Baltic Dry Index. 2438 -34 Brent Crude 71.9
Spot Gold 1892
Well, fancy giving money to the Government! Might as well have put it down the drain. Fancy giving money to the Government! Nobody will see the stuff again. Well, they've no idea what money's for- Ten to one they'll start another war. I've heard a lot of silly things, but, Lor'! Fancy giving money to the Government!
A. P. Herbert.
Hopes for 'historic' global corporate tax deal as G7 meets
Finance ministers from wealthy G7 nations are on Saturday expected to announce support for a minimum global level of corporate tax, aimed at getting multinationals -- especially tech giants -- to pay more into government coffers hit hard by the pandemic.
According to a draft communique seen by AFP, the finance chiefs and central bankers of the world's seven richest nations will express "strong support" and a "high level of ambition" over the US-backed tax plans.
French economy minister Bruno Le Maire told journalists on Friday evening: "If we have an agreement tomorrow, it will be a historic step forward".
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It will also "give considerable momentum to the G20", scheduled to hold a finance meeting in July, he said.
British finance minister Rishi Sunak on Friday chaired the first of two days of meetings, held in person after an easing of Covid-19 restrictions and attended by counterparts from Canada, France, Germany, Italy, Japan and the United States.
The talks were preparing the ground for a broader summit of G7 leaders in Cornwall, southwest England starting on June 11.
US President Joe Biden is set to attend on his first foreign tour since taking office in January.
- 'Difficult to accept' -
Momentum is growing behind the US-led plans to limit the ability of multinationals like tech giants to game the system to boost profits, especially at a time when economies around the world are reeling from the impact of the coronavirus pandemic.
"Before the crisis, it was difficult to understand," a European source told AFP. "After the crisis, it is difficult to accept."
Corporate tax is one of two pillars in efforts for global fiscal reform, the other being a "digital tax" to allow countries to tax the profits of multinationals headquartered overseas.
"It is increasingly clear that in a complex, global, digital economy, we cannot continue to rely on a tax system that was largely designed as in the 1920s," Sunak said in opening remarks.
"And I would just say this: the world has noticed. And I believe they have high expectations for what we all can agree over the coming days."
According to the draft communique, ministers also plan to commit to "sustain policy support", or stimulus, for "as long as necessary" to nurture economic recovery, while addressing climate change and inequalities in society.
Furthermore, they will urge "equitable, safe and affordable access to Covid-19 vaccines" everywhere.
The thorny topic of the regulation of digital currencies such as bitcoin will also be on the agenda.
- Agreement 'within sight' -
Biden has called for a unified minimum corporate tax rate of 15 percent in negotiations with the Organisation for Economic Co-operation and Development (OECD) and G20.
His proposal has so far won broad support from countries such as France and Germany, as well as the International Monetary Fund.
A deal is "within sight", finance ministers from France, Germany, Italy and non-G7 member Spain declared Friday.
----France's Le Maire told journalists in London that Biden's proposed 15 percent is "a minimum. For us, it's a starting point".
Along with its G7 and G20 partners, France wants "a more ambitious level of taxation," the minister said, with the current pandemic crisis showing that "tax evasion, the race towards the lowest possible level of taxation, is a dead end".
Ireland has expressed "significant reservations" about Biden's plan, however. Its 12.5-percent tax rate is one of the lowest in the world, prompting tech giants such as Facebook and Google to make Ireland the home of their European operations.
Job creation accelerated in May but is still below lofty expectations
Job creation disappointed again in May, with nonfarm payrolls up what normally would be considered a solid 559,000 but still short of lofty expectations, the Labor Department reported Friday.
Payrolls were expected to increase by 671,000, according to economists surveyed by Dow Jones.
May’s letdown came after April sharply undershot expectations, with the upwardly revised 278,000 still well short of the initial 1 million estimate that came with high hopes for an economy trying to shake loose its pandemic shackles.
Markets were not disappointed by Friday’s report. Stock market futures actually rose, with investors betting that the measured pace of job gains would keep the Federal Reserve from raising interest rates and tightening monetary policy.
“Economists have been a little overly optimistic about the pace of which we’re moving here. It takes a while for people to get jobs,” said Kathy Jones, head of fixed income at Charles Schwab. “For the stock market, there’s no reason for the Fed to move too quickly, and therefore that’s also good news for the bond market.”
The employment- to-population ratio, which some Fed officials have cited as an important gauge of labor progress, inched higher to 58% but remained well short of its pre-pandemic level of 61.1%. The labor force participation rate, another closely watched metric, edged lower to 61.6% as the size of the group fell by 53,000 with more than 100 million American workers remaining on the sidelines.
The Bottom 90% of Americans Are Borrowing From the Top 1%
The savings of the rich are recycled into household and government debt.
