Hundreds of jobs axed as Australian Broadcasting Corporation imposes government cuts

Richard Phillips

Australian Broadcasting Corporation (ABC) management announced last week that 250 jobs will be axed at the network by the end of July.

The previously foreshadowed job destruction, presented as part of management’s “five-year plan,” was in response to an $84 million budget shortfall caused by a federal government freeze on operational funding. Between 2014 and 2022, the ABC will have suffered more than $783 million in government funding cuts, drastically undermining network operations and destroying hundreds of jobs.

The ABC is the country’s largest broadcasting and media employer, generating a wide range of programs that commercial media networks do not produce. These include arts, science, literature, music, history and education programs, as well as life-saving bushfire and other national emergency broadcasting.

The latest cuts will impact on all aspects of the broadcaster and include the elimination of journalists, commissioning editors, researchers and other key creative and production positions.

At least 70 jobs will go from news, 53 from the entertainment and specialist division and 19 from local and regional sectors of the government-funded network. According to news reports, production positions in some areas are being eliminated and replaced with workers on reduced pay rates.

The network’s popular 7.45 a.m. local radio news services, which has run for 80 years, will end, the ABC Life portal is to be axed, news, documentaries, comedy and children’s programs will be reduced and/or integrated into other departments, and travel expenditure is to be cut by 25 percent.

External and independent screen production funding will be reduced by $5 million annually. The broadcaster spends about $90 million each year commissioning work from independent producers.

Overall, the ABC will broadcast at least 35 fewer hours of original television per year with popular programs, such as “Old People’s Home for 4 Year Olds,” “You Can’t Ask That,” and others shut down. Episodes of high-rating television programs, such as “Foreign Correspondent,” “7.30” and “Australian Story” will also be reduced.

While the ABC’s current number of TV and radio channels will remain, management indicated that there will be other “consolidations” and possible transmission cuts as the network is “re-oriented” towards on-demand and digital services. This, management claims, will ensure the network becomes “more relevant to more Australians.”

Federal Communications Minister Paul Fletcher praised the “five-year plan” and ludicrously claimed, along with Prime Minister Scott Morrison, that government funding to the network had increased.

In real terms, however, government funding of the ABC is 30 percent below what it was in 1985–86 and 10 percent less than in 2013. In the past seven years alone, the network has been subjected to an onslaught. ABC television has axed its “Lateline” and state-based versions of the “7.30” program while “The World Today” and evening current affairs programming on its radio network has been halved.

Foreign news bureaus have also been closed or drastically reduced, international broadcasting services, such as the Australia Network, ended; short wave radio services to the Northern Territory stopped, Classic FM live concerts have been curtailed, and there have been severe cuts to Australian drama and children’s programming. Some 100 websites have been shut down, and substantial areas of production contracted out to private companies.

Federal Labor Party leader Anthony Albanese denounced the Morrison government, accusing it of an “appalling failure to value the ABC.”

Similar hollow and cynical phrases were issued by the unions covering ABC workers. The Community and Public Sector Union (CPSU) declared it was “death by a thousand cuts for ABC staff,” while the Media, Entertainment and Arts Alliance (MEAA) described the government funding cuts as “an act of vandalism.”

This is so much hot air, aimed at covering up the role of Labor and the unions in the systematic undermining of the state-funded broadcaster.

The funding cuts and job destruction did not begin in 2013 with the Liberal-National Coalition but are part of a decades-long and escalating assault. Some of the deepest cuts occurred under the Hawke and Keating Labor governments, with annual operational funding reduced by over 25 percent—from $1.1 billion to $750 million—between 1985 and 1996.

In 1986, the ABC directly employed more than 6,000. Today it has a little over 4,000 workers, many of them part-time or casual. None of these cuts could have occurred without the collaboration of the CPSU and MEAA. Year after year the unions have responded to every round of job cuts by appealing to management for “voluntary redundancies,” offering advice on where to reduce costs, and opposing any mobilisation of ABC employees and other media workers to fight the destruction.

The latest ABC job cuts are happening as the corporate media has seized on the COVID-19 pandemic and falling advertising revenue to radically restructure their operations and axe hundreds of jobs.

In May, Murdoch-owned regional newspapers and Nine Entertainment’s newspaper and broadcasting empire announced the closure of hundreds of local and regional newspapers and the destruction of more than 1,000 jobs.

Early last month, journalists and other editorial staff at Murdoch’s metropolitan daily newspapers were told that scores of jobs would be eliminated, along with pay cuts and shorter working hours. In the past 18 months over 210 newsrooms have been closed or temporarily suspended and more than 1,500 journalists, photographers and editors thrown out of work.

Further falls in advertising revenue will see louder demands by corporate media chiefs for an even deeper assault on the government-funded public broadcasters, which they insist are impinging on “their” market share and profits.

Two days before ABC management unveiled its latest job cuts, the Morrison government announced that it had commissioned a $200,000 report on the impact of state-funded broadcasters “on commercial operators.” The report, which is due to be completed by August, will not be publicly released but given to “Commonwealth officials, relevant Ministers, and their staff.”

In other words, the report will produce government “talking points” and spin to justify the destruction of more ABC jobs, in order to bolster the profits of the corporate media giants.

British government ramps up campaign against China

Jean Shaoul

UK Prime Minister Boris Johnson has upped the ante against China in the wake of the Trump administration’s increasingly bellicose confrontation with Beijing.

Posturing as a defender of human rights, Johnson, speaking in parliament, pledged to honour his provocative and essentially empty pledge—made last month—to offer residency to up to 2.9 million of Hong Kong’s 7.5 million citizens.

Johnson’s shift marks a definitive end to former Conservative Prime Minister David Cameron’s vision of extending economic relations between Britain and China and Johnson’s own once mooted plans for a trade deal with China after Britain leaves the European Union (EU).

Britain’s Prime Minister Boris Johnson holding a news conference earlier this year. (Simon Dawson/Pool via AP)

On Wednesday, Johnson denounced China’s sweeping new security law for Hong Kong as a “clear and serious breach” of the 1985 UK-China agreement over the handover of Hong Kong to Beijing in 1997 at the expiry of Britain’s 99-year lease on the island and mainland territories. “It violates Hong Kong’s high degree of autonomy and is in direct conflict with Hong Kong’s basic law. The law also threatens the freedoms and rights protected by the joint declaration.”

The new legislation, passed Tuesday, will allow Beijing to crack down on political dissent in Hong Kong and further curtail democratic rights. The Hong Kong government is to set up an “Office for Safeguarding National Security” that will grant Beijing judicial rights over criminal cases with alleged “foreign interference,” that includes subversion, secession, terrorism and colluding with foreign forces deemed to pose a threat to national security. Subversion could encompass damage to government property, while attempts to shut down public transportation in a citywide strike, as has happened during recent protests, could constitute terrorism charges.

