May the source be with you, but remember the KISS principle ;-) Skepticism and critical thinking is not panacea, but can help to understand the world better
Financial skeptic
The more things change in the USA casino capitalism the more they stay the same
Cruise to Frugality Island for stock holding 401K Lemmings
Neoliberal economics (aka casino
capitalism) function from one crash to another. Risk is
pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the
economy periodically. The problem are not strictly economical or political. They are ideological. Like
a country which adopted a certain religion follows a certain path, The USA behaviour after adoption
of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to
death. The difference is that debt is used instead of booze.
Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look
into the economic system making the whole system unstable. Any attempts to put some sand into the wheels
in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers
are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism
for ordinary investor (who are dragged into stock market
by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed
under liberalism (in 2000 and 2008) out of probably four (Savings
and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into
account that hypertrophied role of financial sector did not changes neither after dot-com crisis of
200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting
the name of "Great Recession").
Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark
Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes"
;-):
This morning that meant a stream of thoughts triggered by Paul Krugman’s most
recent op-ed, particularly this:
Most of all, the vast riches being earned — or maybe that should be “earned” —
in our bloated financial industry undermined our sense of reality
and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis.
How was that possible? How, for example, could Alan Greenspan have declared, just a few years
ago, that “the financial system as a whole has become more resilient” — thanks to derivatives,
no less? The answer, I believe, is that there’s an innate tendency
on the part of even the elite to idolize men who are making a lot of money, and assume that they
know what they’re doing.
As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish
in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but
this page is accessed mostly during periods of economic uncertainty. At least this was the case during
the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops
to below 1K a month.
It was clear that 2017 stock market run was detached from fundamentals. Mostly speculative run. And the current stock market
decline could well happen three months aerler or three month later but it was in the cards. It is difficult to estimate the power of
inertia in such speculative runs. Also layoffs and decline of the standard liming of workers and lower middle class still can
continue to improve the balance sheet until "Yellow Vests" moment stops them.
Jobs created now are mostly "inferior" low paid or temp/contractor jobs and the numbers just mask the cruel reality of the USA
job market.
Which in reality is dismal, especially for young and old workers. several more or less paid specialties disappeared in 2018 due
to automation (cash office worker is one). automatic cashier is supermarkets are also now more visible. So spontaneous cases
of vandalism, killings of coworkers and other form of "action of desperation" (as well as the rate of death from opioids -- which is
yet another form of the same) would not be too surprising in such an atmosphere. Even with the power of the current national
security state. Trump is playing with fire trying to cut on food stamps and implementing some other action in this program of
"national neoliberalism" which is in internal policy is almost undistinguishable from neofascism. He risk facing "Macron
situation" sooner or later.
In any case at some point Minsky moment should arrive for the stock market. I am not sure that the current decline is that start
of such an event. It might be postponed further down the line for a year or two. But it will eventually come. We can
only guess what form it might take, but with the current Apple troubles and valuations of tech sector I think it might take the form
of something similar to dot-com bubble deflation No.2
I do not see Amazon, Google, Facebook and Microsoft and other tech high flyers completely immune to the stock crash of 50%
magnitude or more. For example, Google is overly dependent on advertising revenue which can grow only by strangulating small sites
owners which use it as the advertizing platform (which it successfully implements fro several years now). But at some point owners
might revolt and start dropping it for Microsoft or other platform. Facebook might face a backlash, if people understand that
selling data about them in the part of the business model, not an aberration.
One of the most unexplainable things that happened in 2018 was dramatic fall of oil prices in the Q4. This was quite surprising
(and destructive) after the period of little or no capital investment in the new fields for three years or so. Shale oil
production increases in the USA are only possible if junk bonds can be produced along with it. Junks bonds that will never be paid.
With the current debt load and prices below $50 most of the USA shale oil companies are zombies. Most if not all of thenm are losing
money. Only return of ~$70 oil prices can save them, if anything at all. WSJ touched this topic recently.
So this surprising fall of oil prices (from around $70 to around $43 WTI) looks connected to the speculations in the "paper oil"
market.
Financialization allows for oil price to be completely detached from fundamentals for a year or even two (Saudis need over $80 I
think to balance the budget, I think; this represents "fair price" as they are one of the three largest producers).
But you will never know this unless there are shortages at gas stations. The difference is covered by inflated statistics from
IEA and similar agencies as well as "paper oil" -- future contracts which are settled in dollars.
This is the reality of "casino capitalism" ( aka neoliberalism ) with its rampant and destructive financialization.
There is also a tendency to think newer=better. I've heard doctors and pharmacists complain
that patients will get offended when prescribed a cheaper, older drug. They want the best and
newest, they need and deserve it!
@Redneck farmer That is because advertising works. Drug companies being allowed to
advertise guaranteed that predators, such as the Sacklers, would want to own drug companies.
More activity on the dark, unethical side of capitalism. There's an entire history of it,
opium wars, Atlantic slave trade, pornography, control of political agents through
pedophilia. The list does go on and strangely enough it's usually the same actors.
At the height of the market turmoil during the previous financial crisis, a Federal Reserve
Bank of New York official confidently told me they would keep throwing stuff at the wall until
something stuck.
This week the US central bank ran some moves from its 2008 playbook -- and then went far
beyond it. Adding to the open-ended buying of US government bonds, the Fed will load up on
investment-grade corporate debt for the first time.
johnbrewster@77
Here's a story from today's Toronto Star. It's a neoliberalism story and goes well with Pepe
Escobar's piece in Asia Times (see above for link)
Basically the Province of Ontario stockpiled everything need for the pandemic that SARs
warned them was bound to come.
Then, a couple of years ago, they destroyed the stockpiles including 55 million
facemasks.
Now there are no face masks to be found and medical staff, inter alia, are having to take
totally unnecessary risks.
Why did this happen? Because neo-liberalism is all about profits and fiscal austerity: as
soon as the masks got beyond their 'best before' date they were destroyed - so the
manufacturers could have another bite at the cherry and sell another 55 million masks. But
then, austerity, the need to finance tax cuts for the wealthy, stepped in so the orders were
not renewed. And people will die, horrible deaths, as a result.
PS to vk # 1. Please think again. Trump has been in a trade war with China for what? a couple
of years? AND, he specifically banned imports of medical supplies from China. Other posters
wave supplied links for this idiocy.
Trump's about as innocent as jack the ripper. You may just be seeing things relatively, as
ghouls like Elliot Abrahms and disgusting Pomposity make Trump seen like an amateur.
@Divine
Right American conflicts with Russia are based partly on self-serving fictions of the
military industrial complex that need an enemy for their continued existence, as well as some
more realistic conflicts involving Eastern Europe and rival interests over oil prices. The US
need for hegemony, which is highly tied to the value of the dollar as a reserve currency,
further thrusts this forward and center(and indeed, into conflict with China as well). This
all is intermingled with a [fake and hypocritical] generalized rejection of "authoritarian"
governments.
China, on the other hand, has no real current conflicts with Russia – most conflicts
involve sales of weaponry and political influence over central Asian states, nothing of vast
importance at least compared to being their the target of an enormous world-spanning
sanctions order or a dedicated trade war.
Your argument has the weird self-contradiction that the CCP both is supposedly the
mind-controlling alien brain of all Asians, while at the same time, not actually benefiting
from any specific conflict with Russia. This also ignores the fact that Asians tend to
assimilate the highest by any population(at nearly 40% intermarriage
in some segments, that Chinese students in particularly no longer tend to stay in the US(
only
20% by 2017 ), and that a overwhelming part of the demographic increase by
immigration is
Indian with long historical and cultural rivalries with China. And far more than Chinese
Americans, who often engage in racial masochism(witness Gordan Chang ), Indian Americans are vastly
more active and influential in American
politics both due to cultural reasons as well as higher verbal IQ. This isn't even
hypothetical: Indian American political writers dominate National Interest articles stressing
for more hawkish Chinese attitudes and were directly contributory to renaming the South China
Seas conflict to the "Indo-Pacific region."
I do agree that the US has long since crippled its resource base. But there's no evidence
that Trump, or anyone else, is demonstrating the barest inkling of trying to resolve it(or
that it is even possible, given the bueaucratic overload and red tape of regulations). Gould
once described evolution as a "drunkard's walk" between complexity, where organisms sometimes
fall trapped inside rail tracks, unable to stumble out.
Indian American political writers dominate National Interest articles stressing for more
hawkish Chinese attitudes and were directly contributory to renaming the South China Seas
conflict to the "Indo-Pacific region."
@Anatoly
Karlin There is apparently a large colony (100.000) of Chinese workers in Lombardy, with
direct flights between Lombardy and Wuhan, so this Italian outbreak is not a coincidence.
Many Italians in Northern Italy sold their leather goods and textiles companies to
China. Italy then allowed 100,000 Chinese from Wuhan/Wenzhou to move to Italy to work in
these factories, with direct Wuhan flights. Result: Northern Italy is Europe's hotspot for
Wuhan Coronavirus
UK had a "herd immunity" strategy from the beginning. They made no real effort at
containment. British government allowed their people to become infected, and only
began to change course after public outrage.
@Felix
Keverich The large Chinese population in Italy has been completely ignored by the media,
in fact China itself seems to have been let completely off the hook. The focus is now on how
terrible Britain and the native British people are.
Someone even posted a Tweet above by a Vietnamese person trying to claim that BRITAIN of
all countries is responsible for the outbreak in Vietnam, I mean what kind of ridiculous
logic is that? Vietnam bloody BORDERS China, the origin and epicentre of the Coronavirus
outbreak, and the Vietnamese are trying to say Britain is the cause? It beggars belief.
less globalization outside North America/Europe/Japan/Australia
You are missing the point of globalization: manufacturing in cheap Third World countries
and rewarding the local compradors with a permission to migrate to the West. That's the deal,
that's what globalization is.
With NA-Europe-Japan all you get is tourism and travel. I would be surprised if we can at
this point convince Chinese and the other cheap labor countries to do the work and forgo the
hope of migration. It was a Faustian deal and those as we know end in hell.
@AP
Calm down, man and stop the stupid blaming game. It seems that your Banderite spin also
includes bashing Chinese which, on the second thought, should not be surprising as there is
only one paymaster. Perhaps you should specialize in Ukraine only and leave China to more
competent haters.
Compare Canada and Italy on Chinese residents: Canada has 5 times more Chinese than Italy
but 62 times less infection cases and 539 times less fatalities than Italy (as of March 16).
Furthermore France and UK have more Chinese than Italy.
What about tourists: In Canada 0.75 mil Chinese tourist but in Italy 3.5 mil Chinese
tourists. So it must be the tourists, right?
So compare Japan with Italy on Chinese tourists: 8.4 mil Chinese tourist in Japan vs. 3.5
mil Chinese tourists in Italy. How many cases in Japan?
So what I am trying to convey is that the expression of the epidemic in different
countries is not congruent with the number of Chinese residents or Chinese tourist.
We will never know where the patients zero (yes plural, there are many patients zero)
really came from. For various political reasons we will not be told and what we will be told
we must be skeptical about. I found interesting data about the first infected in British
Columbia that has huge rather affluent Chinese population. There were as many Iranians as
non-Iranians on the list.
In British Columbia cases 1 to 5 were from China though it does not appear they infected
others while cases 6, 7, , 12 and 14, 15, 19 were traced to Iran. Then the case 22 was from
Iran and also case 31. Case 32 was from Italy, case 35 was from Egypt and case 37 was from
Germany. So out of first 37 cases over 50% were people came form Iran, Egypt, Germany and
Italy. My point is that while Canada has huge Chinese population (1.7 mil) and gets 700,000
Chinese visitors per year it does not look like China was the main vector. In BC it is Iran
and Europe.
One should consider a possibility whether virus introduction to Iran and the Middle East
did precede its introduction in China.
Now let's return to Italy. Most Chinese tourists go to Rome, Florence and Venice. These
cities were not affected as much as Lombardy where there is not that many tourists. So we are
told that Chinese workers could carry the virus. So look at Prato (in Tuscany near Florence)
which has the highest density of Chinese population in Italy. Wiki lists 11,882 (6.32%) for
Prato while the highest absolute number is Milan 18,918 (1.43%). The numbers are probably
outdated as most likely they do not include illegal residents.
"In a single day the positive cases of coronavirus in the province of Prato have
tripled: from 7 to 21 . It is the darkest day since the outbreak began. According to
what was announced in the afternoon of today, March 11, by the bulletin of the regional
council "
"Therefore, 314 patients are currently positive in Tuscany. This is the subdivision by
signaling areas: 71 Florence, 32 Pistoia, 21 Prato (total Asl center: 124), 43 Lucca, 40
Massa Carrara, 34 Pisa, 16 Livorno (total North West Asl: 133), 12 Grosseto, 37 Siena , 14
Arezzo (total Asl southeast: 63)."
So clearly the 2nd largest Chinese community in Italy (and first in density) with 21 cases
(out of 12,246 cases in Italy) did not contribute a lot to the corona virus outbreak in
Italy.
@AP
Calm down, man and stop the stupid blaming game. It seems that your Banderite spin also
includes bashing Chinese which, on the second thought, should not be surprising as there is
only one paymaster. Perhaps you should specialize in Ukraine only and leave China to more
competent haters.
Compare Canada and Italy on Chinese residents: Canada has 5 times more Chinese than Italy
but 62 times less infection cases and 539 times less fatalities than Italy (as of March 16).
Furthermore France and UK have more Chinese than Italy.
What about tourists: In Canada 0.75 mil Chinese tourist but in Italy 3.5 mil Chinese
tourists. So it must be the tourists, right?
So compare Japan with Italy on Chinese tourists: 8.4 mil Chinese tourist in Japan vs. 3.5
mil Chinese tourists in Italy. How many cases in Japan?
So what I am trying to convey is that the expression of the epidemic in different
countries is not congruent with the number of Chinese residents or Chinese tourist.
We will never know where the patients zero (yes plural, there are many patients zero)
really came from. For various political reasons we will not be told and what we will be told
we must be skeptical about. I found interesting data about the first infected in British
Columbia that has huge rather affluent Chinese population. There were as many Iranians as
non-Iranians on the list.
In British Columbia cases 1 to 5 were from China though it does not appear they infected
others while cases 6, 7, , 12 and 14, 15, 19 were traced to Iran. Then the case 22 was from
Iran and also case 31. Case 32 was from Italy, case 35 was from Egypt and case 37 was from
Germany. So out of first 37 cases over 50% were people came form Iran, Egypt, Germany and
Italy. My point is that while Canada has huge Chinese population (1.7 mil) and gets 700,000
Chinese visitors per year it does not look like China was the main vector. In BC it is Iran
and Europe.
One should consider a possibility whether virus introduction to Iran and the Middle East
did precede its introduction in China.
Now let's return to Italy. Most Chinese tourists go to Rome, Florence and Venice. These
cities were not affected as much as Lombardy where there is not that many tourists. So we are
told that Chinese workers could carry the virus. So look at Prato (in Tuscany near Florence)
which has the highest density of Chinese population in Italy. Wiki lists 11,882 (6.32%) for
Prato while the highest absolute number is Milan 18,918 (1.43%). The numbers are probably
outdated as most likely they do not include illegal residents.
"In a single day the positive cases of coronavirus in the province of Prato have
tripled: from 7 to 21 . It is the darkest day since the outbreak began. According to
what was announced in the afternoon of today, March 11, by the bulletin of the regional
council "
"Therefore, 314 patients are currently positive in Tuscany. This is the subdivision by
signaling areas: 71 Florence, 32 Pistoia, 21 Prato (total Asl center: 124), 43 Lucca, 40
Massa Carrara, 34 Pisa, 16 Livorno (total North West Asl: 133), 12 Grosseto, 37 Siena , 14
Arezzo (total Asl southeast: 63)."
So clearly the 2nd largest Chinese community in Italy (and first in density) with 21 cases
(out of 12,246 cases in Italy) did not contribute a lot to the corona virus outbreak in
Italy.
If this started in the USA and spread elsewhere the world would have good cause to
condemn the USA and to judge any subsequent efforts by Americans to help others as "the
least they could do."
Chinese shipments of medical goods are actually to the risk of the own population, where
hospitals are still recovering. While in some ways it is a blatant PR play, its quite a
significant cost amd self-risk that goes beyond "the least they could do."
The Chinese are showing an unprecedented amount of humanity, morality and basic decency
by giving medical aid to more than half the world in genuinely useful forms despite almost
everyone shitting on them by calling this a "Chinese virus" and other garbage.
... ... ...
Here is an article about them in the New York Times. Written soon before the onset of the
plague. It would not be written now – there's too obvious a connection between open
borders, multiculturalism, and death:
As Prato's factories went dark, people began arriving from China to exploit an
opportunity.
Most were from Wenzhou, a coastal city famed for its entrepreneurial spirit. They took
over failed workshops and built new factories. They imported fabric from China, sewing it
into clothing. They cannily imitated the styles of Italian fashion brands, while affixing a
valuable label to their creations -- "Made in Italy."
Chinese groceries and restaurants have emerged to serve the local population. On the
outskirts of the city, Chinese-owned warehouses overflow with racks of clothing destined for
street markets in Florence and Paris.
Among Italian textile workers who have veered to the right, the arrival of the Chinese
tends to get lumped together with African migration as an indignity that has turned Prato
into a city they no longer recognize.
"I don't think it's fair that they come to take jobs away from Italians," says Ms.
Travaglini, the laid-off textile worker. She claims that Chinese companies don't pay taxes
and violate wage laws, reducing pay for everyone.
Since losing her job at a textile factory nearly three years ago, Ms. Travaglini has
survived by fixing clothes for people in her neighborhood. "There are no jobs, not even for
young people," she says.
Chinese-owned factories have jobs, she acknowledges, but she will not apply. "That's all
Chinese people," she says, with evident distaste. "I don't feel at ease."
:::::::::::
Lots of Ukrainians there also. They don't bring such a virus to Italy, but they bring the
virus back to Ukraine.
::::::::::
So nice PR move after killing lots of European old people. One of the sacrificed in Milan
to this virus, Vittorio Gregotti, was an architect who helped build the city. Killed by the
Chinese virus. A symbol of native Italy replaced by migration.
@Kim
The Chinese have internal natural resources and have been vigorously working world wide to
obtain rights to, develop, and extract mineral and energy resources in order to keep
production going. See the documentary Empire of Dust about Chinese getting the rights to
African resources and developing the infrastructure to extract them. Also following the
supposed "war for oil" in Iraq the oil contracts went almost entirely to China. China has a
lot of the mines for the rare earths needed in modern technological products. The largest
single mine used to be in California. A Chinese company bought and re-opened it.
In effect they already own or have contracts for what they need and are much less leveraged
than we are.
As to whether their customers can continue to pay for it, that is a different kettle of fish.
The rest of us have been running up our credit card with them. We have been paying it off by
selling off our countries piece by piece through Chinese purchases of real estate,
businesses, port facilities etc. As China has grown economically they have been developing
their internal market to reduce dependence on Wal-Mart so that might reduce the impact of
poorer foreign markets.
In any event they own a huge infrastructure in plants tooling and human expertise for making
things. Our leaders have deliberately hollowed ours out for profits and cheaper consumer
goods.
No doubt global elites present a united front to protect their common interest in
maintaining the petrodollar and international banking system, insofar as it supports their
individual interests. However, other than that shared interest, the elite are rife with
factions -- both domestically and especially internationally.
Incredibly globalization as a system seems to have mostly disappeared in 6 weeks. There
are closed frontiers, no more container ships, the ports are empty, no flights and the malls
are closing.
It's not clear where the US public are going to get their electronics, clothing and other
Walmart items unless everything rebounds 100%. If there's no rebound, then it starts to look
like some kind of watershed event equivalent to WW1.
If elites and their interests are the foundation of the NWO, then right now they seem to
be all over the place.
– The globalists want a strong dollar which they ensure with the dollar's reserve
currency role (particularly the petrodollar). The dollar is doing fine now as a refuge, but
with oil approaching $20 a barrel it doesn't look like such a great link longer term, and
what use is a reserve currency when there's no trade?
– Globalism is based on ZIRP (Zero Interest Rate Policy) to keep the West consuming
and allow the issuance of massive debt. Now international bond markets are hesitating in the
face of more massive international issuance to deal with the economic fallout of the
Coronavirus. Interest rates only have to rise to their historic averages to collapse the
whole thing.
– The LGBT, SJW crowd find that racism, diversity and generally anti-White
propaganda has become a non-issue. Everything has become Coronavirus which is actually sort
of equalizing , and putting the focus on what the government needs to do to protect all the
public including Deplorables (unusual turnaround).
– Frontiers are closing with the cheap labour/ multicultural crowd having gone
quiet.
– Many globalist interests are facing bankruptcy as demand disappears, new share and
bond issuance is blocked, credit disappears and a myriad of counterparty risks (finacialized
opaque derivatives) turn into counterparty failures.
– The general inability of Western government elites to handle all these combined
events. Monetary policy doesn't work in a ZIRP environment so they may just resort to
"Helicopter Money" but with shortages of goods this is guaranteed to feed directly into
inflation.
Altogether a remarkable change of direction in a very short time.
@Miro23Coronavirus is certainly a useful way to deflate a speculative bubble. The virus gets the
blame rather the Dumpers in the Pump and Dump cycle. -- Miro23
But, given the precarious state of the global financial system, wouldn't any black swan of
sufficient magnitude suffice to accomplish both deflation and take the blame?
No doubt global elites present a united front to protect their common interest in
maintaining the petrodollar and international banking system, insofar as it supports their
individual interests . However, other than that shared interest, the elite are rife with
factions -- both domestically and especially internationally.
Which explains Tom Dye's assertion that one of the critical roles of the Counsel on
Foreign Relations (CFR) is conflict resolution between competing elite factions. Or, in other
words, I am having a bit of difficulty with the currently popular theory that a
unified, omnipotent and near infallible global elite is behind everything single thing that
happens on the world stage
R ussia and Saudi Arabia are engaged in an oil price war that has sent shockwaves around
the world, causing the price of oil to tumble and threatening the financial stability, and even
viability, of major international oil companies.
On the surface, this conflict appears to be a fight between two of the world's largest
producers of oil over market share. This may, in fact, be the motive driving Saudi Arabia,
which reacted to Russia's refusal to reduce its level of oil production by slashing the price
it charged per barrel of oil and threatening to increase its oil production, thereby flooding
the global market with cheap oil in an effort to attract customers away from competitors.
Russia's motives appear to be far different -- its target isn't Saudi Arabia, but rather
American shale oil. After absorbing American sanctions that targeted the Russian energy sector,
and working with global partners (including Saudi Arabia) to keep oil prices stable by reducing
oil production even as the United States increased the amount of shale oil it sold on the world
market, Russia had had enough. The advent of the Coronavirus global pandemic had significantly
reduced the demand for oil around the world, stressing the American shale producers.
Russia had been preparing for the eventuality of oil-based economic warfare with the United
States. With U.S. shale producers knocked back on their heels, Russia viewed the time as being
ripe to strike back. Russia's goal is simple: to make American shale oil producers "
share the pain ".
The United States has been slapping sanctions on Russia for more
than six years, ever since Russia took control (and later annexed) the Crimean Peninsula and
threw its weight behind Russian separatists in eastern Ukraine. The first sanctions were issued
on March 6, 2014, through Executive
Order 13660 , targeting "persons who have asserted governmental authority in the Crimean
region without the authorization of the Government of Ukraine that undermine democratic
processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty,
and territorial integrity; and contribute to the misappropriation of its assets."
The most
recent round of sanctions was announced by Secretary of State Mike Pompeo on February 18,
2020, by sanctioning Rosneft Trading S.A., a Swiss-incorporated, Russian-owned oil brokerage
firm, for operating in Venezuela's oil sector. The U.S. also recently targeted the Russian
Nord Stream 2
and
Turk Stream gas pipeline projects.
Russia had been signaling its displeasure over U.S. sanctions from the very beginning. In
July 2014, Russian President Vladimir
Putin warned that U.S. sanctions were "driving into a corner" relations between the two
countries, threatening the "the long-term national interests of the U.S. government and
people." Russia opted to ride out U.S. sanctions, in hopes that there might be a change of
administrations following the 2016 U.S. Presidential elections. Russian President Vladimir
Putin made it clear that he hoped the U.S. might elect someone whose policies would be more
friendly toward Russia, and that once the field of candidates narrowed down to a choice between
Donald Trump and Hillary Clinton, Putin favored
Trump .
"Yes, I did," Putin remarked after the election, during a joint press conference with
President Trump following a summit in Helsinki in July 2018. "Yes, I did. Because he talked
about bringing the U.S.-Russia relationship back to normal."
Putin's comments only reinforced the opinions of those who embraced allegations of Russian
interference in the 2016 U.S. Presidential election as fact and concluded that Putin had some
sort of hold over Trump. Trump's continuous praise of Putin's leadership style only reinforced
these concerns.
Even before he was inaugurated, Trump singled out Putin's refusal to respond in kind to
President Obama's levying of sanctions based upon the assessment of the U.S. intelligence
community that Russia had interfered in the election. "Great move on delay (by V. Putin)
– I always knew he was very smart!"
Trump Tweeted . Trump viewed the Obama sanctions as an effort
to sabotage any chance of a Trump administration repairing relations with Russia, and
interpreted Putin's refusal to engage, despite being pressured to do so by the Russian
Parliament and Foreign Ministry, as a recognition of the same.
This sense of providing political space in the face of domestic pressure worked both ways.
In January 2018, Putin tried to shield his relationship with President Trump by calling the
release of a list containing some 200 names of persons close to the Russian government by the
U.S. Treasury Department as a hostile and "stupid"
move .
"Ordinary Russian citizens, employees and entire industries are behind each of those people
and companies," Putin remarked. "So all 146 million people have essentially been put on this
list. What is the point of this? I don't understand."
From the Russian perspective, the list highlighted the reality that the U.S. viewed the
entire Russian government as an enemy and is a byproduct of the "political paranoia" on the
part of U.S. lawmakers. The consequences of this, senior Russian officials warned, "will be
toxic and undermine prospects for cooperation for years ahead."
While President Trump entered office fully intending to "
get along with Russia ," including the possibility of
relaxing the Obama-era sanctions , the reality of U.S.-Russian relations, especially as
viewed from Congress, has been the strengthening of the Obama sanctions regime. These
sanctions, strengthened over time by new measures signed off by Trump, have had a negative
impact on the Russian economy,
slowing growth and
driving away foreign investment .
While Putin continued to show constraint in the face of these mounting sanctions, the recent
targeting of Russia's energy sector represented a bridge too far. When Saudi pressure to cut
oil production rates coincided with a global reduction in the demand for oil brought on by the
Coronavirus crisis, Russia struck.
The timing of the Russian action is curious, especially given the amount of speculation that
there was some sort of personal relationship between Trump and Putin that the Russian leader
sought to preserve and carry over into a potential second term. But Putin had, for some
time now, been signaling that his patience with Trump had run its course. When speaking to
the press in June 2019 about the state of U.S.-Russian relations, Putin noted that "They
(our relations) are going downhill, they are getting worse and worse," adding that "The current
[i.e., Trump] administration has approved, in my opinion, several dozen decisions on sanctions
against Russia in recent years."
By launching an oil price war on the eve of the American Presidential campaign season, Putin
has sent as strong a signal as possible that he no longer views Trump as an asset, if in fact
he ever did. Putin had hoped Trump could usher in positive change in the trajectory of
relations between the two nations; this clearly had not happened. Instead, in the words of
close Putin ally Igor Sechin , the chief executive of Russian oil giant Rosneft, the U.S.
was using its considerable energy resources as a political weapon, ushering in an era of "power
colonialism" that sought to expand U.S. oil production and market share at the expense of other
nations.
From Russia's perspective, the growth in U.S. oil production -- which doubled in output from
2011 until 2019 -- and the emergence of the U.S. as a net exporter of oil, was directly linked
to the suppression of oil export capability in nations such as Venezuela and Iran through the
imposition of sanctions. While this could be tolerated when the target was a third party, once
the U.S. set its sanctioning practices on Russian energy, the die was cast.
If the goal of the Russian-driven price war is to make U.S. shale companies "share the
pain," they have already succeeded. A similar price war, initiated by Saudi Arabia in 2014 for
the express purpose of suppressing U.S. shale oil production, failed, but only because
investors were willing to prop up the stricken shale producers with massive loans and infusion
of capital. For shale oil producers, who use an expensive methodology of extraction known as
"fracking," to be economically viable, the breakeven price of oil
per barrel needs to be between $40 and $60 dollars. This was the price range the Saudi's
were hoping to sustain when they proposed the cuts in oil production that Russia rejected.
The U.S. shale oil producers, saddled by massive debt and high operational expenses, will
suffer greatly in any sustained oil price war. Already, with the price of oil down to below $35
per barrel,
there is talk of bankruptcy and massive job layoffs -- none of which bode well for Trump in
the coming election.
It's clear that Russia has no intention of backing off anytime soon. According to
the Russian Finance Ministry , said on Russia could weather oil prices of $25-30 per barrel
for between six and ten years. One thing is for certain -- U.S. shale oil companies cannot.
In a sign that the Trump administration might be waking up to the reality of the predicament
it faces, Treasury Secretary Steve Mnuchin quietly met with Russia's Ambassador to the U.S.,
Anatoly Antonov. According to a read out from the Russian Ministry of Foreign Affairs,
the two discussed economic sanctions, the Venezuelan economy, and the potential for "trade
and investment." Mnuchin, the Russians noted, emphasized the "importance of orderly energy
markets."
Russia is unlikely to fold anytime soon. As Admiral Josh Painter, a character in Tom
Clancy's "The Hunt for Red October," famously said , "Russians don't take a dump without
a plan."
Russia didn't enter its current course of action on a whim. Its goals are clearly stated --
to defeat U.S. shale oil -- and the costs of this effort, both economically and politically (up
to and including having Trump lose the 2020 Presidential election) have all been calculated and
considered in advance. The Russian Bear can only be toyed with for so long without generating a
response. We now know what that response is; when the Empire strikes back, it hits hard.
Scott Ritter is a former Marine Corps intelligence officer who served in the former
Soviet Union implementing arms control treaties, in the Persian Gulf during Operation Desert
Storm, and in Iraq overseeing the disarmament of WMD. He is the author of several books,
including his forthcoming, Scorpion King:
America's Embrace of Nuclear Weapons From FDR to Trump (2020).
Everything the CDC has been doing has been shocking. As a health care provider I just
don't want to even look at their recommendations anymore: their information is months old and
not based in science, let alone current research on COVID-19.
Local colleges have been shutting down but forcing instructors to go to the schools
– that's not social distancing. And many are still having students in EMT, nursing,
psychology, physical therapy, and other health sciences, go to their clinicals, where they
will be exposed without adequate personal protection equipment. This is because of the CDC.
And admin's greed for money.
My local community college, after implementing/pleading with students to incorporate
careful hygiene and social distancing into their time on campus, and seeing minimal
compliance, decided to make ALL lecture classes online access for the next 3 weeks (at
least). We have no known Covid-19 cases in the COUNTY. (But since testing is not extant, or
common, no one knows what the true situation is.)
The goal of moving to online class instruction is to minimize the number of students (15K
total) on campus and limit contact with older instructors, counselors, and other staff. Lab
classes (PE, Science) will continue under strict personal contact protocol. The solution is a
compromise between health issues and the need for students to complete 80% of course
curricula to get transferable college credits. We'll see if the gamble works out.
Closing K-12 schools is a "no win" situation. Some parents want them closed, others don't.
In Los Angeles the school district decided to close from pressure by the teachers labor
union. Again, few kids understand/implement the protocols of social distancing and smaller
home groups may be the better option (for some). Meals for disadvantaged students will
continue at the LAUSD (~500K students), but they will be drive-thru pick-up.
It appears the pandemic could bring even the invincible US to its knees.
Michael Hudson: [00:00:00] There's recognition that commercial banking has become
dysfunctional and that most loans by commercial banks are either against assets – in
which case the lending inflates the prices of real estate, stocks and bonds – or for
corporate takeover loans.
The economy's low-income brackets have not been helped by today's financial system. Here in
New York City, red lining and a visceral class hatred by high finance toward the poor
characterized the major banks. From the very top to the bottom, they were very clear they were
not going to lend to places with racial minorities like the Lower East Side. The Chase
Manhattan Bank told me that the reason was explicitly ethnic, and they didn't want to deal with
poor people.
A lot of people in these neighborhoods used to have savings banks. There were 135 mutual
savings banks in New York City with names like the Bowery Savings Banks, the Dime Savings Bank,
the Immigrant Savings Bank. As their names show, they were specifically to serve the low-income
neighborhoods. But in the 1980s the commercial banks convinced the mutual savings banks to let
themselves be raided. Their capital reserves of the savings banks, was just looted by Wall
Street. The depositors' equity was stripped away (leaving their deposits, to be sure). Sheila
Bair, former head of the FDIC, told me that the commercial banks' cover story was that they
were large enough to provide more capital reserves to lend for low-income neighborhoods. The
reality was that instead, they simply extracted revenue from these neighborhoods. Large parts
of the largest cities in America, from Chicago and New York to others, are underbanked because
of the transformation of commercial banks from providers of mortgages to emptiers-out, just
revenue collectors. That leaves the main recourse in these neighborhoods to pay-day lenders at
usurious interest rates. These lenders have become major new customers for Wall Street bankers,
not the poor who have no comparable access to credit.
Apart from the savings banks, of course, you had the post office banks. When I went to work
on Wall Street in the 1960s, 3 percent of U.S. savings were in the form of post office savings.
The advantage, of course, is that post offices were in every neighborhood. So you actually had
either a local community banking like savings banks – not like today's community banks,
which are commercial banks, lending largely to real estate speculators to capitalize rental
apartments into heavily mortgaged co-ops with much higher financial carrying charges – or
you had post offices. You now have a deprivation of basic bank services in much of the economy,
combined with an increasingly dysfunctional and predatory commercial banking system.
The question is, what's going to happen next time there's a bank crash? Sheila Bair wrote
about after the 2008 crash that the most corrupt bank was Citibank – not only corrupt,
but incompetent. She had wanted to take it over. But Obama and his Secretary of the Treasury,
Tim Geithner, acted as lobbyists for Citibank from the beginning, protecting it from being
taken over. But imagine what would have happened if Citibank would have been become a public
bank – or other banks that are about to have negative equity if there is a downturn in
the stock and bond and real estate market. Imagine what will happen if they were turned into
public banks. They would be able to provide the kind of credit that the commercial banking
system has refused to provide – credit to blacks, Hispanics and poor people that have
just been red-lined in what is becoming a financially polarized dual economy, one for the
wealthy and one for everyone else.
Walt McRee: [00:04:10] Well, power in that realm, of course, lies with the banking
cartel. They look at public banks as a threat. They hate competition of any sort, it seems.
Michael Hudson: [00:04:18] Of course it is a threat.
Walt McRee: [00:04:22] And even when we say, Michael, that we're not going after the
business you're already doing because you aren't lending to small, medium enterprises and so
forth – we want to take on the infrastructure that you don't want to fund, but they still
are pushing back. How will we be able to get past that?
Michael Hudson: [00:04:40] I think you should say that of course you're not going to
take business away from them, because the public community bank or government-owned bank would
not make corporate takeover loans or speculative derivative bets. It would not create the
dysfunctional credit and debt overhead that has been expanding ever since 1999 when the Clinton
administration changed the banking rules.
The problem is that the big commercial banks don't want the productive kind of loans that
public banking would make. For instance, the reason they didn't want to extend credit to the
Lower East Side or the Hudson Yards west side of New York was they wanted to sort of drive out
their residents and gentrify it, by providing the money to the big developers who socially
bulldoze these neighborhoods. Their policy is to kick out as many low-income renters or owners
as they can, and replace them by raising rents from like $50 a month to $5,000 a month. That's
what's happened on the Lower East Side from the time I first lived there to what rents are
today.
There is a fight of the economy's unproductive sector against people who want to use credit
in a productive way that actually helps the economy. I think it's a fight between good and
evil, at least between the productive and unproductive economy, between economics for the
people and economics for the One Percent.
ORDER IT NOW
Ellen Brown: [00:06:14] I wonder, though, if the Fed is going to even allow the banks
to collapse again, with what they just did with the repo market. They can step in at any time
to save anybody. I don't know that Congress, even has a say in it. What do you think?
Michael Hudson: [00:06:30] I think that's right. I've talked to Paul Craig Roberts
and we discuss whether they can just keep on keeping these zombie banks alive. Can they keep
the over-indebted zombie economy alive by the Federal Reserve manipulating the forward stock
and bond markets to support prices? It doesn't actually have to buy stocks and bonds beyond the
$4 trillion it's already put into Quantitative Easing. It can simply make manipulate the
forward market. That doesn't really cost any money until the big crash comes. So I think one
should have a discussion over what President Trump says is a boom that that he's created, with
the stock market going up. Does that mean that the economy is getting richer? Are we fine with
commercial banking the way it is, so that we don't need public banking?
I think you have to expose the fact that what's happened is artificial state intervention.
What we have in the name of free market support of the banks is not a free market at all. It's
a highly centralized market to support the predatory financial sector's wealth against the rest
of the economy. The financial sector's wealth takes the form of credit to the rest of the
economy, extracting interest and amortization, while making loans simply to increase asset
prices for real estate and financial securities, not put new means of production in place to
employ labor. So you have to go beyond the public banking issue as such, and look at the
political context. Ultimately, the way that you defend public banking is to show how the
economy works and how public banking could play a positive role in the economy as it
should work.
Ellen Brown: [00:08:14] Can you explain what you meant by forward lending? I mean,
they don't have to
Michael Hudson: [00:08:19] It's not forward lending, it's buying long. For the stock
market's Dow Jones average, they'll contract to buy all its stocks or those in the S&P 500
in one month, or one week or whatever the timeframe is, for X amount – say, 2% over what
they're selling today. Well, once the plunge protection team issues a guarantee to buy, the
market is going to raise the bid prices for these stocks up to what the Fed and the Treasury
have promised to pay for them. By the time the prices go up, the Fed doesn't actually have to
buy these stocks, because everybody's anticipated that the Fed would buy them at this 2 percent
gain. So it's a self-fulfilling prophecy. We're dealing with a government run by the banks and
the creditor powers to artificially raise asset prices, on credit. This has kept alive a system
that represents itself as creating prosperity. But it's not creating prosperity for the 99
Percent. Public banking would aim at prosperity for the 99 Percent, not just for the One
Percent.
Ellen Brown: [00:09:46] I'm writing about Mexico's AMLO, who is now who has just
announced in January that he will be building 2,700 branches of a public bank in the next two
years. He's expecting 13,000 branches ultimately, so it will be the largest bank in the
country. His reasoning is just what you're saying, that the banks have failed and have not
serviced the poor. His mandate is to help the poor, and he can't do that if they don't have
banking services.
Michael Hudson: [00:10:17] Is that national?
Ellen Brown: [00:10:18] Yes, all across the country.
Walt McRee: [00:10:22] "Loprabrador", AMLO. So we know that a public monetary source
is a public utility. Our vision is to create a network of local and state public banks. That
leads us to the view that what we really need to be targeting is the Federal Reserve, to
ultimately turn it into a publicly-owned entity. Is that folly or
Michael Hudson: [00:10:55] I think the way to get people to support this is if they
understand how the Federal Reserve was created. A few years ago I published an article in an
Indian economic journal (I think it's on my website), about how the Federal Reserve was
created.
[1] "How the U.S. Treasury avoided Chronic Deflation by Relinquishing Monetary Control to Wall
Street," Economic & Political Weekly (India), May 7, 2016. Available on Naked
Capitalism an michael-hudson.com. There was a fight by Wall Street led by J.P. Morgan.
America had a central bank until 1913 – the Treasury. Until 1913 the Treasury was
doing everything that the Federal Reserve began to do. The idea of creating the Federal Reserve
was to take power away from the Treasury. The Treasury wasn't even allowed to be on the board
as an owner of Federal Reserve stock. The idea was to take decision-making away from
Washington, away from democratic politics, and insulate the financial system from the
democratic political system by turning control over to the corporate financial centers -- Wall
Street, Chicago, and the other Federal Reserve districts. They were the same districts as those
that the Treasury already had divided the country into. Remember, these were the decades
leading up to World War I when there was a social democratic revolution from Europe to the
United States. A guiding idea was to democratize banking.
Wall Street very quickly developed a counter strategy to this. And the counter strategy was
the Federal Reserve. You're welcome to republish my article on your site. You and I both aim to
reverse the counterrevolution mounted against classical economics and social democracy. The
entity you're talking about would probably be under the aegis of the Treasury. You'd be putting
the economy back in the direction that the world was moving before World War I derailed these
efforts.
ORDER IT NOW
You talk of nationalizing the Fed. I know people don't like the word nationalizing. How
about thing de-privatizing or de-Thatcherizing the Fed? You have to represent the Fed as having
stolen economic and financial policy away from the public domain. It became part of the
neoliberal project taking form in Austria in the 1930s. You're trying to restore the classical
economic vision of productive versus unproductive credit, productive versus unproductive labor,
and public money as opposed to private money. These distinctions were erased by the censorial
neoliberal counter-revolution.
It's not that you're radical, that these people had a radical revolution to carve away the
financial system from democracy. And you're restoring the classical vision of democratizing,
re-democratizing finance and banking.
Walt McRee: [00:14:12] I want to thank you for saying that, Michael, because
de-privatizing the Federal Reserve is so much more accurate and powerful. You'll recall that we
kind of exchanged a phrase when I said "institutionalized deception.". I think that's really
important. But let's say that prior to that, Stephanie Kelton gets in there, or somebody from
the MMT crowd gets into a new administration prior to de-privatizing the Fed. Does MMT have a
place to play or to emerge in that environment?
Michael Hudson: [00:14:55] Of course, and here's the role: You can leave the
commercial banks to do what they're doing, but you're not going to provide Federal Reserve
credit for them to load down the economy with unproductive debt. The question is, if you're
going to create real community banking via a public banking sector, where will it get the money
to lend out? How do we provide money to the red-lined areas of the economy to actually finance
tangible capital investment and people's living needs, not just predatory lending? The way that
MMT comes in is much like the Chicago plan for one hundred percent reserves. These community
banks will need Treasury-created depository credit beyond the deposits they raise in their
local areas.
They need more money. MMT will provide credit to these banks in exchange for their loan
originations of a productive character, on terms that borrowers can afford, with realistic
mortgages also to build public housing. The new Fed that we're talking about will be a major
depositor and will provider of the capital deposits and reserves to the banks. Right now, it
has provided $4 trillion of Quantitative Easing credit to the banks, not to put into the
economy but only to inflate the stock and bond market and make housing more expensive. Wouldn't
it be much better to provide credit to community banks that actually would make credit
available for productive economic purposes – and not for takeover loans, stock buybacks
and asset speculation?
Productive credit was what everybody expected banking to develop in the late 19th century.
Germany and Central Europe were leading the way. It was called Middle Europa banking, as
opposed to Anglo-American banking. (I discuss this contrast in Killing the Host .) That
was essentially following the classical model, as everybody expected banking to evolve prior to
World War I.
Ellen Brown: [00:17:29] Cool. That's totally what I also wrote about in my latest
book. The Federal Reserve is where you should be getting credit, so you don't have to borrow it
from somewhere else. Everybody thinks this whole repo thing is so contrived. It's
re-hypothecated. One party owns the collateral at night, the other party owns it during the
day. It's all just bluff to make it look like they borrowed something that wasn't really there.
So let's just acknowledge that all money is just credit. And like you say, if you have a good
loan, a good project to be monetized, that's the whole point of a bank. It will turn your
future productivity into something you can spend in the marketplace. And the central bank is
there to provide the credit.
Michael Hudson: [00:18:21] That's right.
Ellen Brown: [00:18:22] Turn it into dollars.
Michael Hudson: [00:18:24] That's right. My way of describing it is to look at
history, to show that this is not a utopian idea. It is what made German and Central European
banking so much more productive in the decades leading up to World War I. So we actually have
historical examples of good banking versus bad banking. But the predators won in the end.
Ellen Brown: [00:18:53] Well, regarding this whole repo thing, one big problem we
have with our public banks is the 110 percent collateralization requirement in California. How
is a bank supposed to make loans if it has to use its deposits to buy securities –
something safe and yielding low interest to back the deposits? It seems to me that what the big
banks do – and I think we could do it, too – is to take those deposits and buy
federal securities at 1.5 percent, and then they turn around and use the securities as
collateral in the repo market, where they pay 1.5 percent. In other words, they earn 1.5
percent and they pay 1.5 percent. So it's a wash. They get their money for free. I think we
could do that, too. Or are only certain players allowed to play that game, and we can't jump
in?
Michael Hudson: [00:19:50] Well, you're the lawyer. Of course they could do it. I
think one of the things that you and other progressives have recommended is that the Fed should
stop paying money to the banks for their reserve deposits. Stop giving them the free giveaway.
If you want to say, "We're against the largest welfare recipients in the country. They're not
the people you think. They're the Wall Street banks. These hypocrites want to cut back Social
Security to balance the budget. They want to cut back medical care and social services, and
make themselves the only welfare recipients."
Ellen Brown: [00:20:30] Right, agreed. But if we just stand on our high horse and say
this has to change, nothing will happen. We could do it ourselves and just show what you're
doing in contrast to what they're doing
ORDER IT NOW
Michael Hudson: [00:20:44] You're asking for symmetry. They're making us carry a big
load on our back, that they don't have to carry. They're loading the dice in their own favor.
You want to unload the dice and stop the insider favoritism. You correctly represent the banks
as being insiders. You have to say, "Look, these insiders are trying to keep a monopoly." You
could use the anti-monopoly legislation that's been on the books since Teddy Roosevelt's time.
You have a lot of legal power to break up the big banks. You could treat them like I think they
could treat the pharmaceutical companies if Bernie gets in.
Walt McRee: [00:21:44] Monopolies are being challenged by the shadow banking
industry. New forms of payment exchange technologies seem to be eating away at that singular
source of credit. What's your prognosis for how that's going to evolve? Will the big banks find
a way to clamp down on that ultimately?
Michael Hudson: [00:22:05] Are we talking about cryptocurrency?
Walt McRee: [00:22:07] That would be one example, yes.
Michael Hudson: [00:22:10] Well,. you can't stop people from gambling. People think
that buying a cryptocurrency is like buying an Andy Warhol etching. Maybe it'll go up in price
if a large number of people want it. But basically, it's junk. It's very speculative. It's
certainly not stable. It goes up and down. One day there may be a solar flare that's going to
wipe out all the bank records for these things. But there is no way to stop people from doing
something that seems to be silly or gambling. You certainly will not insure them. So you will
not give them any protection against loss. You also will want to insulate the economy from
having any transactions in crypto, in these alternative money things that pose a big threat of
loss. They are not real money, because the government will not accept payment of
cryptocurrencies as taxes or for public goods and services. The government will only accept
specified forms of money. You can create any kind of swap or bet. If you want to create the
equivalent of a racetrack on horses. You can do it, but that's a financial racetrack. I think
there may be taxes on racetracks. They were unregulated for a long time. But Hollywood movies
showed that there's a lot of criminalization going on there.
Walt McRee: [00:23:59] We were all amused, well, maybe a little wondering about Max
Kaiser. Ellen and I and Tyson Slokum had some time with him over there just before you were at
his Brooklyn studio, but Max is into Bitcoin in a big way, and he sees it as the new gold.
