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank Group’s chief economist. “Every quarter that interest rates stay high results in more developing countries becoming distressed — and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure….For the poorest countries, debt has become a near paralysing burden,” said Gill.

In the past three years alone, there have been 18 sovereign defaults in 10developing countries including the likes of Zambia, Sri Lanka and Ghana — greater than the number recorded in all of the previous two decades. The World Bank forecasts that by the end of 2024, economic activity in low and middle income countries will be 5% below pre-pandemic levels, with growth over the 2020-24 period projected to be the weakest five-year average since the mid-1990s.

And how is this to be done? Well, “entitlement reforms are inescapable” says Gopinath. That means raising retirement pension contributions and the age threshold; and cutting public services. “Many EMDEs need to reduce the footprint of state-owned enterprises, which strain the public purse and often fail to deliver effectively.” That means privatisation. And “we need to be candid: for many industrial policies, these conditions are simply not met.” That means productive development must be sacrificed for fiscal and monetary probity. Gopinath claimed that putting “fiscal houses in order is essential to ensure governments can deliver for their people.”

High rates also continues to deteriorate the US economy and the growing number of zombie corps. Mag 7 profits are already a huge majority of the entirety of the SP500 for example. The US economy is realy just a literal handful of giant mega corps, something not even 1950's scifi writers would have predicted.

When the Fed finaly lowered interest rates this year it was done because this situation is unbearable. When the mega tech sector starts doing layoffs because even their profitability was not sustainable it was a warning sign.

Here mainstream today on zombiefication

Corporate bankruptcies chart I think the Fed saw data like this too, the '22-current' line going up is unsustainable.

proactive comdemnation to robert reich's son, who i don't know, for having a lib child, who i also don't know

once again proving the "if you want leftist kids, be a lib parent" theory correct

if I ever become a parent, I'm gonna act like a really annoying lib so that my kids will rebel against me but guide them away from the reactionary side so they become leftists, and then once they're in a (relatively, the future will probably suck) stable place in their 20s, I'll start to act like I'm being convinced by their arguments and "become" a cool communist parent