On Wednesday, protesters took to the streets to oppose the new law, blocking roads, prompting the city’s police to detain nearly 400 people for various offences, including nine for violating the new law. One demonstrator was arrested for carrying a Hong Kong independence flag. The police said one officer had been stabbed in the arm while making an arrest.

The 350,000 Hong Kong citizens who hold British National Overseas (BNO) passports issued before the 1997 handover would be offered citizenship, while those eligible for BNO status and currently living in the city, around 2.55 million, would be able to apply for a BNO passport.

Foreign Secretary Dominic Raab said that BNO passport holders would be allowed to live and work in the UK without having to satisfy any income test. After five years they would be eligible to apply for settled status and later citizenship. He stressed, “There will be no quotas on numbers.”

This comes from Brexiteers who fought a vicious campaign to leave the EU based on limiting immigration, whipping up xenophobia and “taking back control of our borders.” The government is to introduce a “points-based” system for migrants to Britain and end free movement for EU citizens after Brexit as part of its efforts to all but end immigration.

The Tories appear to have forgotten that their Conservative predecessors in power in 1995, under John Major’s premiership, refused Lord Chris Patten’s demand for similar measures. According to Lord Michael Heseltine, a minister under both Margaret Thatcher and Major, Britain had not granted residency rights because it would have been seen as “a major insult to China” and undermined the peaceful handover of the colony, which was the gateway to China and the source of much of the City of London’s wealth.

But when pressed, Raab admitted that few Hong Kongers were likely to take up Britain’s offer and that in practice London was powerless to “coercively force” Beijing if it blocked them from leaving the city to come to the UK.

His sights are in fact set on the city’s financiers, hoping to entice them to bring their ill-gotten gains to London and buy property in the City, Canary Wharf and the more affluent parts of the capital. According to Beauchamp Estates, buyers from Hong Kong and China account for 15 percent of international acquisitions worth more than £1 million and 20 percent of deals worth more than £10 million.

Zhang Xiaoming, deputy director of the Chinese government’s Hong Kong and Macau Affairs Office told the media that China would not be intimidated if foreign powers intervened. “Gone are the days when Chinese people had to be at somebody’s disposal or rely on others for the air one breathes.”

China’s ambassador in London Liu Xiaoming said that Britain had no right to grant residency to Hong Kongers, which violated the agreements between the two countries, and vowed to take “corresponding measures” to stop such a move. He pointed out that the city’s citizens were Chinese nationals and Britain’s offer of residency and citizenship breached international law, insisting, “The UK has no sovereignty, jurisdiction or right of ‘supervision’ over Hong Kong.”

The government has also offered asylum to Cheng Man Kit—also known as Simon Cheng—a former employee of the British consulate in Hong Kong and a British overseas national, who reported on the pro-democracy protests for the British government. He claimed he was tortured by Chinese police and was accused of inciting political unrest in the city in 2019 after returning from a day trip to Shenzhen. Cheng told the Guardian that he had been forced under torture to falsely confess that he and the British government were involved in the city’s pro-democracy protests.

The Labour Party backed Johnson to the hilt, welcoming the government's stance. Shadow Foreign Secretary Lisa Nandy urged the government to push for a UN inquiry into police brutality in Hong Kong and to re-examine its commercial ties with Beijing.

London followed up its aggressive stance towards China by summoning Chinese ambassador Liu Xiaoming to a meeting with the Foreign and Commonwealth Office’s permanent under-secretary, Simon McDonald, to express Britain’s “deep concern” about China’s imposition of national security legislation on Hong Kong.

Speaking about Britain’s commercial links with China, particularly its high-tech companies, which it is threatening to cut, a Downing Street spokesperson said, “We have a strong and constructive relationship with China in many areas. But this relationship does not come at any price. It has always been the case that where we have concerns, we raise them, and where we need to intervene then we will.”

The Johnson government, which is moving rapidly to curtail democratic rights in Britain under the cover of the COVID-19 pandemic, has absolutely no interest in the erosion of democratic rights in Hong Kong or anywhere else. Its purpose is to open another front in US imperialism’s economic, diplomatic, and military-strategic offensive against China that threatens military war against the world’s second largest economy.

Washington has blamed Beijing for the US’s shocking death toll from COVID-19, due to its own negligence and incompetence, to deflect public anger and justify aggression against Beijing. It has accused China of pushing disinformation and malicious cyber campaigns and saddling the so-called developing nations with debt and dependency.

It has backed up this war of words by dispatching three aircraft carrier strike groups to operate just off China’s water. It is pressuring American companies to move operations from China and other countries to bar Huawei—China’s flagship telecoms and electronics company—from their 5G networks, promoting India as an alternate global manufacturing production-chain hub, threatening to repudiate support for the “one China policy” and encouraging others to do likewise.

On Wednesday, US Congress approved with bipartisan support a bill to rebuke China over its crackdown in Hong Kong by imposing sanctions on groups, including the police and banks, that undermine the city’s autonomy or restrict its freedoms. Last week, the Trump administration said it would restrict US visas for unspecified Chinese officials for infringing the autonomy of Hong Kong. This follows an earlier announcement that Washington intends to end Hong Kong’s special status as a gateway to mainland China due to its looser export controls and agreements on technology transfers, academic exchanges, taxation, currency exchange and sanctions that continued after 1997.

Johnson’s moves against Beijing are echoed by Australian Prime Minister Scott Morrison who said he was “prepared to step up and provide support” for Hong Kong residents, including the possibility of permanent residency.

Floods inundate Western Ukraine amid renewed spike in COVID-19 cases

Jason Melanovski

Extensive torrential rains have led to the destruction of dams, bridges, villages and roads throughout western Ukraine and left at least three dead.

While the downfall of rain ended on June 24, 70 towns and villages remain flooded, primarily in the Ivano-Frankivsk and Ternopil regions in the western part of the country. At its worst, over 5,000 houses and more than 200 villages were inundated with water.

While the Ukrainian government blamed the origins of the floods on the extraordinary amount of rain, 70 percent of an entire month’s average in just two days, several reports have pointed to illegal logging and soil erosion in the nearby Carpathian Forest at the behest of international firms, such as furniture chain Ikea, which have led to the floods.

Immediately following the floods, Earthsight, an environmental group based in the United Kingdom, released a report which found that, “Ikea is selling beach chairs made from wood which was illegally felled in the forests of the Ukrainian Carpathians.” The report also noted that illegal logging had continued during the COVID-19 lockdown throughout April.