Michael Hudson: [00:24:20] He told me that a lot of people watch his show because
they're gold bugs or they are interested in Bitcoin. I think he's tried to take a neutral view
of it, certainly in our personal conversations. He's not a gold bug and he's not a Bitcoin or
other bug. But he said that a lot of people want to find out about it, so he has guests on his
show telling people, "Here it is, take your choice." It's part of the new speculative financial
landscape, just like swamps are part of landscape for Florida real estate. So he's going to
cover the whole spectrum. Reuters produces his shows, and the audience wants to hear about
this. So he talks about what they want to hear.
Ellen Brown: [00:25:20] I think he actually does promote Bitcoin. He's heavily
invested in it and he was one of the originals, so he's obviously made a lot of money on
it.
Michael Hudson: [00:25:29] Okay.
Ellen Brown: [00:25:29] I think he agrees that it can't be a national currency. It's
too slow, too expensive, and too environmentally unfriendly. But like you say, it has been a
good investment, just like fine art or something that, if people want it, the value goes up.
Plus, there's a big black market for it, for trading and things that you don't want the
government to know about.
Michael Hudson: [00:25:57] It's a real phenomenon. I know people who benefited from
Andy Warhol. So he saw the phenomenon and he seems to have made money, but when Steve Keen and
I and others got together with him for a couple of days two months ago, the topic never came up
in discussion.
But gold did. I wonder where the gold of Libya went, for instance. Apparently it was all
taken and I understand the US gave it to ISIS. Hillary said it had to go to ISIS to act as our
Foreign Legion. We gave them Libya's weapons. Some of the gold must have just been taken by the
CIA and State Department for dirty tricks for its black operations. Certainly, America wants to
prevent any other country or large gold possessor from having enough gold to try to reinstate
it as a means of settling balance-of-payments deficits. America runs a large military deficit,
so at a certain point, the more money it spends abroad for its 800 military bases, the more
gold it would lose. Just like in General de Gaulle's time during the Vietnam War, although
actually Germany was taking more gold than France. So America wants to keep the dollar at the
center of the world financial system. That really was why it went to war with Libya, because
Libya was one of the first countries to de-dollarize and move its currency toward gold. So
you're having a group of countries – Russia, China, Iran and others – add gold to
their reserves instead of dollars. You're having a de-dollarization move throughout the world
to break free from the US ability to do what it did do Iran.
When Iran borrowed in dollars under the Shah, it used Chase Manhattan Bank as its paying
agent. It put enough money into the account to pay its foreign debts service. But then the
State Department told Chase to screw Iran and refuse to turn over the payment. Now that the
Shah wasn't running Iran, once Chase refused to turn over the payment and froze Iran's account,
that meant that Iran went into default on the entire dollarized foreign debt. It was liable for
a huge amount of capital.
ORDER IT NOW
That was a warning for the rest of the world that no government could safely put its money
in an American bank or an American bank branch, or in a British branch that would act as a
subsidiary of the Pentagon. Because if you do, the bank can simply force you into default at
any time, just like the US CIA can come in and use electronic weaponry to destroy your bank
payment-clearing system. That's why the threat of cutting Russia and China and other countries
off from the Swift Interbank Clearing System led Russia to develop its own clearing system.
With a flick of a switch it can begin to work anytime United States tries to cut Russia off
from the SWIFT payments system. So you're having the whole world de-dollarize very quickly. And
right now the question is what Europe will choose. Are Germany and other countries going to
become part of the de-dollarized system, or remain part of the dollar area?
This is part of the fight against using the IT chips and the communications chips from
Huawei. Huawei did not put US spyware into the system. The United States says that if it can't
have a phone system and communications system that it can control by spyware and use to blow up
your economy, your public utilities, your electrical systems, then you're our enemy, because we
feel insecure without this control. When President Trump said that Huawei was a threat to US
national security, he meant that we don't feel secure unless we have the power to destroy any
economy that acts in any way that is independent of the United States – because you might
do something we don't like. This is the most aggressive concept of security that one could
imagine. So of course the rest of the world is seeing its own national security as having a
financial dimension. The financial dimension is to create a monetary and financial system that
minimizes connections to the dollar except to the extent of having to buy and sell dollars to
stabilize foreign exchange rate.
Ellen Brown: [00:31:31] There's a lot of talk, even among central bankers, that we
need to get off the dollar as a global reserve currency. But it seems to me that gold is also
manipulatable. I mean, it's not the ideal I had envisioned a system where instead of reserves
being a thing, like dollars or gold that you can actually trade, it would just be a measure,
like a yardstick. You would be able to compare one currency to another according to what you
could buy with it. Like you'd have a whole basket of things that everybody uses in every
country. And now that they report that kind of stuff, it wouldn't be all that hard to get the
figures and, you know, just compare and say, well, your dollar will be worth so many pesos in
Mexico or whatever. That was my idea, but what do you think?
Michael Hudson: [00:32:27] That would meet one of the criteria of money, which is as
a measure of value, but it would not do at all for international money. You have to have some
means of constraint. In other words, suppose the United States continued to run another
military budget deficit like it did in the Vietnam War. There is no way that you could use the
balance of payments as a constraint on the policy of deficit countries, which are usually the
military aggressors. The whole idea of going off gold was that under the gold standard no
country can afford to make war, because if you go to war your currency collapses. In 1976,
Herman Kahn and I went to the Treasury and – this is to answer your question. He put up a
map of the world and said, "These are the countries – Scandinavia, Western Europe, the
United States – that don't believe in gold. They're all politically stable social
democratic countries. They have faith in government. No look at these others here's the rest of
the world – India, South America, Africa and most of Asia. these are people that believe
in gold. Why do they believe in gold, but not the Protestant cultural area? Well, they don't
have faith in government. They don't trust governments. They want some option that is
independent of government. Gold is not only to bribe the border guards if they're escaping from
somewhere. They want to be free of governments that have been captured by anti-democratic,
predatory forces."
He said if you tried to think of what you would make that is an alternative to the dollar
that people could understand, well, for thousands of years, people have decided that gold and
silver. (I'm sure that you could add platinum and palladium.) So they have been the ultimate
means of settlement, and hence of international monetary constraint.
Gold isn't to be used as money. It's not to be used as a normal means of payment. What it is
to be used for is as a balance-of-payments constraint on the ability of countries to run up
chronic deficits that are mainly military in character. So I called our presentation "Gold: the
Peaceful Metal." Well, needless to say, the Treasury didn't go for that, because they said that
we had just explained how super-imperialism works via the dollar. So they didn't go back to
gold. We lost that argument.
Ellen Brown: [00:35:34] Isn't the reason we went off gold standard, though, that
there simply isn't enough gold and that we wound up leveraging it, and
Michael Hudson: [00:35:42] No, there's plenty of gold. There wasn't enough gold to
pay for the military deficit. Every month the dollars we spent in Vietnam would be turned over
to the banks in Indo-China. They were French. They'd turn the dollars over to Paris and General
de Gaulle would turn in these dollars for gold. We had to pay in gold for the military deficit,
which was the entire source of the US balance-of-payments deficits in the 50s, 60s and into the
70s. America went off gold so that it could afford to wage war without the constraint of losing
its control over the international monetary system.
Ellen Brown: [00:36:29] We went after gold domestically because it didn't work. I
mean, you had to use fractional reserve lending
Michael Hudson: [00:36:35] Yes, of course gold doesn't work domestically. It's
certainly not an appropriate domestic money supply. I'm only talking about it for settlements
among central banks internationally.
Ellen Brown: [00:36:49] But you said it's not to be traded. But if you don't, how do
you settle your balance of payments?
ORDER IT NOW
Michael Hudson: [00:36:53] It can be traded. There is a market. And you began by
saying, quite correctly, that gold prices are manipulated. Well, right now the US and the
central banks are manipulating its price to keep it low, in the same way that they're
manipulating the stock and bond market by buying forward. Except in the case of gold, they're
selling forward. If they keep agreeing to sell gold at a very low price, people will see that
if they can buy gold at this low price, why should they buy it at a higher price today, as the
price will fall and be driven down. So, yes, gold is manipulated downwards today by the U.S.
– essentially the plunge protection team acting internationally to keep the price of gold
down to discourage other countries and populations from buying it is protection against
collapse of the financial system.
So we're back to the fact that the financial system is dysfunctional. In a functional
financial system, you wouldn't need domestic reference to gold. You'd have a domestic financial
system that works fine without gold. Gold is what you have when the financial system becomes
dysfunctional and there's a breakdown.
Ellen Brown: [00:38:21] Well, it almost seems like you need some sort of global
regulator. But that's like a one-world government, which we all freak out about.
Michael Hudson: [00:38:28] You certainly don't want a one world government. Right now
all the plans for world government are neoliberal. They aim essentially to limit, to break up
democratic government regulation of corporate business, mining and monopolies. The idea of a
one-world government is to destroy any democratic government's ability to make its own laws in
the interests of labor or society. You would have a parallel government of wealth, government
of property. It's what the University of Chicago calls the Law and Economics regime. And this
is, this is fascism on an international scale. And there is a wonderful book by Quinn Slobodian
in 2008, Globalists: The End of Empire and the Birth of Nationalism , showing how these
plans were developed by fascists in the 1930s and by the fascist promoters at the University of
Chicago. The fascist promoters were people like Hayek and von Mises and the Geneva economists
around the League of Nations. So when they say they're anti-government, they're really
anti-democracy. They're for an iron-fisted government by big business, big mining and big oil
– and most of all, by big banks. That is the reason why people don't trust an
international government. It would be an international iron fist of fascism, the way the
current maneuvering of the financial classes and the rentier classes and the neocons
have arranged things.
Ellen Brown: [00:39:56] Well, I totally agree. It's quite frightening. We want
sovereignty for all our little nations, and even our little cities, states and so forth. But it
seems to me, how do you get everybody to work together? For example, Venezuela has the debt
problem that any country has that's heavily in debt to foreigners, or to vulture funds or
whatever. There's not a universally recognized court that you can go to. And, you know,
everybody agrees. It does seem like on some level we need some sort of collaborative effort
where we all agree on the rules.
Michael Hudson: [00:40:33] Absolutely right. Now, of course, the United States would
not recognize any international court. So, again, you'd have all the rest of the world
belonging to the court, and the United States as the outlier. It's like you're the healthy body
and we want to parasitize you. And it will not recognize the court. My Super-Imperialism
reviews the history of this policy.
But you're right: There should be a court that would recognize such things as odious
debt for governments. Venezuela's problem is that under the dictators that the Americans had
installed by assassination and force, Venezuela had pledged its oil reserves as collateral for
its international bonds. That gives a vested interest in the creditors to make it default and
grab its oil reserves and its investments in the United States, the oil distributors it bought.
So, yes, you do need a set of international rules for writing down bad debts. That means an
alternative to the IMF. You need an anti-IMF. Instead of acting on behalf of the creditors
imposing austerity on countries, you should create an organization representing society. And s
the interest of society is to grow. Instead of promoting austerity like the IMF does, it would
promote prosperity. Instead of financing the US government dollarization and giving US control,
it would be part of the de-dollarization group.
So you'd have a pro-growth group of nations – of the world economy – using
finance for growth and development with productive credit. You'd also have the United States
providing predatory credit, austerity, cutting back Social Security, cutting back Medicare and
having a polarizing economy that is shrinking and will end up looking like Greece or Argentina.
The rest of the world would follow more productive and less oligarchic financial policies. That
should ultimately be our global dream. But there's been little preparation for that. The
financial sector's neoliberals have o put together an almost conspiratorial Law and Economics
lobbying group to promote the Trans-Pacific Partnership and World Trade Organization rules
blocking governments from imposing anti-pollution fines or regulating monopolies or closing tax
havens. If you fine an oil company for polluting, the government is obliged under this
international law to pay the oil companies what they would have earned if they would have
continued to poison the environment. This is
Ellen Brown: [00:43:41] Shocking.
Michael Hudson: [00:43:41] Definitely. This is an international deathwish.
Ellen Brown: [00:43:45] Agreed. Totally agreed.
Walt McRee: [00:43:47] We've been speaking with economist Michael Hudson. Our thanks
to him for being on this program again. And you'll be hearing more from Michael on future
editions of It's Our Money.
Walt McRee: [00:43:59] Well, that's it for this edition of It's Our Money with Ellen
Brown. Thanks to our guests or sponsors, Public Banking Associates, and to you for listening.
Be sure to check out Ellen's latest writings on the economy and the changing world of money by
visiting ellenbrown.com. And for more information on public banking, visit
PublicBankingInstitute.org. For information on how local and state governments can obtain
professional insight and council about public banks from key national experts, visit
PublicBankingAssociates.com. I'm Walt McRee. See you next time on It's our Money with Ellen
Brown.
Notes
[1] "How the U.S. Treasury avoided Chronic Deflation by Relinquishing Monetary Control to
Wall Street," Economic & Political Weekly (India), May 7, 2016. Available on Naked
Capitalism an michael-hudson.com.
@dc.sunsets "This is why those who promise to "Plan" economic prosperity are liars and
fools, for they have the PRETENSE of knowledge, nothing more. "
Of course, this point is true -- but its posed as an absolute. No government can "plan" an
entire economy -- we know this from the failings of the USSR etc. But nor can economies be
totally unplanned. The US is not an unplanned economy: its an economy planned by the 1% for
the 1%.
Modern economies are "mixed". There is coordinated planning between the public & private
sector.
Sadly the US Gov' has renounced its responsibilities to "plan". Had the US Gov "planned" it
would never have allowed key industries, knowledge & talent to be off shored to China.
Such off shoring was a private plan by the 1% for the 1%. Worked well -- for them.
Adding complexity to an already far too complex system merely hastens blow out of
distributions that are skewed fat tails and stressed to a breaking point of systemic failure.
Greenspan purposely built a complex financial empire of asset inflation to replace Volcker's
fiscal prudence & macroprudential professionalism system wide.
Once Greenspan has locked in the asset inflation regime & deregulated Glass-Steagall
Act it was off to the races on a credit card for the largest parasite in the financial empire
governing by force.
On September 10th 2001 Donald Rumsfeld announced to the world that the ever incompetent
Pentagon had misplaced $1.3 trillion USD of taxpayer money. On September 11th 2001 Donald
Rumsfeld took part in a clandestine covert US Military operation to assassinate all of the
principle investigators & forensic Chartered Accountants that were about to uncover the
crimes taking place under Donald Rumsfeld's directorship as Pentagon executive.
The USA has always been a system of fraud by stealth of US Military force thugsterism
& all out fascist behaviour.
[.]
While it is still popular to claim that the United States has never defaulted on its debt,
this is a myth. The US has been forced to default a couple of times throughout history, the
last of which being when Richard Nixon&rsquo closed the gold window. By cutting the
ability of foreign governments to redeem US dollars for gold, America was allowed to pay
back past debt with devalued fiat money. This form of default has long been a popular
option for governments with debt obligations it can't or won't honor.
Of course, as Peter Klein wrote last week, even Trump's suggestion of the US
restructuring its debt isn't the doomsday scenario CNBC talking heads have made it out to
be, noting that:
[T]he idea that the US can never restructure or even repudiate the national debt -- that
US Treasuries must always be treated as a unique and magical "risk-free" investment -- is
wildly speculative at best, preposterous at worst.
Murray Rothbard himself advocated for outright repudiating the national debt,
arguing:
The government is an organization, so why not liquidate the assets of that organization
and pay the creditors (the government bondholders) a pro-rata share of those assets? This
solution would cost the taxpayer nothing, and, once again, relieve him of $200 billion in
annual interest payments. The United States government should be forced to disgorge its
assets, sell them at auction, and then pay off the creditors accordingly.
Trump himself has even touched on the possibility of selling of assets held by the
Federal government as a form of debt reduction.[.]
c1ue dear friend, the current level of US debt is unsustainable. Never mind the happy
cheerleaders promoting mighty U.S. is the wealthiest nation on earth. Have no fear our dollar
is good as gold, backed by the full faith and credit of Uncle Sam.
Here is a brief history of U.S.defaults starting with year 1790- LINK
Harvard University should be ashamed of itself. It has dumped the problem of its sudden
closure due to coronavirus largely on the students themselves and their families. While most of
them are affluent enough to handle the financial fallout of buying airfare at the last minute
and storing or shipping their clothes, books, and other possessions, Harvard's students from
lower income backgrounds have, to a significant degree, been left in the lurch.
... ... ...
But Harvard's conduct is indefensible. Harvard has, or perhaps more accurately had, a nearly
$39 billion endowment. Contrast that with an exceedingly generous estimate of what it might
cost to help make these financially stressed undergraduates whole, at least in terms of getting
out of Cambridge, or for the ones who really can't go home (flights to their country
cancelled), putting them up. Harvard has 6,800 undergraduates. Assume 25% get significant
financial support. Even a gold plated solution would cost at most $10,000.
6,800 x .25 x $10,000 = $17 million.
That is couch lint for Harvard.
As the University of Dayton example attests, university and college closures are widespread.
For the well-endowed ones who have students attending only by virtue of having received
financial aid and/or having the school arrange for paid employment to help pay for their
tuition, the failure of the school to provide generous help is a disgrace.
At Harvard, the afflicted students are petitioning the university to let them store things
on campus for free (which was standard practice in my day) and let the ones who can't go home
stay on campus. How many could that possibly be? 200 at most? Harvard has a medical center that
won't have anything to do once the kids leave. How hard would it be for their staff to check
these students' temperatures daily and test anyone who had symptoms?
And the university will have enough empty rooms that it could easily set aside other dorm
rooms if quarantine were needed.
But the Harvard disregard is a sign of where things are likely to go in the US. A university
is supposed to be a community. They are more cohesive than most of our cities and towns. Yet a
crisis comes, and the grotesquely well paid university administrators can't be bothered either
to make creative use of resources at hand, or dip in Harvard's huge pot of money.
In other words, expect the rich to walk all over the poor out of indifference, as we are
seeing at Harvard now.
___
1 Harvard houses and Yale colleges are groups of dormitories, each with their own
adminisphere (such as a faculty dean a resident dean, a house tutor), their own kitchen and
dining room, a common room, a library, and other amenities. They are modeled on the Cambridge
and Oxford college system. At Harvard, a house has roughly 300 to 400 students.
The future is already here, it's just not evenly distributed. Get Out! Just got notice I
am next up at my library for Wm Gibson's new book, Agency. $17M is a rounding error yet the
wealthy feel its too much to ask.
Are we hearing the American "college experience" bubble popping? In this fantasy, youth
buy products that are packaged as educational experiences. They pay through the nose for them
and they are blind to their folly because they believe that the stamped and signed receipt of
payment handed to them with great pomp and circumstance will boost their future earning
potential to the degree necessary so that they can some day lead lives that are free of
educational debt, which until then will of course involve interest costs (compounded) as we
do not want socialism.
Why exactly doesn't Harvard charge 1 million? They could get it and they'd only have
customers who can deal gracefully with situations like this.
Although Harvard (and other esteemed Universities) are selling 'exclusivity', the veneer
of egalitarianism is still required for the Brand.
Two Random Thoughts:
I'd like to know the graduation statistics of those college students that entered through
the Admissions Scandle.
The Harvard Endowment is an important pool of shadow money, never forget it was the
Harvard Fund that 'bought' the worthless Arbusto (Harken Energy) stock that enabled Dubya to
get his stake to become Texas Rangers managing general partner, and then Governor, and then
front man for Dick Cheney.
At many US elite academic institutions, the hardest part is getting in (exceptions usually
in "hard science", engineering, etc.). Also, they probably have all the the help they need to
graduate.
Actually, don't come to California for higher education. Housing, traffic, cycling risks,
and, now, Covid-19 is getting worse. The UC/CalState system can't provide access to it's own
in-state high school students that qualify for entry.
This is brutal this. They could have helped their own students using only the money in
their petty cash drawer and they said nope! I suppose that this is a lesson for those Harvard
students that is pretty simple. If you have money so this move is not a problem for you, then
that is the way that it is supposed to be. If you are studying here and are in a precarious
position then it is all on you. Pure power politics.
It would be ironic if down the track that Harvard produced a Bill Gates from the later
group that went on to achieve fabulous wealth. But that this future alumni, when asked by
Harvard for money for them, would say sure – and give a massive contribution to Yale
and call it the 2020 Corona Fund.
I too was an undergrad at an institution in the Cambridge area, and I am not from the
US.
Got a full financial aid, but that does not fully cover your housing and does not at all
cover your food or other expenses, so you had to work during the term to make it. And you had
to move out of the dorm in the summer. Fortunately, in our particular dorm, there was storage
in the basement of the dorm, so we did not have to look for outside storage, but others were
not so lucky. But moving out at the end of the term was still a major disruption that one had
to plan for well in advance.
So I am very well aware of the situation undergrads at Harvard find themselves in, and my
first thought when I saw the news was "WTF are these students supposed to do now?".
Especially the international ones. Because a day after Harvard announces that students are
kicked out of the dorms, what does Trump do? Bans travel from Europe for 30 days. Which
effectively means banning traveling TO Europe too, because those are all round-trip flights.
This is on top of the travel restrictions regarding several countries in Asia already in
place.
In the best of times, it was always near-impossible to find a flight on such a short
notice. Now when so many flights have been cancelled, how is one supposed to go home, when
there are thousands of others in the same situation (because Harvard isn't the only
university that is doing this)? It is not even a possibility for many, forget the expenses.
There are simply no flights. And most of these students don't even have a car to sleep
in.
I will venture a guess regarding why this is done -- they don't want to get sued by
litigious-minded parents if undergrads get it while on campus. Which, admittedly, there is a
high chance of happening, unless they self-isolated the whole campus (but that would have
created a legal mess on a whole new level). Dorms often have 2, 3, 4 students living in the
same room, and the virus is very clearly airborne, so it would also get between rooms through
the air seeping beneath the doors (which is why in China quarantines involve sealing the
doors with tape). Also, bathrooms are shared across the whole floor, which is another
transmission risk.
So the administration took the easy decision -- instead of trying to help the student
population, and start that early on when it was the time to do so (i.e. mid-February), which
would have involved some effort and risk on its part, it just dumped the problem onto the
students
Thats quite disgusting – I'm assuming it is fear of litigation that is driving
this.
I was in Trinity College Dublin last night for an evening class – the nearest
Ireland would have to a Harvard (except, as the grads there would no doubt add 'with about
300 more years of history and teaching experience'). They had a Covid case in, ironically
enough, the biology department last week.
But they are acting I think quite responsibly – phasing in a slow shutdown
– all lectures have gone online, but small tutorials, etc., still going on, with lots
of support for foreign students. They were actually criticised for being over the top (there
are still plenty of people who still 'don't get it' and sadly many are in a position of
authority.)
Litigation is certainly a big part of it. The other aspect might be health insurance.
Students are on university plans. Which tend to not be that great, because it is a young and
healthy population. When catastrophic situations have arisen in the past on campus (which
happens regularly, several times a year in fact), the university has often been stuck with
the bill, especially with international students.
And it will be a lot of long ICU stays to pay for in the coming months, even among the
young and healthy.
I think you're right w/health insurance. plans are likely self-insured and not modeled
to have a cohort students popping into the ICU. Then add rash panic.
Smaller colleges I can kinda understand, Harvard? give me a break
It seems like almost all colleges and universitys will be moving to the online
solution, but you can tell it's a decision made by some administrators who really don't get
it. Online classes may be a substitute for lecture, but they wont fill the needs of art
students (like my wife who laughed at hearing this idea), science and engineering majors or
anyone who needs other facilities and equipment to actually complete work – your oven
at home wont replace a kiln as my wife says.
I would disagree that the administrators don't get it. On their list of priorities,
"avoiding huge lawsuits" is a much higher priority than "providing quality instruction to
students." I have been in and around higher ed for the last 30 years and it's not clear to me
that the latter is even on the list.
Online classes for the yes of the year–mmmm, ok .but closing dorms? that is just
insane and against the medical evidence (aka seniors are the most at risk, under-40, while
not immune, are in infinitely better shape than those over 70 and/or those w/health
issues).
And Dorms are (generally) like typical apartment complexes, not military barracks.
If anything, keeping students (aka asymptomatic, mobile, disease vectors) away from
seniors is the absolutely best thing for society. just saying
I have a child at UC Santa Cruz, hotbed of striking teaching assistants. We are coming up
on spring break and last night had a talk with him about what to do. There are risks to
flying home. There are risks to staying at school. But the latter risks are compounded by the
fact that we don't know what the school admin will do.
If he comes home for spring break, will he be able to go back? If he can't, what happens
to his stuff? If he stays, will they be allowed to remain in the dorms? And what happens in
September? I am sure he will not want to change schools now that he has established
friendships and a sense of place. I don't want to pay $66,000 per year -- an effort that
involves his parents and both sets of grandparents -- for him to take online classes. I have
been a university teacher, so I know exactly what those are worth. :)
At least we can afford it, and we have friends in Cali if he gets stuck there. This action
by Harvard is unconscionable. Then again, if Harvard had a conscience, it wouldn't be
Harvard. But UCSC, based on its treatment of the striking TAs, doesn't have a conscience
either.
I have a handful of relatives who voted for Biden, too, and I just want to punch them all
in the face. Idjits. Hooray for ecocide! Onward to mass extinction! Guess the kid won't need
that college education after all. Maybe we can use the money to send him to survival
school.
Wow! $66,000! For a supposedly public university. I went to UC Santa Cruz, admittedly a
few decades ago, and I was paying something like $2000 a year. The U.S. is making incredible
progress -- just all of it heading off in the wrong direction and toward the edge of the
cliff. Very soon your local library–should it still exist -- can file The Road
Warrior in the documentary section.
Good luck to you and your children. And give your Biden loving relatives a friendly punch
for me.
But UCSC, based on its treatment of the striking TAs, doesn't have a conscience
either.
This is the key point. The neoliberalization of the U.S. university – "public" as
well as private – has been clear for quite awhile but there are strong ideological
pressures not to see it, not least by all the brainiacs who exist on college campuses.
My prediction is that most U administrations will issue guidance to faculty to give
students full credit for all courses this semester (regardless of how much work actually gets
done). The smart ones are looking ahead to the fall and trying to figure out what to do if
enrollment/tuition, state aid and research funding crash, which seems pretty likely if things
are not back to normal shortly. The 2008 crash turned out to be a godsend to higher ed,
driving huge numbers of unemployed back to school for "re-training." But that bubble only
lasted a couple of years and enrollment trends have been steeply downward since 2010-11. The
last five years have already seen, again mostly uncommented on, the beginnings of a shake-out
(some schools closing, lots of changing emphasis to programs that can bring cash in the door,
ubiquitous move to adjuncts instead of permanent faculty). Expect that to ramp up
considerably. Ironically, perhaps the only counter-trend has been a HUGE increase in the
number of Chinese students (of which there are now apparently about 5K at my Big 10 U) paying
full freight. Can that continue?
Well, California does have standards. Getting course credit will require completing 80% of
the course curricula. Since the UC System is on the Quarter system (12 weeks, not 15) the
UCSC students have likely passed that threshold.
Encouraging International students to attend at out-of-state tuition rates is now standard
operating procedure in California. The new president of my local community college
unabashedly said it in a recent letter that it was necessary. The college needs to eliminate
its $5M budget deficit by 2022. (Real estate investors are salivating: student housing,
apartments, and SF Home speculation, etc.)
From a public health standpoint this is insane. Boston is a known epicenter for the
pandemic with reported cases doubling daily. To send students home–wherever home
is–without testing for the virus risks spreading the disease further. I hope Governor
Charlie Baker will step in stop this from happening.
The demise of oil is overstated and the rise of renewables is also. Electric cars? Where do
you think the power is going to come from? Forget nukes and hydro as well healed enviros will
fight to the death to stop them. Japan is closing their nukes and going to coal. Same with
Germany. Without a way to store electricity renewables are a lost cause that needs fossil
backup. Molton salt lovers won't tell you about the huge solar molton salt plant near Tonopah
Nevada that's been mothballed for a year due to being totally unreliable. Or the solar plant
at Ivanpah in Nevada that has never lived up to expectations and has to have a gas plant
running full time to make up for night and shortfalls. The grids, especially local grids in
your neighborhood are creaky and will never handle the amount of electricity if we all go to
electric cars and eliminate gas heat, gas hot water, and gas cooking in favor of electric.
When they tell you how much to upgrade the grid they are only talking about the main grid and
not the even larger expense of upgrading the local. Some Australian neighborhoods have had
grid failure with half a dozen electric cars charging at once.
Thanks to US sanctions Venezuela is not pumping much oil. To make up for the loss of the
Venezuelan crude which the US Gulf coast refiners relied on they are now importing a bunch of
heavy crude from RUSSIA along with other Russian petroleum products. Next door to Venezuela
in Guyana huge finds of oil are in the process of being exploited. Point is the more they
look the more oil they find so to say oil is on it's way out is far too premature. Point is
renewables as they now exist are not ready for prime time in a modern society that needs a
constant flow of electricity. Plenty of pie in the sky predictions of we'll solve the
technical problems but not much in results.
In the US we are getting large numbers of wind farms getting old and junked and their
large rotors made of various composites are not recyclable and are now filling up landfills.
Lots of blather of we can recycle worn out batteries, which are lead acid, but not much if we
can do so with lithium ion. Not to mention the cleared land and roads needed to employ wind
and solar and the destruction of animals and their habitat.
Without hookup to the grid all those bragging about their cheap electricity, as power
companies are required to buy their electricity at top dollar, is no longer cheap. Large
solar and wind installations get a paid subsidy for the electricity they produce without
which those renewables are not cost competitive with fossil fuels. The average ratepayer and
taxpayer does not realize they are subsidizing those "competitive" rates.
Neoliberal v Neoclassical economics – what's the difference?
By Claire Connelly
Economics & Finance |
Bookmark to dashboard
Neoliberalism and neo-classical economics are often terms that are used
interchangeably by various economists and financial writers, but actually, there are important differences between
the two. We've had some requests from readers to make that distinction more obvious, so here goes
Neo-classical economic theory puts 'man' as a rational human being at the heart of the
economic system, extrapolating the functions of the economy based on optimised behaviour of rational, well-informed
individuals trading with one in another in what is effectively a barter system (which as I'm sure we all know by now,
never actually existed
).
It is based on the
general equilibrium model
pioneered by late 19th century economist
Leon Walras
, of the
Lausanne School. Ironically, neoclassical economics guarantees full employment because it models a system with no
frictions or inconveniences like trade unions, minimum wage laws or imperfect information. Also false.
It also guarantees that society will find an optimal allocation of resources on its
own, so long as markets are competitive, and there are no externalities, like pollution, which go unaccounted for.
Neoclassicists are concerned about monopoly power, neoliberals are not. Neoclassicists
believe it merits government intervention and regulation. Neoliberals, do not.
It is possible to be a neoclassical without being a neoliberal.
The most important thing to understand is that neoliberalism is a post-war political
movement that grew out of
the Mont Pelerin Society
, a
thought collective that formed a consensus not to put the market at the centre of the state, but to take it over
completely. Its entire objective is to co-opt economics and subvert the public interest to suit the needs of powerful
capitalist institutions and the politicians, economists, financiers, philosophers, bankers, think-tanks and media
organisations that support them.
Neoliberalism is associated with laissez-faire economic liberalism and was pioneered by
economist Milton Friedman & Friedrich Hayeck, but as the economic historian, Philip Mirowski points out, this is a
deliberate deception to trick people into thinking it is concerned about market equilibrium.
It is the doctrine by which white collar crime has been allowed to prosper unprosecuted
while governments of wealthy nations like the US and UK have abdicated their responsibility for employment, health
care, education and the general well-being of the populations they are supposedly elected to serve. In their minds,
government exists only to maintain property rights, defend capitalists and maintain price stability, (which
apparently doesn't count as intervention when it works in the favour of the wealthy).
We
are what we eat, well, in free market terms anyway
Whilst
90% of the US media (film, TV and radio) is controlled by only 6 companies.
Unlike neoclassicists and neoliberals, heterodox economists and other post-Keynesians, reject the notion of general
equilibrium. They believe the economy evolves through non-equilibrium states over time. Heterodox economists believe
governments need to introduce instability-thwarting mechanisms to stabilise the economy, maintain full employment,
and retain social equity.
"Free-market economists may want you to believe that the correct boundaries of the
market can be scientifically determined, but this is incorrect," writes institutional economist, Ha-Joon Chang, in
his book
23 Things They Don't
Tell You About Capitalism
.
https://www.youtube.com/embed/J7m9wfFnH6o
"If the boundaries of what you are studying cannot be scientifically determined, what
you are doing is not a science," writes the Cambridge University economist.
"Recognising that the boundaries of the market are ambiguous and cannot be
determined in an objective way lets us realise that economics is not a science like physics or chemistry, but a
political exercise."
In other words, a strong economy requires constant time, attention, assessment, and
when it is called for, intervention. The rules will not always be the same, nor the causes. But it helps to start
with an understanding
of the role and purpose of
government spending
and
taxation
.
Further Listening
Listen to this interview economic historian Philip Mirowski who delves into the further
nuances of these economic mindsets.
Claire Connelly
Claire Connelly is the lead writer of Renegade Inc. An award-winning freelance journalist, speaker, and
founder of subscription journalism experiment, Hello Humans.
Specialising in economics, technology and policy, Connelly is working on her first book due out in 2018.
With more than a decade of experience under her belt, Claire has written for leading publications
including The Australian Financial Review, The Saturday Paper, ABC, SBS, Crikey, New Matilda, VICE &
others. She is the co-host of The Week In Start-Ups Australia, and features regularly as a commentator on
TV and radio shows including Radio National's Download This Show, ABC's The Drum, Ten's The Project, and
more.
Latest posts by Claire Connelly
(
see
all
)
What were Hayek's contributions to capital theory? Just wondering. I have never
encountered a single person who speaks of "neoliberalism" (a term we ourselves never use to describe what we
believe) who has read a single word of Hayek's economic work. Or who even knows who Ludwig von Mises is.
(Whenever the two economists mentioned are Milton Friedman and F.A. Hayek, I know
I'm dealing with somebody who hasn't read anything.)
Reply
But of course you have read everything and know all, right Tom ? What
specifically is wrong with this account ? If you can't dispute anything within the piece why do you attempt
to dismiss it out of hand by implying without a shred of evidence what someone has or hasn't read ? How
could you possibly know what someone has read or hasn't ?
Reply
What actually is "capital theory", Tom. Why don't you use the term
'neoliberalism?
Why do you think Claire hasn't heard of Mises and why would it be important anyway? Mises and the Austrian
School are part of the problem that the article refers to.
Reply
Sorry. I just don't believe even smart people can manage markets. That's the
nature of markets: they are individual. If you haven't read Von Mises or Hayek, you're missing out on the
thinking of two very smart people. It is hard for me to embrace the idea that – because a market doesn't seem
to function as a person might want it to – persons should be given authority to govern those markets in a way
that suits them. That, in itself, distorts the market.
Reply
I am responding to an article by you in today's The Automatic Earth about the
vengeance of capitalism. I could not get the response area to work so that is why I am coming to you this way.
You write eloquently and I see the creation of increasing suffering due to a form
of capitalism and class privilege in America and globally. I have read and listened to Keen, Hudson and Kelton.
From my review they all approach the ability of a nation that controls their own currency as an ability to
create an unlimited amount of money to use to reduce human suffering with no discussion of the ultimate end
game if we continue to do so.
There is a lot of suffering now and because of climate change, increasing
usurping of jobs by technology and global resource depletion and more a lot more suffering may be coming our
way.
How much money are they (and you) thinking of creating?
What are the implications of creating money at a much more rapid pace than we
have been with no upper limits in sight?
What are the upper limits of money creation? How would we know?
Our present system of capitalism and privilege is like a drug. It feels good at
the start but kills us in the end,
I am fearful that an addiction to the unlimited or substantial and on going use
of money created from thin air will do the same.
What say you?
PS: Please accept with compassion all the typos that are probably in this note.
Reply
You keep forgetting that having the ability to create money also gives you the
ability to destroy that same money. What is collected in tax revenue is destroyed. More money is issued to
create infrastructure. The deficit in a country that can create it's own currency is really just a ratio of
what is collected(destroyed) and what is created(spent).
Now ask yourself what happens when you quit destroying money and keep right on creating it
Reply
The aim of distinguishing neoclassical and neolilberal is of merit. The interview
with Mirowski makes clear, however, that that are numerous strands of neoliberalism that overlap with each
other, with some drawing on neoclassical arguments, and others having a different starting point. But it is not
clear to me that all of them agree on the market fundamentalism, which is generally regarded as the defining
characteristic of neoliberalism. Was Joseph Schumpeter a neoliberal? His ideas about entrepreneurship have
probably done more to make monopoly respectable than the parallel work of von Mises. Schumpeter's thought has
entered the mainstream in the U.S. via Peter Drucker, who thought the modern corporation was the engine of all
forms of human progress. In Germany, Ordo-liberalism was another form of neoliberalism that called for a strong
state. Was this self-contradiction? What I find frustrating in most discussions on the Left of these thinkers
is the inability or unwillingness to recognize the ***partial*** validity of their ideas. On the particular
subject of government interference to protect against monopoly power, it was Gabriel Kolko, a socialist, who
first showed in 1962 that Progressives were responsible for the national monopolies that emerged around 1900.
Even now, progressives fail to comprehend the many ways in which regulation benefits big business and stifles
small business. Designing regulations that do more social and environmental good than harm is much harder than
most progressives seem to recognize. Analyzing the sociology and politics of neoliberal organizations, as
Mirowski does, gets us no closer to finding way to create effective government programs that do not
simultaneously feed the leviathan of an expansive state. I would very much like to know which heterodox
economists are actually addressing the tough problems we face rather than defining the boundaries between
neoclassical thought and their own domain..
Reply
There are a very large number of errors in this piece. Fundamentally, what is
described as "neoclassical economics" is actually just one model, Walras' circa 1870 general equilibrium model.
If one defines neoclassical economics as equivalent to that one model, then there has never been a single
neoclassical economist, as absolutely no one limits attention to that one model.
The body of research most actual economists would describe as "neoclassical
economics" encompasses an enormous body of work which posits that some social phenomena can be understood as
emergent results of individual, intentional behavior. That research includes literally thousands of papers
studying the phenomena the author wrongly believes are simply excluded by assumption, such as unemployment,
unions, minimum wage laws, and imperfect information. There is an entire field, Public Economics, devoted to
the study of "the role and purpose of government spending and taxation."
The idea that government can and should "introduce instability-thwarting
mechanisms to stabilize the economy, maintain full employment, and retain social equity" is also, contrary to
the article's assumptions, very much part of mainstream, neoclassical thought, and has been for almost a
century.
After having implicitly defined mainstream economics as solely the study of a
single 1870 model, the article then also misrepresents heterodox economics. Notably, the Marxian economist
(less than 1% of all economists) such as Chang do not "reject the notion of general equilibrium". Marxian
analysis is explicitly grounded in general equilibrium, both in Marx's work and in modern neo-Marxian form, and
can be expressed in the same analytical framework as the Walrasian model (see for example:
https://www.jstor.org/stable/1911113?seq=1#page_scan_tab_contents
).
The article is correct that neoliberalism is a strain of political thought, and
not economics at all: they're not even the same type of thing, much the same thing. That's all the article
ought to say -- it gets everything about what economists think, and what neoclassical economics is, really, really
wrong.
Chris Auld
Department of Economics
University of Victoria
Reply
Most though not all mainstream economics is neoclassical economics.
Neoclassical economics is based on marginalism, or optimising behaviour,
expected utility theory, and either implicit or explicit general equilibrium analysis. The economy, in the
absence of frictions, would behave like a stable equilibrium system. In a macroeconomic sense, this is the
basis of all versions of the neoclassical synthesis, including second generation dynamic stochastic general
equilibrium models.
These models all have Walrasian and Wicksellian roots. They all assume
optimising behaviour. They always adopt the ergodic hypothesis and these days adopt rational expectations
formation. Not only that, they have all been constructed in defiance of what we know about the history and
nature of money; they all ignore ontological uncertainty, in the Keynesian sense; they all exclude genuinely
endogenous financial instability and crisis; they are biased towards an essentially technological
explanation of income distribution; they all incorporate a natural or non-accelerating inflation rate of
unemployment; they all exhibit long run money neutrality; they all incorporate an efficient markets approach
to financial markets.
There are of course elements of what some would regard these days as
mainstream economics which don't fit under the neoclassical banner. However, for the most part, mainstream =
neoclassicism.
The greatest divide between neoclassical economics and genuine (i.e. not
'new') institutional economics, is the F-twist of Milton Friedman – the notion that unrealistic axiomatic
foundations in some sense don't matter, and neither does an approach which does not naturally incorporate
realistic institutions.
Of course, economists using a neoclassical frame have things to say about
unemployment, minimum wages, etc. But, as Hyman Minsky put it, "The game of policy making is rigged; the
theory used determines the questions that are asked and the options that are presented. The prince is
constrained by the theory of his intellectuals."
You accuse the author of errors, and I think you are ungenerous – and, more
importantly – incorrect. My advice to you is to read Steve Keen's best-seller 'Debunking Economics'. You
could even read my 'Economics for Sustainable Prosperity'. If you read these two books, you will be much
more aware of the limitations of neoclassical economics, and the rich insights available from the many
economists who have worked, and who are working today, outside the neoclassical frame.
Reply
Perhaps you will find them useful in understanding why it's questionable that
neoclassical economics has anything useful to say about financial stability.
Steve Payson, an US economics practictioner of long standing, will talk about his
book 'How Economics Professors Can Stop Failing us' which provides an eye-opening expose on economics
professors that will surely shock anyone who is not familiar with the topic, and even some of those who are
familiar with it. Ellen Quigley has recently completed her research into economics education in the UK and will
provide a perspective on our local profession.
Our mission is to explain how we reached this moment in history to prevent it from
repeating itself. Again. By considering options not previously considered, readers, creators, entrepreneurs, business
and community leaders can make better, more informed and empowered decisions, so we can all begin to think differently
about our personal and public financial stability.
Neoliberalism destroys solidarity; as the result it destroys both the society and individuals
Notable quotes:
"... Thirty years of neoliberalism, free-market forces and privatisation have taken their toll, as relentless pressure to achieve has become normative. If you're reading this sceptically, I put this simple statement to you: meritocratic neoliberalism favours certain personality traits and penalises others. ..."
"... On top of all this, you are flexible and impulsive, always on the lookout for new stimuli and challenges. In practice, this leads to risky behaviour, but never mind, it won't be you who has to pick up the pieces. The source of inspiration for this list? The psychopathy checklist by Robert Hare , the best-known specialist on psychopathy today. ..."
"... the financial crisis illustrated at a macro-social level (for example, in the conflicts between eurozone countries) what a neoliberal meritocracy does to people. Solidarity becomes an expensive luxury and makes way for temporary alliances, the main preoccupation always being to extract more profit from the situation than your competition. Social ties with colleagues weaken, as does emotional commitment to the enterprise or organisation. ..."
"... Bullying used to be confined to schools; now it is a common feature of the workplace. This is a typical symptom of the impotent venting their frustration on the weak – in psychology it's known as displaced aggression. There is a buried sense of fear, ranging from performance anxiety to a broader social fear of the threatening other. ..."
"... Constant evaluations at work cause a decline in autonomy and a growing dependence on external, often shifting, norms ..."
"... More important, though, is the serious damage to people's self-respect. Self-respect largely depends on the recognition that we receive from the other, as thinkers from Hegel to Lacan have shown. Sennett comes to a similar conclusion when he sees the main question for employees these days as being "Who needs me?" For a growing group of people, the answer is: no one. ..."
"... A neoliberal meritocracy would have us believe that success depends on individual effort and talents, meaning responsibility lies entirely with the individual and authorities should give people as much freedom as possible to achieve this goal. ..."
"... the paradox of our era as: "Never have we been so free. Never have we felt so powerless." ..."
An economic system that rewards psychopathic personality traits has changed our ethics and our personalities
'We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to choose
outside the success narrative is limited.'
We tend to perceive our identities as stable and largely separate from outside forces. But over decades of research and therapeutic
practice, I have become convinced that economic change is having a profound effect not only on our values but also on our personalities.
Thirty years of neoliberalism, free-market forces and privatisation have taken their toll, as relentless pressure to achieve has
become normative. If you're reading this sceptically, I put this simple statement to you: meritocratic neoliberalism favours certain
personality traits and penalises others.
There are certain ideal characteristics needed to make a career today. The first is articulateness, the aim being to win over
as many people as possible. Contact can be superficial, but since this applies to most human interaction nowadays, this won't really
be noticed.
It's important to be able to talk up your own capacities as much as you can – you know a lot of people, you've got plenty of experience
under your belt and you recently completed a major project. Later, people will find out that this was mostly hot air, but the fact
that they were initially fooled is down to another personality trait: you can lie convincingly and feel little guilt. That's why
you never take responsibility for your own behaviour.
On top of all this, you are flexible and impulsive, always on the lookout for new stimuli and challenges. In practice, this leads
to risky behaviour, but never mind, it won't be you who has to pick up the pieces. The source of inspiration for this list? The psychopathy
checklist by Robert Hare , the best-known specialist on psychopathy today.
This description is, of course, a caricature taken to extremes. Nevertheless, the financial crisis illustrated at a macro-social
level (for example, in the conflicts between eurozone countries) what a neoliberal meritocracy does to people. Solidarity becomes
an expensive luxury and makes way for temporary alliances, the main preoccupation always being to extract more profit from the situation
than your competition. Social ties with colleagues weaken, as does emotional commitment to the enterprise or organisation.
Bullying used to be confined to schools; now it is a common feature of the workplace. This is a typical symptom of the impotent
venting their frustration on the weak – in psychology it's known as displaced aggression. There is a buried sense of fear, ranging
from performance anxiety to a broader social fear of the threatening other.
Constant evaluations at work cause a decline in autonomy and a growing dependence on external, often shifting, norms.
This results in what the sociologist
Richard Sennett has aptly described
as the "infantilisation of the workers". Adults display childish outbursts of temper and are jealous about trivialities ("She got
a new office chair and I didn't"), tell white lies, resort to deceit, delight in the downfall of others and cherish petty feelings
of revenge. This is the consequence of a system that prevents people from thinking independently and that fails to treat employees
as adults.
More important, though, is the serious damage to people's self-respect. Self-respect largely depends on the recognition that we
receive from the other, as thinkers from Hegel
to Lacan have shown. Sennett comes to a similar conclusion
when he sees the main question for employees these days as being "Who needs me?" For a growing group of people, the answer is: no
one.
Our society constantly proclaims that anyone can make it if they just try hard enough, all the while reinforcing privilege and
putting increasing pressure on its overstretched and exhausted citizens. An increasing number of people fail, feeling humiliated,
guilty and ashamed. We are forever told that we are freer to choose the course of our lives than ever before, but the freedom to
choose outside the success narrative is limited. Furthermore, those who fail are deemed to be losers or scroungers, taking advantage
of our social security system.
A neoliberal meritocracy would have us believe that success depends on individual effort and talents, meaning responsibility lies
entirely with the individual and authorities should give people as much freedom as possible to achieve this goal. For those who believe
in the fairytale of unrestricted choice, self-government and self-management are the pre-eminent political messages, especially if
they appear to promise freedom. Along with the idea of the perfectible individual, the freedom we perceive ourselves as having in
the west is the greatest untruth of this day and age.
