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2) Britain’s Labour Party Is Now to the Right of America’s Democratic Party
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This is a good news, bad news story. The good news is that it appears the British Labour Party has been mugged by economic reality, and is abandoning its traditional far-left “soak the rich” policies. Maybe that’s because growth at less than 1% has been so anemic in Britain (and the Eurozone) that if present trends continue, the former Communist nation of Poland (which is growing at 3.6%) will be wealthier than Britain in 2030.
Rachel Reeves, who would likely become Treasury Secretary if Labour wins this year’s election, has just pledged she would not raise the 25% corporate tax rate and could even cut it ‘should our competitiveness come under threat’.
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“This Labour Party sees profit not as something to be disdained but as a mark of business succeeding,” she told an economic conference this week. “I don’t see a route towards having more money for public services that is through taxing our way there. It is going to be through growing our way there.”
Labour has also promised not to institute a wealth tax, increase the top income tax rate above the current 45%, or reinstate a cap on bankers’ bonuses it once imposed. It even promises more homes by relaxing rules on building in the Green Belts that surround British cities.
Now for the bad news. The traditionally leftwing Labour Party is now to the right of the Biden Democrats in America. Biden has proposed raising almost every tax on the rich: the highest income tax rate, the corporate rate, the capital gains rate, and the dividend tax, while proposing a new wealth tax on unrealized capital gains.
It used to be a common charge that the Democrats had become as leftwing as the Labour Party in Britain and, sadly, today that’s a smear against the Labour Party.
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3) Bank Lending to Businesses Down $200 Billion
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We mentioned in the Hotline last week that venture capital funding was down by roughly 50% last year.
Now we learn from former World Bank President David Malpass, who heads up the CTUP economic advisory board, that banks are cutting their lending to businesses.
According to the most recent Federal Reserve data on the volume of bank lending at the end of 2023, the amount of money lent fell by $35 billion from the year before. But Malpass points out that if lending had simply grown at the inflation rate, we would have seen a $170 billion INCREASE. Hence, in real terms, bank loans were down by $205 billion.
We suspect there are two reasons for the bank's caution. First, total core bank deposits – i.e., lendable money – were down by $1.1 trillion, or 6% last year.
Second, is stricter bank credit standards – in part as a result of tighter regulations. One of those is the threat of new stricter capital requirements, “Basel 3”, imposed on banks. If banks are required to hold more reserves, by definition they have to loan out less money.
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This loan shrinkage suffocates small businesses' access to capital to grow and invest. It’s a worrisome forward-looking indicator for the economy.
Malpass on Maria Bartiroma: Where are the loans?
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4) Oakland Is Too Dangerous for Denny's
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This closure of a 54-year-old Denny's on the heels of In-N-Out Burgers closing raises a question – how long before there's no place to get a burger in Oakland?
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5) Anthony Fauci Is Now a Leading Climatologist Too!
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In case there was any doubt that climate lockdowns are the sequel to COVID, here is what Fauci said last night at Georgetown:
You can't take emerging infections and say, I'm going to do something about climate change that's going to negate the negative effect of climate change on emerging infections. You've got to be part of the movement, the broad global movement, of taking a look at climate change and its effects.
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By the way, how is it that a man who has been wrong on every single prediction and policy he has ever advocated gets a forum at Georgetown? Who’s next on the agenda: palm readers and astrologists?
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6) Have They Hit Him Yet?
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