As a result of the deforestation, when heavy rains hit the Carpathian Mountains, floods, mudslides and the destruction of bridges, roads and other infrastructure are now much more common.

According to the report, the illegal logging has been taking place for years under various Ukrainian governments and with their full knowledge and assistance. Most recently, the head of one Carpathian region’s forestry agency was fired after accepting bribes in an illegal logging scam.

Rather than improving under the current administration of President Volodymyr Zelensky, who campaigned on a phony “anti-corruption” platform, one experienced lumberjack in the region stated that state-sanctioned illegal logging in the country had “never been worse.”

The Zelensky government has denied any link between the floods and exploitative deforestation, stating that “no amount of trees” could have stopped the floods.

In response to the floods, the United States, which recently approved a $250 million military aid package to Ukraine, announced it was sending a paltry $100,000 in humanitarian assistance.

The floods have taken place in the very same regions where the country has been hardest hit by the coronavirus outbreak, further impoverishing some of the poorer regions of what is already Europe’s poorest country.

In one instance, in the city of Halych, a hospital was evacuated, but 43 COVID-19 patients were left so as to prevent the spreading of the virus.

The western regions of Ukraine have experienced a series of rapid COVID-19 outbreaks in part due to the large number of migrant workers who returned to the region primarily from Poland just prior to the closing of the country’s borders. Approximately 2 million Ukrainian workers returned home from across Europe in order to avoid the risk of being stranded abroad with no jobs or social or legal protections. Upon entering the country, they were forced to pass through crowded checkpoints where social distancing was practically impossible.

In June, Ukraine experienced a renewed surge of cases, hitting almost 45,000, with 1,173 deaths. Among those infected are at least 3,270 children and 6,765 medical workers.

The Ministry of Health announced this week that the rate of COVID-19 hospitalizations had doubled over the past month from 749 a week to 1,410 a week, along with a similar doubling in the number of pneumonia cases from 2,572 to 4,705 cases. One in five patients in Ukrainian hospitals is now infected with COVID-19. Earlier this month, President Zelensky’s wife tested positive for the virus. Zelensky has now publicly stated that the country had to prepare for a “second wave.”

The World Health Organization (WHO) counts Ukraine among one of 11 countries in Europe and Asia where there has been a “very significant resurgence” of the virus. Almost all of these countries are in Eastern Europe and the former Soviet Union, including Armenia, Azerbaijan, Moldova, Kazakhstan and Kyrgyzstan. The director of the European department of the World Health Organization (WHO), Hans Henri Kluge, warned in an interview with the BBC that “if left unchecked [this resurgence of COVID-19] will push health systems to the brink once again.”

The floods and the spread of the virus are fueling an already devastating social crisis. Even before the pandemic began, about 60 percent of the Ukrainian population were living beneath the subsistence minimum. The economist Viktor Skarshevsky estimated in an interview with Kontrakty.ua that, due to the economic fallout of the coronavirus crisis, 3 million to 3.5 million people are now unemployed, the equivalent of 15 to 17 percent of the working age population.

Kremlin pushes to massively strengthen power of the president

Vladimir Volkov & Clara Weiss

On July 1, a seven-day long vote on constitutional changes first proposed by Russian president Vladimir Putin in January, was concluded. According to official numbers by the Kremlin, 77.92 percent voted in favor. This is significantly more than polls in the lead-up to the vote had indicated, which regularly put support for the changes at between 35 and 45 percent of voters. Voter turnout reportedly stood at 67.97 percent.

The vote had initially been scheduled for April 22 but was delayed because of the coronavirus pandemic. The last lockdown restrictions in Moscow, the capital, had been lifted just last Monday, even as cases have continued to skyrocket, to enable the Kremlin to hold both the victory parade and the referendum.

The Kremlin tried hard to fraudulently present the constitutional changes as a means of improving the living standards of the impoverished population. Clauses like the indexation of pensions and a reference to the fact that the minimum wage in Russia cannot be lower than the minimum subsistence level were heavily advertised. However, both points have, in fact, long been contained in other legislation and are systematically violated on a daily basis. Their introduction into the text of the Constitution does not restrain the authorities in any way in further ruthless attacks on the living standards of the population.

Vladimir Putin, center (Credit: en.kremlin.ru)

The approximately 200 amendments affect about 60 per cent of the articles in the Constitution, increasing its text by a factor of 1.5. The most significant of these changes vastly strengthen the powers of the President. The President gets the uncontrolled right to appoint all the power ministers (defence, interior, FSB, etc.). At the same time, he only "consults" with the Federation Council (upper house of parliament) in their appointment.

The terms of President Putin, who has been President since 2000 with a four-year intermission in 2008-2012, are “reset” so that he can now run for president twice more, allowing him to potentially stay in power until 2036. He and Dmitry Medvedev, the former President and prime minister, are granted lifelong immunity.

The President gains direct control over the government by "exercising general management" of its work. The diminished role of the prime minister is complemented by the right of the president to remove the prime minister without resigning the government as a whole – as Putin did with Dmitry Medvedev's cabinet in January. As a result, the prime minister, nominally the second face of the state, is becoming a virtually completely dependent presidential creation.

The widely advertised expansion of the powers of the State Duma (lower chamber of parliament) is nothing but a verbal trick. If the Duma does not "approve" candidates that have been nominated by the president three times, the president's personnel decisions come into effect automatically. He can dissolve the Duma itself and announce new elections.

After years of growing tensions between the Kremlin and the regional elites, the constitutional changes also provide for a significant limitation of the powers of the regional and municipal authorities. The President not only appoints judges of the Constitutional and Supreme Courts, but now also has the right to appoint prosecutors in the regions. In the past, this used to be the exclusive prerogative of the Prosecutor General's Office. Any autonomy of the municipal authorities will also be abolished. Municipal deputies will now become de facto government officials.

Another set of amendments to the Constitution are aimed at promoting notions that are traditionally associated with extreme right-wing ideology. Such amendments include a reference to God, which undermines the declared secular nature of the state, the characterization of marriage as "a union of a man and a woman", as well as a clause declaring Russian as "the language of the nation that is constitutive to the state".

The latter is just a slightly veiled formulation that declares the Russian people "state-forming" - a formulation characteristic of ultra-right parties, such as the fascist party Pamyat which was active during Gorbachev's perestroika period in the last years of the Soviet Union. It was no coincidence that it was fully supported by the ultra-nationalist Stalinist Communist Party (KPRF) of Gennady Zyuganov.