The sociologist Zygmunt Bauman neatly summarised the
paradox of our era as: "Never have we been so free. Never have we felt so powerless." We are indeed freer than before, in the sense
that we can criticise religion, take advantage of the new laissez-faire attitude to sex and support any political movement we like.
We can do all these things because they no longer have any significance – freedom of this kind is prompted by indifference. Yet,
on the other hand, our daily lives have become a constant battle against a bureaucracy that would make Kafka weak at the knees. There
are regulations about everything, from the salt content of bread to urban poultry-keeping.
Our presumed freedom is tied to one central condition: we must be successful – that is, "make" something of ourselves. You don't
need to look far for examples. A highly skilled individual who puts parenting before their career comes in for criticism. A person
with a good job who turns down a promotion to invest more time in other things is seen as crazy – unless those other things ensure
success. A young woman who wants to become a primary school teacher is told by her parents that she should start off by getting a
master's degree in economics – a primary school teacher, whatever can she be thinking of?
There are constant laments about the so-called loss of norms and values in our culture. Yet our norms and values make up an integral
and essential part of our identity. So they cannot be lost, only changed. And that is precisely what has happened: a changed economy
reflects changed ethics and brings about changed identity. The current economic system is bringing out the worst in us.
New York Federal Reserve Bank announced Monday it will increase its daily injections of cash
into financial markets by $50 billion to $150 billion as a protective step amid #coronavirus
epidemic.
I see your tangible assets bet and raise another $50 billion per day of presto digitizer
created out of thin air fiat.
Because I CAN!
Now what are you going to do about it huh?
If you crash our ponzi scheme, who are you going to sell your oil and gas to?
That said, in periods of past extreme economic turmoil folks like Steve Mnuchin, with the
trophy British wife, aka The King of Foreclosure, made out like bandits. He's now duce
Trump's Secretary of the Treasury. The prior Republican standard bearer, the Mitt, was also a
Vulture who participated in the hollowing out of the American Industrial Heartland, for
profit.
A life long con man and grifter coupled up with a Jewish vulture capitalist leading a
phony charge to Make America Great Again...?
A script that writes itself.
Sadly..the supposed opposition are also beholding to AIPAC, and it's dictates.
Chuck Schumer says he was appointed by God to be the Guardian of Israel. It's true, and
confirmation is available on the web.
Is he an American or an Israeli? No one should be allowed to be both, should they? Am I
right or wrong?
Why just look at the good ole boys Netanyahu's very good friend , Tabloid Star and huckster
about town the donald to see who is really the Bossman of Murika's gun toting Patriots.
Pretty sad really when you think about it. A Country that ravaged it's indigenous people
to break the land open for settlers of European descent, only to have it fall into the
clutches of a tiny tribe of foreigners who never put skin the game and came in with their
gangsterism and were always about accumulation of wealth and power for themselves.
Welcome to America, haven for the Gangs of New York and Grifters about town.
The Fed was supposed to take away the punchbowl just when the party was getting going,
instead we had the troika of Greenspan, Bernanke, and Yellen gleefully pouring in gallons of
101 Wild Turkey at 2 A.M. and now the hapless Powell is zero-bound and duty-bound to do the
only thing in the modern CB playbook: ease more. TARP and the first trillion? OK, keep the
doors open at Citi. The next 3 trillion in free money (thanks Obama)? Socialist handout to
the rentier class. That bill is now due and payable.
The grotesque distortions in the entire concepts of lending and investing were as plain as
day to see. The four CEOs of the top four Eurozone banks told the tale, quote: "zero interest
rates destroy the banking system". Was anyone listening? Did our titans of central banking,
whose *first* stated job is the stability of the banking system, heed the call? How do
systems and currencies based on the extension of credit even work if lenders are to receive
*nothing* in exchange for taking risk? Riddle me that, Ph.D-breath.
This is malpractice and criminal incompetence on a galactic scale, from our hallowed
universities, who feed a steady monocultured diet of pure neo-Keynesianism, through to our
"financial press" paid cheerleaders, to our mustachioed "economic pundits" who treated the
entire crisis diagnosis and prescription ("we must make things more expensive!!! More
gasoline on the fire!!!") as though it seriously made *any* logical sense at all. In lockstep
they go, right over the plainly and painfully obvious cliff.
So now we get to watch, again, as they play a game of "who gets screwed worse than me?".
The phone lines are absolutely buzzing, as Hapless Jerome realizes his broom is so short it
cannot possibly stop this outbound tide. I'm sure Bezos and Dimon and Gates and Buffet will
be fine, again, Mr. Henry Longbottom of Periwinkle Court, Anytown, Ohio, homeowner, coupla
kids in college, small 401(k) not so much.
As much as Trump has made about as much a hash of this as he possibly could, the Federal
government can't do much save pass some bills to throw money at the problem. And remember, it
is the Dems that are the party of fiscal orthodoxy. They'll be as reluctant to commit big
numbers as the Republicans.
Public health is in the hands of states and localities, not the Feds. In theory, the Feds
can declare an emergency and do things by force, but in practice, states beg for help and
then the Feds declare an emergency and send $ and FEMA and maybe the National Guard.
Our screwed up private health care system is not even remotely fit for or inclined to deal
with a public health crisis. You may have seen in Links how one of America's elite hospitals,
Mass General, told an prestigious private employer that if any of their employees came to the
ER for coronavirus testing, they'd be hauled off by (campus) police. And they didn't offer an
alternative.
Remember how the supposedly oh so technically/bureaucratically competent Obama
Administration botched the comparatively simple Obamacare rollout?
I remember it well. Then they threw money at it with yuuge corporations to try and fix it.
Probably to one of Obomba's buddies.
The whole concept of connectinginsurance cos' databases to the Obamacare site was a patently
bad idea.
At the very least, our favorite neo-liberal democratic President Obama did set up 47
anti-pandemic programs in countries that have enormous vulnerability to deleterious viruses
in order to keep them from spreading worldwide .and President PT Barnum dismantled 37 of
those programs. Maybe we would have a better handle on Coronavirus if he hadn't shuddered
those programs.
Fears of a financial meltdown at least on the scale of the 2008 crisis intensified Monday as
global markets were gripped by panic resulting from the spread of the coronavirus across the
globe and the ensuing oil price war launched by Saudi Arabia over
the weekend.
"The fear today is about a global recession,"
said Thomas Hayes, chairman of management firm Great Hill Capital, as markets headed for
their
worst day since the 2008 crash .
"U.S. futures pointed to heavy losses on Wall Street on Monday. Overseas, London's FTSE
100 fell more than 8 percent to its lowest in three years; Japan's Nikkei index slumped more
than 5 percent and Australia's benchmark shed more than 7 percent. Oil prices suffered the
sharpest plunge since the 1991 Gulf War, while 10-year U.S. bond yields dropped to a record
low as investors sought safety."
While some urged
caution in interpreting the meaning of daily market fluctuations, analysts said there is
reason to fear that destructive economic crisis is on the horizon. Chris Weston, head of
research at the Melbourne-based web trading platform Pepperstone,
toldThe Guardian that "there is genuine panic" in the market, noting that he hasn't
"seen anything like this for years."
On February 24, Grassley and other Senators attended a "top-secret" briefing on the
coronavirus. Why were there virus "secrets"? What were these? Azar later said that all of the
information disclosed was later made public. Maybe. But why entertain the notion of virus
"secrets" in the first place? Because the default procedure is control of information; here
we go again. This complicates the task of the clown-car CDC, which is in well over its head
to begin with.
Coronavirus theme is not the war issue.
Using the threat of "Coronaviruses" is to exsufflate of the World inflation bloated by
International Banking Sector, yet at the same time, it is the "Wall Street project" to
prevent the recurrence of 2008 crisis.
Having said that, extreme measures do need to be taken to slow down the spread,
preserve life, and to prevent catastrophic economic collapse – modern "Just in Time"
supply chains are far more vulnerable and interdependent than the older-fashioned systems
present during the historic pandemics listed; all redundancy has been sacrificed to
maximising fast profit.
The coronavirus is now exposing a far more deadly disease: Namely, the poisonous brew of
easy money, cheap debt, sweeping financialization and unbridled speculation that has been
injected into the American economy by the Fed and Washington politicians.[.]
It has also left the American economy exceedingly vulnerable to external shocks. That's
because 80% of households have no appreciable rainy day funds and businesses have hollowed
out their balance sheets and artificially extended their supply chains to the four corners
of the earth in order to goose short-run profits and share prices.
However, this unprecedented fragility is becoming evident as public health authorities
around the world aggressively move to contain the Covid-19 contagion. This will mean
separating workers from their workplaces, consumers from the malls, diners from the
restaurants, travelers from the airlines, hotels and resorts and much more like and similar
disruptions to the supply-side of the economy.
In short, the world's supply chains are buckling and freezing-up, thereby causing
production and incomes to fall abruptly. In turn, shrunken incomes and cash flows will pull
the legs out from under the edifice of debt and speculation that has been piled atop the
American economy.
So both a renewed financial and economic crisis and an abrupt change of course lie dead
ahead. The 30-year era of False Prosperity is over. [.]
The decade of reckoning that lies ahead is rooted first and foremost in the fecklessly
incurred mega-debts of the private and public sectors alike. Together they have soared to
the staggering sum of $75 trillion.[.]
Yet the proceeds from these massive borrowings were not used to invest and provide for
tomorrow, but to live high on the hog today. After three decades of such artificial
debt-fueled "prosperity", the very warp and woof of American society has been
deformed.[.]
In our ongoing attempts to glean some objective insight into what is actually happening "on
the ground" in the notoriously opaque China, whose economy has been hammered by the Coronavirus
epidemic,
in February we first showed several "alternative" economic indicators such as real-time
measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy
for electricity usage and manufacturing) and traffic congestion levels (a proxy for commerce
and mobility), before concluding correctly that China's
economy appears to have ground to a halt - the subsequent record drop in China's
manufacturing and service PMI only confirmed this.
... ... ...
Not only that, but as the bank's economists warn, " we are starting to see
evidence of an adverse feedback loop between markets and consumers; this frightens us." Let's
review the signals:
Market indications:
As of Friday, the S&P 500 sold off almost 14.0% from the recent high.
The 3mo-10yr yield curve is inverted by ~18bp, the most since October 2019 when trade war
concerns were dominating the news flow
BofA's global financial stress indicator triggered risk-off for the first time since
August 5 - September 12 2019. While the indicator has been a good signal to buy the dip since
2013, the bank's equity derivatives research team warns that this time may be different given
the nature of this shock.
Freeze in the global credit machine. In the US, high yield bond issuance has slowed and
there was no new US IG corporate issuance this week.
Consumer signs:
In the bank's proprietary consumer survey, BofA has seen some pickup in those noting they
are "very concerned" though it remains modest. And while broad consumer sentiment has been
resilient, as Goldman's data confirmed, this will change drastically in the coming weeks.
... ... ...
The conclusion: so far US consumers haven't showed broad-based fear. But as
BofA reminds us, consumers are very sensitive to big market moves. Case in point: consumer
confidence tumbled following the sell-off in December 2018. Similarly confidence weakened
following the big market move in August 2019. In both cases spending plunged immediately
thereafter. This is more than simply a negative "wealth effect". Consumers see the stock market
as a gauge of the health of the economy and the state of their personal finances; it is also an
indicator of faith in the Fed which has single-handedly kept the stock market ramping for the
past 11 years, avoiding both a bear market and a recession. Which is why when the stock market
sells off violently, it sends an ominous message.
We leave the last words to Bank of America: "We believe that we are in the very early stages
of the adverse feedback loop. In our baseline forecast, we are assuming that it does not
spiral. However, it remains a significant risk and we believe it is prudent to monitor it very
closely."
Creating employment insecurity was the entire point of neoliberal reforms such as
outsourcing, de-skilling and contingent employment. Neoliberal theory had it that desperate
workers work both longer and harder. And they die younger.
We can view "Creepy Joe" and Trump as representatives of "neoliberal plague" The slogan
should be " No Pasaran "
( Dolores Ibárruri's famous battlecry appeal for the defense of the Second Spanish
Republic)
Notable quotes:
"... For those who aren't familiar with Albert Camus' The Plague , disparate lives are brought together during a plague that sweeps through an Algerian city. ..."
"... Through the virus, a new light is being shone on four decades of neoliberal reorganization of political economy. The combination of widespread economic marginalization and a lack of paid time off means that sick and highly contagious workers will have little economic choice but to spread the virus. And the insurance company pricing mechanism intended to dissuade people from overusing health care ('skin in the game') means that only very sick people will 'buy' health care they can't afford. ..."
"... If this last part reads like (Ayn) Randian social theory as interpreted by a budding sociopath in the basement of his dead parent's crumbling tract home, it is basic neoliberal ideology applied to circumstances that we can see playing out in real time. ..."
"... While the American response to the Coronavirus threat seems to be less than robust, there was a near instantaneous response from the Federal Reserve to a 10% decline in stock prices. ..."
"... If priorities seem misplaced, you haven't been paying attention. The statistics on suicides, divorces, drug addiction and self-destructive behavior that result from the loss of employment were understood and widely published by the early 1990s, at the peak of that era's round of mass layoffs. Creating employment insecurity was the entire point of neoliberal reforms such as outsourcing, de-skilling and contingent employment. Neoliberal theory had it that desperate workers work both longer and harder. And they die younger. ..."
"... But how likely is it that people will 'demand' too much healthcare? The starting position of Obamacare was that the American healthcare system provided half the benefit at twice the price of comparable systems. ..."
"... Milton Friedman, one of the founders of neoliberalism through the Mont Pelerin Society, produced a long career's worth of half-baked garbage economics. On the rare occasions when he wasn't helping Chilean fascists toss students out of airplanes in flight, he was pawning his infantile theories off on future Chamber of Commerce and ALEC predators. His positivism was already known to be a farce when he took it up. Here is a primer that explains why it is, and always will be, a farce. ..."
For those who aren't familiar with Albert Camus' The Plague ,
disparate lives are brought together during a plague that sweeps through an Algerian city.
Today, by way of the emergence of a lethal and highly communicable virus (Coronavirus), we --
the people of the West, have an opportunity to reconsider what we mean to one another. The
existential lesson is that through dread and angst we can choose to live, with the
responsibilities that the choice entails, or just fade away.
Through the virus, a new light is being shone on four decades of neoliberal
reorganization of political economy. The combination of widespread economic marginalization and
a lack of paid time off means that sick and highly contagious workers will have little economic
choice but to spread the virus. And the insurance company pricing mechanism intended to
dissuade people from overusing health care ('skin in the game') means that only very sick
people will 'buy' health care they can't afford.
Market provision of virus test kits, vaccines and basic sanitary aids will, in the absence
of government coercion, follow the monopolist's model of under-provision at prices that are
unaffordable for most people. The most fiscally responsible route, in the sense of assuring
that the rich don't pay taxes, is to let those who can't afford health care die. If this means
that tens of millions of people die unnecessarily, markets are a harsh taskmaster. (
3.4% mortality rate @
2X – 3X the contagion rate of the Spanish Flu @ 4 X 1918 population).
If this last part reads like (Ayn) Randian social theory as interpreted by a budding
sociopath in the basement of his dead parent's crumbling tract home, it is basic neoliberal
ideology applied to circumstances that we can see playing out in real time. According to
Ryan Grim of The Intercept, Bill Clinton eliminated the ' reasonable
pricing ' requirement for drugs made by companies that receive government funding. This has
bearing on both commercially developed Coronavirus test kits and vaccines.
Leaving aside technical difficulties that either will or won't be resolved, how would any
substantial portion of the 80% of the population that lives hand-to-mouth be effectively
quarantined when losing an income creates a cascade effect of evictions, foreclosures,
starvation, repossessions, shut-off utilities, etc.? The current system conceived and organized
to make desperate and near desperate workers labor with the minimum of pay and benefits is a
public health disaster by design.
While the American response to the Coronavirus threat seems to be less than robust,
there was a near instantaneous response from the Federal Reserve to a 10% decline in stock
prices. The same Federal Reserve that has been engineering a non-stop rise in stock prices
since Wall Street was bailed out in 2009 knows perfectly well how narrowly stock ownership is
concentrated amongst the rich -- it publishes the data. It quickly lowered the cost of
financial speculation as the cost of Coronavirus tests and a vaccine -- and the question of who
will bear them, remain indeterminate.
If priorities seem misplaced, you haven't been paying attention. The statistics on
suicides, divorces, drug addiction and self-destructive behavior that result from the loss of
employment were understood and widely published by the early 1990s, at the peak of that era's
round of mass layoffs. Creating employment insecurity was the entire point of neoliberal
reforms such as outsourcing, de-skilling and contingent employment. Neoliberal theory had it
that desperate workers work both longer and harder. And they die younger.
The brutality of the logic used by the Obama administration in constructing the ACA,
Obamacare, is worthy of exploration. The premise behind the 'skin in the game' idea is
neoliberalism 101, developed by a founder of neoliberalism, economist Milton Friedman, to
ration health care. The basic idea is that without a price attached to it, people will 'demand'
more health care than they need. That from a public health perspective, oversupplying health
care is better than undersupplying it, is ignored under the premise that public health concerns
are communistic. (Read Friedman).
But how likely is it that people will 'demand' too much healthcare? The starting
position of Obamacare was that the American healthcare system provided half the benefit at
twice the price of comparable systems. Through the 'market' pricing mechanism that
existed, the incentive was for people to avoid purchasing healthcare because it was / is wildly
overpriced. Not considered was that through geographical and specialist 'natural monopolies,'
health care providers had an incentive to undersupply health care by providing high-margin
services to the rich.
Furthermore, why would a healthcare system be considered from the perspective of
individual users? In contrast to the temporal sleight-of-hand where Obamacare 'customers' are
expected to anticipate their illnesses and buy insurance plans that cover them, the entire
premise of health insurance is that illnesses are unpredictable. Isn't the Coronavirus evidence
of this unpredictable nature? And through the nature of pandemics, it is known that some people
will get sick and other people won't. Not known is precisely who will get sick and who
won't.
While there are public health emergency provisions in Obamacare that may or may not be
invoked, why does it make sense in any case to require that people anticipate future illnesses?
Such a program isn't health care and it isn't even health insurance. It is gambling. Guess
right and you live. Guess wrong and you die. Why should we be guessing at all? Prior to
Obamacare, health insurance companies gamed the system with life and death decisions. In true
neoliberal fashion, Obamacare randomized the process as health insurers continue to game the
system.
As I understand it, the public health emergency provision in Obamacare might cover virus
testing and the cost of a vaccine if one is ever found. Great. What about care? How many
readers chose a plan that covers Coronavirus? How many days can you go without a paycheck if
you get sick or are quarantined? Who will take care of your children and for how long? How will
you pay your rent or mortgage? Who will deliver groceries to your house and how will you pay
for them? How will you make the car payment before they repossess it and how will you get to
work without it if you recover?
The rank idiocy -- and the political content, of the frame of individual 'consumers'
overusing health care quickly devolves to the fact that some large portion of the American
people can't afford to go to the doctor when they need to. Even if they can afford the direct
costs, they can't afford the indirect costs. When Obamacare was passed, the U.S. had the worst
health care outcomes among rich countries. Ten years later, the U.S. has the
worst healthcare outcomes among rich countries . And medical bankruptcies are virtually
unchanged since Obamacare was passed.
The reason for focusing on Obamacare is it is the system through which we encounter the
Coronavirus. In the narrow political sense of getting a health care bill passed, Obamacare may
or may not have been 'pragmatic.' In a public health care sense, it is a disaster decades in
the making. The problem wasn't / isn't Mr. Obama per se. It is the radical ideology behind it
that was posed as pragmatism. Mr. Obama's success was to get a bill passed -- a political
accomplishment. It wasn't to create a functioning healthcare system.
The otherworldly nature of neoliberal theory has led to a most brutal of social
philosophies. Mr. Obama later put his energy into lengthening drug company
patents to give drug companies an economic advantage provided by the government. Economist
Dean Baker has made a career out of hammering this general point home. Michael Bloomberg
benefited from government support for both technology and finance. His fortune of $16 billion
in 2009 followed stock prices higher to land him at $64.2 billion in 2020.
Donald Trump inherited a large fortune that likewise followed stock and Manhattan real
estate prices higher. Both he and Mr. Bloomberg could have put their early fortunes into
passive portfolios and received the returns that they claim to be the product of superior
intelligence and hard work. Analytically, if the variability of these fortunes tracks systemic,
rather than personal, factors, then systemic factors explain them. The same is true of most of
the great fortunes of the epoch of finance capitalism that began around 1978.
The point of merging these issues is that they represent flip sides of the neoliberal coin.
In a broad sense, neoliberalism is premised on economic Darwinism, the quasi-religious (it
isn't Darwin) idea that people land where they deserve to land in the social order. This same
idea, that systemic differences in economic outcomes are evidence of systemic causes, applies
here. However, differences in intelligence, initiative and talent don't map to systemic outcomes , meaning that
concentrated wealth isn't a reward for these.
The ignorant brutality of this system appears to be on its way to getting a reality check
through a tiny virus. Unless the Federal government figures this out really fast, most of the
bodies will be carried out of poor and working class neighborhoods like mine. Few here have
health insurance and most health care providers in the area don't take the insurance they do
have. More than a day away from work and many of my neighbors will no longer have jobs.
Evictions are a regular state of affairs in good times. There are no resources to facilitate a
larger-picture response.
Liberalism, of which neoliberalism is a cranky cousin, lives through a patina of pragmatism
until the nukes start flying or a virus hits. Getting healthcare 'consumers' to consider their
market choices follows a narrow logic up to the point where none of the choices are relevant to
a public health emergency. One I plus another I plus another I doesn't equal us. The
fundamental premise of neoliberalism, the Robinsonade I, has
always been a cynical dodge to let rich people keep their loot.
The mortality rate and contagion factor recently reported for Coronavirus (links at top)
place it above the modern benchmark of the Spanish Flu of 1918 in terms of potential lethality.
What should make people angry is how the reconfiguration of political economy intended to make
a few people really rich has put the rest of us at increased risk. These are real people's
lives and they matter.
Finally, for students of neoliberalism: there is no conflation of neoliberalism with
neoclassical economics here. Milton Friedman, one of the founders of neoliberalism through
the Mont Pelerin Society, produced a long career's worth of half-baked garbage economics. On
the rare occasions when he wasn't helping Chilean fascists toss students out of airplanes in
flight, he was pawning his infantile theories off on future Chamber of Commerce and ALEC
predators. His positivism was already known to be a farce when he took it up. Here is a primer that
explains why it is, and always will be, a farce.
Rob Urie is an artist and political economist. His book Zen Economics is
published by CounterPunch Books.
Capital spending is likely in for a prolonged slump because the efforts to contain the
coronavirus will also cause economic growth in the world's advanced economies to slow in
2020
Industries that could be taking a big hit: tourism, airlines, mass entertainment, movies,
sporting events, restaurants, retail malls. A mild recession can't be ruled out. It depends on
how widespread cases are, how long any outbreaks last, and how spooked consumers and businesses
get.
A few businesses will benefit, such as eat-at-home groceries, e-commerce delivery, downloads
of apps and livestreaming.
... ... ...
However bad the situation gets, the hit to global trade is already a given. Expect shortages
of certain goods to begin by late March or April as inventories run out, especially so for
electronics, ingredients for generic drugs and automotive parts.
It is a catalyst. But future is unpredictable. The article is too deterministic and thus
silly. Multiple scenario are possible. The one thing that is missing in many official
pronouncements now is treating the general population as adults and outlining best case and worst
case scenario.
Before onset of neoliberalism, we used to encourage people who were sick to stay home from
work, and sick days were provided,
The economic and behavioral impacts are visible by reduction of regular crowds in cultural
and commercial centers. Demographically, it does hit urban people more than rural dwellers?
It's interesting that hardly anyone is thinking about the economic consequences of 10% of
aged baby boomers checking out this year. Lots of empty homes coming on the market.
For example, can closed schools are providing "distance learning" and teachers continue to be
paid? Or will "distance learning" be off-shored to some corp. somewhere and teachers be laid
off?
This is it! The party is over. The world is now facing the gravest economic and social
downturn in Modern Times (18th century).
We are now entering a period of global crisis that will change the world for a very long
time to come. This should come as no surprise to the people who have studied history and also
read my articles for the last few years. Many others have also warned about the same thing. But
since MSM never talks about the excesses in the world or the risks, 99.9% of people are totally
unprepared for what is coming next.
... ... ...
CORONAVIRUS IS NOT THE CAUSE BUT THE CATALYST
Investors are obviously linking the stock market crashes to the Coronavirus but we must
remember that the virus is not the cause of the falls but only the catalyst. Stocks around the
world have been overvalued on many criteria for quite some time.
The majority of people today are not worried about stocks but instead about the Coronavirus.
Most of us don't understand it since authorities around the world suppress the truth when it
comes to numbers of infected and fatalities . China seems never to have told the truth about
the virus and many countries have followed suit.
The pandemic is spreading exponentially and it can take 3-4 weeks before it breaks out from
the time you are infected.
... I would not be surprised if in the end governments tell people to continue as normal
rather than to quarantine everyone. If the mortality rate is on average not more than 2%, this
is a calculated risk that the authorities are likely to take.
To totally close down countries and production, leading to shortages of food and medicine,
will probably kill more people over time than the virus itself.
FOR INVESTORS BAD NEWS IS
GOOD NEWS – UNTIL NOW
So whilst ordinary people around the world are concerned with the Coronavirus, investors are
focusing on crashing stock markets. Most people are blissfully unaware of the Dow's biggest
point fall ever last week of 4,000 points (14%) or similar falls in other world markets.
Investors love bad news like lower earnings or poor economic figures since this leads to
more economic stimulus. So until a week ago, markets loved the fact that central banks around
the world have embarked on what will be the biggest money printing exercise in history.
Investors are not concerned about the reasons for the massive liquidity injections which are
due to problems in the world's financial system. Instead, more money printing means more credit
and more cash availability for stock market investors. So bad news for the economy has created
ever higher stocks reaching the sky.
Clearly, central banks will soon accelerate money printing and the ones that can, like the
US, will lower rates. The 1/2% rate cut by the Fed on Tuesday seems like panic action. Since
the effects in the US of the Coronavirus have so far been minor, the problems are clearly in
the financial system. Lower rates, more repos, more QE etc. There are clearly major problems in
the system.
The rate cut combined with money printing might create quick bounces in stocks, sucking
everyone in. But this time money printing will only have a very brief effect. Because any
correction up will be short lived and the subsequent big fall will be devastating. So this is
definitely not the time to buy the dips. For anyone in the stock market, much better to get out
on the bounces.
After a string of deaths, some heart-stopping plunges in the stock market and an emergency
rate cut by the Federal Reserve, there is reason to be concerned about the ultimate economic
impact of the coronavirus in the
United States.
The first place to look for answers is China, where the virus has spread most widely. The
news has been grim with
deaths, rolling quarantines and the
economy's seeming to flat line , though the number of new cases has begun to
fall.
Advanced economies like the United States are hardly immune to these effects. To the
contrary, a broad outbreak of the disease in them could be even worse for their economies than
in China. That is because face-to-face service industries -- the kind of businesses that go
into a tailspin when fearful people withdraw from one another -- tend to dominate economies in
high-income countries more than they do in China. If people stay home from school, stop
traveling and don't go to sporting events, the gym or the dentist, the economic consequence
would be worse.
In a sense, this is the economic equivalent of the virus's varied health effects. Just as
the disease poses a particular threat to older patients, it could be especially dangerous for
more mature economies.
This is not to minimize the indiscriminate and widespread
damage that the disease has caused by disrupting the global supply chain. With shortages of
everything from
auto parts to
generic medicines and production delays in things like iPhones and
Diet
Coke , a great deal of pain is coming from the closing of Chinese factories. That
proliferating damage has central banks and financial analysts talking about a global
recession in the coming months.
Nor is it to discount the possibility that the United States will be spared the worst
effects. Scientific and public health efforts might limit the spread of the virus or quickly
find a treatment or vaccine. The warmer weather of summer might slow the spread of the
coronavirus as it usually does with the seasonal flu. Many things could prevent an outbreak as
large as the one in China.
But it is to say that an equivalent outbreak in the United States might easily have a worse
economic impact.
As a baseline, several factors work against the United States. China's authoritarian
government can quarantine entire cities or order people off the streets in a way that would be
hard to imagine in America, presumably giving China an advantage in slowing the spread of the
disease. In addition, a large share of American workers lack paid sick days and
millions lack health care coverage, so people may be less likely to stay home or to get
proper medical care. And 41 percent of China's population lives outside urban areas , more than twice the
share in the United States. Diseases generally spread faster in urban areas.
Beyond those issues, however, is a fundamental difference in economic structure: When people
pull back from interacting with others because of their fear of disease, the things they stop
doing will frequently affect much bigger industries in the United States.
Consider travel. The average American takes three flights a year; the average Chinese person
less than half a flight. And the epidemiological disaster of the Diamond Princess has persuaded
many people to hold off on cruises. That cruise ship stigma alone potentially affects
about 3.5 percent of the United States, which has about 11.5 million passengers each year,
compared with only 0.17 percent of China, which has about 2.3 million passengers.
People may stop attending American sporting events. There have even been calls for the
N.C.A.A. to play its March Madness college basketball tournament
without an audience . But sports is a huge
business in the United States . People
spend upward of 10 times as much on sporting events as they do in China .
And if 60 million Americans stop spending
$19 billion a year on gyms, that would be a much a bigger deal than if the 6.6 million gym
members
in China stopped spending the $6 billion they devote to gyms now.
That's just a start. Who wants to go to the dentist or the hospital during an outbreak if a
visit isn't necessary? Yet health spending is 17 percent of the U.S. economy -- more than triple the
proportion spent in China.
Of course, not every service sector is so much larger than in China. Retail and restaurants,
for example, have comparable shares of gross domestic product in both countries.
But over all, the United States is substantially more reliant on services than China is.
And, on the flip side, agriculture , a sector not noted for day-to-day
social interaction and so potentially less harmed by social withdrawal, is a 10 times larger
share of
China's economy than it is in the United States.
So for all the talk about the global
"supply shock" set off by the coronavirus outbreak and its impact on supply chains, we may
have more to fear from an old-fashioned "demand shock" that emerges when everyone simply stays
home. A major coronavirus epidemic in the United States might be like a big snowstorm that
shuts down most economic activity and social interaction only until the snow is cleared away.
But the coronavirus could be a " Snowmaggedon -style storm" that hits
the whole country and lasts for months.
So go wash your hands for the full 20 seconds. And show some more sympathy for the folks
quarantined in China and elsewhere. Because if it spreads rapidly in the United States, it
could be a heck of a lot worse.
Austan Goolsbee, a professor of economics at the University of Chicago's Booth School
of Business, was an adviser to President Barack Obama. Follow him on Twitter:
@austan_goolsbee
Markets aren't prepared for how severe the fallout of the global spread of coronavirus
could get and the turmoil has only just started, according to the manager of a peer-beating
fund.
The stark warning comes from Allianz Global Investors' portfolio manager Mike Riddell, who
oversees $4.7 billion for the company. "The speed of the market repricing has obviously been
dramatic, however markets have only gone from pricing in no risk of anything to a moderate
risk," Riddell said in a phone interview. "Where we think markets can still move is in
volatility."
Riddell's Strategic Bond Fund, which he manages with Kacper Brzezniak, outperformed 98% of
its peers in the past month, when markets grappled with record-low bond yields, a plunge in
stock markets, spiking currency market volatility and surprise rate cuts from central banks,
including an emergency cut by the U.S. Federal Reserve. Bonds from the U.S. and Germany rallied
on Friday with the 30-year and 10-year yields sliding to a fresh record lows.
The London-based Allianz manager has been bracing for a wobble in markets for a few months
now and thinks the recent repricing is still too mild. He is using options to bet on more
currency swings and also has positioned for short-term U.S. yields to lead declines as he sees
a significant chance the Fed could slash interest rates close to zero.
"If global data really tanks in the coming weeks and months, investors will realize that
central banks can't cure coronaviruses and markets such as currencies and corporate bonds are
still ripe for a correction," Riddell said.
Anon10 says: Show Comment
February 25, 2020 at 9:11 pm GMT 100 Words
@awry From a cui bono perspective, the US conspiracy theory is more plausible than
Limbaugh's China conspiracy theory.
Slowing down China's economic growth and reducing its international trade is in the US
geopolitical interest. That is the whole point of the tariffs, trade war, sanctions on Huawei,
and push to move supply chains out of China.
Well, personally I think the jury is still out whether East Asians are far more vulnerable to
the new coronavirus than whites. The outbreaks in Iran and Italy shift the likelihood
somewhat, but it's still early. Personally, I think the evidence from that cruise ship might
be most definitive.
But if whites are indeed as vulnerable, I'd think that the West might be hit much harder
than China. After all, can we possibly imagine the sort of national lock-down that China has
implemented, apparently with considerable success?
And I'm still very suspicious about the circumstances of the outbreak. It hit China
just before Lunar New Year, the absolutely worst possible time, and the epicenter was Wuhan,
a key transport hub. It really seems an *astonishing* coincidence that 300 American military
servicemen had been visiting Wuhan just prior to the outbreak, at a peak of international
tension.
How would Americans react if 300 PRC officers had visited Chicago, and immediately
afterwards, a deadly new plague broke out in that city, with a major risk of spreading
throughout the country?
Isn't it also rather suspicious that Iran has been hit so hard? So the two countries in
the world most subject to current American hostility just tend to be especially "unlucky"
As for "soft power," I suspect it largely reflects a heavily-lagging indicator of
economic/political power, only somewhat shifted by considerations of pop-culture. If China
continues on its economic/political trajectory, I think it will have plenty of soft power
30-40 years down the road. And if American society/economy collapses, so soon afterward will
our soft power, ignorant rap-stars and basketball players notwithstanding.
Fun theory but it would make more sense if paired with some theory of how the US took
secret steps to protect its own population, e.g., slipped a vaccine in the drinking water.
But it is hard to think of a plausible theory of that sort.
Well, there were some early indications that the virus was especially deadly towards
Chinese and perhaps East Asians rather than whites, though the picture is currently much more
cloudy. But you're looking at things entirely the wrong way
Under normal circumstances, I would be *extremely* skeptical of a possible US biowarfare
attack against China since it would be such a totally insane thing to do. But just last
month, we assassinated a top Iranian leader, and much of everything our government does is
totally insane. So an insane biowarfare attack would just fit into this larger pattern.
Also, consider that a mysterious Swine Flu epidemic suddenly appeared in China during
2019, and destroyed 40% of its primary domestic meat source, certainly a highly suspicious
coincidence.
I'd very strongly recommend that people read this very lengthy article we published a week
ago, which provides a vast amount of background information on the issue. The author is a
highly eccentric American ex-pat living in China, and his own views should be given little
weight. But he provides an enormous wealth of useful information and links, totally excluded
from our worthless MSM:
300 American military servicemen had been visiting Wuhan just prior to the outbreak,
at a peak of international tension.
300 U.S. servicemen of Chinese descent visiting their parents during a National holiday
when hundreds of thousands are travelling? That would be typical.
No, of course not. The Military World Games were being held in Wuhan, and 300 American
servicemen participated. The Wuhan viral outbreak occurred *immediately* afterwards, which
seems extremely suspicious timing to me. Naturally, none of this has been reported in our
totally worthless MSM:
Again, how would America react if 300 Chinese servicemen visited Dallas for an
international event, and immediately afterwards a deadly -- and rather mysterious -- viral
outbreak suddenly occurred in that city
From the earlier days, it has been estimated – and repeatedly confirmed –
that COVID-19 has only a 10% detection rate
mortality with ventilators, drugs, doctors, etc. seems to be ~1% versus 2-3% for people
left to their own devices
If Covid-19 truly has a detection rate of only 10%, then the actual mortality rate is much
lower than what is currently being reported, down to 0.1% with medical treatment versus
0.2-0.3% to people left to their own devices. For comparison, 0.05% of people catching the
flu this year have died. The pandemic of 1918 had a 2.5% mortality.
There seems to be something unusual about the Covid-19 infections in Wuhan that are not
borne out in other areas. There must have been something going on beyond only
person-to-person contact. The virus may have been introduced in an artificial way, perhaps
sprayed as an aerosol over a large area or spread through some other means that would have
had a comparable effect. Outside of Hubei Province, it has proven much easier to control the
disease, and there is a far lower mortality rate.
"The Military World Games were being held in Wuhan, and 300 American servicemen
participated."
Just to add more detail. Even with one of the largest contingent among all participating
countries, an Olympic game giant like US didn't manage to get a single gold medal in Wuhan,
falling behind countries like Tunisia and Namibia. Wonder why?
Isn't it also rather suspicious that Iran has been hit so hard? So the two countries in
the world most subject to current American hostility just tend to be especially
"unlucky"
Iran's largest trade partner is China. There's an outbreak in Japan, South Korea, and
Italy. There'll be an outbreak in the rest of Europe and the USA shortly. I don't think this
is very meaningful, next year no-one will remember which country got it the second time.
@HyperboreanFor an American bioweapon able to paralyse China, the alleged mastermind
appears rather incompetent.
No one suggested that the USA is competent.
The Neocons killed Soleimani. When Trump found out, he claimed it as his own. The
perpetrators had no idea that this catalyst would lead to them being eventually expelled from
Syria and Iraq.
Last week, a US convoy in Syria had to be rescued from the locals by the Russians. But you
won't find that in your lying MSM.
@Half-Jap While technically a true statement, it's more of a semantic difference.
Pneumonia is a life threatening condition along with the associated opportunistic infections.
And it's more or less directly caused by influenza. If someone pushed another person off a
cliff, you would say that it was murder, rather than pointing out that the fundamental force
of gravity and weakness of the falling man's bones was what did him in.
For a more medical example, it's similar to the case of HIV/AIDS. By itself, HIV is a
virus that gradually wipes out the immune system over a decade or so. In all cases, it's
either an opportunistic infection or cancer that actually shuts the body down permanently.
You can trace the causes as far back as you wish, but the HIV virus is the first pathogen
entering the body that ultimately results in its demise.
Well, I'm obviously not suggesting that *most* of the 300 military personnel visiting
Wuhan just prior to the outbreak were involved. But suppose just 2-3 US "ringers" were
included to release the virus during their spare time, perhaps during their visits to the
local "wet market." Again, the timing seems *extremely* suspicious.
Leaving a trail back to yourself is incredibly bad fieldcraft. Using soldiers that are
almost sure to be monitored is too likely to be caught in the act. Without some additional
facts, the timing is simple coincidence not suspicious.
____
Also, Trump just won on trade. Creating a trade problem immediately before an election
makes no sense for the U.S. administration.
There is no motive unless a 3rd party is conspiring against both the U.S. And China
trying to start a war.
well, they might, but not because they're smarter. they are so very clearly
technologically inferior and societally backwards. they're smart enough to be dangerous.
that's about it.
China has already demonstrated a much better response than most governments in its ability
to contain the virus, so your rambles are quite misplaced. The US response, for example, is
for the CDC is stumble around in confusion.
While South Korea has run more than 35,000 coronavirus tests, the United States has
tested only 426 people, not including people who returned on evacuation flights. Only about
a dozen state and local laboratories can now run tests outside of the Centers for Disease
Control and Prevention in Atlanta because the CDC kits sent out nationwide earlier this
month included a faulty component.
In the end, China might end up demonstrating if anything, that it has that is fully
capable of acting decisively and effectively in a disaster in comparison to rivals.
The U.S. markets' deep-in-the-red opening Friday after the release of a very strong
employment report form the Bureau of Labor Statistics confirms the feelings I have had for the
past two weeks. Long-time market watchers will know that bear markets are susceptible to "bear
market bounces" and in fact we have had two of those this week. The yield on the 10-year U.S.
Treasury Note is 0.707%, and the 3-month UST is yielding an astounding 0.42%, well below the
current fed funds target range of 1.00% to 1.25%.
The next direction for a more volatile market
growing terrified about the economic fallout from the coronavirus is anyone's guess, which
probably explains why investors are so nervous right now.
Talk to anyone on the Street and the views on the market's short-term direction vary widely.
They range from those that think we are witnessing a bottoming process underway to those that
believe that now is the ultimate time to buy with the major indices some 10% off the highs
(though numerous individual stocks are down way more).
And of course there is an expanding camp of strategists that believe the next move is
sharply lower in large part because coronavirus will crush global economic activity. To this
group, the
Federal Reserve's emergency rate cut this week is not the equivalent of a cure for
coronavirus and therefore isn't a savior to stocks.
For Hercules Investment CEO James McDonald, the threat of a U.S. recession is by no means
priced into stocks. And investors, said McDonald, would be wise to realize that and position
their portfolios accordingly.
"A recession is imminent, and it's OK," McDonald said on Yahoo Finance's The First Trade . "A 30% correction sounds
scary right, but the Dow, S&P 500 and the Nasdaq rallied to nearly 30% in just one year
last year. If you look at a 35% to 45% trim from here, it sounds bad but it just takes us back
first quarter 2016. Understand that the numbers are relative, it is a good time to anticipate a
major pullback and then get back in the market."
"I think we test the low of the original [low] and then go lower than that. Understand that
a 30%, 40%, 50% pullback in this market only means only we are set back two or three years.
It's not a panic situation," McDonald added.
It's hard to remain calm
While panic selling hasn't begun to grip the markets, one can't be encouraged by the action
this week.
The Dow Jones Industrial Average tanked
more than 600 points on Friday (despite a much stronger than expected February
employment report ...) as COVID-19 infections topped 100,000 globally. Company specific
comments on the coronavirus also continue to weigh on sentiment. Starbucks warned Thursday
evening that its fiscal second quarter earnings would be drilled by 15 cents to 18 cents a
share owing to closed stores in China. That follows Southwest's warning that canceled flights
and routes would hit first quarter sales by $200 million to $300 million.
Not everyone is on board with McDonald's straight shooting on the markets.
"We do not recommend switching away from a balanced allocation at this stage. Policy makers
have clearly entered the race, which should prevent -- for now -- an extended bear market on
risk assets," said SocGen strategist Alain Bokobza.
As we said, the market's next move...is truly anyone's guess. Golfer
3 hours ago Not just stocks; real estate due for a major correction. DC
3 hours ago If your on the verge of retirement, get out of the market. There is no time
to make up a 30%, 40%, 50% drop. I'm out, and will remain out until I feel better about getting
back in. It's called being pro-active. titanbabe54
3 hours ago 30% to 50% correction ?? Because people are panicked over the flu ? Good
grief people, this is a gift of a buying opportunity, especially in the housing market. When
warm weather hits, this flu will dissipate. The media will try to keep the panic going. It's
their last hope to damage the Trumpster. That Dude
3 hours ago I am in the medical field. I AM worried about the elderly, the
immunocompromised, those mid to older folks with pre-existing conditions that will make it
difficult for them to fight off ( eg., diabetes, asthma, COPD, etc.) because of the PANIC you
all are causing. Keep CALM and wash your hands and above all---tend to your sneezes and coughs
like your Momma taught you!!
China has already demonstrated a much better response than most governments in its
ability to contain the virus, so your rambles are quite misplaced. The US response, for
example, is for the CDC is stumble around in confusion .I
n the end, China might end up demonstrating if anything, that it has that is fully
capable of acting decisively and effectively in a disaster in comparison to rivals.
Consider a particularly ironic outcome of this situation, not particularly likely but
certainly possible
Everyone knows that America's ruling elites are criminal, crazy, and also extremely
incompetent.
So perhaps the coronavirus outbreak was indeed a deliberate biowarfare attack against
China, hitting that nation just before Lunar New Year, the worst possible time to produce a
permanent nationwide pandemic. However, the PRC responded with remarkable speed and
efficiency, implementing by far the largest quarantine in human history, and the deadly
disease now seems to be in decline there.
Meanwhile, the disease naturally leaks back into the US, and despite all the advance
warning, our totally incompetent government mismanages the situation, producing a huge
national health disaster, and the collapse of our economy and decrepit political system.
As I said, not particularly likely, but certainly a very fitting end to the American
Empire
@Ron Unz I think the whole thing is somewhat overstated
I think all the empirical evidence showcases that the Wuhan government bungled the
response immensely, hiding information of the Coronavirus until it was too late.
But virtually all the other local and the national Chinese governments did an exceptional
job with containing the virus, especially Xi Jinping's leadership. I think college students
are going to study the rapid response of the National Government in future textbooks on
crisis mamagement. Therefore the non-Wuhan areas had low levels of coronavirus.
In addition, outside of Iran, which isn't really that competent, the only areas to have a
substantial number of coronavirus cases are areas with a massive legal/illegal Chinese
population.
America has some 50 cases, but has the largest Chinese
diaspora of 6 million Chinese and the largest in overall travel with China. Now maybe the
real number of cases is substantially higher, but I really doubt that. Given the absolute
hammering South Korea, Italy, and Japan are having, America seems pretty good, given its
demographics.
I can't predict what is going to happen next, but I think countries like India and
Bangladesh are going to be annihilated by this virus.
Also, the bioweapon meme seems kinda dumb to me. America's East Asian population is vastly
overrepresented in our Technology and Bureaucracy fields, and are very responsible for even
our Deep State. They hold a *huge* chunk of America on our shoulders, including the federal
gov. If such a thing was deliberate by America, wouldn't that destroy the Federal Government
as well? Wouldn't some Chinese/Korean/Japanese/Vietnamese in the higher up know what was
going on and spill the truth? Even our bioweapons industry is probably disproportionately
East Asian, wouldn't some East Asian realize their work is being used to kill someone? If
America was releasing a bioweapon to kill your Chinese grandmother, you would probably speak
up.
Then again, the Military Games coincidence is absolutely fascinating, and it is amazing
the media does not pick up on that. Did someone check if any of the other country
participants got infected as well? If so, then I think it settles it
I call BS Corona is going to kill a few thousands at most . Every time someone catches a cold
the media says the sky is falling . SARS OMG a catastrophe and what ? A thousand deaths . And
what if Corona does kill millions ? With 7,000,000,000 people what are millions ? 10,000,000
<1% . Corona is clickbait that the Americans will use to advance their program of
advancing chaos to make it dangerous to disobey . Personally I hope Corona kills A billion+ .
Shit I'll volunteer to be one .
As far as I know, no one here has mentioned that because of the
globalization drive by Clinton, Bush, and Obama, 85% of the medicines
used in the United States are manufactured in China. Even U.S. troops
depend on medicines from China! China could bring the entire health
system in the U.S. to a stop in a matter of months. This is what our inept
elites have done to America – they gave away the shop. People are beginning
to realize that manufacturing our own medicines is a matter of national
security but it'll take years to bring the factories back to the U.S. So
much for globalization.
Rod Dreher's blog IMHO is the best source for quick info on the coronavirus
because he is in touch with American M.D.'s who are married to women
from China who in turn are in contact with relatives at home and the Chinese
media. Of course, Rod himself can be hysterical at times but, apparently,
that's what it takes to have a successful blog. The M.D.'s are reporting
that the U.S. is already beginning to run out of certain medications, and
recommend stocking up on the basic necessities, i.e., recommend assuming
the mental framework of the survivalists – have plenty of canned goods, etc
and refill your prescriptions ASAP. This is what many people here seem to
forget – the coronavirus's indirect effects due to having no access to medications
may be much worse than the direct pathogenic effects.
