by Ramin Mazaheri for The Saker Blog

It’s the question upon which Western “real” economies have hinged since 2008: will banks actually loan downward taxpayer bailout money – i.e. computer-generated QE dollars/euros – or will they keep hoarding it among themselves and the asset classes frequented by the 1%?

However, this concept goes back much further: since 1980 tax cuts for corporations and the richest tax bracket – essentially giving money to the 1% by never taking it – were supposed to “trickle down” to the lower classes.

Both actions are constructed on the same revolutionary ideology: that the wealthy are benevolent and patriotic, and not (as previously thought throughout human history) greedy, stingy and sanctimonious. It’s a drastic leap of faith but ¡Hasta la victoria, siempre!

Oddly, while socialism’s trial period is finished and cannot possibly be extended one more day, despite 40 years of failure neoliberalism still encourages us to throw more money at the rich and assume that this will fix everything. Socialist-inspired nations choose to throw their money – along with an army of auditors – at humble-living public servants, instead.

When we combine this failed economic redistribution plan with two other principles running in parallel – hyper-financialisation and decreased regulation – we start to comprehend why on this lovely Coronavirus Lockdown Sunday the West is in such an economic mess. Maybe the dollar’s dominance will indeed be ended by Tuesday? We could not have even asked such a question on the first Tuesday in January without being accused of wasting readers’ time, but now…? But let’s return to our original issue rather than overload our mental computers.

The NYC-led neoliberal-deregulation-hyperfinancialisation machine cannot be stopped – the Western form of government is a bankocracy, where national governments, votes and leaders are irrelevant. We were reminded of this fact by the April 14th “s*** show” of a phone call between the President of the United States and the high finance of the United States: the latter basically did not take his call.

The call was about a plan to reopen the US economy, and also to talk about lending to small businesses. The 2020 QE is significant for being the first time that banks have been ordered to lend some QE downwards. That is probably why the heads of Goldman Sachs, JP Morgan and Bank of America – the nation’s three biggest banks – all skipped the call.

Doing such a thing to Leader Khamenei or Chinese President Xi? Unthinkable – the public media backlash would be so great.

The big bankers were sulking at having to share riches and not hoard them, surely, but they obviously have no interest in ending this American corona economic carnage because – according to capitalist logic – they will certainly benefit from any upcoming wave of defaults, bankruptcies and pennies-on-the-dollar desperation deals. We also know exactly what they are thinking: hedge funds and billionaires control the US private media, and the private media has obviously been given an unmistakable editorial line of: promote the lockdowns at all costs – eliminate contrarian views.

The alternative to that explanation for the banksters’ refusal to communicate is: the 0.01% is so very, very humane and patriotic that they don’t want to reopen the country because they fear for the health of their workers and debtors (all of a sudden). Thus, they are working to undermine Trump to save America from him, much like the recently-outed (allegedly) Anonymous. (Yes, US Democrats – in their Trump Derangement Syndrome – championed a far-right blogger who worked as the national security advisor to uber-right presidential candidate Ted Cruz. She surely feels at home in her new assignment in Saudi Arabia.)

The focus of Trump’s phone call was exactly what it should have been: he was calling to ask what is going on with the small business loan program. He wanted answers about what the heck is going on to help ease the catastrophe epidemiologists and technocrats have foisted upon Main Street.

But this bankster ignoring of the expression of the democratic will (Trump was elected fairly, at least according to the American system) should have been entirely expected: massive taxpayer money-printing has never been anything but hoarded within the elite financial ecosystems of the 1% in either the US or the Eurozone.

Again, such snubbing in Iran and China is unthinkable, and don’t make yourself look foolish by saying its because of “authoritarianism”: there is an army of CCP and Basij-member civil servants who would get the word out, and you’d have protests in the press and on the streets. What’s not certain would be mob justice for the bankers – what is absolutely certain is bureaucratic retribution in the form of cutting off the clout and influence of these bankers. Advantage: the non-West.

