"Relative Wealth"
Moody's downgrades the banks, the rise and fall of American growth, global elites raise the energy drawbridge, the Aussie canary in the coal mine and plenty more...
by Bill Bonner
Poitou, France - "Over the Reuters wire comes this news: "Moody's downgrades 10 US banks, warns of possible cuts to others." "Moody's cut the ratings of 10 U.S. banks by one notch and placed some banking giants on review for potential downgrades. The agency also changed its outlook to negative for several major lenders. Overall, it changed the assessments for 27 banks in the sector. The downgraded banks include M&T Bank, Pinnacle Financial Partners, Prosperity Bank and BOK Financial Corp."
The banks are being squeezed. They have to pay higher rates of interest to depositors. And their reserve assets, US Treasury bonds – which the feds insisted they buy to shore up their balance sheets – have gone down in value. Fortunately, the Fed is there to bail them out – with more fake money.
The Other Green Agenda: Yes, it is all coming together – alas – credit downgrades…Justice Department takedowns…and political shakedowns…along with the decline of the US Empire…the corruption of its elites…the fall of US asset values…the rise of inflation, jackassery, numbskullery, criminality, rascality, chaos and confusion…the Green Agenda…LBQT? Rights…wokism…racism…bankruptcy…defaults…
What to make of it? All senseless, random noise? Not completely. We have shown, over and over again, how the switcheroo in 1971 – replacing a real dollar, backed by gold, with a fake dollar, backed by nothing – ruined the US economy. ‘When the money goes, everything goes,’ we keep saying. But what else happened around 1971? That’s what we will look at today.
Recall from last week that there is a hidden logic – a megapolitical meaning – behind the Green Agenda. The poor want and need fossil fuels in order to reach the standards of living that the rich have enjoyed for more than 50 years. Since there are billions of these people…and since they depend on cheap energy to fully participate in the Industrial Revolution…they are probably not going to sign onto a program that will slow their ‘catch up’ growth. So, whatever cutbacks are achieved in the US and other rich countries are likely to be offset by greater use of fossil fuels in the BRICS and other expanding economies. On balance, the planet may see more CO2 emissions, not fewer.
Relatively Wealthy: Even in the ‘rich’ countries, most people are not as fat and sassy as we may think. Most people in the US, for example, have little margin for error. They live ‘paycheck to paycheck.’ Any significant increase in energy costs will lower their standards of living. Will they go along with it? Not likely.
Only the rich…the elites…fully support the Great Transition to “alternative” forms of energy. For them, higher energy costs (along with higher food costs…) will have relatively small consequences. They can afford electric automobiles…and they won’t ask too many questions about where the electricity comes from.
But what do they gain from it? If they can’t really reset the world’s thermostat, why bother? Here’s a thought…Wealth is relative. If you can’t get more of it through honest, win-win deals, you turn to win-lose. That is, if you can’t expand the pie…you just grab all you can and try to keep others away.
Around 1970, the pie stopped growing as fast as it used to. GDP growth rates fell. For 90% of the population, real wage increases came to an end. Advanced economies, even with no prodding from the government, began using less energy. Why? The Industrial Revolution seems to have played itself out.
Rise and Fall: This is not only our view. It is shared by professor Robert J. Gordon, whose 2016 book, ‘The Rise and Fall of American Growth,’ cast a long shadow over hopes for a MAGA economy. Here’s the description from Amazon: "In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, motor vehicles, air travel, and television transformed households and workplaces. But has that era of unprecedented growth come to an end? Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth challenges the view that economic growth will continue unabated, and demonstrates that the life-altering scale of innovations between 1870 and 1970 cannot be repeated.
Gordon argued that there was no way to Make America Great Again. What made it great was the Industrial Revolution. And by 1970, it had already reached the point of declining marginal utility. We already had plenty of motors, machines, and energy-sucking devices. Adding more produced only incremental gains…not revolutionary gains."
And if that is true, the US economy was on its way to becoming…not necessarily a ‘zero sum’ game…but a game with little payoff for the elites. They were rich and powerful. And the only way they could hold onto their advantage was to deny the benefits of cheap energy to everybody else. No factories, slaughter houses or power plants in their neighborhoods!
We pause to note that no one woke up in the morning and said: ‘Gee, the Industrial Revolution is not paying off the way it used to. I guess what I should do is to try to cut people off from cheap energy…so they won’t get what I’ve got.’ “Megapolitics” does not require awareness. People do not generally understand where they are going…or why. They just go where the currents take them.
Today, the elites enjoy avocados from the tropics, autos from Munich factories and vacations in Mallorca. This makes them ‘privileged.’ But the privilege would disappear if these things were available to the masses. How to prevent the rest of the world from getting what the elites alone now enjoy? Raise the price of energy? More to come…"
Joel’s Note: "And here we look to liberal, developed, energy-rich Australia for a shocking glimpse of the near-future…Reliably generous when it comes to ominous portents (see the draconian, “full retard” response to The Covid… the zombie march toward a cashless society… the mad rush to “Net Zero”, etc.) the Australian canary is once again swooning in the proverbial coal mine.
In a country that has enough fossil fuel wealth to power the planet for approximately a gazillion lifetimes, paycheck-to-paycheck Australian workers are finding their electricity bills skyrocketing 20…40…as much as 80% in some cases. Here’s VOA News with the latest from just a few days ago…"New Australian Bureau of Statistics data reveals a record number of people are working multiple jobs as households try to keep up with the surge in the cost of living. Inflation has been at record highs, and Australians are paying some of the world’s highest power prices.
Sharp increases in power prices are making a cost-of-living crisis even worse. In some parts of the country, prices have risen by up to 25%. The figures translate to an annual energy cost increase (for the average family) of over $350 in Victoria… $400 in Queensland… $500 in South Australia… and almost $600 in New South Wales, Australia’s most populous state."
Voters Down Under will recall the Albanese government’s promise to cut (read: lower, lessen, slash, etc.) power bills for households by $275 a year during their 2022 election campaign, largely due to proposed infrastructure upgrades and… here it comes… a nationwide transition to cheap, green energy***
Asked last week how hard-working families can best protect themselves against the rising cost of living in Australia, the government’s energy minister, Chris Bowen, suggested struggling families get on board with the solar project, digging deeper into empty pockets to further an energy policy that has only increased their power bills so far.
Even after the government’s (read: taxpayer-funded) “rebates,” solar panels cost between $4,000 and $16,000 to install for the average household. As one commenter noted…'I looked at going solar in my new house. The payback period is 15 years… Cheaper to stick to my regular supply and use wood fire and gas to heat the home.' Renewable energy: So cheap, even the working poor can’t afford it."
*** May refer to energy that is neither cheap nor green.
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