The term Globalism has been around from at least the 1960's but its origins come from Cecil
Rhodes Round Tables which were set up around 1900 as a mechanism for Rhodes and his allies from
the British and South African Oligarchs to take over the world. Globalism is another term for
Neoliberalism, which is another term for Corporatism. It is principally pushed by Fake Liberals
who pretend to be lefties, but are actually Corporatists or Corporate Fascists.
Globalism
The aim of Globalism is to transfer all power and wealth from ordinary people to a handful
of Banking Elites, Oligarchs and major Corporate CEO's. The ultimate aim is to set up an anti
democratic, authoritarian one world government where ordinary people are effectively serfs and
have no say, in a system of Neo-Feudalism. We are very nearly already there.
This is being constantly carried out by transferring ever increasing powers from elected
local governments to massive governmental Super States, such as the EU or the Federal
government in Washington DC.
A great example of a Globalist policy was Obama's Corporate Power Grab TPP and TTIP,
Corporate protectionist deals, which transferred power from elected legislatures to
transnational tribunals staffed by Corporate lawyers acting as Judge and Jury.
"Neo-libs" are NOT Centrists. They are extremist supporters of Perpetual War, Corruption,
Corporatism, Authoritarianism & the Transfer of all wealth & power from ordinary ppl to
the Oligarchs & CEOs in the top 0.01%.
With the release of the March Beige Book, we find that as one
bogeyman departs, another arrives.
Nearly two years after Beige Book respondents first mentioned tariffs as an economic concern
in April 2018, the number of instances in which tariffs were discussed was just 11 in March -
the lowest since the term first emerged. However, as tariffs faded from the public's
consciousness, they were replaced with fears about the coronavirus, a term which was never
before used in the beige book and in March saw no less than 48 separate mentions!
Before we look at the detailed contents of the latest Beige Book, here is a quick recap of
how the Fed sees the 3 key core
pillar of the US economy - overall economic activity, employment and wages, and prices - at
this moment.
Overall Economic Activity:
Economic activity expanded at a modest to moderate rate over the past several weeks,
according to the majority of Federal Reserve Districts. The St. Louis and Kansas City
Districts, however, reported no change during this period. And while manufacturing activity
expanded in most parts of the country, here is where we got the first mention of supply
chain, to wit: " there were indications that the coronavirus was negatively impacting travel
and tourism in the U.S. Manufacturing activity expanded in most parts of the country;
however, some supply chain delays were reported as a result of the coronavirus and several
Districts said that producers feared further disruptions in the coming weeks. "
While consumer spending generally picked up (if not for long now that millions of
Americans will avoid all open areas), growth was uneven across the nation, including mixed
reports of auto sales. Looking ahead, the outlook for the near-term was mostly for modest
growth with the coronavirus and the upcoming presidential election cited as potential
risks
Employment and Wages:
Employment increased at a slight to moderate pace, overall, with hiring constrained by a
tight labor market, and "insufficient labor lowered growth for many firms and led to delays
in construction projects." Several employers changed from temporary to permanent workers in
order to attract talent, and firms made efforts to retain workers such as keeping seasonal
workers on staff in the off-season.
While employment grew across most sectors, manufacturers, retailers, and transportation
companies reported lower demand for labor in some Districts. That said, wages grew at a
modest to moderate rate in most Districts, similar to last period, and contacts expected wage
growth to continue in this range. Companies also spent more on benefits, as the cost of
benefits rose and as employers expanded benefits to attract and retain workers.
Prices:
Most Districts reported modest growth in selling prices, as well as in nonlabor input
prices. Here was one of the rare mentions of the recent trade deal: "some firms, particularly
manufacturers, were optimistic that the Phase One trade deal with China would reduce goods
prices, but some still struggled with tariffs and were concerned about how the coronavirus
might affect prices."
Meanwhile, oil and gas prices decreased across the country, which was largely attributed
to weak demand from China because of the coronavirus. Retail prices were up in much of the
country although some retailers had lower costs due to improved trade conditions, while
agriculture price changes varied.
Focusing exclusively on the coronavirus case, here is how the global pandemic is impacting
business, so much so apparently that the Fed decided to cut rates by an emergency 50bps
yesterday to offset the aftereffects of the disease:
Most manufacturers experienced revenue increases ranging from mid single-digit
percentages to more than 20 percent, but two respondents cited revenue declines, both
attributed in part to disruptions related to the coronavirus outbreak in China.
Outlooks continued to be positive, with the coronavirus and the presidential election
cited as risk factors.
One retailer noted that their inventory levels were impacted by the coronavirus in China,
which slowed production at some manufacturing plants.
A textile manufacturer reported flat sales, and two firms, in advanced sensors and
chemicals, pointed to disruptions related to uncertainty and supply chain challenges from the
coronavirus as factors leading to their slower 2020 start.
Although the retail sector is expected to see further weakness and downside macroeconomic
risks were cited in relation to the coronavirus outbreak and the presidential election.
One manufacturing contact noted problems with supply disruptions and shipment delays
related to the coronavirus.
A few New York contacts reported that the coronavirus has deterred visitors, though New
York City hotels have continued to report good business.
The share of firms reporting increased revenues and new orders rose, and the share
reporting decreases in both measures fell significantly. The coronavirus has entered the list
of concerns, which still includes tariffs and tight labor markets
Most banking contacts were optimistic about the overall health of the U.S. economy going
forward but expressed concerns over the potential impact of the coronavirus .
And one amusing twist: according to the Fed, in the Chicago district "contacts expressed
frustration" that Chinese purchases of agricultural goods hadn't happened after Phase One trade
deal "and were concerned that the coronavirus outbreak would be used as an excuse for missing
future trade targets."
Of course, this is precisely what China is hoping to do.
That said, with the Fed having slashed rates in response to the coronavirus panic, it is
only logical that Fed contacts across the nation would be freaking out about the pandemic.
Finally, looking at some choice anecdotes from the various the Fed regions, we find the
following picture of the US economy:
Boston: "Two firms, in advanced sensors and chemicals, pointed to disruptions related to
uncertainty and supply chain challenges from the coronavirus as factors leading to their
slower 2020 start. Seven of ten manufacturers did not mention disruptions from the virus to
date."
New York: "Tourism activity was mixed. A few contacts reported that the coronavirus has
deterred visitors, though New York City hotels have continued to report good business."
Philadelphia: "Inquiries and orders to source parts domestically were increasing because
of tariff uncertainty and are continuing because of the coronavirus. Retailers noted no
supply disruptions because of the coronavirus."
Cleveland: "Transportation firms expressed concern about the potential for supply-chain
bottlenecks as a result of COVID-19. The virus aside, transportation firms expect conditions
to improve slightly in the near future as rising consumer spending leads to increases of
merchandise shipments."
Richmond: "Sales of both new and used autos were strong, although dealers expressed
uncertainty from elections and the coronavirus. In the District of Columbia, some groups
canceled travels because of the coronavirus."
Atlanta: "Due to the coronavirus, cancelled flights to China have reduced air cargo
capacity significantly, which is expected to negatively affect first quarter revenues."
Chicago: "Some manufacturing contacts reported low inventories of inputs produced in
China due to disruptions from the coronavirus outbreak; while most said the impact had been
minimal so far, many expected a larger effect if the disruptions continued much longer."
St. Louis: "Contacts were uncertain about the impact of coronavirus on their business; no
contacts reported a significant impact, but some have experienced travel and shipment
delays."
Minneapolis: " Ice conditions have been less favorable this season in Minnesota and
Wisconsin, cutting into spending from fishermen and snowmobilers in areas where trails cross
lakes."
Kansas City: "After declining for several months, manufacturing activity appeared to be
stabilizing with a slight uptick in activity in February, despite nearly half of firms noting
some negative effect from the coronavirus spread."
Dallas: "Overall retail outlooks weakened slightly, with some contacts voicing concern
over the coronavirus and its impact on supply chains and overall demand. A railroad contact
voiced concern that the coronavirus could reduce shipments from China."
San Francisco: "The COVID-19 outbreak led to decreased aircraft demand from China and
Southeast Asia, with one supplier reporting no orders received in January. Solar energy
equipment manufacturers also experienced delayed order fulfillment due to supply chain
disruptions related to the COVID-19 outbreak."
You'd
think people would be used to it by now. Every couple of years the world is thrust into
hysteria by the latest virus that is threatening to wipe out a significant portion of the
population. Whether it's SARS, Dengue, Ebola, Swine Flu or the Coronavirus, fear becomes the
default emotion while States and their confederate agencies appear do everything they can to
stoke the emotion. The press appears to almost celebrate such panics because the population
flocks to their reports in anticipation they will deliver them the information they need to
survive. One wonders why people still trust the media with their history of getting stories
wrong.
It is common among individuals to see the reports of a "super-flu" spreading and default to
the most debilitating of emotions -- especially when it comes to liberty -- that being fear.
But most people don't go further and ask the question; "What exactly are people afraid of?" Is
it death? Of course, that Is mankind's greatest anxiety, especially for those who have
children. Is it civil unrest? Could the threat of mass illnesses shutting down industries,
thereby making certain items of necessity scarce, cause people to loot not only stores, but
their neighbor? Or could it be another fear?
Most Americans feel the dread in knowing that getting sick and not being able to work for an
extended period of time can put them out on the street. There are a couple stats that should be
looked at, as well as a factor that some people don't know about, and one most don't want to
hear.
The Ratio of Work to 'Thriving'
A formula often overlooked when examing your personal economy is the ratio of "work to
thriving." How many weeks of the year do you need to work to pay for the basics? In a February
27, 2020 CBS article
, Aimee Picchi writes, "The typical male worker must now work 53 weeks -- or more than a year
-- to make enough to cover what American Compass Executive Director Oren Cass calls the annual
"cost of thriving," the earnings required to pay of a basket of essentials such as health care
and housing. By comparison, in 1985 that same typical employee needed to work 30 weeks to cover
those same costs, found a recent analysis from American Compass, a newly formed conservative
economic think tank."
When it comes to female workers the number is even more alarming
, "Women these days need about 66 weeks -- or 13 more weeks than men -- to afford the same
basket of basics, given that they on average earn less than men. But like the typical male
worker, they've also lost ground since 1985, when the average female employee could cover her
basics after 45 weeks of income."
Many people are familiar with the term "cost of living," but the "cost of thriving" would be
a better gauge to follow considering American culture. Cass explains," "The cost of living is
the standard measure that gets talked about a lot, but there is a difference between living and
thriving thriving implies a richer conception of what we believe we are achieving, rather than
just living."
Picchi notes, "The Consumer Price Index -- a standard measure of inflation -- focuses on the
cost of food, clothing, housing and other basics that families require. But that doesn't
necessarily reflect the challenges of paying for things you need to flourish in American
society today, such as the ever-rising cost of keeping a roof over your head or going to
college." Picchi explains the criteria for the cost of thriving index, "Instead of using a
broad range of basics, the Cost of Thriving Index focuses on four components: the cost of a
three-bedroom house, health insurance for a family, one semester at a public college and the
expense of operating a car."
"Those costs have become "difficult for a household budget to accommodate," Cass said."
One Paycheck Away
When you take into consideration that most people are one paycheck away from homelessness,
it's easy to understand why many Americans have taken to advocating for an expansive
Scandinavian-style welfare State. In January of 2019, Forbes writer Zack Friedman
wrote , "according to a 2017 survey, CareerBuilder, a leading job site, found some
startling statistics related to debt, budgeting and making ends meet;
Nearly one in 10 workers making $100,000+ live paycheck to paycheck
More than 1 in 4 workers do not set aside any savings each month
Nearly 3 in 4 workers say they are in debt – and more than half think they
always will be
More than half of minimum wage workers say they have to work more than one job to make
ends meet
28% of workers making $50,000-$99,999 usually or always live paycheck to paycheck, and
70% are in debt
The survey also found that 32% of the nearly 3,500 full-time workers surveyed use a budget
and only 56% save $100 or less a month.
At this point some may assume that this article is only about looking to external factors to
find fault with. Yes, they exist, but this is specifically about two factors: one that the
individual has control of, and another that no president or politician has been able to solve
in the last century even if they wanted to.
The Dreaded Federal Reserve System
The negative implications of having a government controlled central bank are too numerous to
list in an article, but one of them is that your spending power is diminished. As Henry Hazlitt
explained in his 1951 Newsweek column (reprinted at Mises.org), Inflation for Beginners ;
"When the supply of money is increased, people have more money to offer for goods. If the
supply of goods does not increase -- or does not increase as much as the supply of money --
then the prices of goods will go up. Each individual dollar becomes less valuable because there
are more dollars. Therefore, more of them will be offered against, say, a pair of shoes or a
hundred bushels of wheat than before. A "price" is an exchange ratio between a dollar and a
unit of goods. When people have more dollars, they value each dollar less. Goods then rise in
price, not because goods are scarcer than before, but because dollars are more
abundant."
Since
1991 the supply of U.S. dollars has grown beyond what most people realize. According to the
Federal Reserve bank of St. Louis, in January of 1991 there were approximately 283 billion
dollars in circulation. As the 90s progressed and the government instituted the blockade in
Iraq, the Kosovo conflicts and various skirmishes, by November 2000, that number climbs to 576
billion, more than doubling.
Now we come to post 9/11. On September 12, 2001, the money supply was at 613 billion. On
March 19th, 2003, dollars in circulation were at 683 billion. Jumping to the start of the Iraqi
surge in January 2007, we are now at 801 billion.
Fast forward to soon after the 2008 financial crisis and the picture gets bleaker. What has
come to be known as QE1 was started on 11/26/08. It began with the Federal Reserve (FED) buying
600 billion in mortgage backed securities. By its end in June of 2010, the FED raised the money
supply from just under a trillion dollars to 2.1 trillion. QE2 lasted seven months between
November 2010 and June 2011. Starting with 2 trillion in circulation, it was raised to 2.6
trillion. Less than QE1, but still a bigger jump than was seen all through the 1990s and most
of the way through the 2000s. QE3 was implemented in September of 2012. By the end of 2013 the
money supply had been increased to 3.6 trillion dollars. On 9/11/01 the money supply was at 613
billion dollars. Twelve years later, because of preemptive wars and government interference in
the market, the money supply was increased by 250%.
What does this look like in the real-world using home prices as an example? In 2017, CNBC
reported
, "If you want to buy a house this year, you may well be paying around $199,200, the median
price for a home in the U.S., according to Zillow." Compare that coming forward from the start
of World War 2, "In 1940, the median home value in the U.S. was just $2,938. In 1980, it was
$47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home
price in 1940 would only have been $30,600 in 2000 dollars, according to data from the U.S.
Census."
No one would argue that homes have in fact increased in value. Atlanta added 75,000 to their
population in 2018 alone. If the supply of housing stays static, or doesn't keep up with the
added numbers, prices will increase. This is common in most major metro areas. But the increase
in the money supply has caused prices to skyrocket beyond what the law of "supply and demand"
would dictate.
Take Some Responsibility
When it comes to this part of the discussion the reader may start to bristle. Setting aside
for a moment the facts laid out about the Federal Reserve System, everyone knows someone who is
more prepared than most. Many people know the "prepper" who has 6-months' worth of food
stashed. How many people know the person who has 6-months' worth of income put aside to cover
their bills in case of emergency?
Sure, the Federal Reserve can be blamed for causing the increase in prices in essentials due
to their policies, but is that really an excuse? In 2016, the average American was carrying
$16,061 in credit card debt alone. Assuming an 18.9% interest rate, paying $640 per month, it
would take 15
years and 4 months to pay off that debt. And that's taking into account no further charges
being made.
The simple fact is that most people, even libertarians who know the system is rigged, live
beyond their means. When you add up a mortgage or rental payment, a couple car payments, money
shelled out for the 2.4 kids and the aforementioned credit card payments and even smart people
are a couple paychecks from disaster.
Using the scare of the Coronavirus an example, it is easy to see that not only is the fear
of death a motivating factor when it comes to the inevitable panic associated with a potential
"pandemic," but even the fear of losing a few weeks at work can have people on edge. As
discussed, there are barriers to keep one from being secure in their possessions that are
beyond their control, but there are also common-sense ways to combat obstacles even as great as
a government-rigged money system. Hopefully people will see fit to prepare for such setbacks in
the future as history has shown that this will not be the last impending "catastrophe" to
derail us from our lives.
Update (1650ET) : The House passed a roughly $8.3 billion emergency spending package for
combating the coronavirus outbreak , sending the legislation to the Senate as lawmakers raced
to respond to the quickly spreading disease.
As The Wasll Street Journal reports, the bill provides more than $3 billion for developing
treatments for the disease and allocates $2.2 billion for the Centers for Disease Control and
Prevention to contain the disease , among other measures. Under the legislation, which the
Senate will also likely pass this week, more than $1 billion will go overseas, while $20
million will be made available to fund administrative expenses for loans to U.S. small
businesses.
The final deal includes $300 million for the government to purchase the vaccine and other
therapeutics and make them available to the public.
It calls on Health and Human Services Secretary Alex Azar to use currently available
authority to ensure the price is "affordable in the commercial market," while additionally
stating that he shouldn't delay the drug's development.
The legislation, crafted by top Republicans and Democrats, caps less than two weeks of
negotiations that began when the White House said it planned to spend roughly $2.5 billion on
fighting the disease, an amount lawmakers said was too low. President Trump has subsequently
said he would sign whatever package Congress approves.
Oil producers are facing the biggest drop in demand for their product ever as the
coronavirus spreads around the world, forcing OPEC and its allies to consider emergency
measures.
Research firm IHS Markit said Wednesday that oil demand will suffer its steepest
decline on record in the first quarter -- worse even than during the 2008 global financial
crisis -- as schools and offices close, airlines cancel flights worldwide and a growing
number of people hunker down at home.
Most of the reduction in demand can be traced to China, where the coronavirus has
caused what IHS Markit describes as an "unprecedented stoppage" of economic activity.
But reduced consumption will be widespread, and IHS Markit expects global demand to
drop by 3.8 million barrels per day in the first quarter compared to 2019. Demand in the
first three months of 2019 was 99.8 million barrels per day.
"This is a sudden, instant demand shock -- and the scale of the decline is
unprecedented," said Jim Burkhard, vice president and head of oil markets at IHS
Markit.
A decline of 3.8 million barrels per day is a real bombshell.
Despite claims by China that they have more recoveries than new infections, there is
strong evidence that they are lying. Travel inside China is still almost non-existent and
most industry is still shut down.
"... United said Wednesday it will reduce passenger-carrying capacity 20% on international routes and 10% to 12% in the U.S. United executives expect the reductions will carry into May. ..."
GROUNDED AIRPLANES: United Airlines will cut international and U.S. flying, freeze hiring and ask employees to volunteer for unpaid leave as it struggles with weak demand for travel because of the new virus outbreak. United said Wednesday it will reduce passenger-carrying capacity 20% on international routes and 10% to 12% in the U.S. United executives expect the reductions will carry into May. Beyond that, it depends what happens to bookings over the next few weeks.
United's CEO and president say they hope the moves are enough, but the nature of the outbreak requires the airline to be flexible in how it responds.
ALTERED EXPECTATIONS: General Electric Co. General Electric believes the viral outbreak could have a negative impact of about $300 million to $500 million on its first-quarter industrial free cash flow. Operating profit for the period could be hurt by about $200 million to $300 million. GE said that the expectations are incorporated into its full-year 2020 outlook. Major corporations like Apple, Microsoft and Visa have already cut expectations.
GROUNDED AIRPLANES: United Airlines will cut international and U.S. flying, freeze hiring and ask employees to volunteer for unpaid leave as it struggles with weak demand for travel because of the new virus outbreak. United said Wednesday it will reduce passenger-carrying capacity 20% on international routes and 10% to 12% in the U.S. United executives expect the reductions will carry into May.
Beyond that, it depends what happens to bookings over the next few weeks. United's CEO and president say they hope the moves are enough, but the nature of the outbreak requires the airline to be flexible in how it responds.
ALTERED EXPECTATIONS: General Electric Co. General Electric believes the viral outbreak could have a negative impact of about $300 million to $500 million on its first-quarter industrial free cash flow. Operating profit for the period could be hurt by about $200 million to $300 million. GE said that the expectations are incorporated into its full-year 2020 outlook. Major corporations like Apple, Microsoft and Visa have already cut expectations.
ALTERED EXPECTATIONS: General Electric Co. General Electric believes the viral outbreak could have a negative impact of about $300 million to $500 million on its first-quarter industrial free cash flow. Operating profit for the period could be hurt by about $200 million to $300 million. GE said that the expectations are incorporated into its full-year 2020 outlook. Major corporations like Apple, Microsoft and Visa have already cut expectations.
RATIONING: Kroger Co., the nation's biggest independent grocer, is placing limits on the number of
certain products that customers buy as its shelves are cleared by people doing heavy stocking in preparation
for any spread of the virus. "Due to high demand and to support all customers, we will be limiting the
number of sanitization, cold and flu related products to 5 each per order. Your order may be modified at
time of pickup or delivery," the company said on its website. Amazon is warning same-day grocery customers
that delivery may be limited. Target and Walmart are scrambling to replenish shelves with basics like canned
goods, toilet paper and other household essentials, but have yet to announced rationing.
TRAVEL RESTRICTIONS: The International Air Transport Association says that January had the slowest
monthly year-over-year growth since April 2010, at the time of the volcanic ash cloud crisis in Europe that
led to massive airspace closures and flight cancellations. "January was just the tip of the iceberg in terms
of the traffic impacts we are seeing owing to the COVID-19 outbreak, given that major travel restrictions in
China did not begin until 23 January," said Alexandre de Juniac, the group director general.
Delta will reduce its weekly flying schedule to Japan through April 30 and suspend summer seasonal
service between Seattle and Osaka for 2020 in response to reduced demand due to COVID-19.
Amazon has asked its 800,000 employees worldwide to postpone non-essential travel. It is also conducting
some job interviews on video conference calls instead of in its offices. Ford Motor Co. has banned all
domestic and international travel, unless approved at the highest levels of the company.
General Motors CEO Mary Barra said Wednesday that all international travel by employees has been
restricted.
NETWORKING IS NOT WORKING: Starbucks converted its big annual shareholders meeting in hometown Seattle to
a virtual only event due to concerns about the virus. The meeting will still be held on March 18 as
originally planned. The party-like event which attracted 4,000 shareholders last year was supposed to be
held at a theater in downtown Seattle. A virus cluster has emerged in Washington state, however, with nine
deaths reported.
The 40th Seafood Expo North America/Seafood Processing North America, scheduled for later this month in
Boston, has been postponed. The largest such event in North America typically attracts about 20,000 people.
Organizers cited concerns about safety and travel restrictions. The event takes place in Boston's Seaport
district.
The International Monetary Fund said its spring meetings in Washington, D.C., along with those of the
World Bank, will now be "virtual" to limit the risk from traveling.
The Global Gaming Expo Asia scheduled for later this month in Macao has been pushed back to the end of
July. More than 13,000 people attended last year's expo.
General Motors asked employees who have traveled within the past 14 days to China, South Korea, Japan,
Iran or Italy to skip the high-profile roll out of the company's new slate of electric vehicles, according
to CEO Mary Barra.
F5 Networks Inc. postponed its analyst and investor event due to the virus outbreak. The company was
scheduled to hold the event in New York this week. The cloud technology company, based in Seattle, also
postponed its annual user conference scheduled for mid-March in Orlando, Florida.
CLOSE TO HOME: Amazon says one of its employees in Seattle has contracted the new coronavirus. "We're
supporting the affected employee who is in quarantine," it said in a prepared statement. Amazon said earlier
this week that two of its employees in Milan, Italy, have contracted the virus and are quarantined.
Aflac announced Wednesday that a temporary worker at its call center in Kobe, Japan is infected with the
virus. The individual had attended an event in Osaka where multiple participants also contracted the virus.
The company said it's continuing to monitor the recovery of the infected individual, who is being instructed
to refrain from coming into the office.
STAFF REDUCTIONS: Finnish national carrier Finnair is planning temporary layoffs between 14 days up to
one month for its entire staff based in Finland due to the economic impact caused by coronavirus to the
airline's operations.
More than 6,000 Finnair employees will be affected.
The Finnish flag carrier, which has a total staff of nearly 7,000, has strongly focused on Europe to Asia
flights from its Helsinki hub and has been forced to temporarily cancel flights to mainland China and other
Asian destinations because of the coronavirus.
THE MACRO VIEW: The head of the 189-nation International Monetary Fund said Wednesday that the economic
impact of the spreading coronavirus will be more serious than originally thought.
The IMF is now prepared to make support quickly available to low-income countries through a $50 billion
emergency fund that the group maintains to help nations facing an economic crisis, IMF Managing Director
Kristalina Georgieva said.
"We unfortunately over the past week have seen a shift to a more adverse scenario for the global
economy," said Georgieva.
The IMF's forecast in January that the global economy would rebound to growth of 3.3% this year, up from
2.9% last year, is no longer reliable.
"We know the disease is spreading quickly with over one-third of our membership affected directly,"
Georgieva said. "This is no longer a regional issue. It is a global issue calling for a global response."
SHORT SUPPLY: A U.N. agency estimated Wednesday that a shortage of industrial parts from China caused by
the coronavirus outbreak has set off a "ripple effect" that caused exports from other countries around the
world to drop by $47 billion last month.
The United Nations Conference on Trade and Development says that figures from Chinese businesses suggest
an annualized 2% decline in output in China. That has led to shrinking supplies for automotive, chemicals,
communications and other industries in many countries, in turn reducing their export capacity.
The agency says the preliminary figures show that industries outside of China that rely on components,
parts and other inputs from the country aren't able to export goods as much as they had before the virus
erupted. The outbreak began in the city of Wuhan, shutting down factories and quarantining workers at home.
The drop in Chinese output results in a "ripple effect throughout the global economy" that rises "to the
tune of a $50 billion fall in exports across the world," said said Pamela Coke-Hamilton, director of the
UNCTAD international trade and commodities division.
Exports from the European Union alone made up for about one third of that, or nearly $15.6 billion.
Exports of the United States were second, at nearly $5.8 billion, and Japan was third at almost $5.2
billion.
SHAKEN: The release of the James Bond film "No Time To Die" is being pushed back several months because
of concerns about coronavirus. MGM, Universal and producers Michael G. Wilson and Barbara Broccoli announced
on Twitter Wednesday that the film will be released in November, rather than next month as originally
planned. "No Time To Die" will now hit theaters in the U.K. on Nov. 12 and worldwide on Nov. 25. Publicity
plans for the film in China, Japan and South Korea had already been canceled because of the outbreak.
Cant Stop the M... on Wed,
03/04/2020 - 8:28am We base our entire politics on the idea that we're living in a
meritocracy. In other words, like the knights of old at a joust, we find out who is best
through competition, a competition assumed to be both fair and honest. In the old days, the
joust was assumed to be fair and honest because God was both omnipotent and just and therefore,
obviously, would not allow a bad man to win. Nowadays, even most of us who believe in God don't
believe that God controls the outcome of competitions in that way. Yet the assumption of a fair
and honest competition persists, despite blatant evidence to the contrary.
In the case of U.S. elections, it is assumed, not that the will of God controls the outcome
of competitions, but that the will of the people does. Voter suppression and election fraud are
hand-waved away on the dubious grounds that any candidate strong enough could overcome such
things. Or maybe the people are to blame. The supporters of the defeated candidate must not
have worked hard enough, or maybe the people generally are to blame for not voting in large
enough numbers. Those who challenge any of these assumptions are defeated, either by
institutional inertia or by gaslighting.
Nothing happens, so nothing happened
Here's what I mean by institutional inertia.
In 2000, there was ample evidence that George W. Bush had committed fraud in the
presidential election, with the help of his brother, the governor of Florida. In 2004, there
was ample evidence that George W. Bush had committed fraud once again, famously in Ohio, and
less famously in Florida for a second time. However, in the first case, Gore stopped fighting
after an obviously partisan and corrupt Supreme Court decision, and not a single member of the
U.S. Senate was willing to help the Congressional Black Caucus challenge the election. In the
second case, Kerry refused to challenge the election in Congress, and the legal case he brought
about election fraud, after the fact, did not even make it to the Supreme Court.
In 2016, when New Yorkers brought a case that there had been election fraud and voter
suppression in the Democratic primaries, the case was thrown out on the grounds that each
county in New York had to file such cases separately, and, by then, the election would be over.
Pleas to delay the vote count, or to delay declaring a winner, until the voting rights of the
people could be secured, were brushed aside. Much later, when a civil lawsuit was brought
against the DNC, the case was once again thrown out for lack of standing, but not before the
DNC lawyers had defended their client on the grounds that the DNC didn't have to provide a fair
competition, or any competition at all, really, and certainly didn't have to care what the
people thought.
The effect of this institutional inertia is not simply that cheaters win the day, or that
the people, whose will is being suppressed, lose morale and give up. The complaint itself
begins to fade from people's minds. People begin to make excuses for what happened, to justify
it, to act as if there never were cheating to begin with. Even many of those who dissent find
that, over time, the injustice they remember mellows: no less a person than Jimmy Dore, hardly
a weak-minded hack for the establishment, talks now about Gore's "loss" in 2000 as an evil
caused by the electoral college. While the electoral college is obviously a tool for elites to
control American politics (and never has that been so obvious as over the past two election
cycles), such a narrative ignores and erases the police checkpoints that were set up in 2000
near predominantly African American polling places in Leon county, Florida. It ignores the
Republican Speaker of the House, Tom DeLay, sending Republican staffers to Dade County to break
up Miami's vote count by marching into the Supervisor of Elections office and screaming at the
top of their lungs so that no accurate count could take place. It ignores and erases the
digital Jim Crow that purged the voter lists of African American Democrats by claiming,
falsely, that they were felons. It ignores the fact that emails between the State of Florida
and the company that created the Jim Crow software revealed that the company had warned that
their software would draw too many false positives, and that the State of Florida had replied
"That's just what we want."
Similarly, the DNC's perfidy in 2016 has been reduced to the following: 1) that they had
pre-selected their candidate, and didn't provide a real or fair competition, 2) that they gave
debate questions ahead of time to Hillary Clinton, 3)that they used the electoral college, most
particularly superdelegates, to overwhelm the Sanders movement, and that 4) the party primaries
were often closed, not allowing independents the right to vote. Left out, or forgotten, are the
multiple polling places closed in states from Arizona to New York (in New York, sometimes even
the open polling places had no staff or broken machines), the media calling California for
Clinton before the votes were counted, the 136,000 voters purged off Brooklyn's voter rolls (no
doubt because Bernie Sanders was born and grew up in Brooklyn and that might have given him an
advantage there), and the much larger multi-state purge of the Democratic party through
changing people's voter registration without their knowledge and consent.
I'm not bringing this up to attack Jimmy Dore, who is one of the most reliable truth-tellers
in the media today, but rather to point out what people's minds do under the stress of watching
the establishment normalize corruption again and again. If there is no power to challenge
institutional corruption, most people, over time, make of the corruption something less unjust
and outrageous. Simply smothering objections to injustice with institutional inertia, will,
over time, allow the victors to erase the evidence of their crime.
Sore Loserman
Since we believe, with the faith of fanatics, that competition must be honest and fair, it's
easy to gaslight the losers (or the apparent losers). The Republicans in 2000 did not need to
disprove the fact that George W. Bush had committed fraud and contravened the will of the
people when he climbed up a staircase of disenfranchised Black faces to become President. All
the Republicans needed to do was issue tens of thousands of bumper stickers that replaced the
words "Gore/Lieberman" with "Sore Loserman." The RNC was using the same argument that was
bruited about in the 1980s about poverty and employment. Unemployed poor people had lost the
economic competition. Therefore, there must be something wrong with them. Maybe they weren't
educated enough, smart enough, clean enough, hard-working enough; maybe they were people of bad
character. Bloomberg's racial profiling worked much the same way. Black people are losers in
the judicial game because they commit more crimes. That's why we put more police in their
neighborhoods, because there are more criminals among young Black men than anywhere else.
Corruption can't bring down a meritorious man. If you're good, you'll win. If you complain
about cheating or any other form of injustice, you must be a Sore Loserman, attempting to cover
up your own inadequacies by whining.
It's pretty obvious that this way of thinking makes it literally impossible to stop even the
most outrageous injustice, as long as the perpetrators of that injustice have enough power to
spread their "Sore Loser" messaging far and wide. So if I commit identity theft today and
access one of your bank accounts, I can be brought to account. But if Wall St cheats
homeowners, there was probably something wrong with the homeowners, or with the government for
suggesting that those homeowners should get loans. If George W. Bush cheats in an election,
there was probably something wrong with the other candidate, or with the voters.
People tend to get upset when I bring this up, because they think that talking about the
corruption of the system will demoralize voters, making such discussions their own form of
voter suppression. But I bring this up because the worst damage that can come out of Bernie
Sanders losing contests in a highly compromised electoral process is that the idea of
meritocracy be preserved. There are valid reasons for voting even in a corrupted system (of the
"make 'em sweat" variety). There are valid reasons for not voting in a corrupted system. But
whatever a citizen chooses to do on Election Day, the idea of meritocracy must die.
Despite all the truly horrendous policies, from both the Democrats and the Republicans, that
have laid our society, our people, and the world to waste, the most poisonous effect of the
tyranny we live under is its fraudulence: its pretense of being a fair, accurate, and
reasonable expression of the will of the people. Even the Democrats' attacks on Trump, who is
supposed to be a Manchurian candidate placed in office by Russian intelligence operatives and
an existential threat to our democracy, have, in the past two years, increasingly focused on
the people who support Trump. It's the voters fault for supporting the bad man. So even when we
are supposedly in a situation of foreign powers changing the outcome of a presidential
election, it's still the people's fault. Why? Well, there was a competition, and somebody won,
so the person who won must be there by the will of the people. It has to be the
people's fault.
Corruption among the powerful isn't a thing.
System-wide corruption in all the various infrastructures of our country, especially the
political ones, isn't a thing.
Or, if it is, you just didn't do enough lifting at the political gym to be able to fend it
off.
"... The Centers for Disease Control and Prevention (CDC) is not billing patients for coronavirus testing, according to Business Insider . "But there are other charges you might have to pay, depending on your insurance plan, or lack thereof," Business Insider noted. "A hospital stay in itself could be costly and you would likely have to pay for tests for other viruses or conditions." ..."
"... Congress needs to immediately pass a bill appropriating funding to cover 100% of the cost of all coronavirus testing & care within the United States. We will not have a chance at containing it otherwise. @tedlieu - as my rep, can you please ensure this is brought up? ..."
"... In the case of the Wucinskis, Kliff reported that "the ambulance company that transported [them] charged the family $2,598 for taking them to the hospital." ..."
"... Last week, the Miami Herald reported that Osmel Martinez Azcue "received a notice from his insurance company about a claim for $3,270" after he visited a local hospital fearing that he contracted coronavirus during a work trip to China. ..."
"... Did anyone expect the unconscionable greed of capitalism to cease when a public health crisis emerges? This is just testing for the virus, wait until a vaccine has been developed so expensive that the majority of the US populace can not afford it at all and people are dropping like flies. Wall Street, never-the-less, will continue to have its heydays ..."
"... The very idea that the defense and "Homeland" security budgets are bloated and additional funding approved year after year but the citizens of this country are not afforded 100% health coverage In a time of global health crisis that could become a pandemic. ..."
"Huge surprise medical bills [are] going to make sure people with symptoms don't get tested. That is bad for everyone." by
Jake Johnson, staff writer Public health
advocates, experts, and others are demanding that the federal government cover coronavirus testing and all related costs after several
reports detailed how Americans in recent weeks have been saddled with exorbitant bills following medical evaluations.
Sarah Kliff of the New York Times
reported Saturday
that Pennsylvania native Frank Wucinski "found a pile of medical bills" totaling $3,918 waiting for him and his three-year-old daughter
after they were released from government-mandated quarantine at Marine Corps Air Station in Miramar, California.
"My question is why are we being charged for these stays, if they were mandatory and we had no choice in the matter?" asked Wucinski,
who was evacuated by the U.S. government last month from Wuhan, China, the epicenter of the coronavirus outbreak.
"I assumed it was all being paid for," Wucinski told the Times . "We didn't have a choice. When the bills showed up, it was just
a pit in my stomach, like, 'How do I pay for this?'"
The Centers for Disease Control and Prevention (CDC) is not billing patients for coronavirus testing,
according
to Business Insider . "But there are other charges you might have to pay, depending on your insurance plan, or lack thereof,"
Business Insider noted. "A hospital stay in itself could be costly and you would likely have to pay for tests for other viruses or
conditions."
Lawrence Gostin, a professor of global health law at Georgetown University, told the Times that
"the most important rule of public health is to gain the cooperation of the population."
"There are legal, moral, and public health reasons not to charge the patients,"
Gostin said.
Congress needs to immediately pass a bill appropriating funding to cover 100% of the cost of all coronavirus testing & care
within the United States. We will not have a chance at containing it otherwise.
@tedlieu - as my rep, can you please ensure this
is brought up?
In the case of the Wucinskis, Kliff reported that "the ambulance company that transported [them] charged the family $2,598
for taking them to the hospital."
"An additional $90 in charges came from radiologists who read the patients' X-ray scans and do not work for the hospital," Kliff
noted.
The CDC declined to respond when Kliff asked whether the federal government would cover the costs for patients like the Wucinskis.
The Intercept 's Robert Mackey
wrote
last Friday that the Wucinskis' situation spotlights "how the American government's response to a public health emergency, like trying
to contain a potential coronavirus epidemic, could be handicapped by relying on a system built around private hospitals and for-profit
health insurance providers."
We should be doing everything we can to encourage people with
#COVIDー19 symptoms to come forward.
Huge surprise medical bills is going to make sure people with symptoms don't get tested. That is bad for everyone, regardless
of if you are insured. https://t.co/KOUKTSFVzD
Play this tape to the end and you find people not going to the hospital even if they're really sick. The federal government
needs to announce that they'll pay for all of these bills https://t.co/HfyBFBXhja
Last week, the Miami Herald reported
that Osmel Martinez Azcue "received a notice from his insurance company about a claim for $3,270" after he visited a local hospital
fearing that he contracted coronavirus during a work trip to China.
"He went to Jackson Memorial Hospital, where he said he was placed in a closed-off room," according to the Herald . "Nurses
in protective white suits sprayed some kind of disinfectant smoke under the door before entering, Azcue said. Then hospital staff
members told him he'd need a CT scan to screen for coronavirus, but Azcue said he asked for a flu test first."
Azcue tested positive for the flu and was discharged. "Azcue's experience shows the potential cost of testing for a disease
that epidemiologists fear may develop into a public health crisis in the U.S.," the Herald noted.
Sen. Bernie Sanders (I-Vt.), a 2020 Democratic presidential candidate, highlighted Azcue's case in a tweet last Friday.
"The coronavirus reminds us that we are all in this together," Sanders wrote. "We cannot allow Americans to skip doctor's visits
over outrageous bills. Everyone should get the medical care they need without opening their wallet -- as a matter of justice and
public health."
Last week, as Common Dreams
reported , Sanders argued that the coronavirus outbreak demonstrates the urgent need for Medicare for All.
The coronavirus reminds us that we are all in this together. We cannot allow Americans to skip doctor's visits over outrageous
bills.
Everyone should get the medical care they need without opening their wallet -- as a matter of justice and public health.
https://t.co/c4WQMDESHU
The number of confirmed coronavirus cases in the U.S.
surged by more than two
dozen over the weekend, bringing the total to 89 as the Trump administration continues to
publicly downplay the severity of the outbreak.
Dr. Matt McCarthy, a staff physician at NewYork–Presbyterian Hospital,
said
in an appearance on CNBC 's "Squawk Box" Monday morning that testing for the coronavirus is still not widely available.
"Before I came here this morning, I was in the emergency room seeing patients," McCarthy said. "I still do not have a rapid
diagnostic test available to me."
"I'm here to tell you, right now, at one of the busiest hospitals in the country, I don't have it at my finger tips," added
McCarthy. "I still have to make my case, plead to test people. This is not good. We know that there are 88 cases in the United
States. There are going to be hundreds by middle of week. There's going to be thousands by next week. And this is a testing issue."
Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.
Did anyone expect the unconscionable greed of capitalism to cease when a public health crisis emerges? This is just testing
for the virus, wait until a vaccine has been developed so expensive that the majority of the US populace can not afford it at
all and people are dropping like flies. Wall Street, never-the-less, will continue to have its heydays
A wall street bank or private predator may own your emergency room. A surprise bill may await your emergency treatment above
insurance payments or in some instances all of the bill.
An effort was made recently in congress to stop surprise billings but enough dems joined repubs to kill it. More important
to keep campaign dollars flowing than keep people alive.
fernSmerl 12h I know emergency rooms are being purchased by organizations like Tenet (because they are some of
the most expensive levels of care) and M.D.s provided by large agencies. I'm not as up on this as I should be but a friend of
mine tells me that some of this is illegal. I have received bills that were later discharged by challenge. This is worth investigating
further. Atlasoldie 11h Hmmmm A virus that
overwhelmingly kills the elderly and/or those with pre-exisitng conditions.
Sounds like a medical insurance companies wet dream. As well as .gov social security/medicare wet dream.
The very idea that the defense and "Homeland" security budgets are bloated and additional funding approved year after year
but the citizens of this country are not afforded 100% health coverage In a time of global health crisis that could become a pandemic.
And as has been stated, the unconscionable idea suggested that a possible vaccine (a long way away or perhaps not developed at
all) might not be affordable to the workers who pay the taxes that fund the government? That's insane.
Another example of "American Exceptionalism." China doesn't charge its coronavirus patients, neither does South Korea. I guess
they are simply backward countries.
I own my own home after years of hard work paying it off. It's the only thing of value, besides my old truck, that I have.
If I get the virus, I will stay home and try to treat it the best I can. I can't afford to go to the hospital and pay thousands in
medical bills, with the chance that they'll come after my possessions. America, the land of the _______. Fill in the blank. (Hint:
it's no longer free).
There are other ways to protect your home. Homesteading or living trust. I'm not good at this but I know there are ways to
do it. Hopefully, it would never come to that but outcomes are not certain even with treatment in this case.
As someone
who lost a mother at 5 years old I can sympathize with your grief in losing a daughter-in-law and especially seeing her four children
orphaned. However, I think you miss the point here: This is about we becoming a society invested in each others welfare and not a
company town that commodifies everything including the health and well being of us all.
As a revision it is better but flawed. It is a cost containment bill based on the same research as the republican plan with global
budgets and block grants.
Edited: I encourage you to read this: -ttps://www.rand.org/blog/2018/10/misconceptions-about-medicare-for-all.html Giovanna-Lepore10h oldie:
Part D
Higher education is not free but they do need to become free for the students and payed by us as a society.
Part D is a scam, a Republican scam also supported by corporate democrats because of its profit motive and its privatization
Medicare only covers 80% and does not cover eye and dental care and older folks especially need these services. Medicaid helps but there are limits and one cannot necessarily use it where one needs to go.
Expanded, Improved Medicare For All is a vast improvement. because it covers everyone in one big pool and, therefore, much more dignified
than the rob Paul to pay peter system we have.
Social Security too can be improved. Why should it simply be based on the income of the person which means that a person working
in a low paying job in a capitalist system gone wild with greed will often work until they die.
Pell grants can be eliminated when we have what the French have: publicly supported education for everyone.
The demise of unions certainly did not help but it was part of the long strategy of the Right to privatize everything to the enrichment
of the few.
The overall competence that Canada is handling this outbreak, compared to the USA, is stark. First world (Canada) versus third-world
(USA). Testing is practically available for free, to any suspect person, sick or not, as Toronto alone can run 1000 tests a day and
have results in 4 hours. That is far more than all the US's capacity for 330 million people.
I wonder how long before Canada closes its borders to USAns? Me and my wife (both in a vulnerable age/medical group) should seriously
consider fleeing to my brother's place in Toronto as the first announced cases in Pittsburgh are probably only days away. What about
our poor cat though? We could try to smuggle her across the border, but she is a loud and talkative kitty
Don't want to discourage anyone from any protective measures – but the
"low down" from my veggie store today was that a lot of health professionals
shop there and they think it's being hyped by media. Did get this from my NJ Sen. Menendez –
Center for Disease and Control and Prevention (CDC)
There is currently no vaccine to prevent coronavirus disease 2019 (COVID-19). The best way to prevent illness is to avoid being
exposed to this virus. However, everyday preventive actions can help prevent the spread of respiratory diseases:
Wash your hands often
Avoid close contact with people who are sick.
Avoid touching your eyes, nose, and mouth.
Stay home when you are sick.
Cover your cough or sneeze with a tissue, then throw the tissue in the trash.
For more information : htps://www.cdc.gov/coronavirus/2019-ncov/about/prevention-treatment.html
How it spreads : The virus is thought to spread mainly from person-to-person. It may be possible that a person can get
COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their
eyes, but this is not thought to be the main way the virus spreads. [Read more.] https://www.cdc.gov/coronavirus/2019-ncov/about/transmission.html )
Symptoms : For confirmed coronavirus disease 2019 (COVID-19) cases, reported illnesses have ranged from mild symptoms to
severe illness and death. Symptoms can include fever, cough, and shortness of breath.
Don't want to discourage anyone from any protective measures – but the
"low down" from my veggie store today was that a lot of health professionals
shop there and they think it's being hyped by media.
I agree it is being hyped by the media to the point of being fear mongering. At the same time it is being ignored by the administration to such an extent that really little almost nothing is being done. At some point the two together will create an even bigger problem.
It is like the old adage: "Just because you are paranoid doesn't mean they aren't out to get you." Each over/under reach in considering the reality of the situation has its own problem, which multiply when combined. Every morning when I wake up I say a little atheistic prayer to myself before I get out of bed: "Another day and for better or
worse...".
Well, two reported here in Florida tonight. One in my county, one in the county next door. And more of the "we already knew, but told you late". One person checked into the hospital on Wednesday. We hear it Monday night.
Both were ignored far a long time it seems, and 84 in particular are being watched (roommates, friends, hospital workers not alerted
for several days, the usual). But no one knows every place they had been since becoming infected.
Oh, and they have tested a handful of people. No worry?
I can't see anyway that this level of incompetency is an accident. Spring break is just starting usually a 100's of thousand tourist
bonanza.
So the question is do they want to kill us, or just keep us in fear?
I think the later. But the end result is a crap shoot. So once again, it is a gamble with our lives.
The business of America is business. Sometimes that can go too far and this is one of those times. Making money from the loss,
distress, harm and suffering of others is perverse beyond belief.
Companies are worried about the mild cases too. I work for a bank in Chicago with
multiple bldgs in the Loop. Starting yesterday they banned travel between Loop bldgs, and
in-person meetings of more than 5 people (arbitrary, to be sure). Travel domestic and
international was cancelled at the end of January.
If 20% of staff are out sick things stop happening immediately. In-flight projects to
meet regulatory decrees, work to keep an unhappy client onboard, etc.
At my wife's place of employment, a co-worker mentioned that their spouse came to work
sporting a mild cough (All the family members having had a bout with the .. 'flu'. Said
spouse (a public employee) was told by their employer (city/county .. not sure which??) to
go home, as a precaution. Humm .