You probably didn’t hear anything about this “s*** show” of a phone call, and you certainly didn’t get a socialist analysis of it as you did here. If you did hear something it was certainly – just like with Politico’s take there – written with a view to discredit Trump with every line. That is the “liberal” (fake-leftist) tack, while the conservative (far-right) tack would be to bury the story because it shows how the US elite doesn’t care at all about Main Street.

The realty is that – amid 12 years of no-strings attached bailouts – the 1% is doing just fine. The Great Lockdown is just an inconvenience, on a personal level. On a financial level they have so very, very much to gain.

What has been lent so far: local banks, not corporate, care about Main Street

Corporate banks needed to explain themselves to Trump precisely because they were in the middle of not lending the $350 billion in small business loans in the Paycheck Protection Program, which started April 3. Their lending performance was entirely in keeping with the previous dozen years – they don’t want to lend but want to keep hoarding among the 1%.

Four easy proofs of that:

  • As predicted, the big banks gave loans to their existing, vetted customers: the clouted get ever-cloutier in capitalism, per Marx. As I keep stressing: those without savings and connections prior to the start of the corona overreaction are going to be left in the cold due to the atrocious future economic sentiment, which has been caused by the frog-march to financial suicide for the West’s governmentally-abandoned lower-classes.
  • JP Morgan (largest US bank) got loans for virtually all their commercial banking customers, but their business banking unit (for smaller firms) only funded 6% of applications.
  • A very minor scandal has ensued over the 150 public companies – i.e, not at all “small” businesses – for which the major banks finagled nearly $1 billion, and I wonder if that is the true tally.
  • In the, “Did we really need to be told that?” file: On April 24 the US had to formally stop hedge funds – the speculating, gambling evictors and the master of sad-eyed repo slave-workers – from applying for small business aid.

The loans were entirely backed by the government – no risk at all – but the problem was threefold for the big banks:

Firstly, not enough profit: the Treasury’s guideline interest rate of 0.5% wasn’t profitable enough for them, so the Treasury department bowed in submission and immediately doubled it to 1%. Still not enough, obviously, but the big banks did process some clout-related loans for the large fees they could charge. Second – and this is minor – because loans are being rushed through without due diligence it’s likely the failure and fraud rates will be higher… but these loans are backed entirely by the government. Thirdly, who profits when people go bust despite small loans from the government? The repo men, i.e. the corporate bankers.

Bankers are never heroes, but in the US it was the community banks which ultimately extended the bulk of the small business loans. It is entirely logical that some bankers actually do care about their local community, but it is also necessary capitalist self-interest: they got the paperwork in and committed themselves to doing some long-term work with just 1% profit rates (plus their fees, of course) because if Main Street fails then the local bank fails as well and falls into corporate hands.

However, only someone who disregards class warfare, and assumes that in the West it’s “US banks versus Japanese banks” or some such nonsense, could possibly believe that multi-national banks have ever cared about Main Street in the US? They did not want to support a new precedent – actually sharing QE – thus they did not participate in a manner proportional to their economic standing.

Thus, the behaviour of community versus corporate banks in the US is something of necessary interest, but the obvious conclusion afforded us by the class warfare lens means that the 1% has to ignore it and cover it up.

The data is in: QE is a failure, and the 1% aims to keep it that way (to keep the money for themselves)

So even though I planned to write this article two weeks ago, at least now the data is in: Will banks give loans this time?

No.

Realising the urgency of the corona crisis as well as the fact that major banks weren’t going to lend money, the US created a small business program to guarantee some loans – even waiving the need for collateral, even making them fully guaranteed by the government… the big banks still said no, and still abused the system.

Bottom line: when corporate banks need money, loans must be rushed through. When Main Street needs it – conditions (strings) matter.

This is a major failure of Western economic policy and their political system – the president is merely the most powerful bureaucrat but even his intervention was ignored and subjected to a mass propaganda campaign.

The reality is that the US has no margin for error now: The New York Times quoted sources which said of small businesses: “25 percent cannot make it past 30 days”. JP Morgan estimated that of 600,000 small businesses only half hold a cash buffer large enough to support 27 days of zero revenue flowing in. Eighty percent of the US was on lockdown as of April 2 – 27 days means this Wednesday.

