Posts Tagged ‘corporations’

PettJ20141030_low

Special mention

6a0105369e6edf970b01b7c6fd1889970b-800wi B1NJ0NWIAAAsybq

155423_600

Special mention

wuc141028-6052_605  cartoon29102014

DAmbrosioFairey2009_Image_4

It’s a good thing I don’t teach Money and Banking. I wouldn’t be very good at it. That’s because, as Magpie and Bruce remind me, my understanding of money and banking is riddled with myths and bad textbook theories.

But I am willing to learn. . .

fredgraph

Lesson #1: it is not the case, as countless textbooks and on-line courses teach, that banks collect the deposits of countless small savers and loan them out for investment projects. That image—of banks as useful financial intermediaries, given the existence of money—is simply false. Instead, what banks (commercial banks, that is) do is make interest-earning loans and leases and then, on the opposite side of the ledger, credit deposits—thus creating money.

So, what role do customer deposits play if not to create loans? According to Ellen Brown, “while banks do not need the deposits to create loans, they do need to balance their books; and attracting customer deposits is usually the cheapest way to do it.”

fredgraph-2

Lesson #2: quantitative easing has not involved the Fed printing money, and then giving that money (as costless or free cash) to banks in order to encourage lending (much less to buy back government debt). Instead, what the Fed has done is expand bank reserve deposits by purchasing Treasury bonds (and mortgage-backed securities) from banks, thereby increasing both the Fed’s holding of Treasury securities and the excess reserves of depository institutions.

The fact is, however, banks of late have renewed their purchases of government debt instruments (as we can see in line 3 of the latest Assets and Liabilities of Commercial Banks in the United States statement). The question is, why? According to Bloomberg, commercial lenders have increased their holdings of Treasury bonds this year “as loan growth fails to keep up with record deposits and banks prepare for rules that take effect in January requiring them to hold more high-quality assets.”

As I see it, banks are not lending at the pace we (and, for that matter, the Fed) would like not because they don’t have adequate reserves (as Paul Krugman argues today) but because they don’t see enough profitable opportunities among their corporate customers—who are not investing but, instead, hoarding their cash, buying back stock, and finding ways to shelter their income from taxes.

The fact is, the nature and pace of the current recovery are not determined by the savings of individuals and households, but of the profit-seeking investment decisions of large private banks and corporations.

So, thanks to Magpie and Bruce, I’ve learned a few things. But, I’ll admit, I still may be getting some of this wrong—and therefore am still not ready to teach Money and Banking.

mcfadden-26-10

Special mention

judge 1024 155307_600

tumblr_ndlpp8RZqW1r55d2io1_1280

Special mention

huck2nov 63694_cartoon_main

 

The second part of That Film about Money is even better than the first.

That’s because it explores the connection between money and the crisis of 2007-08, including giving the working-class more debt instead of increasing wages (which is why, as you can see below, household debt service payments as a percent of disposable personal income rose so precipitously from the early-1990s onward, until the crash) and why the banks have recovered since the crash (by taking cheap money from the government and lending it back, to finance the deficit, at higher rates of interest).

fredgraph

article-1284967555645-0B41B226000005DC-652698_466x310

There is no federal protection for women workers who are pregnant. Such as Angelica Valencia [ht: sm], who was fired after she requested permission from her employer not to be forced to work overtime.

The United States did pass The Pregnancy Discrimination Act of 1978, which prohibits discrimination “on the basis of pregnancy, childbirth, or related medical conditions.” But the Act does not require employers to do anything to accommodate the needs of pregnant workers (although the Supreme Court is set to hear a case, Young v. United Parcel Service, on “whether, and in what circumstances, the Pregnancy Discrimination Act. . .requires an employer that provides work accommodations to non-pregnant employees with work limitations to provide work accommodations to pregnant employees who are ‘similar in their ability or inability to work'”).  And the Pregnant Women’s Fairness Act, H.R. 1975 and S. 942 [pdf], which was referred to Committee on 14 May 14 2013, has no chance of being enacted anytime soon.

So, seventeen separate states and cities, such Illinois and New York City, have had to pass their own legislative protections. Still, many workers don’t know their rights, and often don’t have the means to demand compliance. And their employers often disregard the laws that do exist.

Respecting a woman’s pregnancy at work is also a social and racial equity issue. According to the National Women’s Law Center, low-wage women workers, many of them primary income-earners, often have more physically demanding duties, such as lifting boxes or prolonged standing. Pregnancy-related discrimination complaints have been concentrated in the highly gendered service sectors, like retail sales and hospitality. Many physically strenuous jobs like domestic work and home healthcare services are disproportionately done by immigrant and black women.

A female executive of the Lean In class probably wouldn’t be reprimanded for wanting to lean back a bit with a foot rest at board meetings. But women workers at Walmart had to wage a national campaign for months before the company changed its policies to ensure reasonable pregnancy accommodations (and many say the policy remains only spottily enforced).

Update

There’s good news. And bad news.

The good: Angela Valencia’s bosses [ht: sm] have offered her job back. The bad: the United States still doesn’t have a Pregnant Workers Fairness Act (see original post).