"... But economics can also influence health outcomes, and not just in terms of NHS resources. For a minority of self employed workers there will be no sick-pay and those without a financial cushion will be put under stress. One of the concerns as far as the spread of the pandemic is concerned is that workers will not be able to afford to self-isolate if they have the disease. So if I was in government I would be thinking of setting up something like a sick-leave fund that such workers could apply to if they get coronavirus symptoms. ..."
"... The government also needs to think about keeping public services and utilities running when workers in those services start falling ill. In fact there are a whole host of things the government should now be doing to prepare for a pandemic. It is at times like these that we really need governments to act fast and think ahead. Do we in the UK , and US citizens , have confidence that the government will do what is required? One lesson of coronavirus may be never put into power politicians that have a habit of ignoring experts. ..."
A little over ten years ago I was approached by some health experts who wanted to look at the
economic effects of a influenza pandemic. They needed someone with a macroeconomic model to
look at the general equilibrium impacts. In the 1990s I had led a small team that constructed a model
called COMPACT, and these health experts and I completed a paper that was subsequently
published in Health
Economics. We reference to other studies that had been done earlier in that paper.
The current coronavirus outbreak will have different characteristics to the pandemic we
studied, and hopefully it will not become a pandemic at all. (In terms of mortality it seems to
be somewhere in between the 'base case' and 'severe case' we looked at in our work.) But I
think there were some general lessons from the exercise we did that will be relevant if this
particular coronavirus does become a global pandemic. One proviso is that a key assumption we
made about the pandemic is that it was mainly a 3 month affair, and obviously what I have to
say is dependent on it being short-lived.
It is worth saying at the start that the bottom line of all this for me is that the economics
are secondary to the health consequences for any pandemic that has a significant fatality rate
(as coronavirus so far appears to have). The economics are important in their own right and as
a warning to avoid drastic measures that do not influence the number of deaths, but beyond that
there is no meaningful trade-off between preventing deaths and losing some percent of GDP for
less than half the year.
Let me start with the least important impact from an economic point of view, and that is the
fall in production due to workers taking more time off sick. It is least important in part
because firms have ways of compensating for this, particularly if illness is spread over the
quarter. For example those who have been sick and come back to work can work overtime. This
will raise costs and might lead to some temporary inflation, but the central bank should ignore
this.
This 'direct' impact of the pandemic will reduce GDP in that quarter by a few percentage
points. The precise number will depend on what proportion of the population that get sick, on
what the fatality rate in the UK turns out to be, and how many people miss work in an attempt
not to get the disease. The impact on GDP for the whole year following the pandemic is much
less at around 1% or 2%, partly because output after the pandemic quarter is higher as firms
replenish diminished stocks and meet postponed demand.
All this assumes schools do not close once the pandemic takes hold. School closures can amplify
the reduction in labour supply if some workers are forced to take time off to look after
children. On the basis of the assumptions we made, if schools close for around 4 weeks that can
multiply the GDP impacts above by as much as a factor of 3, and if they close for a whole
quarter by twice that. If that seems large, remember nationwide school closures impact everyone
with children and not just those with the disease.
But even with all schools closed for 3 months and many people avoiding work when they were not
sick, the largest impact we got for GDP loss over a year was less than 5%. That is a one
quarter very severe recession, but there is no reason why the economy cannot bounce back to
full strength once the pandemic is over. Unlike a normal recession, information on the cause of
the output loss, and therefore when it should end, is clear.
All this assumes that consumers who have not yet got the disease do not alter their behaviour.
For a pandemic that spreads gradually this seems unlikely. The most important lesson I learnt
from doing this study is that the pandemic need not just be a supply shock. It can also be a
demand shock that can hit specific sectors very hard, depending on how consumers behave. This
is because a lot of our consumption nowadays can be called social, by which I mean doing things
that bring you into contact with other people. Things like going to the pub, to restaurants, to
football matches or travel. Other sectors that provide consumption services that involve
personal contact (e.g haircuts) and can easily be postponed may also be hit.
If people start worrying about getting the disease sufficiently to cut back on this social
consumption, the economic impact will be more severe than any numbers discussed so far. One
reason it is severe is that it is partly a permanent loss. Maybe you will have a few more meals
out once the pandemic is over to make up for what you missed when you stayed home, but there is
likely to be a net fall in your consumption of meals out over the year. What I realised when I
did the analysis was just how much of our consumption was social.
This is why the biggest impacts on GDP occur when we have people reducing their social
consumption in an effort not to get the disease. However falls in social consumption do not
scale up all scenarios by the same amount, for the simple reason that supply and demand are
complimentary. If school closures and people taking more time off work increase the size of the
supply shock, the demand shock has less scope to do damage. The largest fall in annual GDP in
all the variants we looked at was 6%.
Could conventional monetary or fiscal policy offset the fall in social consumption? Only
partially, because the drop in consumption is focused on specific sectors. What is more
important, and what we didn't explore in the exercise, is what would happen if the banks failed
to provide bridging finance for the firms having to deal with a sudden fall in demand. The
banks may judge that some businesses that are already indebted may not be able to cope with any
additional short term loans, leading to business closures during the pandemic.
It is in this light that we should view the collapse of stock markets around the world. In
macroeconomic terms this is a one-off shock, so Martin Sandbu is right that the
recent stock market reaction looks overblown. But if many businesses are at financial risk from
the temporary drop in social consumption, that implies a rise in the equity risk premia, which
helps account for the size of the stock market collapse we have seen. (I say 'helps'
deliberately, as much of the impact will be on smaller businesses that do not find their way
into the main stock market indices.)
If I was running the central bank or government, I would have already started having
conversations with banks about not forcing firms into bankruptcy during any pandemic.
But economics can also influence health outcomes, and not just in terms of NHS resources. For a
minority of self employed workers there will be no sick-pay and those without a financial
cushion will be put under stress. One of the concerns as far as the spread of the pandemic is
concerned is that workers will not be able to afford to self-isolate if they have the disease.
So if I was in government I would be thinking of setting up something like a sick-leave fund
that such workers could apply to if they get coronavirus symptoms.
The government also needs to think about keeping public services and utilities running when
workers in those services start falling ill. In fact there are a whole host of things the
government should now be doing to prepare for a pandemic. It is at times like these that we
really need governments to act fast and think ahead. Do
we in the UK , and
US citizens , have confidence that the government will do what is required? One lesson of
coronavirus may be never put into power politicians that have a habit of ignoring experts.
Once confidence and certainty are
lost, the willingness to expand debt and leverage collapses.
Even though the first-order effects of the Covid-19 pandemic are still impossible to
predict, it's already possible to ask: did the pandemic pop all the global financial bubbles?
The
reason we can ask this question is the entire bull mania of the 21st century has been based on a
permanently high rate of expansion of leverage and debt.
The lesson of the 2008-09 Global Financial meltdown was clear:
any decline in the
rate of debt/leverage expansion is enough to threaten financial bubbles, and any absolute decline in
debt and leverage will unleash a cascade that collapses all the speculative bubbles in stocks, real
estate, collectibles, etc.
What's the connection between Covid-19 and the rate of debt/leverage expansion?
Confidence
and certainty: people will make bets on future growth and take on additional debt and leverage when
they feel confident and have a high degree of certainty that the trends are running their way.
Over the past 20 years, the certainty that central banks would support markets has been high, as
central banks stepped in at every wobble. Today's 50 basis-points cut by the Fed sustains that
certainty.
What's now broken is the certainty that central bank interventions will lift risk assets
and the real-world economy.
Given the uncertainties of the eventual consequences of the
pandemic globally, confidence in future trends has been either dented or destroyed, depending on your
perspective and timeline.
Certainty that central bank interventions will push markets and real-world economies higher has
also been dented. What happens if the market tanks after every 50 basis-points cut by the Fed?
We wouldn't be in such a precariously brittle state if the global economy hadn't been
ruthlessly financialized
to the point that market dependence on central bank intervention is
now essentially 100%.
Once confidence and certainty are lost, the willingness to expand debt and leverage
collapses
, and that reduction in the rate of expansion will pop all the global asset bubbles.
World Health Organization (WHO) Director General Tedros Adhanom Ghebreyesus said on Thursday
that it would be a "fatal mistake" for any country to believe it will not be hit. WHO advisor
Ira Longini has said that without aggressive measures to contain the virus, it could ultimately
infect two-thirds of the world, which would mean hundreds of millions of deaths.
The economic damage from the virus could exceed the scale of the 2008 financial crisis. The
recession sparked by the 2008 crisis led to a fall in global GDP by 0.5 percent and destroyed
the jobs of tens of millions of people.
The response of ruling elites and the governments they control to the crisis combines
incompetence with a criminal level of indifference. Nowhere is this more evident than in the
United States.
President Trump, concerned above all about the impact of the coronavirus on the fortunes of
the corporate and financial elite, has sought to downplay the danger and grossly overstate the
level of preparedness. "Whatever happens," he said on Wednesday, "we're totally prepared."
In fact, the US government is completely unprepared for a major outbreak. There is no system
in place to even systematically test for the virus. The individual in California who has been
identified as the first reported case of unknown origin in the US was not given a test for days
after symptoms were first expressed.
There is a severe shortage of the most basic health equipment, including respirator masks
needed by health care workers. The government only has about 30 million on hand, while it is
estimated that 300 million may be required.
The Trump administration has appointed Vice President Mike Pence, whose inaction and
reactionary religious ideology contributed to an HIV outbreak in the state of Indiana when he
was governor, as the government's point person for the coronavirus response. The main purpose
of this appointment is to muzzle any officials whose warnings contradict the response of the
administration.
... ... ...
The political establishment in the United States is engaged in a "debate" over whether $2
billion is adequate (the position of the White House) or $8 billion is required (the position
of the Democrats). Both these figures represent a drop in the bucket compared to the scale of
the global crisis.
The provisioning of health care and treatment cannot be regulated by the
insurance, pharmaceutical and health care companies. Treatment, including any future vaccine,
must be available to everyone, free of charge, on an equal basis.
The giant health care companies must be turned into public utilities, democratically
controlled to meet the urgent social need presented by the coronavirus and other health
emergencies Direct financial support and income compensation for all those impacted by the
economic consequences
Millions of workers face reductions in hours or the loss of their jobs due to the immediate
impact of the coronavirus and its broader economic consequences. They must be compensated in
full for their losses.
Governments and the capitalist elites will argue that there is no money to finance such an
emergency response. This is a lie! The amount spent by the capitalist governments on military
expenditures runs into the trillions of dollars. The annual military budget of the United
States alone is more than one trillion dollars. Moreover, the major capitalist governments, led
by the US Federal Reserve, have allocated virtually unlimited sums of money to drive up the
market value of equities. Within weeks of the 2008 crash, the US government doubled the
national debt overnight to provide liquidity for the stock market and bail out corrupt
investors.
Moreover, staggering sums of money are controlled by an infinitesimal percentage of the
world's population. The wealth of the world's 500 richest people stands at nearly $6 trillion,
following an increase of $1.2 trillion last year alone. The working class must demand that
governments impose emergency taxes on the fortunes of the oligarchs to the extent required by
the emergency.
And yet, he says nothing about simply inventing new money (as Hong Kong has already done),
with zero debt burden, to ensure everyone is ok and the economy survives. ere's Economics
Prof. Steve Keen, this very morning:
> To prevent a financial pandemic on top of a medical one:
1. Make a direct payment now, on a per-capita basis, to all residents via their primary
bank accounts (most effectively, their accounts through which they pay taxes).
As Quantitative Easing has shown, Central Banks have a limitless capacity to purchase
assets from the private sector -- or to provide the private sector with money created by the
Central Bank. Under Quantitative Easing, the US Federal Reserve purchased $80 billion worth
of bonds off the private financial sector every month for almost a decade. Technically, that
was an asset swap: the Federal Reserve credited the financial sector with $80 billion of cash
per month, in return for bonds with a face value of $80 billion per month being credited to
the Federal Reserve's assets.
This does not have to be financed by asset purchases: it is also quite possible for
Central Banks to put a notional asset on their balance sheets to finance. This is already
done by the Bank of England to back the value of the notes issued by Scottish Banks: a bill
known as a Titan with a face value of £100 million balances the value of bank notes
issued by Scottish banks.
The same could be done by any Central Bank to balance a direct cash transfer to the bank
accounts of all residents of its country. Frances Coppola makes the case for this in the
general case of a financial crisis in her book People's Quantitative Easing (Coppola 2019).
This power could be used now to stop a financial crisis happening in the first place.
The payment should be per capita -- as it has been in the country that has already done
this because of the crisis, Hong Kong. The payment there is HK$10,000, or roughly US$2,000.
It does not need to be financed by the Treasury or by taxation: neither were used by the USA
to support its $1 trillion dollars per year Quantitative Easing program. There will be no
"debt burden for future generations".
Recommended reading, the unfashionable Edward Bulwer-Lytton's " Last Days of Pompeii "
for a good exposition of how effete, over urbanised fantasists face reality.
It's could be a big reset button.
JIT and complex long-distance procurement chains have become the norm in efforts to maximise
profits. This virus may make it obvious to all that even a slight disturbance to them can
bring everything to a halt.
Back in the distant past businesses thought about that, holding a reserve stock and having at
least duplex suppliers. Maybe what goes around comes around.
In most areas of the economy, supply and demand are roughly in balance. In the UK health care
sector, extreme rationing is in force. The UK has a very low spending per capita on the NHS
compared to health systems in say the USA or France. The right side of politics doesn't
believe that good access to health care resources is a universal right but something that
should be minimised and de-prioritised. This is why health related issues become major
national problems. The NHS should be funded to meet demand.
I don't see any free market zealots here. Austerity is an interventionist policy driven by
the growth theories of the author of this very article. Similarly, Boris's public
infrastructure projects and levelling up for the North are essentially Keynesian policies,
normally associated with post-War macroeconomic policy. Don't let their bullshit about free
markets fool you.
"Affected countries will, and should, engage in massive deficit spending to shore up their
health systems and prop up their economies"
Austerity is the only thing the Tories know, for ordinary working people anyway. It's a
different story for bankers who got £423 billion of "QE" (newly-printed money) after
2008. No doubt when banks start going bust again as a result of the coronavirus pandemic
it'll be Christmas come early for Tory donors in the City. All of this is entirely
predictable. A leopard doesn't change its spots.
"Affected countries will, and should, engage in massive deficit spending"
Where the hell was this ten years ago? Bearing in mind the death toll from the austerity
you championed is likely significantly higher than the death toll from Convid-19 so far.
America the country with a 5 percent budget deficit and debt approaching 110% of gdp is the
country best prepared for the next recession. Right.. I think I will stick with China, a
country with a fast growing economy for 30 years, producing products the world wants and with
it seems a very effective response to the Covid crisis (new cases down fast).
A supply side recession would usually imply that inflation will rise - the classic response
of central banks to that is interest rate rises. Good job most of the world is not over
indebted..... oh wait.
The shake up is long over due the only issue now is who will be the winners and who will
be the losers
I t is too soon to predict the long-run arc of the coronavirus outbreak. But it is not too
soon to recognise that the next global recession could be around the corner – and that it
may look a lot different from those that began in 2001 and 2008.
For starters, the next recession is likely to emanate from China, and indeed may already be
under way. China is a highly leveraged economy, it cannot afford a sustained pause today
anymore than fast-growing 1980s Japan could. People, businesses and municipalities need funds
to pay back their out-size debts. Sharply adverse demographics, narrowing scope for
technological catch-up, and a huge glut of housing from recurrent stimulus programmes –
not to mention an increasingly centralised decision-making process – already presage
significantly slower growth for China in the next decade.
Moreover, unlike the two previous global recessions this century, the new coronavirus,
Covid-19, implies a supply shock as well as a demand shock. Indeed, one has to go back to the
oil-supply shocks of the mid-1970s to find one as large. Yes, fear of contagion will hit demand
for airlines and global tourism, and precautionary savings will rise. But when tens of millions
of people can't go to work (either because of a lockdown or out of fear), global value chains
break down, borders are blocked, and world trade shrinks because countries distrust of one
another's health statistics, the supply side suffers at least as much.
Affected countries will, and should, engage in massive deficit spending to shore up their
health systems and prop up their economies. The point of saving for a rainy day is to spend
when it rains, and preparing for pandemics, wars, climate crises, and other out-of-the-box
events is precisely why open-ended deficit spending during booms is dangerous.
But policymakers and altogether too many economic commentators fail to grasp how the supply
component may make the next global recession unlike the last two. In contrast to recessions
driven mainly by a demand shortfall, the challenge posed by a supply-side driven downturn is
that it can result in sharp declines in production and widespread bottlenecks. In that case,
generalised shortages – something that some countries have not seen since the gas queues
of 1970s – could ultimately push inflation up, not down.
Admittedly, the initial conditions for containing generalised inflation today are
extraordinarily favourable. But, given that four decades of globalisation has almost certainly
been the main factor underlying low inflation, a sustained retreat behind national borders,
owing to a Covid-19 pandemic (or even lasting fear of pandemic), on top of rising trade
frictions, is a recipe for the return of upward price pressures. In this scenario, rising
inflation could prop up interest rates and challenge both monetary and fiscal policymakers.
It is also noteworthy that the Covid-19 crisis is hitting the world economy when growth is
already soft and many countries are wildly overleveraged. Global growth in 2019 was only 2.9%,
not so far from the 2.5% level that has historically constituted a global recession. Italy's
economy was barely starting to recover before the virus hit. Japan's was already tipping into
recession after an ill-timed hike in the value-added tax, and Germany's has been teetering
amidst political disarray. The United States is in the best shape, but what once seemed like a
15% chance of a recession starting before the presidential and congressional elections in
November now seems much higher.
It might seem strange that the new coronavirus could cause so much economic damage even to
countries that seemingly have the resources and technology to fight back. A key reason is that
earlier generations were much poorer than today, so many more people had to risk going to work.
Unlike today, radical economic pullbacks in response to epidemics that did not kill most people
were not an option.
What has happened in Wuhan, China, the current outbreak's centre, is extreme but
illustrative. The Chinese government has essentially locked down Hubei province, putting its 58
million people under martial law, with ordinary citizens unable to leave their houses except
under very specific circumstances. At the same time, the government apparently has been able to
deliver food and water to Hubei's citizens for roughly six weeks now, something a poor country
could not imagine doing.
Elsewhere in China, a great many people in major cities such as Shanghai and Beijing have
remained indoors most of the time in order to reduce their exposure. Governments in countries
such as South Korea and Italy may not be taking the extreme measures that China has, but many
people are staying home, implying a significant adverse impact on economic activity.
The odds of a global recession have risen dramatically, much more than conventional
forecasts by investors and international institutions care to acknowledge. Policymakers need to
recognise that, besides interest rate cuts and fiscal stimulus, the huge shock to global supply
chains also needs to be addressed. The most immediate relief could come from the US sharply
scaling back its trade-war tariffs, thereby calming markets, exhibiting statesmanship with
China, and putting money in the pockets of US consumers. A global recession is a time for
cooperation, not isolation.
Kenneth Rogoff is professor of economics and public policy at Harvard University. He
was the chief economist of the IMF from 2001 to 2003
In my youth it used to be said that successful economies were based on supplying the home
market first, with surpluses exported. The global economy, based upon JIT cross border supply
lines, could be tested to destruction by the coronavirus. Could it be that, in order to make
our economy more reliant to global shocks, we have to revisit our old thinking.?
The government in China isn't delivering water, that's the being done by existing private
enterprise companies because in much of the country tap water isn't safe to drink or tastes
pretty awful.
Likewise with food that's also delivered by hundreds of thousands of mainly young men on
motor scooters. I've had two deliveries today - water in a 60 litre plastic bottle and four
packs of frozen part cooked lamb ribs from New Zealand. Yesterday it was a tray of 24 cans of
Spanish black beer and the day before a circuit board for my electric toilet. Tomorrow I'm
expecting a stainless steel non-stick saucepan.
One of the problems in the US, leaving aside the confusing "hoax" nonsense from Tump and his
sycophants, is the automatic belief, and not just by Republicans, that whatever America does
is automatically the best in the world. Thus, we have taken the most aggressive steps in
history, the American pandemic response is the best in the world, American doctors know more
than any other doctors and so on and so forth. In fact this is a delusion. The national
response has been fragmented and haphazard, some people are being charged for testing whilst
other advanced economies with universal health care systems have been able to construct a
nationwide response. S. Korea has developed a drive in system of testing. The US government
sends out defective test kits. The UK seems likely to have already developed an antivirus but
the necessity of testing prevents the silly Trumpian response that it will be ready in a
couple of weeks.
In order to resolve any problem we must first understand it. Just to think that because
America is America the problem is solved is delusional.
At the same time, the government apparently has been able to deliver food and water to
Hubei's citizens for roughly six weeks now, something a poor country could not imagine
doing.
Everyone I know in China and everywhere I've been, and that's quite a lot of places,
people have water delivered, in my case in 60 litre plastic bottles which you then put in a
gravity deed or electric pump dispenser. Today I can make a phone call and without speaking
to anyone, often in as little as a few minutes, there's a guy knocking on the door to deliver
and take away the empty. Furthermore they are the only delivery people allowed into the
complex by the security guards. Those full bottles are fairly heavy. For food, drink and
anything else you get a call and have to go down to the gate to collect.
A supply side recession will not be solved by central bank QE programs - that's the gist of
the author's argument. Instead direct intervention is required to avoid possible shortages -
hence the wonderfully evocative picture of 1970s Britain.
Affected countries will, and should, engage in massive deficit spending to shore up
their health systems and prop up their economies.
And bang goes another irony meter when
the father of wrongheaded austerity policies worldwide can say this with a straight face.
Still, I guess finally getting it right should receive some praise. Pity we had a decade of
suffering to get here.
Uk spends 2700 euros per head on health, Germany spends 4300 euros per head on their
health,France spends 3700per head..UK,in comparison with similar sized advanced nations makes
available far fewer resources for health. Not to mention the fewest doctors per head in the
OECD apart from Poland, fewer nurses,fewer hospital beds per 1000.In health the UK is a sick
man.
I have read serious academic stuff about how the Black Death (1347 to 1351) was a boon for
humanity because those that survived were much better off (wealthier). Who knew economic
rationalists have been around for so long (like plagues in a way).
What economics professors would like to tell you is humanity needs to downsize so that the
world biosphere can recover from the plague of humanity.
The next global recession will achieve even more than the last ones, which turn up almost
on schedule every decade:
-- everyone will dump shares & the super rich will buy them up further concentrating
their control over everything
-- there'll be another round of wage decreases which will never be made up when the next wave
of 'wealth' rolls around
-- another generation of graduates will be cast into oblivion as any new jobs that emerge
after the recession will go to the cheapest workers.
I'm speaking as someone who vividly remembers all the recessions from 1960 when it was
called a 'credit squeeze' because so many adults still remembered the Great Depression.
Recessions are just about the only economic event that the IMF can predict.
As I understand it, these payments will come from reserves, not inventing new money. In
addition, politically this is really difficult - what about citizens with no bank account,
what about convicted criminals, what about British citizens versus non-British citizens?
Lastly, as graun says, what if the money is used by people to pay off debt rather than
consume?
the supply side suffers at least as much.
Affected countries will, and should, engage in massive deficit spending to shore up their
health systems and prop up their economies.
But what to spend on?
When the supply side is not supplying, it is difficult to source the materials needed to
expand businesses, create new enterprises or even to build new infrastructure - the stuff you
need to create these things is not being supplied!
As for comparisons with the 1970s - they don't really work any more. As The
Economist explained a couple of weeks ago
Covid-19 presents economic policymakers with a new sort of threat , the world has moved
on. Interest rates are low, inflation is low, we are less dependent on oil and central banks
have few "tricks" left up their sleeves.
It is also true that one of the biggest problems in economics is to determine whether a
recession is caused by lack of supply, or lack of demand. They both look very similar at the
time. The only real way of knowing is to look back, afterwards, and see which remedies pulled
which economies out of recession most successfully. Was it austerity, or stimulus - guess:
heads or tails?
We need the stock markets to drop 25%. We need senseless, unabated consumption to be reined
in. We need to rein in the wealth divide. We need to bring back meaningful value creating
businesses, not those that are eyeballs and clicks generation.
"... I have been a physician now for almost 30 years. It has been a career spanning the very end of the "Marcus Welby" era, and then piece by piece the complete dismantling of the medical profession by the insurance companies and now "non-profit" corporations. When I was young, the leadership structure in the hospitals was completely and utterly controlled by three groups: the physicians, the nurses, and in the case of Catholic hospitals, the church and the nuns, or in non-Catholic hospitals, philanthropic community leaders. ..."
"... There were no four-star mahogany and marble lobbies. There were no 2 million dollar annual salaries for the hospital CEOs. There were no non-profit corporate boards extracting every bit of wealth from the patients to maintain multimillion dollar salaries for the board members and the middle managers. ..."
"... In further conversation, the doctor said that we should be thinking about a world in which a large number of health care workers can't come to work because they are in quarantine or sick with the virus. We are looking at this problem right now. ..."
Read
the whole thread. His basic point is that the US Government did not want to see data that
would indicate community transmission, so it didn't look for that. What do you think? I'm
especially interested in what medical professionals in this blog's readership have to say.
I received this e-mail from Wyoming Doc a couple of days ago, and have his permission to
post it:
I have just learned of the first Coronavirus Death in the USA. It is now getting real.
I would point you to the following links -- I am seeing myself -- but to a greater degree
hearing about rather concerning things happening in our hospitals across the country.
The first is this video:
I would start first with a little background. I have been a physician now for almost 30
years. It has been a career spanning the very end of the "Marcus Welby" era, and then piece
by piece the complete dismantling of the medical profession by the insurance companies and
now "non-profit" corporations. When I was young, the leadership structure in the hospitals
was completely and utterly controlled by three groups: the physicians, the nurses, and in the
case of Catholic hospitals, the church and the nuns, or in non-Catholic hospitals,
philanthropic community leaders.
The focus at the time was mostly on taking care of the most patients the best that could
be done in a compassionate way with the resources available. And believe it or not, in my
opinion, the care that was given in that time was far superior than what is going on now. The
leaders of the hospitals were community leaders, and so was the medical and the nursing
staff. To put it succinctly: they cared about their neighbors. Many, many nights while on
call I would see the nuns right along side the nurses and physicians working themselves to
death to take care of sick patients. These hospitals were never in debt -- the resources and
the donations coming in were used for the expenses going out. There were no four-star
mahogany and marble lobbies. There were no 2 million dollar annual salaries for the hospital
CEOs. There were no non-profit corporate boards extracting every bit of wealth from the
patients to maintain multimillion dollar salaries for the board members and the middle
managers.
When I was a young medical student, a very old professor taught a course in medical
ethics. In one of his most pressing lectures, he discussed the fact that the goals and ideals
of medicine and public health were a complete 180 degrees from the wants and desires of a
free market. He added that every time combining public health/medicine and free markets had
been tried in history it ended in tears -- usually bankrupting the society. It was his
fervent desire that we not allow this to happen to the profession as we entered its ranks,
and to keep an eye out for this at all times.
Well, as everyone knows by now, his worst fears have been realized. Many, probably not
most, members of my profession -- especially the procedure-based specialists and surgeons --
in the past 10-15 years have completely lost sight of the public well-being. Their sights are
now on lucre. The one desire for many of them has been how to make more money more quickly.
They have been aided and abetted by the governing agencies and Boards of all the various
medical specialties. These national leadership organizations have made all the activities of
being a physician so onerous and the billing so difficult that the vast majority of
physicians have no choice but to become employees of these mega-corporations. The physicians
have made a deal to take a back seat to these "businessmen" to keep the cash coming. The
leadership of our hospital systems are no longer physicians, nurses, nuns, and
philanthropists. Nope –it is all MBA all the time. Even the physicians who are
nominally in charge -- ie the ubiquitous Chief Medical Officers of the corporations -- do not
get considered for the jobs unless they have an MBA after their name. And the credentialing
of the leadership teams are just absolutely ridiculous. Look at the websites of your local
hospital and its leadership. It is usual to see things like this: John Doe, MD MBA FACP
PhD FACC. The non-MD credentialing is even more hilarious -- I have no idea what 95% of
these abbreviations mean -- but they have to puff themselves up anyway. The hubris and the
arrogance would be hilarious, but now the crisis is upon us.
About 10-15 years ago, the change began in earnest. One by one, the physicians in charge
were replaced with MBA bureaucrats. The usual committee structure in the hospital --
"Pharmacy & Therapeutics", "Patient Care Committee" etc -- had their physicians, nurses
and pharmacists replaced with bureaucrats. Some of these bureaucrats were MDs and RNs -- the
paycheck was awesome -- and they turned their backs on their duties and their colleagues and
patients on the ground to keep the cash coming. I even lived to see the day when one of my
hospitals fired the MD and RN leadership of the Medical Ethics Committee and replaced them
with an MBA.
Suddenly, the only ethical thing to do was whatever was needed to maximize cash flow. And
any MD or RN who did not like it? Well, you're fired -- see you later. We began to completely
corporatize medical care. Advertisements and billboards everywhere, customer service feedback
surveys flowing in the mail, the list is endless. Public health concerns began to be confined
strictly to things that would boost revenue: colonoscopies, mammograms, labs, vaccinations,
bone density studies, etc. Things that have no revenue flow -- like mental health issues,
opioid abuse, elder care -- well, who cares about that? Very soon, the hospitals began to
merge into gigantic corporations and then they began to collude to control the health care
costs in the community. Our health care systems in all our big cities are gigantic
monopolies. This despite the fact that this kind of behaviour is illegal under federal
statutes. And please note: this is why insurance costs are so enormously high in this country
-- and getting higher every year. Obamacare did NOTHING to stop this; it actually in many
ways has made it much easier to pull off.
Because of this situation and for many other reasons, I decided to make a change in my
life a few years ago. I have now moved to a very small hospital in rural America. In my life
now, the corporate board has now been replaced by a board elected by the taxpayers: they are
truly leaders of the community and do everything in the spirit of what the people need and
are counting on from their hospital. The hospital is led by an MD -- and there are
administrators -- but they too are members of the community. There is an obvious care about
the community and its needs. I have spoken to colleagues across the country this week -- some
big hospitals have done nothing at all to prepare for the crisis. It is no surprise to me
that people in all levels at my current hospital have gone to enormous lengths to make sure
everyone here is ready to go. I feel like I have stepped back in time twenty years. It is a
very good feeling.
In the big city, I had become very accustomed to going to important meetings in the
hospitals -- all controlled by the business leadership now -- and no medical facts or issues
being discussed at all. Anything medical is distilled down to number crunching, revenue
cycles, and "profit centers." Never a word is said about medical facts, public health, impact
on patients, or morality like it used to be -- at least most of the time. Anyone who voices
dissent is ostracized, and finds themselves disinvited and even dismissed from
employment.
So the Youtube video is old hat to me. The people in charge of these critical things in
our world often look like Barbie and Ken. They are cool cucumbers. They know all about
branding, deceptive advertising, maximizing revenue, hiding truths, sucking up. But when
actually asked questions that are critical to the issue at hand -- they often know nothing.
And because they know nothing, nothing gets done. I have seen it many times before and am
sure I will see it again. I read commentary online that people were shocked by that DHS
Chief's answers to questions. I am not shocked -- I am very accustomed to it. Please note:
our entire corporate health care system at the local hospital level in the big cities is now
under the control of people just like him. They are looking for every way they can to defuse
this crisis with calming advertising, words, pleasantries, smiles, and soothing statements. I
am sure that they are also looking for any way they can profit financially from it as well.
All I can say is: Good Luck.
A case in point was the following interaction I was told about yesterday by an old student
of mine who is now a fellow at a major medical center on the East Coast. I heard the same
exact recollection of the story from someone else in the room.
This was a meeting with the upper administration of the hospital system and heads of
departments and multiple physicians and nurses. It occurred between the CEO and a DOC who is
older and near retirement and who is an infectious disease specialist. The discussion about
the current crisis went something like this:
CEO: I am not sure that we need to be preparing like this – this is obviously
overblown – and is really going to damage our budget projections. The HHS seems to
think this is going to go away in the spring anyway. DOC: Why in God's name would you want it to go away in the spring? CEO: (chuckling) What the hell are you talking about? We all want this thing to go away as
soon as possible. DOC – Historically, when pandemics are spread by aerosol droplets, and are as
infectious as this one seems to be, they may recede in the spring -- but then come back in
the fall with horrific fury. Remember the last one -- the Spanish Flu? The first wave was
nothing, but the second and third waves turned the planet into a funeral home. CEO: Oh for God's sake – don't you get it? That will give us time to get a vaccine
-- we will not need to worry about it in October. DOC: A vaccine? you must be kidding. It is never a good idea to rush a vaccine. Remember
the first polio vaccine was rushed to market. It did not work and actually harmed many
children. Remember the swine flu vaccine in the 1970s? It was not properly tested. Very few
died from the swine flu. Hundreds and thousands were maimed or killed by Guillain
Barré Syndrome because of it. And I doubt that half of our population would be even
willing to take it. You do not understand.
CEO: Oh I understand way more than you obviously do. There is already an antiviral --
we will have that as well.
DOC: Really? Again, not really fully tested. And have you looked at the cost? Even a
conservative estimate at the dosing they are using it would be $5000 a day. What is that
going to do to your budget projections when you have 100 people in here in the hospital on
that drug? Do we even have enough in the country for a sudden mass need? I do not
know.
And then CEO looked DOC in the eye and just moved on to something else.
And DOC found out later that he would no longer be welcome at any of these meetings.
Please know this: viruses are not Republicans, they are not Democrats. Viruses are not
going to respond to advertising, sweet words, or revenue cycles. They are going to accomplish
their mission, and that alone. There may be things we are able to do, but we will need all
the medical wisdom in the world focusing on our country as a whole and our local communities.
That is just not happening to the extent it should be. We are going to fight this one with
business school principles.
I again pray all the time that this virus will burn out -- that it will stop, that it will
not get worse. I pray that God will have mercy and allow this to be a close call. But I am
afraid that we have let our society crumble in so many ways –not just medicine -- that
it is going to take a punch in the face to get our attention. This coronavirus may very well
be the brass knuckles.
A follow-up e-mail from him:
This has been one of the most harrowing weeks in my career. The patients are really wigged
out. Multiple times this week, I have seen patients with a cough or fever -- and we cannot ID
a pathogen. That has caused a constant boogeyman to be sitting on my shoulder: fear. I can
see the fear in my staff's eyes, and then on Friday, a nurse suddenly after lunch developed a
101 fever and a bad cough -- again no pathogens. I have a feeling this is happening in many
other places in this country.
We have no way to test these people. I can offer little if any hope. I am telling them to
stay at home, and I can see the horror in their eyes. I am now at the same level of those
physicians in Milano 700 years ago –
So when I get this kind of soul crushing fear in my life, I always call one of my elder
family members. My parents and grandparents are all gone now. The only one left is my 92 year
old Auntie Marina. She lived through hell in Greece during the Nazi occupation and
immediately thereafter. She is an amazing woman. And this is what she said to me.
"My dear, I was there when your parents handed your life and everything you are over to
God. I was right on the front row. He has been preparing you every day of your life since you
were a baby for the duties that you must now perform. Be brave, and sturdy, and do everything
in His name. He will surround you with courage -- and fear not, if he decides this is your
time to go, you will be welcomed by all the saints and angels. But here in our house, we are
going to be lifting you up in prayer, multiple times a day. And I am certain that your
parents are looking down and are very very proud of you."
I am a member of my community and my church. I cannot leave my post -- and I would ask
that you pray for me and my staff for the bravery to continue on. I know that is a lot of
drama, but we are really having fear here on the front lines. I would ask that you keep all
the health care workers in America in your prayers right now.
In further conversation, the doctor said that we should be thinking about a world in which a
large number of health care workers can't come to work because they are in quarantine or sick
with the virus. We are looking at this problem right now.
He also recommends that people follow the coronavirus Reddit, which he says is
well-moderated, and a source of solid information: https://www.reddit.com/r/Coronavirus/
Rate cuts don't do anything in a credit contraction. Matter of fact, they make it worse.
Might as well go to negative rates and really screw things up.
The effective Fed rate should have been 400bps or more considering the rate of inflation
was in the low 2's. If the Fed rate isn't high enough, it robs from the productive economy
and stimulates credit bubbles. This has shown itself 2 straight cycles. The first in subprime
mortgages and now subprime consumer loans(which hopefully won't have the same contagion
effect).
Lets also note, the effective rate being about 2% above the rate of inflation is a JMK
belief.
Below are parts of a ZH article on the financial market front in the civilization war
humanity is engaged in. In case you were not watching, the world markets went down
significantly all last week and the financial world and a few others are wondering what
Hand, The Invisible is going to do.
"
Update (2225ET): Well who could have seen that coming? Following The BoJ's promise to do
'whatever it takes' to stabilize the markets (though nothing about the economy of course),
the reaction was delayed until someone got the tap on the shoulder to buy with both hands and
feet...
NKY Futs are up 900 points from the opening lows...
Dow futures are now up 850 points from the opening lows...
WTI is soaring...
And Treasury yields have reversed dramatically higher...
Did Stevey (Mnuchin, US Treasury Sec.) make the call?
Or is The National Team on the case? (Plunge Protection Team)
"
Their version had graphs and pictures but you get the picture of wild fluctuations based on
promises of public bailouts of private loss
Given the yet to be appreciated global economic impact of the spreading coronavirus, the
next couple of weeks/months should be something to experience....grin. There may be rebounds
but the trajectory seems evident and anticipated for quite some time......death by a thousand
cuts and this is just the significant financial front.
a few who warned ahead of the 2008 financial collapse sees the Coronavirus being the
catalyst for a severe Credit Crunch and not just a supply chain disruptor.
There are mounting risks of a credit crunch in vulnerable sectors of the corporate bond
market
A swath of highly indebted companies face an incipient funding shock and risk being shut
out of the capital markets as the COVID-19 epidemic mushrooms into global crisis, Standard
& Poor's has warned.[.]
Clearly the view two or three weeks ago that this would peak in March is no longer
appropriate. The question becoming very relevant is which companies are going to be able to
refinance," he said..[.]
{from Ambrose's article -
He presents a scary list of zombie companies, many are household names heavy in debt. A mix
of US and European Zcos on the list is: Kraft-Heinz, VW, Macy, Xerox, Western Digital.
Small companies will be forced to lay off workers.
Chinese companies are told to use electricity even if on skeleton staff just for
appearances sake as that usage goes into the data as in measuring GDP. )
Btw, Canada Health and UK are advising their citizens to stock up on meds, food, water and
daily essentials.
A healthy market correction this week, as it was called by some pundits, thankful that the
lack of 'market collars' and 'circuit breakers' allowed buyers and sellers to find each other
without interference. It's almost romantic sounding.
This was the worst week for stocks since 2008, with the SP 500 and Nasdaq down a little over
ten percent.
But it did end on a kind of an upbeat note, as the stock futures recovered today's losses
and managed to go into the weekend in the green.
Several factors contributed to this.
First and foremost, the odds of a rate cut in March jumped to 96.3% today from 8.9% a week
ago, we hear. I am struggling with the notion that cheaper benchmark rates are going to tempt
people to ignore the coronavirus and go to the mall. But it may put a little life back into the
financial asset bubble. Needs must.
The team of Kudlow and Mnuchin managed to rally the banks to smack the crap out of gold and
silver, running the stops and triggering margin calls from the recently increased margin
requirments on the Comex. Since the Banks were struggling with an oversized short position it
certainly helped out the financial system while dampening the enthusiasm for hard assets
No slackers here, there is a two prong effort across the established powers to manage and
control the narrative, while ensuring boatloads of money continue to reach 'the right kinds of
people.'
The spice must flow.
And in a bipartisan celebration of better news, Joe Biden is expected to crush the
opposition (Bernie) in South Carolina this weekend, an all important victory for the forces of
the status quo.
In all seriousness, let's remember those who are suffering with this virus around the world,
struggling to go about their business while trying to protect their livelihoods and
families.
Now is a good time to prepare, if you have not already done so, and to begin engaging in
those simple procedures that may help us weather this.
A healthy market correction this week, as it was called by some pundits, thankful that the
lack of 'market collars' and 'circuit breakers' allowed buyers and sellers to find each other
without interference. It's almost romantic sounding.
This was the worst week for stocks since 2008, with the SP 500 and Nasdaq down a little over
ten percent.
But it did end on a kind of an upbeat note, as the stock futures recovered today's losses
and managed to go into the weekend in the green.
Several factors contributed to this.
First and foremost, the odds of a rate cut in March jumped to 96.3% today from 8.9% a week
ago, we hear. I am struggling with the notion that cheaper benchmark rates are going to tempt
people to ignore the coronavirus and go to the mall. But it may put a little life back into the
financial asset bubble. Needs must.
The team of Kudlow and Mnuchin managed to rally the banks to smack the crap out of gold and
silver, running the stops and triggering margin calls from the recently increased margin
requirments on the Comex. Since the Banks were struggling with an oversized short position it
certainly helped out the financial system while dampening the enthusiasm for hard assets
No slackers here, there is a two prong effort across the established powers to manage and
control the narrative, while ensuring boatloads of money continue to reach 'the right kinds of
people.'
The spice must flow.
And in a bipartisan celebration of better news, Joe Biden is expected to crush the
opposition (Bernie) in South Carolina this weekend, an all important victory for the forces of
the status quo.
In all seriousness, let's remember those who are suffering with this virus around the world,
struggling to go about their business while trying to protect their livelihoods and
families.
Now is a good time to prepare, if you have not already done so, and to begin engaging in
those simple procedures that may help us weather this.
"... With Glass-Steagall now removed, legitimate capital such as pension funds could be used to start a hedge to end all hedges. Billions were now poured into mortgage-backed securities (MBS), a market which had been artificially plunged to record-breaking interest rate lows of 1-2% for over a year by the US Federal Reserve making borrowing easy, and the returns on the investments into the MBSs obscene. ..."
"... This is the system which died in 2008. Contrary to popular belief, nothing was actually resolved. For all the talk of an "FDR revival" under Obama, speculation wasn't actually regulated under the Dodd-Frank Act or the Volker Rule of 2010. No productive credit was created to grow the real economy under a national mission as was the case in 1933-1938. ..."
"... Banks were not broken up while derivatives GREW by 40% with the new bubble concentrated in the corporate/household debt sector now collapsing. During this time, nation states continued to be stripped, as austerity was rammed down the throats of nations. ..."
"... It should be no surprise that in the midst of this despair, a creative alliance was consolidated in defense of the interests of sovereign nation states and humanity at large led by the leadership of Russia and China. ..."
"... The Eurasian nations are already firmly committed to this new system, and if the west is to qualify morally to take part in this new epoch, then the first step will be a return to a Glass-Steagall. ..."
"... Joe Kennedy was tasked by FDR with creating the regulations to reform Wall Street, thus earning him their undying enmity. ..."
"... Joe Kennedy has therefore had a hard press and been accused of the Corbyn disease of anti-semitisms, and I imagine the same old experts will be lining up to give him another kicking ..."
"... I would venture that the coronavirus rollocks is all a cover for the inevitable economic collapse. ..."
"... At last. Sanity. A brilliantly truthful article. Almost totally agree with this history of how the fuck the fucking bankers got their hands on almost fucking everything. ..."
"... Interesting article, but the conclusions are off. That solution (i.e. return to Glass-Steagall) would have worked 20 , maybe 10 years ago. We are way to passed that point. The looters are now part of the system– no one will embrace Glass-Steal. The system is on life support. ..."
(Photo by Philip FONG / AFP) (Photo by PHILIP FONG/AFP via Getty Images)
With last Monday's 1000 point stock market plunge the internet has been set ablaze with discussion of a new crash looming on the
horizon. The fact that such a chain reaction collapse was only kept at bay due to massive liquidity injections by the Federal Reserve's
overnight repo loans should not be ignored.
These injections which began in September 2019, have grown to over $100 billion per night all that to support the largest financial
bubble in human history with global derivatives estimated at $1.2 quadrillion (20 times the global GDP!).
Sadly economic illiteracy is so pervasive among today's modern economists that the real reasons for this crisis have been entirely
misdiagnosed with financial experts from CNN, to Forbes blaming the volatility on the spread of the Corona virus!
Not the Corona Virus: The real cause of the oncoming Financial collapse.
As refreshing as it is to hear candid criticisms of the system's failure and even support for the restoration of Glass-Steagall
bank separation from presidential candidates like Bernie Sanders, Tulsi Gabbard or even the lame Elisabeth Warren we find that in
each case, those candidates are on record supporting policies cooked up by the very same oligarchs they appear to despise in the
form of the Green New Deal.
In spite of what many of its progressive proponents would wish, such a global green reform would not only impose Malthusian depopulation
upon nation states globally were it accepted, but would establish a the supranational authority of a technocratic managerial elite
as enforcers of a "de-carbonization agenda".
Due to the rampant lack of comprehension of how this crisis was created such that such idiotic proposals as "green new deals"
are now seriously being suggested as remedies to our current ills, a bit of history is in order.
Some necessary background
"The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the
ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary
profit."
Franklin Delano Roosevelt, first Inaugural Address 1933
Knowing that the "money changers" had only been able to create the great bubbles of the 1920s via their access to the deposits
of the commercial banks, Franklin Roosevelt made the core of his battle against the abuses of Wall Street centre around a 1933 legislation
entitled "Glass-Steagall", named after the two federally elected officials who led the reform with FDR.
This was a bill which forced the absolute separation of productive from speculative banking, guaranteeing via the Federal Deposit
Insurance Corporation (FDIC) only those commercial banking assets associated with the productive economy, but forcing any speculative
losses arising from investment banking to be suffered by the gambler. The striking success of this law inspired other countries around
the world to establish similar bank separation.
Alongside principles of capital budgeting, public credit, parity pricing and a commitment to scientific and technological development,
a dynamic had been created that would express the greatest hope for the world, and the greatest fear for the financial empire occupying
the City of London and Wall Street.
The death of John F. Kennedy ushered in a new age of pessimism and cultural irrationalism from which our society has never recovered.
The destruction of a long term vision as exemplified by the space program, the St. Lawrence Seaway and the New Deal projects had
resulted in a tendency within the population to increasingly look upon present pleasures as the only reality, and future goods as
the mystical expression of the sum of present pleasures.
In this new philosophical setting, so alien in previous epochs, money was permitted to act as a power unto itself for short term
gains instead of serving the investments into the real productive wealth of society. With this new paradigm shift into the "now",
a new economic model was adopted to replace the industrial economic model which had proven itself in the years preceding and following
World War II.
The name for this system was "post-industrial monetarism". This would be a system ushered in by Richard Nixon's announcement of
the destruction of the fixed-exchange rate Bretton Woods system and its replacement by the "floating rate" system of post 1971 fame.
During that same fateful year of 1971, another ominous event took place: the formation of the
Rothschild Inter-Alpha Group of banks under the umbrella of the Royal Bank of Scotland, which today controls upwards of 70% of
the global financial system.
The stated intention of this Group would be found in the 1983 speech by Lord Jacob Rothschild:
"two broad types of giant institutions, the worldwide financial service company and the international commercial bank with
a global trading competence, may converge to form the ultimate, all-powerful, many-headed financial conglomerate."
