US Economy in recession, Capitalism in denial & the shiver of thousands queuing for Airport jobs

U.S. teetering on brink of recession as GDP contracts in second quarter

Second-quarter GDP decreases at 0.9% rate
Inventories account for large decline in GDP
Consumer spending slows; business investment contracts
Weekly jobless claims fall 5,000 to 256,000

On the Working Group last week, Brilliant Economist and political commentator Bernard Hickey was very upbeat about Capitalism’s ability to bounce back from Covid and his optimism is shared by many, many commentators all far smarter than I.

I however remain unconvinced of their optimism.

Optimists argue the natural tipping points within glorious capitalism where price destruction occurs when consumers can’t afford the product will automatically kick in and tame inflation.

This is what we are seeing in America and the slump in gas prices, because people can’t afford to pay any more.

But that’s only part of the story and the Optimists seem to be holding onto this classic tenant of Capitalistic faith in the belief it will rebalance the market.

I disagree.

Yes prices must drop if consumers can’t to buy it any longer, but that’s not the only issue here. On top of price destruction you have supply chains severing and snapping and collapsing altogether.

Viruses and their continued outbreaks via overcrowded conditions are expanding their ability to move on top of supply chains being decimated by the effects of catastrophic weather events.

These are supply side shocks ON TOP OF price destruction. That makes this a unique recipe for hyper inflation.

People are turning away from petrol despite powerful upward wage pressure, despite low unemployment, despite the military propping up hideous human rights abusing middle eastern regimes, despite being forced to live in cities built for cars, despite a multi-billion dollar propaganda campaign via advertising to convince you freedom is linked to a climate crisis polluting vehicle – DESPITE ALL THAT – punters are still fleeing a tsunami  of inflation increase every week.

As global capitalism brings back all the shitty, dangerous, cheap jobs from their collapsing supply chains, workers in the west aren’t getting ahead! They are simply being flooded by more cheap, dangerous, shitty jobs!

There’s a reason the West exported them in the first place!

As the Stock Market soars on the belief the Fed can’t stop them ever, there is a total disconnect in reality between the Financial Economy and the Real Economy.

We didn’t get a tsunami of inflation post 2008 as Central Banks pumped $25Trillion into the markets to stave off a global recession and global supply chains stretched into the deepest, darkest, most de-unionised workforces China could provide but the level of interest rates they now must hike things to will ignite the event horizon of a black hole of debt.

Despite the lowest unemployment numbers, despite high wage pressures, the naked reality is that the inflation shockwave hitting the prices of everything is terrifying the consumer who is feeling it every day. The simple truth is those who don’t have the privilege of working from home are not being paid enough to keep afloat.

That there were 3000 people at an Airport Jobs fair in NZ at a time of such low unemployment in this country is a red flag that people are just holding on by their fingertips and when Russia cuts gas to Europe in 6 months, shit is going to get real.


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