A number of new paragraphs – for example, the abolition of the priority of norms of international law – contradict articles of the Constitution which are part of its so-called "protected" sections.

The national referendum over the changes to the Russian Constitution was a shameful and thoroughly anti-democratic farce. There is no legal basis for either the advancement of the constitutional changes, which were initiated in January, or the mechanism of a national discussion and vote. Instead, they were enacted on the basis of a specially drafted document. The changes and the referendum provide a pseudo-legal cover for a massive escalation of the push toward ever more open dictatorial forms of rule.

The vote was conducted under conditions in which the coronavirus pandemic is ravaging the country. Whatever the propagandistic announcements in the media that the pandemic is “going away”, Russia still ranks as the country with the third-highest number of confirmed cases in the world. There are now over 650,000 cases and more than 9,500 people have died. Over the past month, every day between 7,000 and 9,000 new infections were recorded. On July 1, the highest number of deaths in three months was reported at 216. The vote, much like last month’s victory parade, in which basic social distancing measures were not observed, will likely drive up infections further.

While trying to simulate the supposed stability and strength of the regime, the referendum and constitutional changes in fact grow out of an enormous crisis of the Russian oligarchy. The vote took place amid an unprecedented breakdown of world capitalism which has escalated class tensions in every country and is further fueling the imperialist drive to war, especially against Russia and China. Approval ratings for Putin have been plummeting as the coronavirus pandemic has thrown millions out of work and many more into utter destitution. Hospitals in Russia have been devastated by the pandemic, revealing the catastrophic implications of the restoration of capitalism and decades of austerity.

Under these conditions, the Russian oligarchy seeks to solidify the power of Putin as a figure that can balance between different warring factions of the ruling elite, while at the same time fostering extreme nationalism and strengthening authoritarian rule in anticipation of major confrontations with the working class.

The crisis of the oligarchy and the drive toward dictatorship ultimately grow out of the Stalinist counter-revolution against the October Revolution of 1917, and the destruction of the Soviet Union in 1991 and restoration of capitalism at the hands of the Stalinist bureaucracy. Contrary to the assertions of the Stalinist and imperialist propaganda at the time, the privatization of former state property and the dismembering of the Soviet Union were not the basis for the flourishing of democracy and general welfare, but, on the contrary, provided the basis for unprecedented plunder of social resources and the emergence of a new ruling layer of criminal and thoroughly parasitic oligarchs. The 1993 Constitution was the pseudo-legal codification of this counterrevolution and the established capitalist property relations.

Under Putin, the oligarchy has further enriched itself. The Boston Consulting Group recently published its Global Wealth report which found that the personal wealth of Russia's super-rich has increased 16-fold over the past 20 years, from $0.1 trillion to $1.6 trillion, with an average annual growth rate of 14% between 1999 and 2014.

At the same time, according to Finance Minister Anton Siluanov, the median salary in the country is around 18,000 rubles ($255). At least half of all families are struggling to make ends meet. In March, President Putin announced that people with an income 1.5 times the minimum wage, which is just over 12,000 rubles ($170) a month, should be considered the “middle class”.

US anti-China campaign intensifies factional conflicts within Canada’s ruling elite

Roger Jordan

Sharp differences have emerged within Canada’s ruling elite over Ottawa’s policy towards China. The rift is directly tied to Washington’s escalating diplomatic, economic and military-strategic offensive against Beijing, which has already roiled Canada’s relations with China, and to intense US pressure for Canada to adopt an even more hardline anti-China stance.

The latest salvo in this increasingly fractious dispute came in the form of Wednesday’s lead article in the Globe and Mail. Titled “Canada-China relations need ‘urgent rethink,’ Mulroney says,” the article promoted the call of the former Progressive Conservative Prime Minister for the establishment of a “blue-ribbon” committee to fundamentally redefine Canada’s China policy.

Mulroney, who has counselled the federal Liberal government on its dealings with the Trump administration and has close ties to both sides of the aisle within the US political establishment, told the Globe that “China has become an aggressive global player and a real threat to Canada.” He said Ottawa must do “whatever’ is needed to preserve the Canada-US military-strategic partnership; and praised Prime Minster Justin Trudeau for spurning calls to free Huawei Chief Financial Officer Meng Wanzhou, whose extradition from Canada to the US is pending, as part of a deal to “reset” Ottawa-Beijing relations.

Brian Mulroney (Credit: Flickr.com/NATO Association of Canada)

The remarks of Mulroney, who speaks on behalf of key sections of the Canadian ruling elite, signal a pronounced shift in the direction of an even more confrontational approach towards Beijing. Just last year, Mulroney was advocating that former Liberal Prime Minister Jean Chretien be sent as an interlocutor to Beijing to negotiate the release of Canadian citizens Michael Spavor and Michael Kovrig, who were detained following Meng’s arrest. Like Chretien, Mulroney has long had close ties to the multi-billionaire Desmarais family, which has had extensive business dealings with China for decades.

Mulroney’s intervention followed the publication in mid-June of an open letter to Trudeau from 19 retired diplomats and senior politicians, including former Liberal Foreign Minister Lloyd Axworthy, former Conservative Foreign Minister Lawrence Cannon, former New Democratic Party leader Ed Broadbent, and Derek Burney and Hugh Segal, who both served as chief of staff under Mulroney. The 19 urged the Trudeau government to use its legal prerogative to end Meng’s extradition to the United States and return her to China.

Meng was detained by Canada in Dec. 2018 at the behest of the Trump administration on fabricated chargers of violating US sanctions against Iran. Her prosecution under criminal charges that could result in a 30-year jail-term is a political provocation, aimed both at intimidating China into acceding to US economic demands and furthering Washington’s campaign to thwart Beijing’s emergence as a dominant player in 5G, AI, and other pivotal new technologies. Recently released RCMP documents written in the hours prior to Meng’s arrest confirm Canadian authorities knew full well that her arrest would prove politically explosive.

The authors of the open letter argued that allowing Meng to go free could bring about the release from Chinese custody of Michael Kovrig and Michael Spavor, who were charged with espionage on June 19. But they tied this to broader strategic considerations. “Removing the pressures of the extradition proceeding and the related imprisonment of the two Michaels will clear the way for Canada to freely decide and declare its position on all aspects of the Canada-China relationship,” wrote the signatories.

In an attempt to put this proposal into practice, a high-level delegation of Canadian officials, including former Conservative Foreign Minister John Baird, reportedly traveled to China last November for negotiations on releasing Spavor and Kovrig.

