WORLD WORLDWIDE EUROPE ITALY - news journal UPDATE - (en) Italy, Umanita Nova #14-25 - There is logic to this madness. Trade war, interest rates and military spending (ca, de, it, pt, tr)[machine translation]

 "There will be bloodshed," economists at JP Morgan, America's largest

bank, said on "Liberation Day" (April 2), when Donald Trump announced
his "reciprocal" tariffs on all US imports. JP Morgan has raised the
probability that the trade war will trigger a global recession to 60%.
The IMF expects global growth to be 0.8 percentage points lower than its
previous forecast for 2025, falling to 2.8% this year, due to US tariff
hikes and uncertainty about what will happen next. In its latest report,
UNCTAD, the United Nations trade agency, is much more pessimistic.
UNCTAD forecasts global growth to slow to just 2.3% this year, below the
2.5% level UNCTAD has set as a sign of a global recession. UNCTAD notes
that while "the slowdown will hit all nations," it will hit most
"developing countries and particularly the most vulnerable economies"
hardest. Just 10 of the US's nearly 200 trading partners account for
nearly 90% of its trade deficit. Yet the least developed countries and
small island developing states - accounting for just 1.6% and 0.4% of
the US deficit respectively - are the hardest hit. Many low-income
economies now face a "perfect storm" of worsening external conditions,
unsustainable debt levels and slowing domestic growth. In early May,
Standard & Poor's also warned of increased uncertainty in the economic
outlook.

The best indicator of whether there will be a crisis is what is
happening to the overall profit rate, of which corporate profits are a
part. US companies will be reporting their financial results in the next
couple of weeks. But if we look at official corporate earnings data,
through the fourth quarter of 2024, everything looks reasonably good. US
corporate profits have risen sharply since the start of the COVID-19
pandemic, reaching nearly $4 trillion at the end of 2024. Profits of the
domestic non-financial industries, which averaged 8.1% of national
income in 2010-19, rose to 11.2% in the last quarter of 2024. Relative
to national income, this is a 2.3% increase from the pre-pandemic
period. Globally, corporate profits are also continuing to grow, albeit
at a relatively weak pace. As long as the profit rate continues to rise,
a recession is unlikely, and corporate profits can be an indicator.
However, much of the growth in profits in the United States has been
achieved by a fall in interest rates that has reduced the cost of debt.
And companies have not invested most of these increased profits in new
equipment and plants. Instead, 76% of the growth in corporate profits
has gone to dividends that reward shareholders. Only 15% has been
invested (the rest has gone to taxes). Corporate profits, dividends, and
taxes are all fractions of the profit that is produced in the process of
producing surplus value, where the exploitation of labor capacity occurs.

Industrial development itself is the cause of the reduction in the
profitability of capital invested in the process of producing surplus
value. The increase in the mass of means of production set in motion by
the same amount of labor capacity reduces the percentage of surplus
value in relation to total capital. The increase in the scale of
production makes it increasingly necessary to resort to credit and
government intervention; all of this has a cost, an increase in interest
expenditure and tax burden, which reduces the share of profit that
remains for the industrial capitalist. The same increase in the mass of
means of production necessary to start a new industrial cycle pushes
companies to form joint stock companies; shareholders invest with a view
to a dividend, and the dividends distributed further reduce the share of
profit destined for accumulation. We are therefore faced with a
structural overcapitalization.

The picture described above is one of stagnation, rather than recession.
It is at this point that the action of governments comes into play,
which move in three directions: keeping the working class under control,
supporting national production, conquering new markets and new sources
of raw materials for this production. There is logic to this madness.
Trade war, interest rates and military spending

"There will be bloodshed," economists at JP Morgan, America's largest
bank, said on "Liberation Day" (April 2), when Donald Trump announced
his "reciprocal" tariffs on all US imports. JP Morgan has raised the
probability that the trade war will trigger a global recession to 60%.
The IMF expects global growth to be 0.8 percentage points lower than its
previous forecast for 2025, falling to 2.8% this year, due to US tariff
hikes and uncertainty about what will happen next. In its latest report,
UNCTAD, the United Nations trade agency, is much more pessimistic.
UNCTAD forecasts global growth to slow to just 2.3% this year, below the
2.5% level UNCTAD has set as a sign of a global recession. UNCTAD notes
that while "the slowdown will hit all nations," it will hit most
"developing countries and particularly the most vulnerable economies"
hardest. Just 10 of the US's nearly 200 trading partners account for
nearly 90% of its trade deficit. Yet the least developed countries and
small island developing states - accounting for just 1.6% and 0.4% of
the US deficit respectively - are the hardest hit. Many low-income
economies now face a "perfect storm" of worsening external conditions,
unsustainable debt levels and slowing domestic growth. In early May,
Standard & Poor's also warned of increased uncertainty in the economic
outlook.

The best indicator of whether there will be a crisis is what is
happening to the overall profit rate, of which corporate profits are a
part. US companies will be reporting their financial results in the next
couple of weeks. But if we look at official corporate earnings data,
through the fourth quarter of 2024, everything looks reasonably good. US
corporate profits have risen sharply since the start of the COVID-19
pandemic, reaching nearly $4 trillion at the end of 2024. Profits of the
domestic non-financial industries, which averaged 8.1% of national
income in 2010-19, rose to 11.2% in the last quarter of 2024. Relative
to national income, this is a 2.3% increase from the pre-pandemic
period. Globally, corporate profits are also continuing to grow, albeit
at a relatively weak pace. As long as the profit rate continues to rise,
a recession is unlikely, and corporate profits can be an indicator.
However, much of the growth in profits in the United States has been
achieved by a fall in interest rates that has reduced the cost of debt.
And companies have not invested most of these increased profits in new
equipment and plants. Instead, 76% of the growth in corporate profits
has gone to dividends that reward shareholders. Only 15% has been
invested (the rest has gone to taxes). Corporate profits, dividends, and
taxes are all fractions of the profit that is produced in the process of
producing surplus value, where the exploitation of labor capacity occurs.

Industrial development itself is the cause of the reduction in the
profitability of capital invested in the process of producing surplus
value. The increase in the mass of means of production set in motion by
the same amount of labor capacity reduces the percentage of surplus
value in relation to total capital. The increase in the scale of
production makes it increasingly necessary to resort to credit and
government intervention; all of this has a cost, an increase in interest
expenditure and tax burden, which reduces the share of profit that
remains for the industrial capitalist. The same increase in the mass of
means of production necessary to start a new industrial cycle pushes
companies to form joint stock companies; shareholders invest with a view
to a dividend, and the dividends distributed further reduce the share of
profit destined for accumulation. We are therefore faced with a
structural overcapitalization.

The picture described above is one of stagnation, rather than recession.
It is at this point that the action of governments comes into play,
which move in three directions: keeping the working class under control,
supporting national production, conquering new markets and new sources
of raw materials for this production.

https://umanitanova.org/ce-una-logica-in-questa-follia-guerra-commerciale-tassi-di-interesse-e-spese-militari/
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