Secondly, some of today’s news from the system that is international casino capitalism:
World financial markets nose-dived on Monday after the Chinese economy issued troubling signals to investors and a contagion of worry circled the globe as indexes plunged across Asia and Europe and the U.S. Stock Exchange opened the New Year with its worst performance in nearly 84 years.
As the Wall Street Journal reported the day’s market drama:
Though U.S. stocks regained much ground by the end of the trading day, CNBC reports how the Dow Jones ultimately lost triple-digits on Monday — its worst opening day in 8 years.
“It’s going to be a turbulent year,” said Kevin Kelly, chief investment officer of Recon Capital Partners, to the Associated Press. “This isn’t a blip.”
Sharing a widely-held opinion, Devendra Joshi, an HSBC Asia equity strategist, told the New York Times that “volatility” in the markets “will be the theme for the year.”
And while some financial experts issued warnings, other analysts downplayed the global slide as an over-reaction to the new economic data coming out of China.
Either way, that’s about enough of the stock market coverage for one day, which leaves room for just a couple comments on what average working people can expect from the “real economy” in the year ahead. But don’t expect it to be pretty.
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Here’s what economist and former labor secretary Robert Reich, in a post published amid Monday’s market turbulence, predicted for the year to come: “I expect the U.S. economy to sputter in 2016. That’s because the economy faces a deep structural problem: not enough demand for all the goods and services it’s capable of producing.”
The fundamentals of the economy continue to show how badly the status quo continues to punish the American people, writes Reich:
And he’s not alone in arguing that sagging demand—largely fueled by the diminished buying capacity of average consumers—continues to have a pervasive and negative impact on both local and national economies. In an analysis on Sunday, Nobel Prize-winning economist Joseph Stiglitz also predicted a slump in the year ahead would continue what he calls the “great malaise” of the global economy. Why is this? Stiglitz says the “economics of this inertia is easy to understand,” explaining:
Pointing towards an alternate way forward, Stiglitz continues by arguing that there “are huge unmet global needs that could spur growth” and act as a remedy to counter this sputtering and unstable economic situation. “Infrastructure alone,” he writes, “could absorb trillions of dollars in investment, not only true in the developing world, but also in the US, which has underinvested in its core infrastructure for decades. Furthermore, the entire world needs to retrofit itself to face the reality of global warming.”
According to Reich, it remains hard to muster much optimism, given the current political climate. “I’d feel more optimistic if I thought government was ready to spring into action to stimulate demand, but the opposite is true,” laments Reich. “The Federal Reserve has started to raise interest rates—spooked by an inflationary ghost that shows no sign of appearing. And Congress, notwithstanding its end-of-year tax-cutting binge, is still in the thralls of austerity economics.”
And, sadly, as Stiglitz maintains, the ultimate problem is that the chief “obstacles the global economy faces are not rooted in economics, but in politics and ideology.”
But because when the way out is more spending, but everyone refuses to spend—and corporate powers and a cadre of global billionaires are hoarding great sums of cash away from the public coffers—the only realistic outlook is more of the same.
“Optimists say 2016 will be better than 2015,” concludes Stiglitz. “That may turn out to be true, but only imperceptibly so. Unless we address the problem of insufficient global aggregate demand, the Great Malaise will continue.”
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