The spirit of the age can be assessed by what grabs our attention. What are talking about now? The great global slowdown. Or, more accurately, we’ve been talking about it for a year so; ever since big, old-economy corporations that had just been holding on started to go under.
Sears, the great US retailer, once the largest mail-order company in the world, finally collapsed late last year. General Electric, a company at the heart of industrial capitalism and founded by Thomas Edison, has saved itself from default by selling off practically every division that makes any money. I could add numerous examples.
But what really got our attention was when BuzzFeed and Huffington Post announced major layoffs — which continue this week. Huffington Post, that strange product of the giddy mid-noughties, is more a case of “wow — is that still going?”. I just looked at it now. Alec Baldwin’s in trouble, and Glenn Close wants to talk about sex and seniors. Good god. It’s like visiting a great-great aunt in a rickety old house: “why don’t you ever visit meeeeeeeeee?” So much for HuffPost.
But BuzzFeed is a different matter, with 15% of its employees going — including, from an announcement this morning, much of the Australian news team that has punched well above its weight in recent times. It’s inevitable that a mass layoff of journalists would attract the attention of journalists. But beyond that, BuzzFeed was the standard-bearer of the era, starting as clickbait and pictures of cats doing amazing things, then pivoting to serious news (it’s made some extraordinary scoops).
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But there’s always been a sense that it was a cartoon character walking on air. Clickbait, its revenue model, died long ago under the impact of the sheer exponential expansion of available material for eyeballs.
Many sites went to the wall last year. Mic, a bandwagon jumping competitor, was gutted and its masthead was sold off. BuzzFeed has been running ahead of the fire for some time. The company’s dire straits can be assessed by the fact that it is, as yet, refusing to pay the accrued deferred vacation time of laid-off employees in states and countries where it does not have to. The management announced that it was scaling back, in order to rely on its own resources.
Translation: no one will give the company money anymore. The party’s over again.
What has hit BuzzFeed below the waterline? As Doug Henwood of Left Business Observer put it simply: “the end of QE”. As this correspondent noted mid-last year, the turning off of quantitative easing is the major event of the moment, and its consequences are just starting to rattle through the global economy.
Quantitative easing — putting money into the system, largely through government bond buybacks from private banks — has been running since the global 2008 crash. How much new money has been pumped into/printed for the global economy in that time? No one knows a true figure, but it’s likely somewhere between $10-20 trillion.
That vast rainstorm of cash just about managed to keep the global economy flowing, but not with anything like the impact you’d want or expect. The problem was largely structural. The money was given to financial institutions to lend out, thus ensuring the health of the financial institutions. Most of it was simply reinvested in other financial products.
The result has been wages stagnation and the inflation of a global property bubble, hidden by the archaic methods we apply to measuring the official inflation rate. We’ve been in a period of hidden stagflation for some time, and the large proportion of the population affected by it have adapted: giving up on home ownership, then giving up on living in certain city areas (or the city they work in), then adapting to sharehouse living as adults. Outside of the urban hot zones, the reverse: people gave up on full-time, secure and well-paid employment and accepted that partial, casual work was the new norm.
Well all that was taking place in the era of QE. Now we’re in the era of QT – quantitative tightening — where the money tap has been turned off, so as to prevent the erosion of value in the system. There has been pressure from wealth holders for years to implement QT; government and world bodies have feared to do so because of what could essentially be a double recession.
The world, having barely recovered from the 2008 recession, is about to get a whole new one. But in the decade since, simultaneous with money-pumping, there has been low underlying growth in the West, rising debt in all sectors, and no pay down of the money used for the — outside of Australia — inadequate stimulus packages applied to the last recession. The forecast for the US is that growth in 2020 will be 1.7% — which is effectively recession — and it is clear that China is transitioning to a lower growth period, to some degree in a directed fashion.
This has started, and it won’t end soon. The troubles of one clickbait/news website don’t amount to much — though all solidarity to our colleagues — but they perversely fulfil the site’s mission of letting us know where things are at. Maybe we should just let the cats run things. They seem to know what they’re doing.