None of the letter’s supporters is advocating a pro-Beijing policy. They are fully committed to maintaining Ottawa’s close military-strategic partnership with Washington, but merely want Canada’s corporate elite to retain the option of pursuing lucrative business opportunities with China. Their chief fear is that Canadian imperialist interests are being damaged by Ottawa being so closely associated with the bipartisan US drive to economically isolate and militarily encircle China. Mulroney’s intervention underscores that the proponents of this approach are increasingly isolated within ruling circles.

Nevertheless, the open letter triggered an outraged response, with right-wing corporate media outlets denouncing it as tantamount to negotiating with “terrorists” and engaging in a “prisoner swap.” Right-wing columnists railed against an old and “out-of-touch” Liberal foreign policy establishment bent on “appeasing” Beijing.

Trudeau promptly dismissed any suggestion Ottawa exchange Meng for Kovrig and Spavor, and stressed that his government will not “intervene” in Meng’s case. “Releasing Meng Wanzhou to resolve a short-term problem would,” Trudeau claimed, “endanger thousands of Canadians who travel to China and around the world by letting countries know that a government can have political influence over Canada by randomly arresting Canadians.”

Trudeau’s rebuff to the retired politicians and diplomats was, as far as it went, greeted enthusiastically by the Globe and Mail and National Post, Canada’s leading right-wing publications, as well as by the pro-Liberal Toronto Star. But influential sections of the ruling class, including the Conservative Party, remain frustrated with Trudeau’s failure to impose punitive sanctions on China and end Canadian involvement in the Chinese-led Asian Infrastructure Investment Bank.

They reject out of hand any attempt to reduce tensions with China, and instead demand that the government “stand up” to Beijing’s “bullying” and immediately act on Washington’s demand it block Huawei from any involvement in Canada’s 5G cell phone network. Of the five countries in the Five Eyes alliance, which unites the signals intelligence agencies of the United States, Britain, Canada, Australia, and New Zealand, only Canada has not yet banned or at least imposed sweeping restrictions on the use of Huawei 5G technology. In his Globe interview, Mulroney insisted that Canada must do “whatever it takes” to retain a leading role in the Five Eyes partnership.

Writing in the National Post, John Iveson complained that while Trudeau had “ruled out a prisoner swap,” nobody should “expect him to take a harder line” towards China.

An open letter countering the call for Meng to be released was subsequently published at the initiative of the Macdonald-Laurier Institute (MLI), which assembled 30 high-ranking military and defence policy officials to warn darkly of China’s nefarious global activities. Earlier this year, the MLI helped organize the issuing of a statement signed by academics and politicians, including the main contenders for the Conservative Party leadership, that touted false claims China had hid the coronavirus from the world, dubbed the pandemic Beijing’s “Chernobyl moment,” and demanded China be held “accountable” for its supposed responsibility for the global pandemic.

The Canadian Security Intelligence Service, Canada’s primary spy agency, also weighed in to the debate by describing Canada as a “permissive target” for Chinese interference. “Canada is kind of a sleepy and unaware target,” David Mulroney, a former Canadian ambassador to China told Global News. “We don’t have the same kind of vigilance that you now see in places like Australia and New Zealand. That had better change.” Presumably enthused by the former ambassador’s hawkish view of Beijing, Brian Mulroney told the Globe that David Mulroney would be his recommendation for chair of the proposed blue-ribbon panel to redefine Canada’s China strategy.

The bitter factional conflicts tearing apart the Canadian bourgeoisie arise out of the rapidly accelerating global capitalist crisis and the escalating rivalry between the United States and China. Ottawa has relied on its close partnership with US imperialism for over three-quarters of a century to advance its own predatory imperialist ambitions. However, Washington is sinking into ever deeper economic and political crisis, as the ongoing coronavirus debacle has laid bare, and is seeking to offset its economic decline with unilateral and increasingly aggressive threats, bullying and military actions, including against its erstwhile European and Canadian allies. As a result, the Canadian ruling elite’s traditional geopolitical calculations are being rendered inoperable.

Since early June, the Trump administration has dramatically ratcheted up tensions with China, including by deploying three aircraft carrier strikes group to operate in the western Pacific. Following last month’s deadly border clash between India and China in the Himalayas, Trump administration officials intruded into the dispute to denounce Chinese “aggression.” US intelligence has also declared high-profile Chinese companies, including Huawei, to be directly controlled by the Chinese government, which clears the way for them to be targeted by tougher sanctions. Speaking in Copenhagen late last month, US Secretary of State Mike Pompeo told his European audience that American troops were being redeployed from Europe to the Asia-Pacific to counter China.

As it escalates its confrontation with China, raising the danger of a catastrophic war fought with nuclear weapons, Washington is also issuing starker warnings to its allies to fall into line. In early June, the US State Department warned that it would “reassess” intelligence sharing with Canada if Huawei is permitted to participate in its 5G network.

Pressure is also being applied on the economic front. Last week, Trump threatened Canada with the re-imposition of 10 percent tariffs on aluminum, citing the alleged flooding of the US market with foreign aluminum as the pretext. Later in the week, Democratic Senate leader Charles Schumer chastised Canada for its refusal to open its dairy and agricultural markets, which Ottawa protects with high tariffs.

Under these conditions, the explosive character of the factional disputes within the Canadian ruling elite should not be underestimated. An editorial in the Toronto Sun earlier this year raised the prospect of Trudeau’s removal should he fail to stand up firmly enough to China.

That such a scenario is by no means mere idle speculation can be seen by the political situation in Australia, which last week marked the tenth anniversary of the unceremonious removal of Prime Minister Kevin Rudd in a backroom coup initiated by US assets in the Labour Party. Rudd was deemed to be an obstacle to Washington’s offensive against China, as he sought to position Australia as a mediator and go-between helping to manage US-China tensions, rather than a subordinate ally and launching pad for US military aggression in the Asia-Pacific.

Primaries show deepening political polarization in US

Patrick Martin

The primary elections held on Tuesday, June 30, and results of earlier primaries announced the same day, showed the ongoing political polarization in the United States. Both the major capitalist parties, the Democrats and Republicans, are moving to the right, while working people in general are moving to the left.

This is one more indication of the mounting conflict between the corporate-controlled two-party system and the working class, which comprises the vast majority of the population.

The shift to the right among the Republicans was demonstrated in the victory of a fascist supporter of the QAnon internet conspiracy theory, Lauren Boebert, over a sitting congressman in the Republican primary for the Third Congressional District of Colorado.

A man voting at a polling place (Credit: Flickr.com)

Representative Scott Tipton has held the seat, which covers the entire half of the state west of the Rocky Mountains, for the past ten years, since he defeated an incumbent Democrat, John Salazar, in the 2010 election, when the right-wing “Tea Party” campaign returned the House of Representatives to Republican control.