This policy demanded the destruction of the sovereign nation-state system and the imposition of a new feudal structure of world
governance through the age-old scheme of controlling the money system on the one side, and playing on the vices of credulous fools
who, by allowing their nations to be ruled by the belief that hedonistic market forces govern the world, would seal their own children's
doom.
All the while, geopolitical structures foreign to the United States constitutional traditions were imposed by nests of Oxford-trained
Rhodes Scholars and Fabians who converted America into a global "dumb giant" enforcing a neo colonial program under a "Anglo-US Special
Relationship". The Dulles brothers, McGeorge Bundy, Kissinger, and Bush all represent names that advanced this British directed plan
throughout the 20th century.
London's 'Big Bang'
The great "liberalization" of world commerce began with a series of waves through the 1970s, and moved into high gear with the
interest rate hikes of Federal Reserve Chairman Paul Volcker in 1980-82, the effects of which both annihilated much of the small
and medium sized entrepreneurs, opened the speculative gates into the "Savings and Loan" debacle and also helped cartelize mineral,
food, and financial institutions into ever greater behemoths.
Volcker himself described this process as the "controlled disintegration of the US economy" upon becoming Fed Chairman in 1978.
The raising of interest rates to 20-21% not only shut down the life blood of much of the US economic base, but also threw the third
world into greater debt slavery, as nations now had to pay usurious interest on US loans.
In 1986, the City of London announced the beginning of a new era of economic irrationalism with Margaret Thatcher's "Big Bang"
deregulation. This wave of liberalization took the world by storm as it swept aside the separation of commercial, deposit and investment
banking which had been the post-world war cornerstone in ensuring that the will of private finance would never again hold more sway
than the power of sovereign nation-states.
After decades of chipping away at the structure of regulation that FDR's bold intervention into history had built, the "Big Bang"
set a precedent for similar financial de-regulation into the "Universal Banking" model in other parts of the western world.
The Derivative Time Bomb is Set
In September 1987, the 20-year foray into speculation resulted in a 23% collapse of the Dow Jones on October 19, 1987. Within
hours of this crash, international emergency meetings had been convened with former JP Morgan tool Alan Greenspan introducing a "solution"
which would have the future echoes of hyperinflation and fascism written all over it.
"Creative financial instruments" was the Orwellian name given to the new financial asset popularized by Greenspan, but otherwise
known as "derivatives".
New supercomputing technologies were increasingly used in this new venture, not as the support for higher nation building practices,
and space exploration programs as their NASA origins intended, but would rather become perverted to accommodate the creation of new
complex formulas which could associate values to price differentials on securities and insured debts that could then be "hedged"
on those very spot and futures markets made possible via the destruction of the Bretton Woods system in 1971.
So while an exponentially self-generating monster was created that could end nowhere but in a meltdown, "market confidence" rallied
back in force with the new flux of easy money. The physical potential to sustain human life continued to plummet.
NAFTA, the Euro and the End of History
It is no coincidence that within this period, another deadly treaty was passed called the North American Free Trade Agreement
(NAFTA). With this Agreement made law, protective programs that had kept North American factories in the U.S and Canada were struck
down, allowing for the export of the lifeblood of highly skilled industrial workforce to Mexico where skills were low, technologies
lower, and salaries lower still.
With a stripping of its productive assets, North America became increasingly reliant on exporting cheap resources and services
for its means of existence.
Again, the physically productive powers of society would collapse, yet monetary profits in the ephemeral "now" would skyrocket.
This was replicated in Europe with the creation of the Maastricht Treaty in 1992 establishing the Euro by 1994 while the "liberalization"
process of Perestroika replicated this agenda in the former Soviet Union. While some personalities gave this agenda the name "End
of History" and others "the New World Order", the effect was the same.
Universal Banking, NAFTA, Euro integration and the creation of the derivative economy in a space of just several years would induce
a cartelization of finance through newly legalized mergers and acquisitions at a rate never before seen. The multitude of financial
institutions that had existed in the early 1980s were absorbed into each other at great speed through the 1990s in true "survival
of the fittest" fashion. No matter what level of regulation were attempted under this new structure, the degree of conflict of interest,
and private political power was uncontrollable, as evidenced in the United States, by the shutdown of any attempt by Securities and
Exchange Commission head
Brooksley Born
to fight the derivative cancer at its early stages.
By 1999 a politically castrated Bill Clinton found himself signing into law a treaty authored by then Treasury Secretary Larry
Summers known as the Gramm-Leach-Bliley Act, which would be the final nail in the coffin for the Glass-Steagall separation of commercial
and investment banking in the United States.
The new age of unregulated trading and creation of over-the-counter derivatives caused these strange financial instruments to
grow from $60 trillion in 2000 to $600 trillion by 2008.
The 2000-2008 Frenzy
With Glass-Steagall now removed, legitimate capital such as pension funds could be used to start a hedge to end all hedges.
Billions were now poured into mortgage-backed securities (MBS), a market which had been artificially plunged to record-breaking interest
rate lows of 1-2% for over a year by the US Federal Reserve making borrowing easy, and the returns on the investments into the MBSs
obscene.
The obscenity swelled as the values of the houses skyrocketed far beyond the real values to the tune of one hundred thousand dollar
homes selling for 5-6 times that price within the span of several years.
As long as no one assumed this growth was ab-normal, and the unpayable nature of the capital underlying the leveraged assets locked
up in the now infamous "sub-primes" and other illegitimate debt obligations was ignored, then profits were supposed to just continue
infinitely. Anyone who questioned this logic was considered a heretic by the latter-day priesthood.
The stunning "success" of securitizing housing debts immediately induced a wave of sovereign wealth funds to come into prominence
applying the same model that had been used in the case of mortgage-backed securities (MBS) and collateralized debt obligations (CDO)
to the debts of entire nations.
The securitizing of bundled packages of sovereign debts that could then be infinitely leveraged on the de-regulated world markets
would no longer be considered an act of national treason, but the key to easy money.
Conclusion
This is the system which died in 2008. Contrary to popular belief, nothing was actually resolved. For all the talk of an "FDR
revival" under Obama, speculation wasn't actually regulated under the Dodd-Frank Act or the Volker Rule of 2010. No productive credit
was created to grow the real economy under a national mission as was the case in 1933-1938.
Banks were not broken up while derivatives GREW by 40% with the new bubble concentrated in the corporate/household debt sector
now collapsing. During this time, nation states continued to be stripped, as austerity was rammed down the throats of nations.
It should be no surprise that in the midst of this despair, a creative alliance was consolidated in defense of the interests
of sovereign nation states and humanity at large led by the leadership of Russia and China.
This leadership took the form of the China-led Belt and Road Initiative which has grown to embrace over 130 countries today and
looking more and more like an Asian-led version of the New Deal of the 1930s.
Indeed, China's capacity to unleash long term credit for thousands of international long term infrastructure projects was made
possible by the fact that it was the only country on the globe which had not given up the principles of bank separation which were
destroyed in every other nation.
Very few western figures stood up to this self-induced destruction over the decades, but one notable exception here worth mentioning
is the figure of the late American economist Lyndon LaRouche (1922-2019) who not only resisted this process for
over four decades , but fought alongside the Schiller Institute
to promote New Silk Road as early as 1996 .
With the 2016 Brexit and election of President Trump, a new wave of nationalist spirit has become a fire which the technocrats
have lost their capacity to snuff out.
Increasingly, the idea that nation-states have a power over the private banking system has become revived and discussion for reforming
the now dead Trans-Atlantic system is increasingly shaped not by the calls for a "New World Order" as Sir Kissinger would have liked,
but rather for a New Silk Road and a true New Deal.
The Eurasian nations are already firmly committed to this new system, and if the west is to qualify morally to take part in
this new epoch, then the first step will be a return to a Glass-Steagall.
Excellent article which I could almost understand (my eyes glaze over at any mention of filthy lucre). The author makes clear
that the world took a different trajectory after the convenient death of JFK. As I recall from a biography of his father, Ambassador
Joe, was that Joe Kennedy was tasked by FDR with creating the regulations to reform Wall Street, thus earning him their undying
enmity.
Joe Kennedy has therefore had a hard press and been accused of the Corbyn disease of anti-semitisms, and I imagine the
same old experts will be lining up to give him another kicking
Spinky ,
A New Deal? A Green New Deal or a true New Deal? After revealing all of this incredible amount of manipulation of banking without
going the final step to the ultimate controllers of the deep state, and you suggest another New Deal? What the world needs now
is for the control systems to fail, not to be re supported again with handouts from the corporatocracy to the workers. We need
to reclaim our communities with local food security via non corporate food systems based on living soils. We need to reclaim any
kind of semblance of currency sanity with local currencies and supports. We need health care based on food as medicine, food that
is not GMO and chemical based, but based on healthy local ecosystems, not transportation systems spanning the globe, controlled
by central planners of any ideological stripe. Only if we focus on our own local regions can we ever hope to have any semblance
of sanity again. We need to realize that the corporatocracy, the deep state, doesn't concern itself with ideologies other than
as tools to control us with. All they care about is control, like all neurotics. After going through that entire article outlining
the insanity of regulation and control and deregulation and infinity of financial flows and the obvious insanity of all of it,
you surely must see that the ones with the money making the systems work are totally gonzo and the best the rest of us can do
is focus on what we can do locally, like they have done in Greece. We can't control trillionaires with logical arguments. It ain't
gonna happen. Bernie Sanders can become president and he still isn't going to stop the trillionaires and their insane efforts
to control the planet. He will just be a different type of puppet with different types of handouts and control mechanisms. Voting
is pointless and so are efforts at regulation. At this point, the best we can do is abandon the system, focus on our communities
and self sufficiency locally, and try to avoid the system collapse when it falls around us.
It looks like they're rolling out the police state in the UK
https://www.bbc.com/news/uk-51708550 but we'll have to wait until tomorrow (Tuesday) to get a better idea of what the psychopaths are trying to foist on us.
I would venture that the coronavirus rollocks is all a cover for the inevitable economic collapse.
Dungroanin ,
At last. Sanity. A brilliantly truthful article. Almost totally agree with this history of how the fuck the fucking bankers got their hands on almost fucking everything.
The first quibble is that starting history at FDR ignores the period of the creation of the Fed all the way back to it's prototype
the BoE.
The second is about the creation of the Euro which ignores the political economic security desire of the evolving EU – the
EMU and it's years of alignment of the EC preceding Maastricht and the bastardisation of the original vision by the rapid enrollment
of countries and economies for Geopolitical (and even anti-EU) reasons. The EU being more likely to implement a 'Glass-Steagle'
type of alignment through the level-playing-field ever-closet-union. That chalice being liberally poisoned by the global Banker
interests.
Torontonian,
Interesting article, but the conclusions are off. That solution (i.e. return to Glass-Steagall) would have worked 20 , maybe 10 years
ago. We are way to passed that point. The looters are now part of the system– no one will embrace Glass-Steal. The system is on
life support.
he federal government's inadequate testing for coronavirus over the last two months has
meant that the authorities have been oblivious to the
full extent of the outbreak in the U.S.:
The coronavirus has been circulating undetected and has possibly infected scores of people
over the past six weeks in Washington state, according to a genetic analysis of virus samples
that has sobering implications for the entire country amid heightening anxiety about the
likely spread of the disease.
The researchers conducted genetic sequencing of two virus samples. One is from a patient
who traveled from China to Snohomish County in mid-January and was the first person diagnosed
with the disease in the United States. The other came from a recently diagnosed patient in
the same county, a high school student with no travel-related or other known exposure to the
coronavirus. The two samples look almost identical genetically, said Trevor Bedford, a
computational biologist at Fred Hutchinson Cancer Research Center in Seattle who announced
the results of the research on Twitter late Saturday night.
"This strongly suggests that there has been cryptic transmission in Washington State for
the past 6 weeks," Bedford wrote. "I believe we're facing an already substantial outbreak in
Washington State that was not detected until now due to narrow case definition requiring
direct travel to China."
When the administration is determined to minimize the significance of the outbreak and to
pretend that all is well, they are signalling to the relevant agencies that they don't want to
hear contradictory information. It then requires whistle-blowers inside those agencies to
call attention to serious lapses and failures in the government's response, and if it
weren't for these people the public would be even more in the dark about what is happening and
how the government is reacting. The administration's handling of the response has already
proven itself to be quite poor, but that still doesn't fully capture how
chaotic and confused it has been :
Interviews with nearly two dozen administration officials, former White House aides,
public health experts and lawmakers -- many speaking on the condition of anonymity to share
candid assessments and details -- portray a White House scrambling to gain control of a
rudderless response defined by bureaucratic infighting, confusion and misinformation.
"It's complete chaos," a senior administration official said. "Everyone is just trying to
get a handle on what the [expletive] is going on."
The government was ill-prepared for this outbreak and then frittered away what time they had
to get ready. The Trump administration previously
dismantled the part of the National Security Council concerned with organizing a response
to pandemics (thank you, John Bolton). Laurie Garrett
wrote about this last month:
Public health advocates have been ringing alarm bells to no avail. Klain has been warning
for two years that the United States was in grave danger should a pandemic emerge. In 2017
and 2018, the philanthropist billionaire Bill Gates met repeatedly with Bolton and his
predecessor, H.R. McMaster, warning that ongoing cuts to the global health disease
infrastructure would render the United States vulnerable to, as he put it, the "significant
probability of a large and lethal modern-day pandemic occurring in our lifetimes." And an
independent, bipartisan panel formed by the Center for Strategic and International Studies
concluded that lack of preparedness was so acute in the Trump administration that the "United
States must either pay now and gain protection and security or wait for the next epidemic and
pay a much greater price in human and economic costs."
The Trump administration opted for weakening protections for public health on the off-chance
that the bill wouldn't come due while they were in office. Like so many other short-sighted
things they have done over the last three years, this has blown up in their face to the
country's detriment.
ProPublica reported last week on
the CDC's mistakes that led to the lack of adequate testing:
As the highly infectious coronavirus jumped from China to country after country in January
and February, the U.S. Centers for Disease Control and Prevention lost valuable weeks that
could have been used to track its possible spread in the United States because it insisted
upon devising its own test.
The federal agency shunned the World Health Organization test guidelines used by other
countries and set out to create a more complicated test of its own that could identify a
range of similar viruses. But when it was sent to labs across the country in the first week
of February, it didn't work as expected. The CDC test correctly identified COVID-19, the
disease caused by the virus. But in all but a handful of state labs, it falsely flagged the
presence of the other viruses in harmless samples.
As a result, until Wednesday the CDC and the Food and Drug Administration only allowed
those state labs to use the test -- a decision with potentially significant consequences. The
lack of a reliable test prevented local officials from taking a crucial first step in coping
with a possible outbreak -- "surveillance testing" of hundreds of people in possible
hotspots. Epidemiologists in other countries have used this sort of testing to track the
spread of the disease before large numbers of people turn up at hospitals.
Jeremy Konyndyk explains how the CDC effectively blinded itself to the reality of the
problem by defining it so narrowly that they missed what was happening:
The result of that definition, as @JenniferNuzzo and others have
eloquently argued, was that we were blind to community spread – because CDC had defined
suspect cases so narrowly as to exclude that possibility.
Can't see them, so can't test them, so blind to what's happening.
The U.S. has been flying blind in response to the outbreak of this virus. Our government is
lagging badly behind more effective efforts at detection and treatment in other countries, and
the public will pay the price for this negligence and unpreparedness.
Below are parts of a ZH article on the financial market front in the civilization war
humanity is engaged in. In case you were not watching, the world markets went down
significantly all last week and the financial world and a few others are wondering what
Hand, The Invisible is going to do.
"
Update (2225ET): Well who could have seen that coming? Following The BoJ's promise to do
'whatever it takes' to stabilize the markets (though nothing about the economy of course),
the reaction was delayed until someone got the tap on the shoulder to buy with both hands and
feet...
NKY Futs are up 900 points from the opening lows...
Dow futures are now up 850 points from the opening lows...
WTI is soaring...
And Treasury yields have reversed dramatically higher...
Did Stevey (Mnuchin, US Treasury Sec.) make the call?
Or is The National Team on the case? (Plunge Protection Team)
"
Their version had graphs and pictures but you get the picture of wild fluctuations based on
promises of public bailouts of private loss
Given the yet to be appreciated global economic impact of the spreading coronavirus, the
next couple of weeks/months should be something to experience....grin. There may be rebounds
but the trajectory seems evident and anticipated for quite some time......death by a thousand
cuts and this is just the significant financial front.
The article is mostly junk. But it contains some important insights into the rise of Trympism (aka "national neoliberalism") --
nationalist oligarchy. Including the following " the governments that have emerged from the new populist moment are, to date, not
actually pursuing policies that are economically populist."
The real threat to liberal democracy isn't authoritarianism -- it's nationalist oligarchy. Here's how American foreign policy should
change. The real threat to liberal democracy isn't authoritarianism -- it's nationalist oligarchy. Here's how American foreign policy
should change.
Notable quotes:
"... Fascism: A Warning ..."
"... Can it Happen Here? Authoritarianism in America ..."
"... the governments that have emerged from the new populist moment are, to date, not actually pursuing policies that are economically populist. ..."
"... The better and more useful way to view these regimes -- and the threat to democracy emerging at home and abroad because of them -- is as nationalist oligarchies. Oligarchy means rule by a small number of rich people. In an oligarchy, wealthy elites seek to preserve and extend their wealth and power. In his definitive book titled Oligarchy ..."
"... Oligarchies remain in power through two strategies: first, using divide-and-conquer tactics to ensure that a majority doesn't coalesce, and second, by rigging the political system to make it harder for any emerging majority to overthrow them. ..."
"... Rigging the system is, in some ways, a more obvious tactic. It means changing the legal rules of the game or shaping the political marketplace to preserve power. Voting restrictions and suppression, gerrymandering, and manipulation of the media are examples. The common theme is that they insulate the minority in power from democracy; they prevent the population from kicking the rulers out through ordinary political means. ..."
"... Classical Greek Oligarchy ..."
"... Framing today's threat as nationalist oligarchy not only clarifies the challenge but also makes clear how democracy is different -- and what democracy requires. Democracy means more than elections, an independent judiciary, a free press, and various constitutional norms. For democracy to persist, there must also be relative economic equality. If society is deeply unequal economically, the wealthy will dominate politics and transform democracy into an oligarchy. And there must be some degree of social solidarity because, as Lincoln put it, "A house divided against itself cannot stand." ..."
"... We see a number of disturbing signs the United States is breaking down along these dimensions. ..."
"... The view that money is speech under the First Amendment has unleashed wealthy individuals and corporations to spend as much as they want to influence politics. The "doom loop of oligarchy," as Ezra Klein has called it, is an obvious consequence: The wealthy use their money to influence politics and rig policy to increase their wealth, which in turn increases their capacity to influence politics. Meanwhile, we're increasingly divided into like-minded enclaves, and the result is an ever-more toxic degree of partisanship. ..."
"... The Counterinsurgent's Constitution: Law in the Age of Small Wars ..."
"... The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens our Republic ..."
Ever since the 2016 election, foreign policy commentators and practitioners have been engaged in a series of soul-searching exercises
to understand the great transformations taking place in the world -- and to articulate a framework appropriate to the challenges
of our time. Some have looked backwards, arguing that the liberal international order is collapsing, while others question whether
it ever existed. Another group seems to hope the current messiness is simply a blip and that foreign policy will return to normalcy
after it passes. Perhaps the most prominent group has identified today's great threat as the rise of authoritarianism, autocracy,
and illiberal democracy. They fear that constitutional democracy is receding as norms are broken and institutions are under siege.
Unfortunately, this approach misunderstands the nature of the current crisis. The challenge we face today is not one of authoritarianism,
as so many seem inclined to believe, but of nationalist oligarchy. This form of government feeds populism to the people, delivers
special privileges to the rich and well-connected, and rigs politics to sustain its regime.
... ... ..
Authoritarianism or What?
Across the political spectrum, commentators and scholars have identified -- and warned of -- the global rise of autocracies and
authoritarian governments. They cite Russia, Hungary, the Philippines, and Turkey, among others. Distinguished commentators are increasingly
worried. Former Secretary of State Madeleine Albright recently published a book called Fascism: A Warning . Cass Sunstein
gathered a variety of scholars for a collection titled, Can it Happen Here? Authoritarianism in America .
The authoritarian lens is familiar from the heroic narrative of democracy defeating autocracies in the twentieth century. But
as a framework for understanding today's central geopolitical challenges, it is far too narrow. This is mainly because those who
are worried about the rise of authoritarianism and the crisis of democracy are insufficiently focused on economics. Their emphasis
is almost exclusively political and constitutional -- free speech, voting rights, equal treatment for minorities, independent courts,
and the like. But politics and economics cannot be dissociated from each other, and neither are autonomous from social and cultural
factors. Statesmen and philosophers used to call this "political economy." Political economy looks at economic and political relationships
in concert, and it is attentive to how power is exercised. If authoritarianism is the future, there must be a story of its political
economy -- how it uses politics and economics to gain and hold power. Yet the rise-of-authoritarianism theorists have less to say
about these dynamics.
To be sure, many commentators have discussed populist movements throughout Europe and America, and there has been no shortage
of debate on the extent to which a generation of widening economic inequality has been a contributing factor in their rise. But whatever
the causes of popular discontent, the policy preferences of the people, and the bloviating rhetoric of leaders, the governments
that have emerged from the new populist moment are, to date, not actually pursuing policies that are economically populist.
The better and more useful way to view these regimes -- and the threat to democracy emerging at home and abroad because of
them -- is as nationalist oligarchies. Oligarchy means rule by a small number of rich people. In an oligarchy, wealthy elites seek
to preserve and extend their wealth and power. In his definitive book titled Oligarchy , Jeffrey Winters calls it "wealth
defense." Elites engage in "property defense," protecting what they already have, and "income defense," preserving and extending
their ability to hoard more. Importantly, oligarchy as a governing strategy accounts for both politics and economics. Oligarchs use
economic power to gain and hold political power and, in turn, use politics to expand their economic power.
Those who worry about the rise of authoritarianism and fear the crisis of democracy are insufficiently focused on economics.
The trouble for oligarchs is that their regime involves rule by a small number of wealthy elites. In even a nominally
democratic society, and most countries around the world today are at least that, it should be possible for the much larger majority
to overthrow the oligarchy with either the ballot or the bullet. So how can oligarchy persist? This is where both nationalism and
authoritarianism come into play. Oligarchies remain in power through two strategies: first, using divide-and-conquer tactics
to ensure that a majority doesn't coalesce, and second, by rigging the political system to make it harder for any emerging majority
to overthrow them.
The divide-and-conquer strategy is an old one, and it works through a combination of coercion and co-optation. Nationalism --
whether statist, ethnic, religious, or racial -- serves both functions. It aligns a portion of ordinary people with the ruling oligarchy,
mobilizing them to support the regime and sacrifice for it. At the same time, it divides society, ensuring that the nationalism-inspired
will not join forces with everyone else to overthrow the oligarchs. We thus see fearmongering about minorities and immigrants, and
claims that the country belongs only to its "true" people, whom the leaders represent. Activating these emotional, cultural, and
political identities makes it harder for citizens in the country to unite across these divides and challenge the regime.
Rigging the system is, in some ways, a more obvious tactic. It means changing the legal rules of the game or shaping the political
marketplace to preserve power. Voting restrictions and suppression, gerrymandering, and manipulation of the media are examples. The
common theme is that they insulate the minority in power from democracy; they prevent the population from kicking the rulers out
through ordinary political means. Tactics like these are not new. They have existed, as Matthew Simonton shows in his book
Classical Greek Oligarchy , since at least the time of Pericles and Plato. The consequence, then as now, is that nationalist
oligarchies can continue to deliver economic policies to benefit the wealthy and well-connected.
It is worth noting that even the generation that waged war against fascism in Europe understood that the challenge to democracy
in their time was not just political, but economic and social as well. They believed that the rise of Nazism was tied to the concentration
of economic power in Germany, and that cartels and monopolies not only cooperated with and served the Nazi state, but helped its
rise and later sustained it. As New York Congressman Emanuel Celler, one of the authors of the Anti-Merger Act of 1950, said, quoting
a report filed by Secretary of War Kenneth Royall, "Germany under the Nazi set-up built up a great series of industrial monopolies
in steel, rubber, coal and other materials. The monopolies soon got control of Germany, brought Hitler to power, and forced virtually
the whole world into war." After World War II, Marshall Plan experts not only rebuilt Europe but also exported aggressive American
antitrust and competition laws to the continent because they believed political democracy was impossible without economic democracy.
Framing today's threat as nationalist oligarchy not only clarifies the challenge but also makes clear how democracy is different
-- and what democracy requires. Democracy means more than elections, an independent judiciary, a free press, and various constitutional
norms. For democracy to persist, there must also be relative economic equality. If society is deeply unequal economically, the wealthy
will dominate politics and transform democracy into an oligarchy. And there must be some degree of social solidarity because, as
Lincoln put it, "A house divided against itself cannot stand."
We see a number of disturbing signs the United States is breaking down along these dimensions. Electoral losers in places
like North Carolina seek to entrench their power rather than accept defeat. The view that money is speech under the First Amendment
has unleashed wealthy individuals and corporations to spend as much as they want to influence politics. The "doom loop of oligarchy,"
as Ezra Klein has called it, is an obvious consequence: The wealthy use their money to influence politics and rig policy to increase
their wealth, which in turn increases their capacity to influence politics. Meanwhile, we're increasingly divided into like-minded
enclaves, and the result is an ever-more toxic degree of partisanship.
Addressing our domestic economic and social crises is critical to defending democracy, and a grand strategy for America's future
must incorporate both domestic and foreign policy. But while many have recognized that reviving America's middle class and re-stitching
our social fabric are essential to saving democracy, less attention has been paid to how American foreign policy should be reformed
in order to defend democracy from the threat of nationalist oligarchy.
The Varieties of Nationalist Oligarchy
Just as there are many variations on liberal democracy -- the Swedish model, the French model, the American model -- there
are many varieties of nationalist oligarchy. The story is different in every country, but the elements of nationalist oligarchy
are trending all over the world.
... ... ...
... the European Union funds Hungary's oligarchy, as Orbán draws on EU money to fund about 60 percent of the state projects
that support "the new Fidesz-linked business elite." Nor do Orbán and his allies do much to hide the country's crony capitalist
model. András Lánczi, president of a Fidesz-affiliated think tank, has boldly stated that "if something is done in the national
interest, then it is not corruption." "The new capitalist ruling class," one Hungarian banker comments, "make their money from
the government."
The commentator Jan-Werner Müller captures Orbán's Hungary this way: "Power is secured through wide-ranging control of the
judiciary and the media; behind much talk of protecting hard-pressed families from multinational corporations, there is crony
capitalism, in which one has to be on the right side politically to get ahead economically."
Crony capitalism, coupled with resurgent nationalism and central government control, is also an issue in China. While some
commentators have emphasized "state capitalism" -- when government has a significant ownership stake in companies -- this phenomenon
is not to be confused with crony capitalism. Some countries with state capitalism, like Norway, are widely seen as extremely non-corrupt
and, indeed, are often held up as models of democracy. State capitalism itself is thus not necessarily a problem. Crony capitalism,
in contrast, is an "instrumental union between capitalists and politicians designed to allow the former to acquire wealth, legally
or otherwise, and the latter to seek and retain power." This is the key difference between state capitalism and oligarchy.
... ... ...
Ganesh Sitaraman is a professor of law
and Chancellor's faculty fellow at Vanderbilt Law School, and the author of The Counterinsurgent's Constitution: Law in the
Age of Small Wars and The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens our Republic
.
Why no recession? Because the bank which until Friday expected no rate cuts in 2020,
suddenly expects no less than three rate cuts, and all of them taking place in the next three
months:
... we would expect some monetary easing from a number of the world's major central banks,
including 75bp of rate cuts by the Federal Reserve through June starting with a 25bp cut in
March. Although moderate Fed rate cuts are unlikely to be very powerful, the committee will
probably be reluctant to disappoint market expectations for substantial rate cuts for fear of
tightening financial conditions further.
Of course, by now Hatzius must be surely getting tired of being called the macroeconomic
"Thomas Stolper" (long-time readers know what that means), and as a result he has quietly
inserted two additional scenarios just to cover all his bases. While the "upside" scenario is
meaningless as it has no hope in hell of occurring, it's the downside one that is more
ominous:
We also consider two alternative scenarios. The upside scenario assumes that the global
spread of the virus is brought under control quickly and supply chain disruptions remain
mostly absent; if so, global GDP would rebound in Q2, risk asset markets would recover
sharply, and central banks may stay on hold. The downside scenario assumes widespread supply
chain disruptions as well as domestic demand weakness across the global economy. This would
involve sharp sequential contraction in global GDP in Q1 and Q2 -- i.e., a global recession
-- and probably an aggressive monetary easing campaign, including a return to the near-zero
funds rate of the post-crisis period.
Notably, not even the market expects a full 3 rate cuts by the end of June, which suggests
that for all its cheerful optimism, Goldman is bracing for its "downside scenario"
materializing.
If "Trump recession" materialize, he and Melania can start packing. As as he will most
probably repeat Bush II blunders in handling the epidemics, his chances are already lower that
they were before.
"Trump is highly concerned about the market and has encouraged aides not to give predictions
that might cause further tremors .In a Twitter post, he misspelled the word 'coronavirus' as
'caronavirus' and wrote that two cable news stations "are doing everything possible to make the
Caronavirus look as bad as possible, including panicking markets, if possible. Likewise their
incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape!"
As far as the markets, I would be concerned with the China supply chain to the US. At most
there is 5-weeks, three on the ocean and a week on each side getting board ship, unloading, and
customs. Perhaps companies will have 2 -4 weeks in stock already. We are two-3 weeks into this.
China plants are more than likely closed or are half-staffed. Ships woill not call on Chinese
ports till the crisis is over or is pronounced safe.
run75441 , February 28, 2020 6:39 am
PGL:
Yep, he believes he is doomed if the economy tanks. It is actually an opportunity
for him to shine if only he knew how to be presidential and lead the nation.
EMichael , February 28, 2020 9:31 am
So Trump keeps trying to reassure investors about the market when there is not a single
person in the world that would pay attention to his comments on the market.
It's not as if the global economy was doing particularly well before the Wuhan coronavirus'
outbreak. In August, a survey of economists by the National Association for Business Economics
concluded that 72% of analysts expect a US recession to hit by the end of 2021. This percentage
included 38% of economists who believe a recession will strike by the end of this year and 34%
who think it will come next year. A
UN report published in September similarly warned of a worldwide recession this year. In
its case, the report's authors pointed to such risk factors as trade wars, and a no-deal Brexit.
It was clear earlier this month that the coronavirus outbreak could severely damage
the global economy.
On Feb. 12, I wrote that American and Chinese demand had been sustaining the world economy
for the last few years, and if China were shut down due to the virus, the ripple effect through
global supply chains could drag down the rest of world with it. And sure enough, this week
began with news of how the disease is throttling trade flows in and out of China.
Technically called COVID-19 ("coronavirus" actually being the name for a whole family of
viruses), the disease
has now infected at least 77,150 people in China, with 2,592 deaths. On Monday, stock
markets plunged on news that new and rapidly spreading outbreaks are now popping up
in South Korea,
Iran, and Italy . The Dow Jones dropped 3.5 percent -- or 1,000 points -- the S&P 500
fell 3.7 percent, and the Nasdaq plunged 3.7 percent.
The possibility of the virus spreading across the world is certainly unnerving. And while
the World Health Organization has so far avoided declaring the disease an official pandemic,
the organization did say it has "pandemic potential." But we don't even need to posit a
pandemic to see how the virus could tank economies around the world.
An example: Reliable trade data out of China is hard to come by, but a Boston company named
CargoMetrics has been trying to keep tabs. Their data covers not just shipping traffic but how
full the cargo vessels are. And their
index shows a 27 percent decline in Chinese imports from Feb. 7 to Feb. 17 -- a massive
deviation from the average trend in prior years. Dry cargo imports -- things like metals, ores,
grains, wood, coal, and steel products -- are down 40 percent.
China's imports "are totally in freefall," as CargoMetrics' CEO Scott Borgerson put it.
Basically, over the last month, the country has bought way less stuff from the rest of the
world than normal. And while China's exports to the rest of the world aren't suffering quite as
badly, the situation is still "ugly," and down from the historical trends.
At this point, it is well-known that major players like Nike, Hyundai, Apple, and General
Motors are having to curtail some operations, because they rely on Chinese manufacturers for
goods and parts.
But smaller businesses are getting hit , too. Everyone from shoe and blue jean
manufacturers, to electric bicycle makers and outdoor fireplace suppliers and 3D printed
toymakers for children are feeling the pinch, as imports from China they depended on suddenly
dry up -- in some cases, forcing them to switch to other Asian suppliers that are now shutting
down as well , in fear of the spreading disease. In a particularly unpleasant irony,
there are roughly 150 prescription drugs -- "antibiotics, generics, and some branded drugs
without alternatives,"
according to Axios -- that may well experience shortages because of how dependent we
are on Chinese manufacturers to produce them. Even the
fashion industry is not immune. And
it's the same story in other countries that rely on China for their supply chains, from
Australia to Japan.
"The second-largest economy in the world is completely shut down. People aren't totally
pricing that in," Larry Benedict, CEO of The Opportunistic Trader, toldCNBC .
According to the
New York Times , an analysis from JPMorgan concluded that "the immediate impact of a
large China demand and supply shock will be substantial." China's own President Xi Jinping
called the coronavirus a "crisis," as the country reneged on its earlier plans to ease
travel restrictions out of the city of Wuhan, an epicenter of the outbreak.
The basic problem is that the way to contain a disease is to prevent people from traveling
and from interacting in large groups. Which is not limited to, but certainly includes, keeping
them from working -- many factory employees in China, for example, remain stuck at home and
unable to commute to work. "Because the remedies are extreme, even small risks of infection and
of death can have a drastic effect on economic activity," as economist Olivier Blanchard
put
it .
And there's no way "stimulate" a country out of this situation: China has announced various efforts
to prop up its economy, from a hose of new loans to keep companies afloat to a raft of new tax
breaks. But no amount of money can compensate a business model when workers literally aren't
allowed to go to work.
The good news is that, in an already-depressed world economy, economic stimulus can increase
demand throughout the world in the places that haven't been physically hit by the virus yet,
and that could at least provide a cushion as supply chains transition.
Beyond that, the global economy's best hope is that the virus can be contained relatively
soon. The growth of new cases of COVID-19 in China actually peaked earlier this month,
according to
World Health Organization data. And in China itself, six provinces that were more or less
shutdown
have relaxed their emergency ratings , and are allowing companies to bring their workers
back in. (The problem is that it's hard to know precisely what to make of this given given how
untrustworthy
the Chinese government has proven itself to be.) Experts also predict world
economic growth will slow to a measly 1 percent this quarter, but recover soon after.
Of course, all that depends on virus peaking already or soon. Given the outbreaks in Italy
and elsewhere, that doesn't sound like a safe bet.
There's no way to predict the future in a situation like this. But if the outbreak grows
around the world while continuing to drive the Chinese economy into the ground, it's not hard
to see how the world's already-limping economic growth could go negative. In which case, we've
got a coronavirus recession on our hands.
Trump might not survive the Coronavirus, literally (he is over 70 and has a high range of
contacts; the mortality to this age group is close to 10%), or figuratively as voters might
not forgive him inadequate and/or incompetent response (which is given) .
Unfortunately, Bernie is at even higher risk as mortality for 80+ is over 15%, and
pre-existing cardiovascular disease is a serious negative factor.
One can wonder if this will be " Strawthat broke the camel'sback " for Trump. With 10% drop of S&P500 (aka "correction") it is difficult to
talk about booming economy on rallies ( 20% decline marker defines a recession and some
stocks -- like oil sector are already in this territory ). High yield bonds are also going
down, although more slowly. Now suddenly, Trump has nothing to talk about on his rallies, and
he knows it.
A part of rich retirees who are overexposed to stocks constitutes a sizable part of
remaining avid "Trumpers" voter block (kind of double stupidity, if you wish :-) , and some
of them might not forgive Trump the liberty of depriving them honestly earned in 2019 ~10% of
their 401K accounts.
IMHO troubles for Trump just started. Being incompetent DJT and his merry band of grifters
will almost definitely botch the response.
They already made three blunders.
1. When asked if, and when, a vaccine is produced, would the vaccine be affordable to
everyone? They replied; We'll let the "market" decide that. And some part of electorate
probably noted that.
2. The last December, they cut the budget for the CDC (center for disease control).
In this sense appointing Pence as the head of the coronavirus response may be a smart move
by Trump. When and if the pandemic hits big time, exposing the mass incompetence and
unpreparedness of the US government, in combination with the tanking of the stock market,
Trump can, of course, blame Christian Zionist neoconservative Israeli apartheid supporter
Pence for his troubles :-)
But, unfortunately, that will not do him any good.
It's not as if the global economy was doing particularly well before the Wuhan coronavirus'
outbreak. In August, a survey of economists by the National Association for Business Economics
concluded that 72% of analysts expect a US recession to hit by the end of 2021. This percentage
included 38% of economists who believe a recession will strike by the end of this year and 34%
who think it will come next year.
Taking a global view,
a UN report published in September similarly warned of a worldwide recession this year. In
its case, the report's authors pointed to such risk factors as trade wars, currency fluctuations,
long-term interest movements, and also the possibility of a no-deal Brexit.
It was clear earlier this month that the coronavirus outbreak could severely damage
the global economy.
On Feb. 12, I wrote that American and Chinese demand had been sustaining the world economy
for the last few years, and if China were shut down due to the virus, the ripple effect through
global supply chains could drag down the rest of world with it. And sure enough, this week
began with news of how the disease is throttling trade flows in and out of China.
Technically called COVID-19 ("coronavirus" actually being the name for a whole family of
viruses), the disease
has now infected at least 77,150 people in China, with 2,592 deaths. On Monday, stock
markets plunged on news that new and rapidly spreading outbreaks are now popping up
in South Korea,
Iran, and Italy . The Dow Jones dropped 3.5 percent -- or 1,000 points -- the S&P 500
fell 3.7 percent, and the Nasdaq plunged 3.7 percent.
The possibility of the virus spreading across the world is certainly unnerving. And while
the World Health Organization has so far avoided declaring the disease an official pandemic,
the organization did say it has "pandemic potential." But we don't even need to posit a
pandemic to see how the virus could tank economies around the world.
An example: Reliable trade data out of China is hard to come by, but a Boston company named
CargoMetrics has been trying to keep tabs. Their data covers not just shipping traffic but how
full the cargo vessels are. And their
index shows a 27 percent decline in Chinese imports from Feb. 7 to Feb. 17 -- a massive
deviation from the average trend in prior years. Dry cargo imports -- things like metals, ores,
grains, wood, coal, and steel products -- are down 40 percent.
China's imports "are totally in freefall," as CargoMetrics' CEO Scott Borgerson put it.
Basically, over the last month, the country has bought way less stuff from the rest of the
world than normal. And while China's exports to the rest of the world aren't suffering quite as
badly, the situation is still "ugly," and down from the historical trends.
At this point, it is well-known that major players like Nike, Hyundai, Apple, and General
Motors are having to curtail some operations, because they rely on Chinese manufacturers for
goods and parts.
But smaller businesses are getting hit , too. Everyone from shoe and blue jean
manufacturers, to electric bicycle makers and outdoor fireplace suppliers and 3D printed
toymakers for children are feeling the pinch, as imports from China they depended on suddenly
dry up -- in some cases, forcing them to switch to other Asian suppliers that are now shutting
down as well , in fear of the spreading disease. In a particularly unpleasant irony,
there are roughly 150 prescription drugs -- "antibiotics, generics, and some branded drugs
without alternatives,"
according to Axios -- that may well experience shortages because of how dependent we
are on Chinese manufacturers to produce them. Even the
fashion industry is not immune. And
it's the same story in other countries that rely on China for their supply chains, from
Australia to Japan.
"The second-largest economy in the world is completely shut down. People aren't totally
pricing that in," Larry Benedict, CEO of The Opportunistic Trader, toldCNBC .
According to the
New York Times , an analysis from JPMorgan concluded that "the immediate impact of a
large China demand and supply shock will be substantial." China's own President Xi Jinping
called the coronavirus a "crisis," as the country reneged on its earlier plans to ease
travel restrictions out of the city of Wuhan, an epicenter of the outbreak.
The basic problem is that the way to contain a disease is to prevent people from traveling
and from interacting in large groups. Which is not limited to, but certainly includes, keeping
them from working -- many factory employees in China, for example, remain stuck at home and
unable to commute to work. "Because the remedies are extreme, even small risks of infection and
of death can have a drastic effect on economic activity," as economist Olivier Blanchard
put
it .
And there's no way "stimulate" a country out of this situation: China has announced various efforts
to prop up its economy, from a hose of new loans to keep companies afloat to a raft of new tax
breaks. But no amount of money can compensate a business model when workers literally aren't
allowed to go to work.
The good news is that, in an already-depressed world economy, economic stimulus can increase
demand throughout the world in the places that haven't been physically hit by the virus yet,
and that could at least provide a cushion as supply chains transition.
Beyond that, the global economy's best hope is that the virus can be contained relatively
soon. The growth of new cases of COVID-19 in China actually peaked earlier this month,
according to
World Health Organization data. And in China itself, six provinces that were more or less
shutdown
have relaxed their emergency ratings , and are allowing companies to bring their workers
back in. (The problem is that it's hard to know precisely what to make of this given given how
untrustworthy
the Chinese government has proven itself to be.) Experts also predict world
economic growth will slow to a measly 1 percent this quarter, but recover soon after.
Of course, all that depends on virus peaking already or soon. Given the outbreaks in Italy
and elsewhere, that doesn't sound like a safe bet.
There's no way to predict the future in a situation like this. But if the outbreak grows
around the world while continuing to drive the Chinese economy into the ground, it's not hard
to see how the world's already-limping economic growth could go negative. In which case, we've
got a coronavirus recession on our hands.
IIRC correctly, the majority of the worst drops in Dow History have now occurred since
January 2017.
While some of the largest budget deficits -- which are far higher than officially reported
-- have occured since January 2017. Unofficially, those budget deficits exceed any under
Obama.
While Democratic leaders, Nancy Pelosi and Chuck Schumer, aid in approving those
budgets.
Much like Tip O'Neill aided Reagan in producing the first massive deficits.
The direct, actual disruption caused by by a coronavirus pandemic?
Or
Disruption caused by the panicky over-reaction to the potential of of a pandemic?
A little bit off-topic, or very much off-topic but related with Hudson's favourite
theme. This is about potential bankruptcies derived from quarantines almost certainly not
covered by insurance: wouldn't this be an excellent case for debt forgiving?
I dunno. My impression is too much of corporate malfeasance involves the use of
debt. Consolidation, stock buybacks, leveraged everything, hostile
take-everything.
This stacked system is currently confronting two crises it has no good solution to.
One is Covid19 and the other is insurrection. Obama forgave the one percent's debts once
already. No more of that. I'm hoping this is "the great leveling" event.
I can not find a link but a comment here yesterday said China has announced it will
pay all healthcare costs related to Covid for those without insurance. I honestly don't know
if that's true but it lead me to understand that China has a hybrid public/private system
health insurance system. Wikipedia says China provides "basic" healthcare for 95% of the
population which covers roughly 50% of treatment costs. Hmmm I wonder what the treatments
cost
Sadly, promises to cover the cost of treatment are ineffectual without enough
facilities, supplies and healthcare workers.
With regard to the question of "corporate debt", a better way than "forgiveness" IMO
would be "temporary nationalization" by means of some public entity bidding on operating
assets (with, hopefully, the entity still functioning) at a liquidation auction. The senior
creditors (first in line, I think are employees with unpaid back wages due) would get
something; the shareholders -- given the degree of leverage that is customary today -- often
would be wiped out (which they would be in any event under the conditions in
view).
The publicly owned and operated businesses would go private again through conversion
to worker-owned cooperatives. This would take time, which would permit the bugs to be worked
out. I can't imagine that the transition would be smooth.
This kind of conversion from shareholder-owned to worker-owned enterprise has been
proposed previously (don't have links) as something that could be done as ongoing policy
through money creation by the central government and new forms of "eminent domain"
legislation, or simply by purchase of shares in the open markets, New private enterprises
could be created by the former owners using the funds received and, at such time as these
became sufficiently powerful to be problematic, could likewise be converted to cooperatives.
It might be an engine of innovation. Significant regulation would probably be needed to curb
clearly unproductive uses of funds.
Perhaps it's another way that this crisis is creating opportunities that we don't
want to allow to be wasted.
It will be interesting to see what the government of China does, as it will be the
first to face this problem at large scale. Will they turn into a "workers' party"? Hard to
imagine, but the paths out of the current turmoil may contain possibilities that could not be
realistically contemplated just months ago.
How do you prevent this feed-me-seymour financialization-economy from imploding?
Keep feeding it. Biden and his cronies, including little George, knew it. And that has to be
the reason why they passed laws preventing the process of bankruptcy. Like they placed their
bets on winning the war for oil in the middle east at the same time. Why did they think these
bad decisions would keep our economy stable?
"... Neoliberalism and its usual prescriptions – always more markets, always less government – are in fact a perversion of mainstream economics. ..."
"... The term is used as a catchall for anything that smacks of deregulation, liberalisation, privatisation or fiscal austerity. Today it is routinely reviled as a shorthand for the ideas and practices that have produced growing economic insecurity and inequality, led to the loss of our political values and ideals, and even precipitated our current populist backlash. ..."
"... The use of the term "neoliberal" exploded in the 1990s, when it became closely associated with two developments, neither of which Peters's article had mentioned. One of these was financial deregulation, which would culminate in the 2008 financial crash and in the still-lingering euro debacle . The second was economic globalisation, which accelerated thanks to free flows of finance and to a new, more ambitious type of trade agreement. Financialisation and globalisation have become the most overt manifestations of neoliberalism in today's world. ..."
"... That neoliberalism is a slippery, shifting concept, with no explicit lobby of defenders, does not mean that it is irrelevant or unreal. Who can deny that the world has experienced a decisive shift toward markets from the 1980s on? Or that centre-left politicians – Democrats in the US, socialists and social democrats in Europe – enthusiastically adopted some of the central creeds of Thatcherism and Reaganism, such as deregulation, privatisation, financial liberalisation and individual enterprise? Much of our contemporary policy discussion remains infused with principles supposedly grounded in the concept of homo economicus , the perfectly rational human being, found in many economic theories, who always pursues his own self-interest. ..."
Neoliberalism and its usual prescriptions – always more markets, always less government – are in fact a perversion of
mainstream economics.
As even its harshest critics concede, neoliberalism is hard to pin down. In broad terms, it
denotes a preference for markets over government, economic incentives over cultural norms, and
private entrepreneurship over collective action. It has been used to describe a wide range of
phenomena – from Augusto Pinochet to Margaret Thatcher and Ronald Reagan, from the
Clinton Democrats and the UK's New Labour to the economic opening in China and the reform of
the welfare state in Sweden.
The term is used as a catchall for anything that smacks of deregulation, liberalisation,
privatisation or fiscal austerity. Today it is routinely reviled as a shorthand for the ideas
and practices that have produced growing economic insecurity and inequality, led to the loss of
our political values and ideals, and even precipitated our current populist backlash.