More stories by Peter Coy June 4, 2021, 6:00 AM EDT
We know three things about the U.S. economy: The rich are getting richer, everyone else is in debt, and interest rates have fallen. Is there a connection? Yes, and the link has implications for fiscal and monetary policy.
By forcing interest rates down, extreme wealth inequality pushes the U.S. economy toward a “debt trap” that’s hard to escape with conventional macroeconomic tools, write Atif Mian of Princeton, Ludwig Straub of Harvard, and Amir Sufi of the University of Chicago in an important paper that came out earlier this year, titled “Indebted Demand.” They advocate unconventional measures such as redistributive tax policies that narrow the gap between rich and poor.
The paper is in the same vein as work by former Federal Reserve Chairman Ben Bernanke, who publicized the concept of a global savings glut, and former Treasury Secretary Lawrence Summers, who revived the Depression-era notion of secular stagnation. Mian, Straub, and Sufi’s contribution is the theory of indebted demand, which they write is “the idea that large debt burdens lower aggregate demand, and thus the natural rate of interest.”
Here’s their concept: The rich can’t possibly spend everything they earn, so they save a lot. In theory those savings can be recycled into productive investment, but in practice a lot of the money finances borrowing—i.e., dissaving—by people farther down the income ladder. “A substantial amount of borrowing by households in the bottom 90% of the wealth distribution was financed through the accumulation of financial assets by the top 1%,” the economists write, citing their own prior work.
The lending from rich to poor can be indirect. For example, let’s say a rich person buys shares issued by a company. The company stashes the proceeds in a bank. The bank in turn makes a loan to a non-rich person to buy a car or a house. The borrowers have a higher propensity to spend than the lenders, but they have less money to spend because part of their income goes to debt service.
The excess of desired savings over desired investment pushes interest rates down and down until the effective lower bound of around zero. Rates can’t get much below zero because savers won’t tolerate it—they’d rather put their money under a mattress than earn a negative return on it.
Any policy that attempts to fix things by encouraging more borrowing makes things better in the short run but worse in the long run by saddling the private or government borrowers with even more debts that will eventually have to be repaid, the economists write.
Finally, after yesterday’s UN food supply warning a look at this year’s North American grain season. High prices drove early and widespread planting, now it’s all down to the rains, the heat and the harvest.
USDA releases strong corn good/excellent rating
Corn planting is nearly over.
By Mike McGinnis 6/1/2021
U.S. farmers nearly wrap up corn planting, while the soybean crop goes into the ground a lot faster than average.
Emergence of both crops remains ahead of five-year averages by 10%, according to the USDA Crop Progress Report.
CORN
As of Sunday, the U.S. had 95% of the corn crop planted, above an 87% five-year average and equal to the trade’s expectations.
Of the total U.S. corn planted, 81% of it has emerged, above the 70% five-year average.
In its report, the USDA pegged the U.S. corn good/excellent rating at 76%, above the trade’s expectations of 70%. This is the first good/excellent rating for the 2021 crop season.
SOYBEANS
As of Sunday, the USDA rated the nation’s soybean crop as 84% planted vs. a 67% five-year average.
The USDA noted that 62% of the soybeans are out of the ground vs. a 42% five-year average.
WHEAT
In its report Monday, the USDA rated the U.S. spring crop as 43% good/excellent vs. 45% a week ago.
The U.S. winter wheat crop is rated as 48% good/excellent, vs. 47% a week ago.
More
https://www.agriculture.com/news/crops/usda-releases-strong-corn-goodexcellent-rating
Western Drought Is Locked In, But Some Relief Is Ahead For Emerging Midwest, East Drought
By Jonathan Erdman June 2, 2021
The increasingly dire western U.S. drought is locked in through the summer, while other areas of drought in the Northern Plains, Great Lakes and East are in need of rain as well. Some relief is on the way for the East and Midwest.
Drought currently blankets just over 43% of the area of the Lower 48 states, according to the latest Drought Monitor analysis.
It has reached the highest drought category –- "exceptional" –– in parts of eight western states, from Oregon and California to western Texas. Water restrictions are growing in California and the Colorado River could face its first-ever water shortage due to paltry snowpack that feeds it and downstream reservoirs, including Nevada's Lake Mead.
Drought has also developed or worsened in three other areas of the country this spring.
Here's a closer look at these regions and the prospects for any drought relief:
More
https://weather.com/forecast/regional/news/2021-06-02-drought-relief-midwest-northern-plains-east
“The government you elect is the government you deserve.”
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift populist politicians, inflation now needs an entire section of its own.
China Starts a War on Commodity Prices Goldman Says It Can’t Win
Bloomberg News
· The crackdown could ripple through markets around the world
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