Tipton won only a narrow victory in 2018 against a well-financed and thoroughly right-wing Democratic Party opponent, former state representative Diane Mitsch Bush, who won the Democratic primary again on Tuesday. The incumbent Republican evidently was looking ahead to the general election, having accumulated a war chest of $630,000, and spent little on the primary, not airing even a single television ad.

But Boebert, an ultra-right gun rights activist, unexpectedly won 54 percent of the vote in a relatively high turnout for a primary contest. She campaigned against Tipton as a supposed moderate, linking him to four liberal Democrats—Alexandria Ocasio-Cortez, Ilhan Omar, Rashida Tlaib and Ayanna Pressley—because he has voted or co-sponsored coronavirus relief legislation they supported.

Boebert is the second advocate of QAnon to place first in a Republican congressional primary. The first, Marjorie Taylor Greene, faces an August 11 runoff against the second-place finisher in Georgia’s 14th Congressional District. The Republican Party establishment has lined up against Greene, who won 41 percent of the vote in the first-round vote.

A third supporter of QAnon, Jo Rae Perkins, won the Republican nomination for the US Senate seat in Oregon held by Senator Jeff Merkley, who is a heavy favorite to win reelection. Six others linked to QAnon have won Republican nominations for congressional seats in heavily Democratic districts where the Republican Party has little official presence.

If elected, either Boebert or Greene would be the first member of the House of Representatives with close ties to the ultra-right internet tendency.

Boebert owns Shooters Grill in the town of Rifle, Colorado, where the wait-staff serves customers with guns on their hips, and the menu features food described using the names of various types of weapons, both civilian and military.

The restauranteur launched her political career last year by confronting Beto O’Rourke, then a candidate for the Democratic presidential nomination, over his call to confiscate semi-automatic weapons like those used by a fascist gunman to murder nearly two dozen people, mainly Hispanic and immigrant, at a Walmart in El Paso, Texas. Boebert spoke out at a town meeting with O’Rourke held in Aurora, site of a horrific movie theater massacre in 2012 in which 12 people were shot to death.

She also defied state coronavirus restrictions and refused to close the dining area of her restaurant until county officials obtained a letter from a local judge compelling her to do so.

Boebert has indicated sympathy for the QAnon theory, while proclaiming her main causes to be hostility to socialism and support for Trump. She told an internet interview program in April, “Everything I’ve heard of Q—I hope this is real. Because it only means America is getting stronger and better and people are returning to conservative values.”

The QAnon theory claims that Trump is leading a battle against a secret cabal of child sex abusers who control the Democratic Party, and that at some point the president will arrest and even execute his opponents in Washington.

While the Republican leadership has sought to distance itself from the QAnon candidate in Georgia—who may still be defeated in the runoff—there is no such effort in Colorado, where Boebert has won the Republican nomination outright. The National Republican Congressional Committee declared, “This is a Republican seat and will remain a Republican seat,” while Trump tweeted his congratulations.

On the Democratic side, the party establishment asserted its dominance in primary contests for US Senate nominations in Colorado and Kentucky. In both cases, heavily funded and more conservative nominees beat back more liberal challengers.

In the Colorado race, to choose a nominee to face first-term Republican Senator Cory Gardner, former governor John Hickenlooper won the nomination over Andrew Romanoff, former speaker of the state house of representatives, by 60 percent to 40 percent. Hickenlooper has led Gardner in the polls, and the seat is considered essential to the Democratic Party effort to win back control of the Senate, now held by the Republicans with a 53-47 majority.

Both candidates are longtime fixtures in state politics, but Hickenlooper had a higher national profile because of his failed campaign for the Democratic presidential nomination, and vastly more access to big money and endorsements. He was supported by Senate Minority Leader Charles Schumer. Romanoff adopted a more “left” sounding platform, embracing Medicare for all and the “Green New Deal,” but Senator Elizabeth Warren endorsed Hickenlooper, while Bernie Sanders adopted a position of neutrality.

In Kentucky, final vote tabulations from the June 23 primary were released on June 30, after lengthy counting of mail-in ballots that comprised the bulk of the vote. Retired Marine Corps fighter pilot Amy McGrath narrowly defeated state representative Charles Booker for the Democratic nomination to face Senate Majority Leader Mitch McConnell, who is finishing his sixth six-year term. McGrath received 45.4 percent of the vote compared to 42.6 percent for Booker, while a third candidate finished well back.

McGrath is one of the CIA Democrats—candidates coming directly from military-intelligence activities into Democratic Party politics—who lost her race for Congress in 2018, narrowly defeated by Representative Andy Barr for the seat including Lexington, Kentucky. She had the backing of Schumer and the Democratic Party leadership, and has already raised an astonishing $40 million, much of it over the internet. McGrath had to spend half that sum in the primary contest, overwhelming Booker with a 20-1 financial advantage.

Booker trailed badly in the early stages of the race, but as an African American representative from Louisville, he positioned himself at the forefront of the demonstrations that erupted in May and June over the police murders of George Floyd in Minneapolis and Breonna Taylor in Louisville. McGrath was a well-publicized no-show for these demonstrations. Booker also was endorsed by Warren and Sanders, as well as Ocasio-Cortez.

While outright fascists gained in the Republican Party, and the right-wing party establishment maintained control among the Democrats, there was a noticeable shift in Oklahoma, long a byword for right-wing politics in both capitalist parties. In a statewide referendum conducted alongside the primary voting Tuesday, State Question 802 passed by a narrow margin of less than one percentage point.

The measure expands Medicaid, as allowed for under Obamacare, over the refusal of the state government, under Republican control, to carry out such action. Moreover, the expansion of Medicaid is in the form of a constitutional amendment, which takes the action entirely out of the control of the state government.

Four other states expanded Medicaid through ballot questions that amended state law, thus still allowing the state legislature and governor significant leeway in implementing the action. The constitutional amendment in Oklahoma stops the legislature from rolling back the Medicaid expansion. A similar vote is to be held in Missouri August 4.

Oklahoma was one of a total of 14 states, all Republican-dominated, that have refused to expand Medicaid as provided by the 2010 Affordable Care Act, denying health care coverage to millions of lower-income families even though the federal government would pay 90 percent or more of the cost.

An estimated 215,000 state residents would qualify for Medicaid as a result of the statewide vote, according to the Oklahoma Health Care Authority. The state share of this coverage would come to $164 million a year, a bargain at only $800 per person, with the federal government paying the balance.

The measure was placed on the ballot through a petition drive that collected a record 313,700 signatures, conducted before the outbreak of the coronavirus pandemic, which has only underscored the need for universal health care coverage. Oklahoma has one of the highest rates of uninsured, 14.2 percent of the population, second only to neighboring Texas.