We live in the age of neoliberalism, apparently. But who are neoliberalism's adherents and
disseminators – the neoliberals themselves? Oddly, you have to go back a long time to
find anyone explicitly embracing neoliberalism. In 1982, Charles Peters, the longtime editor of
the political magazine Washington Monthly, published an essay titled
A Neo-Liberal's Manifesto . It makes for interesting reading 35 years later, since the
neoliberalism it describes bears little resemblance to today's target of derision. The
politicians Peters names as exemplifying the movement are not the likes of Thatcher and Reagan,
but rather liberals – in the US sense of the word – who have become disillusioned
with unions and big government and dropped their prejudices against markets and the
military.
The use of the term "neoliberal" exploded in the 1990s, when it became closely associated
with two developments, neither of which Peters's article had mentioned. One of these was
financial deregulation, which would culminate in the 2008
financial crash and in the still-lingering euro debacle . The second was economic
globalisation, which accelerated thanks to free flows of finance and to a new, more ambitious
type of trade agreement. Financialisation and globalisation have become the most overt
manifestations of neoliberalism in today's world.
That neoliberalism is a slippery, shifting concept, with no explicit lobby of defenders,
does not mean that it is irrelevant or unreal. Who can deny that the world has experienced a
decisive shift toward markets from the 1980s on? Or that centre-left politicians –
Democrats in the US, socialists and social democrats in Europe – enthusiastically adopted
some of the central creeds of Thatcherism and Reaganism, such as deregulation, privatisation,
financial liberalisation and individual enterprise? Much of our contemporary policy discussion
remains infused with principles supposedly grounded in the concept of homo
economicus , the perfectly rational human being, found in many economic theories, who
always pursues his own self-interest.
But the looseness of the term neoliberalism also means that criticism of it often misses the
mark. There is nothing wrong with markets, private entrepreneurship or incentives – when
deployed appropriately. Their creative use lies behind the most significant economic
achievements of our time. As we heap scorn on neoliberalism, we risk throwing out some of
neoliberalism's useful ideas.
The real trouble is that mainstream economics shades too easily into ideology, constraining
the choices that we appear to have and providing cookie-cutter solutions. A proper
understanding of the economics that lie behind neoliberalism would allow us to identify –
and to reject – ideology when it masquerades as economic science. Most importantly, it
would help us to develop the institutional imagination we badly need to redesign capitalism for
the 21st century.
N eoliberalism is typically understood as being based on key tenets of mainstream economic
science. To see those tenets without the ideology, consider this thought experiment. A
well-known and highly regarded economist lands in a country he has never visited and knows
nothing about. He is brought to a meeting with the country's leading policymakers. "Our country
is in trouble," they tell him. "The economy is stagnant, investment is low, and there is no
growth in sight." They turn to him expectantly: "Please tell us what we should do to make our
economy grow."
The economist pleads ignorance and explains that he knows too little about the country to
make any recommendations. He would need to study the history of the economy, to analyse the
statistics, and to travel around the country before he could say anything.
Facebook
Twitter Pinterest Tony Blair and Bill Clinton: centre-left politicians who enthusiastically
adopted some of the central creeds of Thatcherism and Reaganism. Photograph: Reuters
But his hosts are insistent. "We understand your reticence, and we wish you had the time for
all that," they tell him. "But isn't economics a science, and aren't you one of its most
distinguished practitioners? Even though you do not know much about our economy, surely there
are some general theories and prescriptions you can share with us to guide our economic
policies and reforms."
The economist is now in a bind. He does not want to emulate those economic gurus he has long
criticised for peddling their favourite policy advice. But he feels challenged by the question.
Are there universal truths in economics? Can he say anything valid or useful?
So he begins. The efficiency with which an economy's resources are allocated is a critical
determinant of the economy's performance, he says. Efficiency, in turn, requires aligning the
incentives of households and businesses with social costs and benefits. The incentives faced by
entrepreneurs, investors and producers are particularly important when it comes to economic
growth. Growth needs a system of property rights and contract enforcement that will ensure
those who invest can retain the returns on their investments. And the economy must be open to
ideas and innovations from the rest of the world.
But economies can be derailed by macroeconomic instability, he goes on. Governments must
therefore pursue a sound
monetary policy , which means restricting the growth of liquidity to the increase in
nominal money demand at reasonable inflation. They must ensure fiscal sustainability, so that
the increase in public debt does not outpace national income. And they must carry out
prudential regulation of banks and other financial institutions to prevent the financial system
from taking excessive risk.
Now he is warming to his task. Economics is not just about efficiency and growth, he adds.
Economic principles also carry over to equity and social policy. Economics has little to say about how
much redistribution a society should seek. But it does tell us that the tax base should be as
broad as possible, and that social programmes should be designed in a way that does not
encourage workers to drop out of the labour market.
By the time the economist stops, it appears as if he has laid out a fully fledged neoliberal
agenda. A critic in the audience will have heard all the code words: efficiency, incentives,
property rights, sound money, fiscal prudence. And yet the universal principles that the
economist describes are in fact quite open-ended. They presume a capitalist economy – one
in which investment decisions are made by private individuals and firms – but not much
beyond that. They allow for – indeed, they require – a surprising variety of
institutional arrangements.
So has the economist just delivered a neoliberal screed? We would be mistaken to think so,
and our mistake would consist of associating each abstract term – incentives, property
rights, sound money – with a particular institutional counterpart. And therein lies the
central conceit, and the fatal flaw, of neoliberalism: the belief that first-order economic
principles map on to a unique set of policies, approximated by a Thatcher/Reagan-style
agenda.
Consider property rights. They matter insofar as they allocate returns on investments. An
optimal system would distribute property rights to those who would make the best use of an
asset, and afford protection against those most likely to expropriate the returns. Property
rights are good when they protect innovators from free riders, but they are bad when they
protect them from competition. Depending on the context, a legal regime that provides the
appropriate incentives can look quite different from the standard US-style regime of private
property rights.
This may seem like a semantic point with little practical import; but China's phenomenal
economic success is largely due to its orthodoxy-defying institutional tinkering. China turned
to markets, but did not copy western practices in property rights. Its reforms produced
market-based incentives through a series of unusual institutional arrangements that were better
adapted to the local context. Rather than move directly from state to private ownership, for
example, which would have been stymied by the weakness of the prevailing legal structures, the
country relied on mixed forms of ownership that provided more effective property rights for
entrepreneurs in practice. Township and Village Enterprises (TVEs), which spearheaded Chinese
economic growth during the 1980s, were collectives owned and controlled by local governments.
Even though TVEs were publicly owned, entrepreneurs received the protection they needed against
expropriation. Local governments had a direct stake in the profits of the firms, and hence did
not want to kill the goose that lays the golden eggs.
China relied on a range of such innovations, each delivering the economist's higher-order
economic principles in unfamiliar institutional arrangements. For instance, it shielded its
large state sector from global competition, establishing special economic zones where foreign
firms could operate with different rules than in the rest of the economy. In view of such
departures from orthodox blueprints, describing China's economic reforms as neoliberal –
as critics are inclined to do – distorts more than it reveals. If we are to call this
neoliberalism, we must surely look more kindly on the ideas behind the most dramatic
poverty reduction in history.
One might protest that China's institutional innovations were purely transitional. Perhaps
it will have to converge on western-style institutions to sustain its economic progress. But
this common line of thinking overlooks the diversity of capitalist arrangements that still
prevails among advanced economies, despite the considerable homogenisation of our policy
discourse.
What, after all, are western institutions? The size of the public sector in OECD countries
varies, from a third of the economy in Korea to nearly 60% in Finland. In Iceland, 86% of
workers are members of a trade union; the comparable number in Switzerland is just 16%. In the
US, firms can fire workers almost at will;
French labour laws have historically required employers to jump through many hoops first.
Stock markets have grown to a total value of nearly one-and-a-half times GDP in the US; in
Germany, they are only a third as large, equivalent to just 50% of GDP.
Facebook
Twitter Pinterest 'China turned to markets, but did not copy western practices ... '
Photograph: AFP/Getty
The idea that any one of these models of taxation, labour relations or financial
organisation is inherently superior to the others is belied by the varying economic fortunes
that each of these economies have experienced over recent decades. The US has gone through
successive periods of angst in which its economic institutions were judged inferior to those in
Germany, Japan, China, and now possibly Germany again. Certainly, comparable levels of wealth
and productivity can be produced under very different models of capitalism. We might even go a
step further: today's prevailing models probably come nowhere near exhausting the range of what
might be possible, and desirable, in the future.
The visiting economist in our thought experiment knows all this, and recognises that the
principles he has enunciated need to be filled in with institutional detail before they become
operational. Property rights? Yes, but how? Sound money? Of course, but how? It would perhaps
be easier to criticise his list of principles for being vacuous than to denounce it as a
neoliberal screed.
Still, these principles are not entirely content-free. China, and indeed all countries that
managed to develop rapidly, demonstrate the utility of those principles once they are properly
adapted to local context. Conversely, too many economies have been driven to ruin courtesy of
political leaders who chose to violate them. We need look no further than
Latin American populists or eastern European communist regimes to appreciate the practical
significance of sound money, fiscal sustainability and private incentives.
O f course, economics goes beyond a list of abstract, largely common-sense principles. Much
of the work of economists consists of developing
stylised models of how economies work and then confronting those models with evidence.
Economists tend to think of what they do as progressively refining their understanding of the
world: their models are supposed to get better and better as they are tested and revised over
time. But progress in economics happens differently.
Economists study a social reality that is unlike the physical universe. It is completely
manmade, highly malleable and operates according to different rules across time and space.
Economics advances
not by settling on the right model or theory to answer such questions, but by improving our
understanding of the diversity of causal relationships. Neoliberalism and its customary
remedies – always more markets, always less government – are in fact a perversion
of mainstream economics. Good economists know that the correct answer to any question in
economics is: it depends.
Does an increase in the minimum wage depress employment? Yes, if the labour market is really
competitive and employers have no control over the wage they must pay to attract workers; but
not necessarily otherwise. Does trade liberalisation increase economic growth? Yes, if it
increases the profitability of industries where the bulk of investment and innovation takes
place; but not otherwise. Does more government spending increase employment? Yes, if there is
slack in the economy and wages do not rise; but not otherwise. Does monopoly harm innovation?
Yes and no, depending on a whole host of market circumstances.
Facebook
Twitter Pinterest 'Today [neoliberalism] is routinely reviled as a shorthand for the ideas
that have produced growing economic inequality and precipitated our current populist backlash'
Trump signing an order to take the US out of the TPP trade pact. Photograph: AFP/Getty
In economics, new models rarely supplant older models. The basic competitive-markets model
dating back to Adam Smith has been modified over time by the inclusion, in rough historical
order, of monopoly, externalities, scale economies, incomplete and asymmetric information,
irrational behaviour and many other real-world features. But the older models remain as useful
as ever. Understanding how real markets operate necessitates using different lenses at
different times.
Perhaps maps offer the best analogy. Just like economic models, maps are highly
stylised representations of reality . They are useful precisely because they abstract from
many real-world details that would get in the way. But abstraction also implies that we need a
different map depending on the nature of our journey. If we are travelling by bike, we need a
map of bike trails. If we are to go on foot, we need a map of footpaths. If a new subway is
constructed, we will need a subway map – but we wouldn't throw out the older maps.
Economists tend to be very good at making maps, but not good enough at choosing the one most
suited to the task at hand. When confronted with policy questions of the type our visiting
economist faces, too many of them resort to "benchmark" models that favour the
laissez-faire approach. Kneejerk solutions and hubris replace the richness and humility of
the discussion in the seminar room. John Maynard Keynes once defined economics as the "science
of thinking in terms of models, joined to the art of choosing models which are relevant".
Economists typically have trouble with the "art" part.
This, too, can be illustrated with a parable. A journalist calls an economics professor for
his view on whether free trade is a good idea. The professor responds enthusiastically in the
affirmative. The journalist then goes undercover as a student in the professor's advanced
graduate seminar on international trade. He poses the same question: is free trade good? This
time the professor is stymied. "What do you mean by 'good'?" he responds. "And good for whom?"
The professor then launches into an extensive exegesis that will ultimately culminate in a
heavily hedged statement: "So if the long list of conditions I have just described are
satisfied, and assuming we can tax the beneficiaries to compensate the losers, freer trade has
the potential to increase everyone's wellbeing." If he is in an expansive mood, the professor
might add that the effect of free trade on an economy's longterm growth rate is not clear
either, and would depend on an altogether different set of requirements.
This professor is rather different from the one the journalist encountered previously. On
the record, he exudes self-confidence, not reticence, about the appropriate policy. There is
one and only one model, at least as far as the public conversation is concerned, and there is a
single correct answer, regardless of context. Strangely, the professor deems the knowledge that
he imparts to his advanced students to be inappropriate (or dangerous) for the general public.
Why?
The roots of such behaviour lie deep in the culture of the economics profession. But one
important motive is the zeal to display the profession's crown jewels – market
efficiency, the invisible hand, comparative advantage – in untarnished form, and to
shield them from attack by self-interested barbarians, namely
the protectionists . Unfortunately, these economists typically ignore the barbarians on the
other side of the issue – financiers and multinational corporations whose motives are no
purer and who are all too ready to hijack these ideas for their own benefit.
As a result, economists' contributions to public debate are often biased in one direction,
in favour of more trade, more finance and less government. That is why economists have
developed a reputation as cheerleaders for neoliberalism, even if mainstream economics is very
far from a paean to laissez-faire. The economists who let their enthusiasm for free markets run
wild are in fact not being true to their own discipline.
H ow then should we think about globalisation in order to liberate it from the grip of
neoliberal practices? We must begin by understanding the positive potential of global markets.
Access to world markets in goods, technologies and capital has played an important role in
virtually all of the economic miracles of our time. China is the most recent and powerful
reminder of this historical truth, but it is not the only case. Before China, similar miracles
were performed by South Korea, Taiwan, Japan and a few non-Asian countries such as Mauritius
. All of these countries embraced globalisation rather than turn their backs on it, and they
benefited handsomely.
Defenders of the existing economic order will quickly point to these examples when
globalisation comes into question. What they will fail to say is that almost all of these
countries joined the world economy by violating neoliberal strictures. South Korea and Taiwan,
for instance, heavily subsidised their exporters, the former through the financial system and
the latter through tax incentives. All of them eventually removed most of their import
restrictions, long after economic growth had taken off.
But none, with the sole exception of Chile in the 1980s under Pinochet, followed the
neoliberal recommendation of a rapid opening-up to imports. Chile's
neoliberal experiment eventually produced the worst economic crisis in all of Latin
America. While the details differ across countries, in all cases governments played an active
role in restructuring the economy and buffering it against a volatile external environment.
Industrial policies, restrictions on capital flows and currency controls – all prohibited
in the neoliberal playbook – were rampant.
Facebook
Twitter Pinterest Protest against Nafta in Mexico City in 2008: since the reforms of the
mid-90s, the country's economy has underperformed. Photograph: EPA
By contrast, countries that stuck closest to the neoliberal model of globalisation were
sorely disappointed. Mexico provides a particularly sad example. Following a series of
macroeconomic crises in the mid-1990s, Mexico embraced macroeconomic orthodoxy, extensively
liberalised its economy, freed up the financial system, sharply reduced import restrictions and
signed the North American Free Trade Agreement (Nafta). These policies did produce
macroeconomic stability and a significant rise in foreign trade and internal investment. But
where it counts – in overall productivity and economic growth – the
experiment failed . Since undertaking the reforms, overall productivity in Mexico has
stagnated, and the economy has underperformed even by the undemanding standards of Latin
America.
These outcomes are not a surprise from the perspective of sound economics. They are yet
another manifestation of the need for economic policies to be attuned to the failures to which
markets are prone, and to be tailored to the specific circumstances of each country. No single
blueprint fits all.
A s Peters's 1982 manifesto attests, the meaning of neoliberalism has changed considerably
over time as the label has acquired harder-line connotations with respect to deregulation,
financialisation and globalisation. But there is one thread that connects all versions of
neoliberalism, and that is the
emphasis on economic growth . Peters wrote in 1982 that the emphasis was warranted because
growth is essential to all our social and political ends – community, democracy,
prosperity. Entrepreneurship, private investment and removing obstacles that stand in the way
(such as excessive regulation) were all instruments for achieving economic growth. If a similar
neoliberal manifesto were penned today, it would no doubt make the same point.
Critics often point out that this emphasis on economics debases and sacrifices other
important values such as equality, social inclusion, democratic deliberation and justice. Those
political and social objectives obviously matter enormously, and in some contexts they matter
the most. They cannot always, or even often, be achieved by means of technocratic economic
policies; politics must play a central role.
Still, neoliberals are not wrong when they argue that our most cherished ideals are more
likely to be attained when our economy is vibrant, strong and growing. Where they are wrong is
in believing that there is a unique and universal recipe for improving economic performance, to
which they have access. The fatal flaw of neoliberalism is that it does not even get the
economics right. It must be rejected on its own terms for the simple reason that it is bad
economics.
A version of this article first appeared in Boston
Review
401(k) Millionaires Surge To Record Level Under Trump by Tyler Durden Sat, 02/22/2020 - 19:00
A Fidelity Investments
press release on Thursday said the number of customers with more than $1 million in their
409k
There's a reason why President Trump touted 401k growth during his State of the Union
address last week, because balances are increasing, and it will help him win the
election.
Fidelity noted that 401k millionaires soared last quarter, reaching a record level.
Customers with the brokerage house that have over one million dollars in their 401k hit
233,000, up from 200,000 in Q3, a 17% jump M/M.
The number of IRA millionaires increased to 208,000, also a record high and an increase
from 182,400 in Q3.
All of these new 401k and IRA millionaires were created through President Trump's
pressure on the Federal Reserve to unleash easy money policies to boost the stock
market.
And, of course, as we all know, JPM's
drain of liquidity via Money Markets and reserves parked at the Fed promoted a liquidity
crisis that resulted in "Not QE," which allowed even more liquidity to flow into the stock
market starting last September, the same period when all of these investment accounts soared in
value. Coincidence?
Kevin Barry, president of Workplace Investing at Fidelity Investments, noted in the
release that "growth in savings levels over the last 10 years demonstrates the positive impact
of taking a long-term approach to retirement, and recent Fidelity research demonstrates workers
who do so have reason to feel increasingly confident about their retirement readiness."
"However, as we enter a new decade and continue to see markets rise and fall, it's more
important than ever to remember some of the important elements of a successful retirement
strategy – these include maintaining positive savings habits, ensuring your account has
the right balance of stocks, bonds, and cash, and continuing to focus on your long-term
savings goals," Barry added.
Every chance Trump gets, he tweets or tells everyone that their 409k
Raoul Pal of Real Vision had a good take on it:
The irresponsiblity of this, telling the average person to take more risks this late in
the cycle is simply staggering, regardless of what the markets do. To make them think a 50%
return is low lacks any fiduciary responsibility. This is worse than the Greenspan housing
comments. https://t.co/UqrFbYmoXM
It seems that the Fed's easy money policies over the last year, juicing markets to
all-time highs, could be a vote of confidence by the central bank to get Trump
reelected.
Listening to the howls from Democrats and the applause from Republicans, one would think
President Trump's proposed fiscal year 2021 budget is a radical assault on the welfare state.
The truth is the budget contains some minor spending cuts, most of which are not even real
cuts. Instead they are reductions in the "projected rate of growth." This is equivalent of
saying you are sticking to your diet because you ate five chocolate chip cookies when you
wanted to eat ten.
President Trump's plan reduces the Education Department's budget by nearly eight percent,
leaving the department with "only" 66.6 billion dollars. Cuts to other departments are
similarly small, while reductions in entitlement spending consist mostly of reforms that will
not affect most of those dependent on these programs.
President Trump deserves credit for proposing an 11.6 billion dollars cut in funding for the
Department of State and the US Agency for International Development (USAID). Foreign aid does
little to help impoverished people overseas. Instead, it benefits foreign government officials
willing to do the US government's bidding. The State Department and USAID are extensively
involved in US intervention abroad, including efforts to overthrow governments.
President Trump's budget proposes a number of increases in spending. For example, his budget
spends around 900 million additional dollars on vocational education. It also includes
additional spending on items including infrastructure and childcare.
Few in DC have expressed concern over the fact that President Trump's 4.8 trillion dollars
budget proposal is the largest budget in American history. There is also little outcry from
supposedly antiwar progressive Democrats over Trump's proposal to spend hundreds of billions of
dollars on militarism. This is not surprising, as many progressives are happy to support
increased warfare spending as long as conservatives go along with increased welfare spending.
Similarly, many conservatives are happy to support increased welfare spending as long as it
means that progressives will vote for increased warfare spending. So, Congress is unlikely to
approve any of President Trump's spending cuts, but Congress will gleefully agree to all of his
spending increases.
Even if Congress agrees to all of President Trump's cuts, federal deficits will still be
over one trillion dollars for the next several years. However, President Trump claims the
budget will balance in 15 years. In order to show a balanced budget by 2035, the administration
assumes three percent economic growth for most of the next decade. This level of growth is
unlikely to come to pass. Instead, the current boom will likely end soon, and the economy will
experience another major recession. Signs that we are on the verge of a downturn include rising
homelessness and the Federal Reserve's bailout of the repurchasing market.
The current economic boom is built on debt, and the debt-based economy is facilitated by the
Federal Reserve's easy money policies. The massive amount of debt held by consumers,
businesses, and especially government is the main reason the Fed feels compelled to maintain
historically low interest rates. If rates were to increase to market levels, government
interest payments would be unstable. This would cause the government debt bubble to burst,
leading to a major crisis. However, continuing on the current path of low interest rates will
inevitably lead to a dollar crisis and a collapse of the welfare-warfare Keynesian system.
Continuing to waste billions on wars abroad and failed programs at home while pretending
that we can avoid a crisis via phony cuts and Fed-fueled growth will only make the inevitable
collapse more painful. The only way to avoid economic disaster is to cut spending and audit,
then end, the Federal Reserve.
It seems that Japan's feared bureaucracy has handled the issue without
the advice from any specialist. Cruise ships are perfect to spread diseases. They have
central air condition and central septic systems that can spread viruses to every room on
board. There are many places on board which are commonly used. The crew is usually housed
in less than perfect conditions. Any suspected cases should have been taken off board
immediately. But these were simply told to stay in their cabins which they, of course, did
not do.
The Japanese military has some troops working on the ship but they are only now taking
protective measures which are still
less than sufficient :
About 50 staffers from the Self-Defense Forces are working on the vessel to examine the
passengers, disinfect cabins and transport patients. The ship was quarantined for two
weeks off Yokohama on Feb. 5 to prevent COVID-19 from spreading in Japan.
Those handling medicine are now required to wear masks, gloves, gowns and hair caps,
ministry officials said.
At a news conference, Kono admitted that the Defense Ministry applied the standards --
which are higher than those in use by health ministry officials working on the vessel --
after viewing a video from the ship posted by Dr. Kentaro Iwata of Kobe University
Hospital, who joined the disaster-relief team as a veteran infectious disease
specialist.
On Wednesday 500 Japanese passengers who had tested negative
were let go from the ship without further measures. But many of them will carry the
virus as more new confirmed cases from the ship still appear daily. These people should
have been further isolated. Letting them leave without such measures guarantees that new
outbreaks will soon appear throughout Japan.
This situation might have developed due to political pressure. Japan is supposed to hold
the summer Olympics later this year and it may have wanted to avoid bad headlines. To me it
seems that there will be no Olympics this year and that Japan's Prime Minister Shinzo Abe
will soon hear some harsh
public criticism .
Another big clusters established itself in Daegu, South Korea, where people from a
Christian sect infected each other during mass. There are currently some 130 such cases and
some 70 more spread elsewhere in South Korea.
Iran has a smaller cluster in Qom with 14 cases. It closed all schools and seminaries
and suspended religious gatherings in the city. Other countries report single new cases or
small clusters. This will continue as the disease races around the world. Large new
outbreaks will appear in those many countries which have less than perfect medical systems
or where the authorities want to suppress news of a smaller outbreak.
In the Ukraine rioters had to be brought under control when they protested
against quarantining evacuees from China near their villages.
The economic ripple effect of this epidemic and of the enormous quarantine in China will
be huge. It will be felt everywhere but especially in highly developed
industries :
The impacts on China both intrinsic and psychological are still vastly under estimated.
This is the largest containment/effective imprisonment via quarantine of human being in
world history. People are assuming no ripples from that.
The biggest factor that's not understood is the non linearity of supply chains. A two
week total shut down *does not* mean a two week delay in products to consumer. This is
very different from the tariff impacts, where pricing was adjusted.
A single component missing in a 500+ part product means all levels of production are
moot. Autos and consumer electronics are obvious examples. We have heard from multiple
auto players and Jaguar has publicly stated they have sub 2 weeks of operating
inventory.
Just In Time (JIT) production is a form of operational leverage. And like all forms of
leverage, there is a non linear downside effect. People are not putting it together that
this is a very big deal. It's not a 1 month hit. It's not a 1 quarter hit. It's an annual
hit *right now*.
Some large factories which depend on parts from China will soon have to shut down. Then
their other suppliers will also have to cease production. The loss of income will be felt
throughout the local economies.
The effects of the epidemic may well lead to an end of the globalization of production
processes. Companies will go back to buy locally to be as unaffected as possible from
similar future incidents. This might well be the most positive long term outcome of this
epidemic.
Some large factories which depend on parts from China will soon have to shut down. Then
their other suppliers will also have to cease production. The loss of income will be felt
throughout the local economies.
The ones who are insured won't be monetarily affected. The uninsured will. This may
trigger a bubble burst in the West, though.
The effects of the epidemic may well lead to an end of the globalization of production
processes. Companies will go back to buy locally to be as unaffected as possible from
similar future incidents. This might well be the most positive long term outcome of this
epidemic.
Globalization had already halted after 2008. That was the material base for the
so-called "populist" rise in the Western Civilization. Populism is a symptom, not the
cause, of the halt of globalization.
That doesn't mean, though, the the western countries are heading towards socialism. This
is specially the case with the First World countries, which have powerful armies, and thus
can restore (at least in part) their economies through dispossession of the weaker (Third
World) countries. The working classes of the First World tend to fascism, not
socialism.
That's why China is countering the death of globalization with OBOR. For socialism to
rise, there needs to be world prosperity. If the pot is small, fascism will rise again.
Infodemic continuing to spread.
Gullible people continuing to fail to understand that the real issue isn't the coronavirus,
it is the fear which the infodemic (and outright agitprop) is feeding - and which many of
these people are exacerbating.
China supplies enormous amounts of everything the world uses except energy.
Even food - China doesn't supply as much of the raw, but provides an enormous amount of
processing/handling.
And yes, "just in time" combined with the Lunar New Year holiday and a greatly prolonged
re-ramp time is going to impact everyone, everywhere.
The only question is how much.
The effects of the epidemic may well lead to an end of the globalization of production
processes. Companies will go back to buy locally to be as unaffected as possible from
similar future incidents. This might well be the most positive long term outcome of this
epidemic. I wholeheartedly agree but I have some trouble reconciling this with your
support of the EU and the British remainers.
Pepe Escobar writes about the possibility
that the virus is a bioweapon --but produced by whom? He looks at the Outlaw US
Empire's Hybrid War against China:
"There's no question coronavirus, so far, has been a Heaven-sent politically useful
tool, reaching, with minimum investment, the desired targets of maximized U.S. global power
– even if fleetingly, enhanced by a non-stop propaganda offensive – and China
relatively isolated with its economy semi paralyzed.
"Yet perspective is in order. The CDC estimated that up to 42.9 million people got sick
during the 2018-2019 flu season in the U.S. No less than 647,000 people were hospitalized.
And 61,200 died."
As far as I know, the bioweapon hypothesis has yet to be 100% disproven. IMO, it isn't.
I know how bacteriums and viruses share their DNA such that as I wrote previously humans
must always treat them as their #1 enemy/threat as they're potentially very deadly. It's
also a big mistake for the Outlaw US Empire to gloat about China's misfortune as it's not
immune whatsoever.
I read Escobar on your comment. He does have the Chinese and Persian perspective well in
hand. I still remember Trump at Mar-a-Lago treating Xi to 'beautiful piece of chocolate
cake', and bombing the Syrians.
A threat thrown at Xi and China. That was very telling and the threats, sanctions, have
occurred ever since non stop. This virus is all too convenient and once the dust settles we
may have some reciprocal action.
It is also hard to imagine how "first-world" countries will control the virus if it ever
does get a foothold, since they are scared of their own shadows and can't possibly compete
with the PRC when it comes to ruthlessness (at times there may be advantages to living in a
dictatorship ..)
Container shipping from Chinese ports has collapsed since the outbreak of coronavirus and
has yet to show any sign of recovery, threatening weeks of chaos for manufacturing supply
lines and the broader structure of global trade.
Almost half of the planned sailings on the route from Asia to North Europe have been
cancelled over the last four weeks. A parallel drama is unfolding on routes from the
Pacific Rim to the US and Latin America.
Lars Jensen from SeaIntelligence in Copenhagen said the loss of traffic is running at
300,000 containers a week. This will cause a logistical crunch in Europe in early March
even if the epidemic is brought under control quickly.[.]
Refrigerated ships full of frozen food are unable to enter Chinese ports because
berths are full.... cannot tap into electricity. No dockers or drivers.
In Europe Fiat Chrysler has suspended production. Jaguar Land Rover are flying in parts
in suitcases from China to UK.....
=========
Not just Europe. It's global. Could tip the world into a deep recession. Shortages
abound from everyday essentials,[Walmart, Family Dollar, DollarTree, Home Depot] food,
pharmaceuticals and manufacturers.
Food!!? Yes. garlic in the produce area.
You shop at Costco? Cheesecake - loaded with sodium benzoate- with milk being the last
ingredient listed on the label.
Good question: As one analyst asked; over the next 3-4 months who will want to open a
container from China or buy anything marked "Product of or Made in China?
I do not think the Chinese will counter-attack for this US bio weapon attack.
Why is it that many people dismiss this event as being biological warfare launched by
the US against China? Because it is too horrific. We know that the empire murders by the
thousands and millions without the slightest hesitation or guilt, but for some reason we
assume that even the empire is not so vile and malevolent as to use biological weapons. We
assume that the empire has some sort of conscience that will moderate its behavior, even
though we've never seen evidence of it.
These are people who built armies of literal head-choppers... death squads. They
gleefully murder respected statesmen on diplomatic missions. If they can do nothing else
then they will run you off the road just because they are hatefully psychotic.
This collectively psychotic culture cannot back down from their aggression if they are
losing, so they always escalate that aggression as far as they can.
America is losing its trade war with China, but is running out of economic weapons. From
within its bubble of psychosis America feels it has no choice but to escalate beyond
economic weapons. What other weapons can America possibly use to defeat China at this point
other than bio weapons?
There is no question that this is biological warfare.
That said, China is not going to retaliate and try to hurt Americans.
Why not?
Because unlike America they are not a culture of psychopaths.
Lost in this whole scaremongering affair is the CDC estimates that already for this flu
season 29 million have contracted the flu and 16,000 have died.
The American Sheeple can be herded anywhere with the MSM sheepdogs being controlled by
competent shepherds.
Mr. Gruff: I am told that bioweapons are not considered, by developed world spooks and
military types, to be "useful" as weapons. They are highly unstable, difficult to deploy
and tend to have lots of blowback, as in their effects being next to impossible to predict
and just as likely to result in non-desired outcomes as desired. Yes, Escobar makes a good
point that it sure all looks very, very suspicious, especially given the gigantic Western
anti-China info op that was marched out, and that right quick. But bioweapons are said to
not be considered serious as weapo0ns systems.
"...bioweapons are said to not be considered serious as weapons systems." --casey
@31
That just makes them all the more attractive to the "Shock Doctrine" CIA
gangsters. Agents of chaos love that sort of stuff. Nothing serious, just "bloodying
their nose" a little.
A bio-weapon is a dubious hypothesis, or at the very least, it's not exactly destined to
kill massess of "enemy" people. The virus kills basically 70/80+ years old people, which
isn't exactly a problem for most countries. The heavy load on healthcare system and its
cost might be a reason, but there's many other ways of attaining such a goal. A Trump-ian
desire to limit globalization perhaps, but doubtful as well.
That said, we can only state that China did its job, but it remains to be seen if other
countries are as effective. Japan obviously isn't. I suspect many European countries won't
as well - they're repatriating people from China and cruise ships by commercial flights and
don't bother with quarantines if people have no symptoms. Then there's Iran; was it some
Iranian who came back infected, was it Chinese workers who were let in unquarantined? (if
the latter, then it's a minor failure for China not to have screened them, though the
bigger failure would probably be Iranian immigration authorities)
B's last paragraph seems spot on. Chinese emissions of greenhouse gases are going down
big time, and other countries might learn the virtues of being self-sufficient as much as
possible.
While most of the discussion here centres on supply-chains and manufacturing exports from
China, in Australia it's our service sector that will be hit. We rely on at least three
relationships with China: education (Chinese fee-paying university students), tourism
(AUD$12bn/annum from PRC) and mining exports (iron-ore and coal). The first is the sector I
work in and my university is hysterical about the 6000 PRC students stranded in China under
the travel ban. Each of those students spends a lot of money here on accom, food, etc. and
represent about AUD$100m across the year including tuition fees. As b and others have said,
it's the ramifications and delayed unexamined consequences that will bite already
over-leveraged sectors. And the MSM are very silent on this aspect of the situation,
preferring instead to whip up fear and loathing toward the PRC, which may indeed be the
intent in order to prepare populations for a longer-term 'decoupling' from the Chinese
economy.
It's not that the Outlaw US Empire wouldn't deploy a bioweapon--it did in September
2001, anthrax--but as with The Omega Man and The Walking Dead they're too
unpredictable and can easily blowback on the users. IMO, chemical weapons that are
carcinogens like Agent Orange and glyphosate (Roundup) also ought to be classed as
bioweapons since they attack our biological systems in ways different from "classical"
chemical agents.
The economic affects have yet to even be felt; and if the virus was a bioweapon, its
blowback will severely damage Western economies as they're the most developed and
dependent. Otherwise, we have another deadly strain of virus that must be controlled just
as with all the other viruses.
I wish I had the optimism of some here ! Casey @ 31 for instance.
But we live in a real distopyian world, the most powerful country is run by a psychopathic
mass murderer whose population has been brain washed! To look for logic and reason in the
actions of the insane will never work! Their insane end of story.
So here is the truth it may save a lot of speculation.
Must read. But very long. Solid evidence as to intent, motavation and opportunity
What makes you think the ones using the bioweapons (CIA) care? If a million people in
poor health, or elderly, or with no insurance die in the US these monsters will put that on
the benefit side of the ledger. Less useless eaters leaching the empire's resources (most
of the US population are considered useless eaters now that the country has been largely
de-industrialized). Blowback doesn't faze them in the slightest. Head-chopping terrorists
are rabid dogs... very difficult to control. The CIA's version of James Bond got snuffed in
Benghazi by the very same rabid dogs that he was recruiting for the "American Foreign
Legion" . Has that blowback slowed the CIA down working with these animals? No, of
course not.
Posters are trying to maintain the completely unfounded belief that these people behind
the attacks are rational and intelligent. They are not. They are psychopaths, and that is
not hyperbole. These psychopaths actually like collateral damage, even when it
happens to citizens of the empire. They're laughing about the people dying on the cruise
ships. They are joking with each other about how stupid the useless eaters are for getting
on planes with infected people. They don't see this as a problem at all, aside perhaps from
being disappointed that more people in China are not dying.
Time and again people insist upon fooling themselves into disbelieving how monstrous
these psychotic freaks are, despite the fact of their monstrosity being revealed over and
over.
Try this: Read up on Jeffrey Dahmer. Maybe you think you know a little about him but
most people don't dig too deep because it makes them uncomfortable trying to imagine how
another human being could be that messed up.
Once you get a good idea of what I am referring to by "psychopath" , then try to
imagine an entire global crime syndicate made up of these types of individuals. If you work
at it you may start to get a grasp of what the CIA really is.
Yeah, I agree with your reasoning and have referred to The Establishment of being
wannabe Neros and Caligulas, and elsewhere I've described their philosophy as Libertinism
as designed by the Marquis de Sade. Some movies depicting CIA personnel behaviors come
close to portraying what you describe, like Mr Joshua and ilk from Lethal Weapon .
Not enough people seem to be troubled by the "fictional" Jason Bourne Story. Proven yet
again: Absolute Power corrupts absolutely. It's this aspect that's always troubled me when
thinking about how to disband the CIA. The fiction's horrid enough, and we know the truth's
worse.
Different strain a cold virus causing only a fraction of hospitalizations and deaths from
pneumonia from other infections, are way overhyped by China and international health
organizations. To what end?
Mandatory vaccinations down the road which will cause many adverse effects that will be
underreported, conditioning people to allow governments worldwide to lockdown people
without protest to keep them safe, etc.
This is all a psy-ops operation for greater pharma profits and government control. China
will blame the US for using a biowarfare weapon to gain the peoples nationalist support
(fake enemies are wonderful for that purpise). Despite being "attacked" China will continue
providing America antibiotics, tech gadgets and API's used for drugs and vaccines and will
honor American intellectuals property rights and pay royalties for vaccines they produce
using patented vaccine processes. Fake wrestling man.
Anyone notice it was not until China signed the trade agreement that the virus became
newsworthy?. Gates Event 201 and his documentary on Netflix shows the this was a preplanned
psyops .
For all we know there is not even a new virus. Just a test that detects endogenous viral
proteins present in a percentage of people that get tested when sick or exposed to a sick
person. How would we even know? But lets assume it is a new virus. Just look at the numbers
outside Hubei (numbers not to be trusted), and understand many people had the virus without
symptoms and you see the mortality rate not much greater than influenza and affecting
mostly elderly or other sick people hardest.
From past conversations I've had here at MoA with Clickkid, VK and some others on the
COVID-19 virus as a bioweapon, my conclusion is that it cannot be a bioweapon.
It's too contagious and it has too many modes of transmission for it to be easily
controllable by the attackers using it to subdue an enemy without risking blowback once the
enemy is dead and gone, and the attackers start moving their own people in to mop up and
take over cities and steal equipment, factory machines and armaments where the virus may
still be lingering. A virus that kills people past the age when they've finished raising
families and their own health is in long-term decline? Not ideal - as Clickkid pointed out,
a better bioweapon is one that incapacitates people in the prime of their lives, doesn't
kill them outright but reduces their productivity, maybe also renders them sterile or
infertile.
A vaccine would be a better bioweapon than an actual disease. With the various side
effects that have been reported for it, Gardasil (to prevent cervical cancer in women)
would be ideal as a bioweapon.
my conclusion is that it cannot be a bioweapon.
Bingo!
We have a winner.
It is 96% similar to a 2014 coronavirus, of bat origin, a double stranded positive RNA
virus.
A bat virus, like SARS and MERS, the other two significant coronavirus.
Jen
China has been in lockdown. Factories closed ect. Major resources diverted to stop the
spread. It is a major economic hit to China.
Hygiene is high in China compared to other densely populated parts of Asia. China has been
hit now with a number of exotic viruses ect that have been hits to its economy. Ebola
kicked off in Africa, but other than that, other countries that eat anything and
everything, who's hygiene is often not up to the standard of China do not seem to be
experiencing these outbreaks.
As to using bio weapons, any country that would develop and use them would have also
developed a vaccine.
my comment with LINK @ 25 addressed the just-in-time supply chain, global shipping
disruptions.
Now, the CDC has announced "in the eventuality of" they are getting prepared to adopt
closures:
(Reuters) - U.S. health officials on Friday said they are preparing for the possibility
of the spread of the new coronavirus through U.S. communities that would force closures
of schools and businesses.
The United States has yet to see community spread of the virus that emerged in central
China in late December. But health authorities are preparing medical personnel for the
risk, Nancy Messonnier, an official with the Centers for Disease Control and Prevention
(CDC) told reporters on a conference call.
In coming weeks, if the virus begins to spread through U.S. communities, health
authorities want to be ready to adopt school and business closures like those undertaken
in Asian countries to contain the disease, Messonnier said.[.]
The CDC is taking steps to ensure frontline U.S. healthcare workers have supplies they
need, she added, by working with businesses, hospitals, pharmacies and provisions
manufacturers and distributors on what they can do to get ready.[.]
The United States currently has 13 cases of people diagnosed with the virus within the
country and 21 cases among Americans repatriated on evacuation flights from Wuhan, China,
and from the Diamond Princess cruise ship in Japan, CDC said.
Of 329 Americans evacuated from the cruise ship, 18 tested positive for the
virus. Eleven of them are at University of Nebraska Medical Center, five are in medical
facilities near Travis Air Force Base in California and two are near Lackland Air Force
Base in San Antonio, Texas.[.]
That's the downer that australia experiences after drinking to excess.
He is also the downer that as aus ambassador to UK blew the game with his formal
references to Joe Mifsud and the Papadopolus fiasco in Italy and the Englanders homeland.
Once he had committed his report and used the diplomatic service to deliver it the game had
to follow with a formal presentation to FBI. Then the FISA court evidence and so on.
He also gave $30Mil to the Clinton Foundation for their non work on AIDS in Papua New
Guinea or some scam like that.
Can someone prosecute these thieving scum? But then they are useful idiots to both the
oligarchy and to us mere observers.
It is 96% similar to a 2014 coronavirus, of bat origin, a double stranded positive RNA
virus.
A bat virus, like SARS and MERS, the other two significant coronavirus.
To be any sort of winner one would have to go a further furlong and explain some of the
anomalies being reported or refute those reports etc. To say a coronavirus of today is
closely similar to a (bat derived) coronavirus of yesterday and therefore the source
identified is direct really stretches evidence a little.
WTF do you mean %96? What is the %4 comprised of?
If I drink %96 water with %4 arsenic it is not healthy water eh?
How many bats were sold at the FISH market?
Have they been reduced/banned in their popularity following the last outbreak?
Is the coronavirus species specific?
Try some detailed refutation if you will Duncan Idaho and actually negate the
proposition that the previous coronavirus could not be fiddled to produce this
emergence.
The speed, location and size of this COVID-19 outbreak are not natural and do not fit the
online narratives targeting China.
Attacking China with bioweapons is nothing new, Japan did it with Unit 731 and US did it
during Korean War in 1950s attacking China with Yellow Fever.
These latest attacks on the sounder of pigs with Swine Flu then followed by COVID-19
carefully timed near Chinese New Year at the central of China for maximum impacts. Followed
by the US hypocrisy pretending to help then later lied that China refused the offer.
It has become too obvious the motive of a very well coordinated amount of online disinfo
as deflections with "Eating bat soup, eating wild animals, engineered virus escape from
Wuhan L-4 lab" to pin the blame China for the outbreak.
The amount of intensive of online trolls attacking China to support the anti-China
propaganda narratives above. Have seen these kinds one too many times, like White Helmet
making fake video blaming Syrian government gas attack on Syrian people, Saddam Hussein got
WMD and he ripped babies out of incubators testimony in UN, no less. Muammar Gaddafi
violated human right, et al.
Hong Kong Color revolution, Uighur Islamic Extremist, Tibet Dalai Lama bill, swine flu
attack, virus attack on the people, kidnapping Huawei CFO by Canada, .......... amid
US-China trade war. All the attacks on China intensified when China launched the Belt and
Road Initiative. Can it be more obvious?
The remaining patient contracted the disease from his daughter, who had travelled
along with seven workmates to a training course in Wuhan. The workers who attended the
course were all from the province of Vinh Phuc, where currently 73 persons are suspected of
having contracted the virus. They, and affected areas in the commune (population 10,000)
are under a twenty-day quarantine, due to end on March 3. If anyone tests positive, of
course further quarantine and treatment will follow.
Elsewhere in Vietnam, schools are closed, and will stay closed until at least the
beginning of March, and large gatherings have been suspended. Masks were in short supply
but production is now beginning to meet the demand. The government is attempting to enforce
a quarantine for fourteen days for citizens returning from travel to China; non-citizens
are not being permitted to enter VN from China. (Unfortunately, some people are attempting
to avoid these restrictions by travelling to a third country, and entering Vietnam from
there.)
In sum, there is no large outbreak of the virus in Vietnam as yet, public awareness
campaigns are in full swing, there is clear awareness of the economic impacts in all
sectors, and concentrated nursing care has led to recovery in all cases to date.
What makes you believe the ZOG can surreptitiously attack China with COVID-19 won't carry
out the same attack at home and at the enemies of the ZOG empire?
You are cheering the death of innocent Chinese people, you better think again what makes
you so special that you will be spared.
I stopped reading ZeroHedge as it's the most anti China disinfo portal. They publish
anti China propaganda from Falun Gong, EpochTime, Gatestone, NED, Propaganda outlets from
India, et al.
Also ZeroHedge banned several times for questioning their narratives. But my other
account bashing China, Iran, North Korea, ........ is still alive after more than 10
years.
As the usual suspects fret over the "stability" of the Chinese Communist Party (CCP) and
the Xi Jinping administration, the fact is the Beijing leadership has had to deal with an
accumulation of extremely severe issues: a swine-flu epidemic killing half the stock; the
Trump-concocted trade war; Huawei accused of racketeering and about to be prevented from
buying U.S. made chips; bird flu; coronavirus virtually shutting down half of China.
Add to it the incessant United States government Hybrid War propaganda barrage,
trespassed by acute Sinophobia; everyone from sociopathic "officials" to self-titled
councilors are either advising corporate businesses to divert global supply chains out of
China or concocting outright calls for regime change – with every possible
demonization in between.
There are no holds barred in the all-out offensive to kick the Chinese government while
it's down.
A Pentagon cipher at the Munich Security Conference once again declares China as the
greatest threat, economically and militarily, to the U.S. – and by extension the
West, forcing a wobbly EU already subordinated to NATO to be subservient to Washington on
this remixed Cold War 2.0.
The whole U.S. corporate media complex repeats to exhaustion that Beijing is "lying" and
losing control. Descending to sub-gutter, racist levels, hacks even accuse BRI itself of
being a pandemic, with China "impossible to quarantine".
All that is quite rich, to say the least, oozing from lavishly rewarded slaves of an
unscrupulous, monopolistic, extractive, destructive, depraved, lawless oligarchy which uses
debt offensively to boost their unlimited wealth and power while the lowly U.S. and global
masses use debt defensively to barely survive. As Thomas Piketty has conclusively shown,
inequality always relies on ideology.
We're deep into a vicious intel war. From the point of view of Chinese intelligence, the
current toxic cocktail simply cannot be attributed to just a random series of coincidences.
Beijing has serial motives to piece this extraordinary chain of events as part of a
coordinated Hybrid War, Full Spectrum Dominance attack on China.
Enter the Dragon Killer working hypothesis: a bio-weapon attack capable of causing
immense economic damage but protected by plausible deniability. The only possible move by
the "indispensable nation" on the New Great Game chessboard, considering that the U.S.
cannot win a conventional war on China, and cannot win a nuclear war on China.
A biological warfare weapon?
On the surface, coronavirus is a dream bio-weapon for those fixated on wreaking havoc
across China and praying for regime change.
Yet it's complicated. This report is a decent effort trying to track the origins of
coronavirus. Now compare it with the insights by Dr. Francis Boyle, international law
professor at the University of Illinois and author, among others, of Biowarfare and
Terrorism. He's the man who drafted the U.S. Biological Weapons Anti-Terrorism Act of 1989
signed into law by George H. W. Bush.