Bloomberg reports that as of April 17 only 20% of small businesses had received any loan money at all.

Bottom line on this lovely lockdowned Sunday: There is no way that an enormous number of small US businesses – the lowest of any bank’s priorities – are going to get loans in time. Expect huge economic problems.

The capitalist-dogma stupidity of this is that only Congress could indeed send checks directly local businesses but a bankocracy is predicated on going through banker middlemen. The lie is that government is too slow, not “nimble” enough (to use a word rabid capitalists love) – the untold truth is the the banks are too “hoarding”.

Saturday’s headline: Congress approved $370 billion more in small business loans, but the money could run out in days — again. With $700 billion the Small Business Association has instantly become one of the world’s biggest institutions, but it is as if the US thought they could build a Chinese Communist Party-sized institution – and with all their experience and strong organisational culture – on the fly. This is how capitalists adopt socialist solutions – only in a crisis, and with a purposeful ineptness which only increases the money and market concentration of the 1%.

For the Eurozone “strings” mean life-or-death for both Main Street and the political structure, as I recently summarised at the end of Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US: “…in a post-corona world: QE is not going to finally create economic growth unless strings are FINALLY attached. Not down-loaning this round(s) of QE means total, prolonged economic chaos combined with rapid governmental insolvency in the awful neoliberal-empire structure which is the Eurozone.”

The Western 1% is united in collusion – nations do not matter in liberal economics, and places like Iran and China did not ignore the ramifications of that principle when reorganised their political cultures.

In the US small businesses provide half the jobs and half the GNP, but even when the US president tries to intervene on behalf of the lower classes the truth is only revealed yet again: the lower classes have been politically and socioeconomically neutered in the West.

So even if the Sandernista liberal reformists/fake-leftists took power tonight there would still be no reason to expect drastic behavioral changes from the hoarding and clouted banks, nor from a neoliberalism-shrunk bureaucracy, nor from a media which only wants to pounce on Trump and sanctify the 1%, nor from a culture used to accepting obvious propaganda without question.

This mere hard news reporter can report that the on-the-ground reality has remained unchanged for 12 years: if Western corporate banks don’t loan QE more to small businesses, their Main Streets will be finished. This doesn’t mean an immediate end to the geopolitical dominance of Western capitalist-imperialist cultures, of course.

Combine the lack of loans with the corona overreaction and the West as a whole may not commit suicide, but many in their lower classes will.

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Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis, and I hope you will find them useful in your leftist struggle!

Capitalist-imperialist West stays home over corona – they grew a conscience? – March 22, 2020

Corona meds in every pot & a People’s QE: the Trumpian populism they hoped for? – March 23, 2020

A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020

MSNBC: Chicago price gouging up 9,000% & the sports-journalization of US media – March 25, 2020

Tough times need vanguard parties – are ‘social media users’ the West’s? – March 26, 2020

If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020

Landlord class: Waive or donate rent-profits now or fear the Cultural Revolution – March 31, 2020

Corona repeating 9/11 & Y2K hysterias? Both saw huge economic overreactions – April 1, 2020

(A Soviet?) Superman: Red Son – the new socialist film to watch on lockdown – April 2, 2020

Corona rewrites capitalist bust-chronology & proves: It’s the nation-state, stupid – April 3, 2020

Condensing the data leaves no doubt: Fear corona-economy more than the virus – April 5, 2020

‘We’re Going Wrong’: The West’s middling, middle-class corona response – April 10, 2020

Why does the UK have an ‘army’ of volunteers but the US has a shortage? – April 12, 2020

No buybacks allowed or dared? Then wave goodbye to Western stock market gains – April 13, 2020

Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020

No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all – April 16, 2020

Same 2008 QE playbook, but the Eurozone will kick off Western chaos not the US – April 18, 2020

We’re giving up our civil liberties. Fine, but to which type of state? – April 20, 2020

Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020

Iran’s ‘resistance economy’: the post-corona wish of the West’s silent majority (1/2) – April 23, 2020

Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the upcoming ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.

 

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