The measure had widespread support in the state’s urban areas, including Oklahoma City, the state capital, and Tulsa, where President Trump held an in-person, indoor campaign rally June 20 in defiance of health concerns over the pandemic. The referendum was defeated in the vast majority of rural counties, but not by a wide enough margin to offset the votes in the cities.

US Supreme Court rules in favor of religious schools

John Burton & Ed Hightower

On Tuesday, the United States Supreme Court voted 5–4 to reverse a decision by the Montana Supreme Court that invalidated a state program allowing dollar-for-dollar tax credits for donations to private or parochial primary or secondary schools.

The reasoning and breath of the ruling in Espinoza v. Montana eliminate the legal barriers to government subsidies for religious education. The decision wipes out a provision in dozens of state constitutions dating back to the post-Civil War Reconstruction period and undermines the First Amendment wall of separation between church and state as well as public education.

In 2018, of the donations to Montana schools under the tax rebate program, 94 percent went to religious institutions, mostly evangelical Christian and Catholic. The scheme diverted substantial state tax revenues from public education and other uses for deposit directly into the coffers of primary and secondary schools that teach their pupils religious doctrine, perhaps along with subjects such as math, science, history and English.

Clouds roll over the Supreme Court at dusk on Capitol Hill in Washington, Sunday, May 3, 2020. (AP Photo/Patrick Semansky)

The Montana high court ruled that the tax credits violated a state constitutional provision that prohibits “any direct or indirect appropriation… to aid any church, school, academy, seminary, college, university… controlled in whole or in part by any church, sect, or denomination.”

This provision derived from a proposed amendment to the United States Constitution introduced by Speaker of the House James G. Blaine in 1875, intended to clear a path for the development of public education.

After passing the House of Representatives by a vote of 180–7, it fell two votes short of the two-thirds vote in the Senate required for distribution to the states for ratification. To compensate, 37 of the 50 states, including Montana, adopted “Baby Blaine” provisions in their state constitutions.

These provisions promoted the development of public education, free of religious entanglements, for families of the emancipated “freedmen” in the South, as well as the rapidly growing, heavily immigrant working class in the North and the settlers populating newly formed states such as Montana.

Because the Montana court based its decision on the state’s Baby Blaine provision, not on any federal constitutional provision, adherence to the conservative principle of “states’ rights” would have ended the litigation. Instead, a group of parents asserted that the state court decision interfered with their federal First Amendment right to the free exercise of religion by denying financial support to the religious schools where they wanted to send their children. They petitioned the Supreme Court for review, backed by a consortium of reactionary anti-public education activists, including the Koch Foundation and the family of Secretary of Education Betsy DeVos.

The Espinoza ruling itself consists of seven opinions spanning 92 pages. Chief Justice John Roberts wrote for the right-wing majority. His opinion was joined by Associate Justice Brett Kavanaugh. Justices Clarence Thomas, Samuel Alito and Neal Gorsuch filed separate concurrences. Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor filed dissents. Elena Kagan dissented without an opinion.

The First Amendment to the US Constitution begins: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Thomas Jefferson explained in an 1802 letter that the so-called “Establishment Clause” on religion erects “a wall of separation between Church and State.” Over time, following the ratification of the post-Civil War Fourteenth Amendment, the religion clauses have been incorporated to bind state governments as well.

Roberts, who has recently oscillated between the four extremely right-wing and the four more liberal justices, brushed aside Establishment Clause concerns. “To be eligible for government aid under the Montana Constitution,” Roberts wrote, “a school must divorce itself from any religious control or affiliation. Placing such a condition on benefits or privileges inevitably deters or discourages the exercise of First Amendment rights… A State punishes the free exercise of religion by disqualifying the religious from government aid as Montana did here.”

This reasoning turns the religion clauses upside down. According to Roberts, the Montana state law that prohibits the subsidizing of religious education, i.e., prohibits the establishment of religion, cannot be enforced because it denies certain adherents to certain religions their right to free exercise. Under this view, religious subsidies are not only constitutionally permitted, they are constitutionally mandated.

Under Roberts’ reasoning, parents who want a religious education for their children can sue in federal court to fund religious schools because the free exercise clause precludes the state from providing funding only for secular public schools.

Espinoza repudiates the very foundation of the First Amendment’s religion clauses, which arose from 1785’s “Memorial and Remonstrance Against Religious Assessments” by James Madison, who four years later drafted the First Amendment.

Roberts writes: “Madison objected in part because the Bill provided special support to certain churches and clergy, thereby “violating equality by subjecting some to peculiar burdens.”

Roberts’ history is very wrong. Madison objected to the Virginia Legislature’s “Assessment Bill” because it imposed a tax to support religious education, even though it gave each taxpayer the right to designate which church was to receive it, a proposal no different in substance from the Montana tax credit scheme.

Madison opposed the Assessments Bill because “in matters of Religion, no man’s right is abridged by the institution of Civil Society, and that Religion is wholly exempt from its cognizance.” Government sponsorship of religion violates “that equality which ought to be the basis of every law,” he wrote.

True to his convictions, as the fourth US president, Madison vetoed a bill that would have allocated tax revenue in the District of Columbia to an Episcopal church for the education and care of poor children.

The Virginia Assembly rejected the Assessments Bill and passed Thomas Jefferson’s “Bill for Establishing Religious Freedom,” the preamble to which stated that “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves is sinful and tyrannical.”

Justice Thomas’ concurrence denigrates decades of often eloquent Supreme Court jurisprudence affirming the separation of church and state championed by Jefferson and Madison as a “trendy disdain for deep religious conviction.” Joined by Gorsuch, Thomas argues that the Establishment Clause, unlike other provisions of the Bill of Rights, should apply only to the federal government and should not be incorporated to limit direct state government support for particular religions, a recipe for a patchwork of theocratic states levying taxes to support favored churches.

Alito’s concurrence paints the Blaine Amendment, proposed during Reconstruction with the support of President Ulysses S. Grant to promote public education, as solely the product of anti-Catholic bigotry, with no progressive content.

While there was undoubtedly some invidious “nativist” sentiment among forces supporting the Blaine Amendment, as noted by Stephen K. Green, an expert cited by Alito, states began prohibiting state funding for religious schools in the 1830s, before the first waves of Catholic immigration. Professor Green documents collaboration among religious leaders of different denominations, including Catholics, to support non-sectarian public education by banning public funding for religious schools.

Green recognizes that anti-Catholicism may have influenced some who supported the Blaine Amendment, but he cautions that “included in the mix was a sincere effort to make public education available for children of all faiths and races, while respecting Jeffersonian notions of church-state separation.” He adds that “those who characterize the Blaine Amendment as a singular exercise in Catholic bigotry thus give short shrift to the historical record and the dynamics of the times.”

Indeed.

The justices who support religious subsidies must rewrite history because they do not accept the secular foundations of the democracy that grew out of the American Revolution of 1775–1783, nor the egalitarian impulses generated by the Union victory in the Civil War of 1861–1865.

Ironically, Espinoza was the final Supreme Court decision released before the Fourth of July, the celebration of the signing of the Declaration of Independence, which traditionally marks the end of the Supreme Court’s annual term. In this COVID-19 year, however, more cases remain to be decided.

US Fed official warns of potential for a financial crisis

Nick Beams

A leading member of the US Federal Reserve Board has warned that the financial crisis that threatened to erupt in mid-March—when markets in all assets essentially froze—could return unless the COVID-19 pandemic is brought under control.

In an interview, the Federal Bank of St Louis, James Bullard, told the Financial Times yesterday that the United States was still “in the middle of a crisis.”

“Even though we got past the initial wave of the March-April time-frame, the disease is still capable of surprising us,” he said. “Without more granular risk management on the part of health policy, we could get a wave of substantial bankruptcies and [that] could feed into a financial crisis.”

Marriner S. Eccles Federal Reserve Board Building (Credit: Wikimedia Commons)

The coronavirus is surging through southern and western US states, with 50,701 new infections reported on Tuesday, the highest number recorded.

Bullard insisted the Fed’s policy of providing trillions of dollars to financial markets, now extended to the purchase of corporate debt, including so-called junk bonds, had to continue. That was because there were “twist and turns” in a crisis and “there can be another shoe to drop, and it could happen here.”

While the purchase of corporate bonds, both directly and through Exchanged Traded Funds, was “controversial,” the central bank’s measures had to be kept in place, as the corporate debt market had been “sorely tested” in March.

“With all these programs the idea is to make sure the markets don’t freeze up entirely, because that’s what gets you into a financial crisis, when traders won’t trade the asset at any price.”

Bullard said this was not his base case, “but it’s possible we could take a turn for the worse at some point in the future.”

The Fed’s justification for its extraordinary measures, which go far beyond what it did in response to the financial meltdown of 2008, is that they are necessary to sustain the economy. Their real purpose, however, is to finance the accelerated siphoning of wealth into the coffers of Wall Street.

As the result of the Fed’s decision to act as the backstop of all areas of the financial system, the market capitalisation of the US stock exchanges has increased by more than $7 trillion since the freeze in mid-March.

Between the mid-March and mid-June, the net worth of the more than 640 US billionaires rose from $2.948 trillion to $3.531 trillion. The combined wealth of the five richest men in America—Jeff Bezos, Bill Gates, Mark Zuckerberg, Warren Buffett and Larry Ellison—grew by $101.7 billion, or 26 percent.

Having boosted the wealth of the financial oligarchy, in the midst of economic devastation for vast swathes of working people, the Fed is actively considering giving the rich even more support, as revealed in the minutes of its June meeting published on Wednesday.

The discussion at that meeting centred on two questions: how to provide “forward guidance” to financial markets in the form of explicit guarantees that interest rates will remain at their present levels of virtually zero for an indefinite period; and whether to exercise direct control over rates in the US Treasury bond market.

The Fed has already signaled that it expects to keep interest rates at zero through to the end of 2022. According to the minutes, officials expressed a “great deal of uncertainty” about whether a safe reopening of the economy could be achieved. They maintained that whatever eventuated, “highly accommodative monetary policy and sustained support from fiscal policy” would be needed.

But the financial markets want more. As a result of the massive corporate bailout measures under the CARES Act, running at over $3 trillion with more to come, the level of US government debt is rising rapidly. It is expected to reach levels, as a proportion of gross domestic product, higher than during World War II.

Increased debt means a greater supply of Treasury bonds, tending to push down their price and increasing their yields (the two have an inverse relationship). This will exert upward pressure on interest rates in financial markets more broadly.

Consequently, the Fed is discussing measures to control the yield curve on bonds. This would mean the central bank would declare it is targeting a rate on specific bonds and then intervene to buy them, thereby lifting their price and keeping the yield at the designated level.

Currently, two countries have adopted such measures, Japan and Australia. Japanese yield control, targeting ten-year bonds, has been in place for some years. It effectively means that as the government issues more debt, the Bank of Japan buys it.

The Australian controls were introduced in mid-March as one of the emergency measures the Reserve Bank of Australia (RBA) adopted when financial markets froze. The RBA intervenes at the shorter end of the market, targeting the yield on three-year bonds.

The US Fed minutes revealed the issue was under active discussion. “Some participants” in its June meeting said it “could serve as a powerful commitment device.” That is, it would be a means of demonstrating to financial markets that the Fed will keep interest rates at ultra-low levels, despite the massive increases in government debt in the pipeline.

According to the minutes, Fed officials were still undecided on the policy but saw the Australian approach as the “most relevant” to the US situation. “All participants” wanted to see further analysis.

The financial markets had anticipated there would be a more definitive statement on yield control from the June meeting. While they did not get their wish, they clearly expect it will be met in the future.

In a revealing comment on how Fed policy is driven by Wall Street, Deepak Puri, chief investment officer at Deutsche Bank Wealth Management, told the Financial Times he expected yield control to be adopted in the not-too-distant future.

“After reviewing the minutes, I feel like it is not at the top of the list of what the Fed is looking to do,” he said. “But I wouldn’t be surprised if the bond market just forces the Fed to have some kind of yield curve control before the end of the year.”

His remarks point to the broader modus operandi at work. In all his testimony before Congressional bodies, Fed chairman Jerome Powell has maintained the present extraordinary measures are temporary and “when economic and financial conditions improve, we will put these tools back in the toolbox.”

The same line was used with regard to the quantitative easing (QE) and ultra-low interest rate policies introduced after 2008. But when the Fed signaled in 2018 that, as a result of a slight improvement in the economic outlook, it intended to lift interest rates to more “normal” levels and reduce the pile of financial assets it had purchased under QE, the markets staged a revolt.

After Wall Street experienced its biggest December fall in 2018 since 1931, the Fed promptly reversed course, declaring interest rate rises were off the agenda and halting its asset wind-down program.

In the past three months, the Fed’s holdings of financial assets have expanded from $4 trillion to over $7 trillion. Further expansion is to come as Wall Street demands that still more money be pumped out to finance what amounts to the equivalent of war profiteering and looting.