Dr. Boyle is convinced coronavirus is an
"offensive biological warfare weapon" that leaped out of the Wuhan BSL-4 laboratory,
although he's "not saying it was done deliberately."
Dr. Boyle adds, "all these BSL-4 labs by United States, Europe, Russia, China, Israel
are all there to research, develop, test biological warfare agents. There's really no
legitimate scientific reason to have BSL-4 labs." His own research led to a whopping $100
billion, by 2015, spent by the United States government on bio-warfare research: "We have
well over 13,000 alleged life science scientists testing biological weapons here in the
United States. Actually this goes back and it even precedes 9/11."
Dr. Boyle directly accuses "the Chinese government under Xi and his comrades" of a cover
up "from the get-go. The first reported case was December 1, so they'd been sitting on this
until they couldn't anymore. And everything they're telling you is a lie. It's
propaganda."
The World Health Organization (WHO), for Dr. Boyle, is also on it: "They've approved
many of these BSL-4 labs ( ) Can't trust anything the WHO says because they're all bought
and paid for by Big Pharma and they work in cahoots with the CDC, which is the United
States government, they work in cahoots with Fort Detrick." Fort Detrick, now a
cutting-edge bio-warfare lab, previously was a notorious CIA den of mind control
"experiments".
Relying on decades of research in bio-warfare, the U.S. Deep State is totally familiar
with all bio-weapon overtones. From Dresden, Hiroshima and Nagasaki to Korea, Vietnam and
Fallujah, the historical record shows the United States government does not blink when it
comes to unleashing weapons of mass destruction on innocent civilians.
For its part, the Pentagon's Defense Advanced Research Project Agency (DARPA) has spent
a fortune researching bats, coronaviruses and gene-editing bio-weapons. Now, conveniently
– as if this was a form of divine intervention – DARPA's "strategic allies"
have been chosen to develop a genetic vaccine.
The 1996 neocon Bible, the Project for a New American Century (PNAC), unambiguously
stated, "advanced forms of biological warfare that can "target" specific genotypes may
transform biological warfare from the realm of terror to a politically useful tool."
There's no question coronavirus, so far, has been a Heaven-sent politically useful tool,
reaching, with minimum investment, the desired targets of maximized U.S. global power
– even if fleetingly, enhanced by a non-stop propaganda offensive – and China
relatively isolated with its economy semi paralyzed.
Yet perspective is in order. The CDC estimated that up to 42.9 million people got sick
during the 2018-2019 flu season in the U.S. No less than 647,000 people were hospitalized.
And 61,200 died.
This report details the Chinese "people's war" against coronavirus.
It's up to Chinese virologists to decode its arguably synthetic origin. How China
reacts, depending on the findings, will have earth-shattering consequences –
literally.
Setting the stage for the Raging Twenties
After managing to reroute trade supply chains across Eurasia to its own advantage and
hollow out the Heartland, American – and subordinated Western – elites are now
staring into a void. And the void is staring back. A "West" ruled by the U.S. is now faced
with irrelevance. BRI is in the process of reversing at least two centuries of Western
dominance.
There's no way the West and especially the "system leader" U.S. will allow it. It all
started with dirty ops stirring trouble across the periphery of Eurasia – from
Ukraine to Syria to Myanmar.
Now it's when the going really gets tough. The targeted assassination of Maj. Gen.
Soleimani plus coronavirus – the Wuhan flu – have really set up the stage for
the Raging Twenties. The designation of choice should actually be WARS – Wuhan Acute
Respiratory Syndrome. That would instantly give the game away as a War against Humanity
– irrespective of where it came from.
Theres been massive media and of course covert pressure to make china submit to US
diktat.. Hongkong riots is one of a mess , indoctrinationg HK young people into rabid
terrorist who rejoice on chinese coronavirus debacle.
now this is funny , these HKers are also chinese descent no matter what their delusional
mind feeds them.. Corona virus practically next door and without chinese effort to contain
it , HK will get wiped out.. yet they are still acting like useful idiots ..
the world knew about these morons and their names , i doubt they are welcome to other
countries even australia banned them entry
Global
Times OP/ED tangentially about virus and more about China/Outlaw US Empire
deteriorating relation. Some meat:
"No matter how you look at it, there will be no winner in this hypothetical cold war,
and the US will not be able to continue its march to greatness unscathed. In a word, the
time has changed, and Sino-US relations are very different from the US-Soviet relations 70
years ago.
"First of all, although the development paths of the two countries are different, China
holds the correct course. For more than 40 years, China has always adhered to the path of
reform and opening up, firmly integrated into and safeguarded the current international
system, and committed itself to a fair and reasonable reform direction. In contrast, the
foreign policy of the present US administration is not only disorderly, but also
increasingly assertive. The US presents itself to the world as a destroyer and subversive
of the international order, which makes it mired in a moral deficit."
A "moral deficit" indeed! In that connection, it ought to be noted that the Boy Scouts
of America filed for bankruptcy because of the numerous lawsuits targeting its pedophile
scoutmasters for which it's liable.
A very deep "recession" aka depression was already expected by those paying attention. How
do the financial elites hide blame for it? Launch a bio-weapon in a nation that is the
world's factory, grinding the world economy to a crawl, and blame the depression on that.
The CIA exists primarily to advance the interests of Wall Street. The timing of this is
just too coincidental.
"Last year, the faculty at Harvard's Kennedy School of Government voted to offer Mr.
Zucman, 33, a tenured position. But Harvard's president and provost nixed the offer, partly
over fears that Mr. Zucman's research could not support the arguments he was making in the
political arena, according to people involved in the process." NYT
He subsequently got a post at the University of California, Berkeley.
In a move that drew outrage from labor unions and progressives, President Donald Trump this week
quietly
took steps to slash
a scheduled pay raise for millions of federal workers from 2.5% to 1% due to
supposed concerns about "keeping the nation on a fiscally sustainable course."
"I have determined that for
2021 the across-the-board base pay increase will be limited to 1.0%," Trump
said
in
a message to Congress on Monday. "This alternative pay plan decision will not materially affect our ability
to attract and retain a well‑qualified federal workforce."
The president's proposed "adjustment" to the scheduled pay raise will take effect in January 2021 unless
Congress passes legislation to override the change.
Just a day after his message to Congress, Trump
tweeted
,
"BEST USA ECONOMY IN HISTORY!"
Critics highlighted the disconnect between the president's justification for cutting the planned raise
for federal workers and his boasts about the state of the U.S. economy.
"Trump claimed we had the 'BEST USA ECONOMY IN HISTORY' and cited 'serious economic conditions affecting
the general welfare' to justify limiting pay increases for federal workers,"
tweeted
Rep.
Steve Cohen (D-Tenn.). "These are contradicting claims. They can't both be true."
This is just the latest action in
@realDonaldTrump
's war on civil
servants. He held their pay hostage during the failed
#TrumpShutdown
,
worked to undermine their collective bargaining rights and proposed cuts to their retirement benefits.
#TrumpBudget
.
Slate
's Elliot Hannon
wrote
Wednesday
that "cutting the 2.5% raise set for 2021 to 1% for millions of federal workers seems a bit austere in the
face of such self-proclaimed boom times."
"Even more absurdly, Trump is justifying ordering the cut on the grounds that the country is in the midst
of a 'national emergency or serious economic conditions affecting the general welfare,' which the White
House says authorizes the president to 'implement alternative plans for pay adjustments,'" Hannon added. "So
which is it? The best economy in the history of economies or a national economic emergency? Either way,
somebody's lying."
Pat Garofalo, managing editor at
Talk Poverty
,
tweeted
that
warnings about fiscal sustainability are not credible coming from the president who
signed
into law $1.5 trillion in tax cuts
for the rich in 2017.
The administration approved trillions of dollars in tax cuts for the wealthy and
corporations, but sure, shortchanging federal employees is what will set the nation on a "fiscally
sustainable course"
https://t.co/3cmDRB5D60
Tony Reardon, president of the National Treasury Employees Union (NTEU), the largest independent union of
federal workers in the U.S., said a 1% pay raise would "do nothing to close the gap between federal employee
salaries and their higher-paid private sector counterparts, it won't keep up with inflation, it won't keep
up with private sector wage increases."
"For an administration that has added $3 trillion to the federal debt, gouging federal employee pay and
benefits in the name of deficit reduction is ridiculous," Reardon said in a
statement
.
"NTEU will fight these regressive proposals on retirement while supporting existing legislation calling for
a 3.5% pay increase in 2021."
(sciencemag.org)
sea of red ink for federal research funding programs in President Donald Trump's latest
budget proposal. The 2021 budget request to Congress released today calls for deep, often
double-digit cuts to R&D spending at major science agencies. From a report: At the same
time, the president wants to put more money into a handful of areas -- notably artificial
intelligence (AI) and quantum information science (QIS) -- to create the new technology needed
for what the budget request calls "industries of the future." Here is a rundown of some of the
numbers from the budget request's R&D chapter. (The numbers reflect the portion of each
agency's budget classified as research, which in most cases is less than its overall
budget.)
1. National Institutes of Health: a cut of 7%, or $2.942 billion, to $36.965 billion.
2. National Science Foundation (NSF): a cut of 6%, or $424 million, to $6.328 billion.
3. Department of Energy's (DOE's) Office of Science: a cut of 17%, or $1.164 billion, to $5.760
billion.
4. NASA science: a cut of 11%, or $758 million, to $6.261 billion.
5. DOE's Advanced Research Projects Agency-Energy: a cut of 173%, which would not only
eliminate the $425 million agency, but also force it to return $311 million to the U.S.
Department of the Treasury.
6. U.S. Department of Agriculture's (USDA's) Agricultural Research Service: a cut of 12%, or
$190 million, to $1.435 billion.
7. National Institute of Standards and Technology: a cut of 19%, or $154 million, to $653
million.
8. National Oceanic and Atmospheric Administration: a cut of 31%, or $300 million, to $678
million.
9. Environmental Protection Agency science and technology: a cut of 37%, or $174 million, to
$318 million.
10. Department of Homeland Security science and technology: a cut of 15%, or $65 million, to
$357 million.
11. U.S. Geological Survey: a cut of 30%, or $200 million, to $460 million.
For a fictional character, homo economicus has had a pretty good run
.
Since the 1950s,
this mono-motivated, self-seeking figure has stalked the pages of economics textbooks, busy deciding each
action according to a rational calculus of personal loss and gain. But more recently his territory has
shrunk as experts on human nature have demonstrated what any decent novelist could have told them: our real
selves are nothing like this.
Unfortunately, many economists still plug this flawed view of people into computer models that determine
all kinds of things that impact our lives, from how much workers get paid to how we value life or common
goods, such as a clean environment. The results can be disastrous.
Typically, economists aren't that keen on admitting that their work is deeply connected to morality --
never mind that Adam Smith himself was a moral philosopher. But if you ask a question as simple as how to
price a used car, you quickly find that moral concerns and economic activity happen together all the time.
In his 2012 book,
The Righteous Mind
, New York University social psychologist Jonathan Haidt
explored why so many perfectly intelligent people have misread human nature– and not just economists, but
plenty of psychologists and even (shocker!) people who identify as politically liberal. For him, the key to
getting to know ourselves properly lies with moral psychology, a newish strain that pulls together
evolutionary, neurological, and social-psychological research on moral emotions and intuitions.
As Haidt sees it, we are creatures driven by moral intuition and attuned to both our personal interests
as well as what's good for the groups with which we identify. He points out that in order to thrive, we have
to appreciate our complex, interactive natures and see each other more clearly and empathetically – an
observation that may be especially useful at a time when threats like climate change and the concentration
of money and power threatens all of us, no matter who we are or what groups we belong to. At the moment, we
aren't doing such a good job of this.
In Haidt's view, the conscious mind is like a press secretary spewing after-the-fact justifications for
decisions already made. Thinkers like David Hume and Sigmund Freud were certainly hip to this idea, but
somehow a lot of economists missed the memo, as did psychologists following dominant rationalist models in
the 1980s and '90s.
Haidt invites us to consider ourselves as a rider (our analytical, rational part) and an elephant (our
emotional, intuitive part). The rider holds the reins, but the beast below is in charge, urged on by the
complex interaction of genetic influence, neural wiring, and social conditioning. The rider can advise the
elephant, but the elephant calls most of the shots.
Fortunately, the elephant is quite intelligent and equipped with all sorts of intuitions that are good
for conscious reasoning. But elephants get very stubborn when threatened and like to stick to what's
familiar. The rider, for her part, is not exactly a reliable character. She's not really searching for
truth, but mostly for ways to justify what the elephant wants.
That's why a rebel economist challenging conventional thinking about subjects like human nature faces a
heavy lift. Experts have to see a lot of evidence accumulating across many studies before they reach a point
where they are finally forced to think differently. Scientific studies are even less helpful in persuading
the general public.
When I asked Haidt how the mavericks could help their cause, he noted that humans are social creatures
more influenced by people than by ideas. So, it matters
who
says something as much as
what
they say. It also makes a difference how they say it: elephants don't like to be insulted, and they lean
towards arguments made by people they like and admire. Not very rational, perhaps, but likely true.
Homo Duplex
The notion that human beings are social creatures is another strike against homo economicus. We are
selfish much of the time, but we are also "groupish," as Haidt puts it, and perhaps better described as
"homo duplex" operating on two levels. Here he offers another animal analogy, suggesting that we're 90%
chimp and 10% bee, meaning that from an evolutionary perspective, we are selfish primates with a more
recently developed a "hivish" overlay that lets us occasionally devote ourselves to helping others, or our
groups.
This helps explain why you can't predict how someone is going to vote based on their narrow
self-interest. Political opinions are like badges of social membership. We don't just ask what's in it for
us, but also what it means to our groups. Having a kid in public school doesn't tell you that a person will
support aid to public schools, probably because there are group interests in play. What unifies us in
groups, Haidt argues, are certain moral foundations that allow us to share emotionally compelling worldviews
that we can easily justify and defend against any attack by outsiders who don't share them. And we can get
pretty nasty about those outsiders.
This begins to sound like ugly tribalism, the kind of stuff that leads to war. But Haidt reminds us that
this propensity also prepares us to get along within our groups and even to cooperate on a large scale -- our
human superpower. We differ from other primates because we exhibit shared intentionality: we're able to plan
things together and work together towards a common goal. You never see two chimps carrying a log – they just
don't act in concert that way. We do, and in our groups we've developed mechanisms to suppress cheaters and
free riders and reap the benefit of division of labor. Groups of early humans may well have triumphed over
other hominids not because they smashed them with clubs , but because they out-cooperated them.
To better understand how we operate in political groups, which have lately become more antagonistic,
Haidt created a map of our moral landscape called Moral Foundations Theory which delineates multiple
"foundations" we presumably use when making moral decisions, including care/harm, fairness/cheating,
loyalty/betrayal, authority/subversion, sanctity/degradation, and liberty/oppression. (Some scholars have
challenged
his system, offering alternative maps). His research indicates that liberals and
conservatives differ in the emphasis they place on each of these foundations, with conservatives tending to
value all six domains equally and liberals valuing the first two much more than the other three.
Haidt argues that liberals tend to home in on care and fairness when they talk about policy issues, which
can put them at a disadvantage vis-à-vis conservatives, who tend to activate the whole range of foundations.
Republicans are thus better able to talk to elephants than Democrats because they possess more ways to go
for the gut, as it were. If Democrats want to win, Haidt warns, they need to think of morality as more than
just care and fairness and to try to better understand that foundations more important to conservatives,
like deference to authority or a reverence for sacredness, are not pathological, but aspects human social
evolution that have helped us survive in many situations.
When he wrote
The Righteous Mind
, Haidt noted that Democrats had espoused a moral vision that
did not resonate with many working class and rural voters. In the current presidential race, he sees some
progress on economic populism from the Bernie Sanders wing, in part because Occupy Wall Street got people
attuned to issues of fairness and the oppression of the 1%. When politicians talk about the abuse of
political and economic power, they can activate not only care and fairness concerns, but also the
liberty/oppression foundation which people respond to across the political spectrum.
But this line is also tricky because, as Haidt pointed out to me, "Americans don't really hate their
rich." (One
recent study
suggested only 25% of Americans have a negative view of the rich, though a majority said
they should be taxed more).
Haidt also worries that many Democrats, particularly elites, are currently engaging with cultural issues
by embracing a what he called a "common enemy" form of identity politics which "demonizes people at the
intersectional point of evil (white men)" rather than focusing on a "common humanity" story which "draws a
larger circle around everyone. (Haidt plunged into controversial territory with his 2018 book,
The
Coddling of the American Mind
, which argues that college campuses are shutting down useful debate
through "safetyism" that protects students from ideas considered harmful or offensive).
He observed to me that while the polarizing Donald Trump may have turned off the younger generation "for
the next few decades," Democrats may be failing "to look seriously at the ways that their social
policies -- and their messengers -- alienate many moderates." Newly "woke" white elites, for example, who see
racism as the driver of nearly every phenomenon, may be having an unintended negative effect in his view.
When they ascribe Trump's victory to racial resentment and ignore the concerns of those who fear sliding
down the economic ladder, for example, they may turn off potential allies. Call a person or a group racist
and you won't be able to convince them to support your view on anything. Their elephants aren't listening.
Haidt acknowledges that our moral matrices are not written in stone; they can and do evolve, sometimes
quite rapidly within a couple of generations. Economic forces surely act to shift attunement to moral
foundations, making people more susceptible, for example, to anti-immigration arguments. If you fail to
consider the economic influence on this kind of moral activation, you'll be less equipped to address
problems like ethnic conflict. Being able to step outside our own moral matrix is essential to persuasion.
We not only have to talk to the elephant, but see the beehive.
We also have to remember the truth is not likely to be something held by any one individual, but rather
something that emerges as a large number of flawed and limited minds exchange views on a given subject. Our
smarts and flexibility are increased by our ability to cooperate and share information. Economists, for
example, improve their understanding of human nature by opening up to other social sciences and the
humanities for insight.
There is evidence that economists are paying attention to moral psychology. In their book
Identity
Economics
, Nobel laurate
George
Akerlof
and Rachel Kranton argue that people identify with "social categories," and that each category,
whether it be Christian, mother, or neighbor, has associated norms or ideals to which people want to aspire.
Sam Bowles'
The Moral Economy
shows that monetary incentives don't work in many situations and that
policies targeting our selfish instincts can actually weaken the institutions which depend on our more
selfless impulses– including financial markets. At the Institute of New Economic Thinking (INET), the
connection between economics and morality has been explored by
INET president Rob
Johnson and political philosopher Michael Sandel
as well as thinkers like
economic historian Robert Skidelsky
and
economist Darrick Hamilton
.
All of this rather bad news for homo economicus. But pretty good news for humanity.
we're 90% chimp and 10% bee, meaning that from an evolutionary perspective, we are selfish primates
with a more recently developed a "hivish" overlay that lets us occasionally devote ourselves to helping
others, or our groups.
Well if one wants to take an "evolutionary perspective" (works for me) then obviously our instincts are
shaped to promote survival of the species and not just the individual. And if that's true then the
Randian/economics version of rational isn't rational at all. Perhaps it would be clearer to talk about this
problem in terms of rational versus irrational rather than appealing to some "altruism gene" that will
supposedly save us. IMO only that rational, intelligent, creative aspect of humans will save us from that
irrational side that is indeed totally instinctive. Somehow we've gotten this far–despite everything–"by the
skin of our teeth." Here's hoping those minds will find a path.
Over what? Carol's point about the sociology of Ayn Rand?
In point of fact, Carol, altruism is always secondary (where it appears) in nature. Selfishness
ensures the fittest genes survive to carry on the species. Only in the face of catastrophe does
altruism at
the individual level become more valuable than selfishness. So, indeed it is because of our
selfishness, because we've struggled by the skin of our teeth, that we as a species have survived and
prospered.
but, but erik, that leaves out all the energy saving advantage we get from a cohesive group
which is also determined to survive and carry on centuries of knowledge on just how to do so .
Just a quick jab: why does Haidt, and others, assume that feelings are inferior to logic and intellect?
Seems to me they are inter-twined, separate-able, but equal in value, if not dimension.
It could be a three way set-up instead of a two way (like markets, which are commonly spoken of as two:
buyer and seller, but are three: buyer, seller, and banker /money man). Man's consciousness could be 1)
feelings, 2) logic /intellect, and 3) the decider (call out to ex-prez W, so got political jab in too!).
In fairness to Haidt, I think he's more nuanced than "rationality good; feelings bad"
I have encountered more of that rather rigid approach among those who have read "Thinking Fast and
Slow" perhaps because that book doesn't do as good a job of outlining as crucial the capacity to
recognize which situations favor System 1 thinking and those which favor System 2 -- a problem compounded
by the emphasis in the book on the rather narrow range of circumstances in which System 2 is clearly
superior.
Jeez – I spent years getting an Econ degree in the homo economus/monetarist era (dark times), when I
should've been making my way through my D&D Dungeon Master's sci fi collection!
I always thought that the Professors who thought up homo economus never went with their wives (as
it was back then) to the grocery store.
The rational choice, always, was the store brand. DelMonte and all other such brands owed their
very existence to non-rational, emotional choices–by tons of people.
'Rational' just means 'consistently following an internally sound logic.' A machine does that –
following the logic of its mechanics. A computer does that – following the logic of code. An animal does
that – following the logic dictated by emotion. And an animal certainly does that better than we humans
whose behaviors become muddled by ideas. Truly, by this measure animals are better machines than humans –
more mechanical, more emotional, more logical, more rational.
That's why a rebel economist challenging conventional thinking about subjects like human nature faces
a heavy lift. Experts have to see a lot of evidence accumulating across many studies before they reach a
point where they are finally forced to think differently.
As an ex-organic chemist, I was astonished to find that more than a few scientists cling to outdated
paradigms with a tenacity that would shame the most rigid religious fundamentalist. Cf. heliobacter,
continental drift, even the heliocentric solar system.
While "continental" drift was first proposed in about 1600 AD it was not completely wrong. Like many
initial geologic theories it was partially correct. It is now known that it is not the "continents" that
move across the earth, but tectonic plates, on which the continents are located, that is creating
movement. The convection of the earths interior magma is thought to be the movement vector for the
plates.
"this propensity also prepares us to get along within our groups and even to cooperate on a large scale --
our human superpower"
Yuval Harari's central point revolves around this. Humans, like other primates, engage in "grooming"
activities to maintain group cohesion. With the development of language, this "grooming" went from picking
lice out of each other's hair (fun!) to gossiping about each other. But this behavior seems to be unable to
maintain a group size larger than 150 individuals, not surprising considering the person-to-person contact
necessary.
To gather a larger group around common goals requires myth, Harari says. Early myths involved gods, often
imagined as living in a separate world with structures parallel to our own. In a polytheistic society, the
head god related to the lesser gods as a king related to his human subjects. In the henotheistic Ancient
Near East, nations like Babylon, Assyria and even the southern Israelite kingdom of Judah envisioned a
parallel war occurring in "heaven" between the national gods when two countries went to war. These days,
there are new, completely secular myths like what Harari calls "Money" that orient our world around
materialism, competition and power.
William H. McNeill also noted the almost universal human behaviours of mass marching/dancing (which
requires and reinforces cooperation) as indicative of a social behaviour rooted in a biological need
We also have "mirror neurons" for a reason -- one that baffles the proponents of "homo economicus"
I was more interested in this article from the political perspective; i.e. what liberals get wrong.
Like many who read this site, I'm interested in the primary elections and want Bernie to win.
But Bernie's message could be better by being more attuned to some of the "Moral Foundation" issues Haidt
raises.
Take Medicare for All which, by most accounts, is the leading issue to most voters:
Talking more about Medicare being a simple and successful 50+ year program appeals to authority. Medicare
Advantage plans can be framed as subversion. Or loyalty / betrayal. Also consider sanctity / degradation.
Talking more about the 80/20 aspect of coverage addresses fairness / cheating and "free stuff"
Not talking about eliminating private insurance shows concern for liberty / oppression. I would actually
make a joke about people who would still want private insurance after M4A becomes available
Just food for thought in terms of how the ideas contained in the article could be applied.
And the next time some nefarious reporter asks how we will pay for this or that; I wish someone will just
say "Mexico will pay for it".
As an economist (M.A. in Econ), I am elated to see Jonathan Haidt's work receive this kind of attention
from serious thinkers. In addition to the reasons cited by Lynn Parramore, I believe Professor Haidt's work
validates, by building on, the work of Humanistic Economics by Professor Mark Lutz (Ph.D. UC-Berkeley) and
Dr. Kenneth Lux. Moreover, Professor Haidt's work appears, to me, to further validate the astute criticisms
of Dean Baker and Mark Weisbrot for neoclassical Marxists' use of "Rational Economic Man" in their
paradigm's modls (no "e"). Having obtained my degree about 25 years ago, basically in humanistic economics,
I am sure that adoption of such thinking by grad students in economics can help rescue humanity from its
current barbaric state. I just hope there's still time left.
On hate and having negative view on the rich
: this article mentions that "only" 25% of
Americans have a negative or very negative view of the rich". Only is the proper word? I would say that is a
lot of bad feelings. Hate is not a sane feeling and we are inclined to hate in stressful situations. So, if
25% of Americans, have these negative feelings (8% very negative) about the rich this spells quite a lot of
despair/stress. It would be interesting a comparison with other countries to evaluate if this is normal by
international standards.
I mention this because stress & despair might explain, at least partially, the relative low turnout in
general elections in the US compared with other OECD countries. Does anybody here know the evolution of
electoral turnout in the US since 1950? Has turnout declined with time?
I remembered an old David Brooks column mentioning that Americans vote their aspirations.
I'm not a fan of Brooks, but this 20 year old column may explain some USA citizens' current
attitudes..
Here is a sample quote (about a proposed Al Gore estate tax):
"The most telling polling result from the 2000 election was from a Time magazine survey that asked
people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the
richest 1 percent and a further 20 percent expect to be someday. So right away you have 39 percent of
Americans who thought that when Mr. Gore savaged a plan that favored the top 1 percent, he was taking a
direct shot at them."
While it has been 20 years since this was published, one might suspect American "I'll be rich"
aspirations have taken a beating during this interval.
The economics profession has ridden the hydrocarbon energy spend of the last 100+ years as hydrocarbon
energy has been pulled from the ground and converted into "economic growth".
It will be interesting to see how the profession responds to future events with climate change, peak
human population and peak energy inexorably (in my view) arriving.
One thing that has happened is that over the past several decades so- called liberals have agreed with
conservatives that the market represents freedom and efficiency and the government represents the opposite.
Some younger people are rebelling, but older voters have been hearing this their whole lives without
challenge until Sanders came along.
I just read a description of a Trump rally at the NYT and I think it was accurate. The reporters just
repeated what ordinary people said there. One guy claimed the Democrats have just swung so far left he can't
support them anymore, yet on economics this simply isn't the case. Sanders just represents what Democrats
used to be on economic issues.
I enjoyed the article, and agree with the main ideas, but he was a little rough on our primate cousins.
Chimps may not cooperate by "carrying logs", but, like a lot of social animals, they work together when,
say, hunting other primates. And most social animals have a pretty well-developed sense of fairness (watch
what happens if you give one of your dogs a treat and ignore the other one).
Yes I am trying to think about what chimps would actually need to transport a log for. That famous
jocular saying by one of the researchers "we were beginning to think the difference between us was merely
cultural".
Is that a sense of fairness or a sense of competition or perhaps a sense of both? Each dog would
prefer being the favorite but will accept being the equal.
Dogs are an interesting analogy because in my observation they are, as social animals, so much like
us. Perhaps the main takeaway from the above article is the belief that there is such a thing as "human
nature" and that we have a kinship with the other species. Needless to say such a view was once anathema
in an intellectual climate dominated by religion and a human centric world view. Even now people like
Pence are "dominionists" and believe that humans have been given dominion over the planet and all its
other species because of what it says in the Bible. Power always needs to justify itself–perhaps because
of that innate sense of fairness/competition that you mention.
Haidt got me thinking about language too. His thesis could be talking about the evolution of
language itself. The evolution of rationalization. Since he seems to premise his insights on human
intuition and a certain bedrock of morality that all animals seem to have. Pre language. Can we
attribute the morality of animals to a lack of rationalization? They do seem to lack immorality. If we
were mute, but very intuitive as we are, what effect would our intuition have on our communication
skills and our actions? Raising the question here, Is language the emotional middleman that is always
(duplex) less than rational and causing all this confusion? Sort of thinking here about someone giving
an over-the-top sermon, like an economics professor claiming that we are all homo-economicus.
Morality traditionally implies conscious choice so I'm not sure that's relevant to the animal
world. Guess what I'm saying is that we are similar to certain animals in our instincts, not our
intelligence.
However the language of economic profs is deceptive since they should be saying "irrational self
interest" rather than "rational self interest." Pure selfishness usually ends up being bad even for
the selfish.
Also on this very subject, last night on Nova, the one about dogs, their domestication (or
ours?) and their amazing ability to relate – communicate. They attribute a dog's ability to
communicate to oxytocin – because they thrive on love and friendship. I do believe that because
I've only had one aloof dog and he was very wolf-like. A throwback. Indicating that evolution
tends toward love – not to be too corny. Maybe Oxytocin will save us ;-)
If by "pack animals" you mean species that live in societies I never said they didn't. But
obviously there is also cooperation on some level and social bonding. I do think this is a very
complicated subject and not easily reduced to simplifications by yours truly–not a biologist–or the
above article. But arguably the above is correct in asserting that economists themselves are
ignoring the complications.
And for those interested, here is
a paper published in 2008
that empirically demonstrates that the "Homo economicus" approach in this case
disguised in the form of "median-voter model" is bullshit regarding inequality, redistribution and public
opinion, though they regard it as intelectually compelling. Economists!
>Experts have to see a lot of evidence accumulating across many studies before they reach a point where
they are finally forced to think differently.
Ummm, the whole, underlying maybe, point of the rest of the article is that the dominant economic thought
of our age has nothing to do with evidence. Yet they overthrew Keynes. "Trust us, We're Experts" or
something like that right?
I just finished slogging through The Master and His Emissary by Iain McGilchrist, which harmonizes with
this article. Instead of the rider on an elephant, McGilchrist writes of the functions of the left and right
hemispheres of the brain, which are significantly different. The left brain is verbal, analytical, and task
oriented. It likes straight lines. (This strikes me as a description of the pseudo-accuracy and busyness of
economics.) The right brain sees a larger picture, is less talky, and is generally better at perceiving the
world around us. It is the hemisphere that can attain greater knowledge even if it is not as adept at
expressing such knowledge in words. (The "bee" part of the brain–and more than 10 percent.)
McGilchrist's book is good, but way too long, which is an irony given that he asserts that the left
brain, the emissary, is trying to subvert the master, the part of the brain less likely to go on and on and
on in words.
But this era of too many easy paradigms (economics, "free markets"), too much flimsy analysis (critical
studies, queer studies, economics, New York Times op-ed columnists), and too much talk (social media) is
very much left-brained. I think that what is wearing all of us out is the endless tsunami of word salad.
Economics, with its insistance on rationality rather than reasonableness (left brain rather than right
brain), fell into the salad bowl a long time ago.
Yes. I, too, think this is a very important book. Being retired, I don't think it's too long. I revel
in how much stuff I got for only thirty bucks (or whatever it was -- something like that.)
The neurological case is complete after 94 very dense pages. (535 citations. Pleasantly readable prose,
though, and that bizarre experiment that "proves" that porcupines are monkeys.) After that he traces the
effects and footprints of the two independent modes of thought through philosophy, art, music, and,
generally, the working of our societies from ancient to post-modern.
There's a strong parallel to Daniel Kahneman's Fast and Slow thinking, the right hemisphere being the
fast one. The one wrinkle is that language is the province of the left hemisphere, but Kahnemann finds
that fast thinking is perfectly adept at small-talk, as long as it doesn't get too abstract.
Worst for me is that now that I've read it, I've got to go back into Heidegger, all the other modern
Germans, John Dryden, classical and modern painting, religion
So how would homo economicus work out in anything other than a modern industrial system? In earlier
times, I would say that at the least they would be shunned as a danger to the community or maybe even thrown
out altogether as being incapable of working in a close-knit community. Want a modern example instead? How
about the fact that you cannot have a military based on the idea of homo economicus unless you are talking
about a band of mercenaries. This whole stupid idea is why every relationship these days whether for work,
employment, government, etc is defined by contracts. In short, it is a cookie-cutter idea that come in only
one shape.
"Since the 1950s, this mono-motivated, self-seeking figure has stalked the pages of economics
textbooks, busy deciding each action according to a rational calculus of personal loss and gain."
Advertising gave up with that sort of approach years ago.
Advertisers appeal to deep seated wants and desires and this works really well, so they haven't looked back.
Are the wealthy much more rational?
Let's have a look at adverts targeted at wealthy people.
Are they a long list of specifications and comparisons saying why these products are better?
No.
An advert for a Sunseeker luxury yacht conveys luxury, elegance, being able to get away from it all and
there is usually a young woman in the back in a bikini; the less said about that the better.
What about PR and propoganda?
How do they work?
The same as advertising really, and it's got nothing to do with appealing to rational human beings.
It works; they are not going to be doing it differently anytime soon.
A propos of nothing, long, long ago there was an ad during the Superbowl placed by Cadillac. It was
all about authority, power, celebrity, and it hardly mentioned cars at all, if it even did. Blog
commenters had to work very hard to explain how this was selling Cadillacs. IMHO, it didn't sell
Cadillacs. It told the top Cadillac executives all the things about themselves that they most longed to
hear. It didn't sell cars to wealthy people, it sold the ad itself to the Cadillac C-suite. It worked
like a charm.
Y-axis – top to bottom
X-axis – Across genders, races, etc ..
As long as the Democrats wealthy donors keep them focussed on identity politics and the X-axis, the
donors should be able to keep making progress in the reverse direction on the Y-axis.
and he's MUCH better than Haidt. I recommend this book and lots
of his earlier work, much of it done with Herbert Gintis.
Their 1976 "Schooling in capitalist America" is no less necessary
reading now than it was then, and their 1986 "Democracy & capitalism"
is maybe even more relevant now (Milanovic credits it as a forerunner
to his current "Capitalism, alone", which it is–and much more than that).
More recent stuff is referenced in "The moral economy" and pretty
much always worthwhile.
Morality is a big part of decision making, but I'll argue that is secondary to our cognitive biases that
exist at an even lower level of consciousness to enable us to retain function and decision making in the
face of an overwhelming number of variables.
The opposite of cognitive bias or perhaps the antidote is critical thinking, which must be
taught/learned, so yeah it is preposterous to assume people use solid reasoning that could only come about
with the use of critical thinking, which vasts swaths of society almost never exercise.
The article to me is all over the place, which builds on Haidt's views that seem all over the place too.
Interesting though. Comments too. The experimental data about Haidt's classifications of moral decision
making elements, and where self-described liberals and conservatives rank them in importance was
interesting. I suppose the liberals regarding only two of the six as important could be due to their college
educations. As a math professor I had once observed about a smart student in his class: "he learned his
subject too well". Or to paraphrase Othello: "One that learned not wisely but too well".
The most important takeaway from this is that we should not let economists guide the economy. Not the
economists believing in homo economicus anyway (and, while we are at it, believing in equilibrium as
well). The reason for existence of such a concept is clearly to replace ethics and morality as a guiding
principle of human economic activity with a pseudo- "natural law" (humans by nature are "economicus" –
i.e. self-interested and materialistic – phew!), which once entrenched, relieves those in power from
moral obligations because it safely explains away almost any economic outcome as result of "natural"
forces – i.e. no one to blame (globalization=natural force). It's a great tool for them. Down with it.
The asumption of rationality has been defeated by many economists, as well as psychologists,
sociologists, etc.. Carrying on about this is unncessary. Assuming that humans worry about "care and
fairness' is true. The "12" prophets of the Tanakh (Old Testament") raised this concern numerous times, and
one can find it as a major issue in the Synoptic Gospels. Smith also worried about this in his first book on
economocs, "The Theory of Moral Sentiments." The only reason for any further consideration of "rationality"
in economics is due to the attemprt by economists to treat economics as a "science" like physics. There are
also numerous misguided attempts to mathemaize economics.
But one insidious reason to pretend that economics is a "science" is to justify the idea of a "Nobel
Prize" in economics, or to give a "halo" to economists that win the "Swedish Central Bank Prize in Economic
Scholarship in Memory of Alfred Nobel."
Avner Offer and Gabriel Söderberg have written a good book about the creation of this prize, "The Nobel
Factor." Please note, the words "Nobel Prize" do not seem to appear on either the certificates or medal
awarded.
Daniel Kahneman who won the prize (justifiably, (and John Nash a famous mathematicin who won many real
prizes) notd that giving labels often transfers a false aura to those being labeled. Offer and Söderberg
noted that this is true of the label "winner of the Nobel Prize." Given that there is no decent
encompasssing theory of economics similar to Newton's Laws and how often the prizes are awarded to
economists who don't produce anything like such a theory, we should once and for all abandone the pretense
that economis is a science. It is an attempt to describe social behaviour in a very restricted context.
Leaving it to psychologists, sociologists and others has produce better undertandings of human behaviour.
In last week's State of the Union address, President Trump gave a rosy portrayal of the US
economy. American workers, according to Trump, have never had it so good.
"Wages," he declared, "are rising fast." Household income, he claimed, "is the highest ever
recorded." The results of Trump's policies, since first taking office three years ago, is a
"blue-collar boom." This coincides, according to Trump, with a 70 percent run-up in the stock
market, "adding more than $12 trillion to our nation's wealth." For the American ruling class,
the massive profits they are making on the stock market is the real criterion of economic
success, not the conditions of life for the working class.
The reality is very different than the fantasy which Trump delivered over the country's
airwaves. Corporate profits, dividends and the incomes of wealthy executives are higher than
ever before -- the direct result of unprecedented levels of social misery.
Trump's policies are an acceleration of those pursued under Obama and the Democrats after
2008. The deliberate aim of these policies, which included the 2009 restructuring of the auto
industry, the promotion of for-profit charter schools and the pro-corporate Affordable Care
Act, was to prop up the profits of American capitalism by driving millions of workers into
poverty.
This is the real situation facing American workers:
The jobs bloodbath in the auto
industry
US manufacturing cut 12,000 jobs in January, according to government figures. This continues
a decades-long decline in manufacturing employment, from a high of nearly 20 million in 1979 to
less than 13 million today. January's losses were almost entirely concentrated in the auto and
auto parts industries, which shed 11,000 jobs last month alone. Over the last twelve months,
24,000 US autoworkers lost their jobs.
The betrayal of the strike by the United Auto Workers paved the way for the closure of four
US plants, including the historic Lordstown plant in Ohio. New investments, including a new
battery plant near Lordstown, will be based on lower wages and benefits, and will account for
only a fraction of the jobs lost.
While Trump never tires of nationalist tirades against Mexican and Chinese workers stealing
"American" jobs, these cuts were part of a global jobs massacre in the auto industry, which
eliminated over 500,000 jobs worldwide last year. Auto companies are pursuing an international
strategy to force workers in every country to bear the cost of the emerging downturn in the
industry, and to prepare for the transition to electric and autonomous vehicles, which will
require a vastly reduced workforce.
However, 2019 was only a down payment -- German automakers have announced tens of thousands
of additional job cuts. The disruption to global supply chains caused by the coronavirus,
Ford's disastrous 2019 performance and the impending merger between Fiat Chrysler and French
automaker Peugeot all point to further cuts in 2020 and beyond.
Stagnating and declining
wages
Under Trump, real wages have continued their post-2008 stagnation. According to The
Conversation website, from December 2016 to September 2019, nominal wages rose only 6.79
percent, but even this was almost entirely wiped out by inflation. When "fringe benefits" such
as health insurance, retirement packages, bonuses and other forms of non-wage compensation are
included, total real compensation actually declined by 0.22 percent. In the traditionally
higher-paying manufacturing sector, total real compensation plunged 4.33 percent.
This is particularly pronounced in the traditionally industrial states of the Midwest. In
six of the seven heaviest manufacturing states that voted for Trump in 2016, economic growth
has slowed since 2016, and in all but one, personal income growth is below the national
average, according to Barron's. Trump's vaunted rise in wages for low-income workers is due in
large part to local minimum wage increases -- the federal rate of $7.26 has not budged since
2009 -- which still leaves workers at or near poverty.
Part-time and "gig" work -- the
"new normal"
In his speech, Trump cited the fact that 3.5 million people have joined the workforce.
However, this increase is due almost entirely to a rise in part-time and casual employment,
according to the McKinsey Global Institute. The US employment rate, the percentage of the
working-age population with jobs, remains 3 points lower than in 2000. Full-time employment has
fallen 6.8 percent since the turn of the century, while part-time employment has risen 4.1
percent.
A survey conducted last year by the Federal Reserve found that 3 in 10 American adults rely
on "gig" work for at least part of their income. For half of these workers, gig work represents
10 percent or more of their total income, and 6 percent of gig workers rely on gig work for 90
percent or more of total family income.
This "new normal," together with hundreds of thousands who have given up looking for jobs
altogether, has masked the actual state of the job market by keeping official unemployment
figures at artificial lows. Real unemployment, once underemployed and "discouraged" workers are
added, is 6.9 percent, nearly twice the official rate.
This is bound up with a significant rise in economic insecurity. Forty-four percent of the
US workforce are classified by the Brookings institution as low-wage. Millions of Americans are
one crisis away from destitution; nearly half the country cannot make an unexpected $400
expense without taking on debt.
Inequality at record levels
Karl Marx's observation that "accumulation of wealth at one pole" of society is
"accumulation of misery [and] agony" at the other pole is being decisively confirmed. On the
basis of endemic poverty in the working class, the American ruling class is accumulating
historically obscene levels of wealth.
Three individuals -- Jeff Bezos, Warren Buffett and Bill Gates, own more wealth than the
bottom half of the US population. However, another study by inequality researchers Emmanuel
Saez and Gabriel Zucman found that the bottom half of the country actually has a negative
combined net wealth, meaning their debts are larger than their assets.
Meanwhile, US corporations are making money hand over fist. According to the Federal
Reserve, annualized after-tax profits of $1.8 trillion have increased to three times the level
of 2000. This figure has stayed constant since 2012, the end of Obama's first term. The labor
share of national income, meanwhile, is by far the lowest on record.
These huge profits are being made, not through investments in productive activities -- for
more than a decade, US companies have sat on a $1.5 trillion cash hoard which they refuse to
invest -- but through financial transactions, including stock buybacks and dividends, mergers
and acquisitions and other speculative activities, propped up by Trump through massive
infusions of cash from the Federal Reserve and corporate tax cuts. These irrational and
essentially criminal policies, which amount to the ruling class looting society, are preparing
the way for another economic crisis.
So here we are, with a global economy that's very cost-efficient but not resilient. It's wonderful that Walmart has worked
out how to order a new tube of toothpaste from China the second one is pulled off a shelf in Topeka, KS. But that means there is
no deep storage to draw upon in times of disruption to the status quo. No warehouses stocked with 12 months of future goods.
Just a brilliantly-complicated supply chain thousands of miles long that has to work perfectly for things to keep running.
As an example that drives home this point: we learned during the 2011 earthquake in Japan
that there was just one single
factory making a necessary polymer gel for the odd-shaped lithium batteries used in
smartphones and iPods. There was no backup factory.
We watched closely during that enormous crisis (which also spawned the Fukushima nuclear
disaster) as electronics companies scrambled to triage their remaining supplies and attempt to
find new sources. It was very touch and go. Vast portions of the battery-fueled electronic
industry came within a whisker of simply shutting down production -- all for want of an
esoteric polymer gel.
Yes, the most cost-effective way to make that gel was to house it all in a single plant. But
it made no sense from a redundancy and resilience standpoint.
And did 'we' learn from that experience? Nope.
Supply Chain Armageddon
The global economy is more interdependent than ever. Its supply chains are built on a huge
network of dependencies with many 'single points of failure' strung along its many
branches.
Can anybody predict what will happen next? No.
But we're already seeing early failures as Chinese plants, factories and ports sit idle from
the country's massive quarantine efforts:
China set to lose out on production of 1M vehicles as coronavirus closes car plants
China exports about $70 billion worth of car parts and accessories globally, with roughly
20 percent going to the U.S.
Feb. 5, 2020, 4:32 PM EST
By Paul A. Eisenstein
China could suffer the loss of a million vehicles worth of production as factories in its
crucial automotive industry remain shuttered until at least next week -- and likely longer in
Wuhan, the "motor city" at the center of the coronavirus outbreak.
With more than 24,000 people infected, the impact of the highly contagious disease is also
beginning to be felt by automakers in other parts of the world. Hyundai is suspending
production in its South Korean plants because of a shortage of Chinese-made parts, and even
European car manufacturers could be hit: Volkswagen and BMW could see a dip of 5 percent in
their earnings for the first half of 2020, according to research firm Bernstein.
We're predicting that these auto shutdowns are just beginning. All it takes is a single
component to be unavailable and the entire line has to be shut down.
Is China the sole source for many critical components in the auto industry? Absolutely.
Here's an inside view:
On Monday, Steve Banker and I had the opportunity to speak with Razat Gaurav, CEO of
Llamasoft. Razat had some interesting takes on the outbreak, especially as it relates to the
automotive and pharmaceutical supply chains. On average it takes 30,000 parts to make a
finished automobile.
Due to the virus, production facilities have already indicated that they will have lower
than normal parts volumes. This has left companies scrambling to make contingency plans.
During my conversation with Razat, he mentioned that inventories for most of these automotive
parts are managed on a lean just-in-time basis.
This means that, on average, companies have anywhere between two and twelve weeks of
buffer inventory on-hand for automotive parts. As production volumes are decreasing, this has
the potential to cause quite the global shortage of parts. The buffer inventory will only
last so long, and once the pre-holiday supply runs dry, the industry is going to be in
serious trouble. According to Gaurav: " Most OEMs single source components for new vehicles
and China is a large supplier of those."
"Single sourcing" is exactly what it implies. There's a single factory somewhere churning
out a single component that is absolutely vital to make a motorized vehicle. If that factory
goes away for any length of time, a new source has to be identified or – worse, from a
time and cost standpoint – built from scratch.
But this vulnerability to China-dependent supply chains is by no means unique to the auto
industry:
Last month, the U.S.-China Economic and Security Review Commission held a hearing on the
United States' growing reliance on China's pharmaceutical products. The topic reminded me of
a spirited discussion described in Bob Woodward's book, Fear: Trump in the White House.
In the discussion, Gary Cohn, then chief economic advisor to President Trump, argued
against a trade war with China by invoking a Department of Commerce study that found that 97
percent of all antibiotics in the United States came from China.
That's as close to a 'sole source' as you can get.
And to put the cherry on top: guess the name of the region in China responsible for
producing all if these antibiotics? Yep, Hubei province. With Wuhan its most important
production hub.
Can we find another source for our generic drugs and antibiotics? India, possibly. But here
again we run into the same global interdependency issue:
Another industry that is feeling the impact of the coronavirus is the pharmaceutical
industry. The average buffer inventory for the pharmaceutical industry is between three and
six months. However, this does not tell the full story. Gaurav mentioned that China is
responsible for producing 40 percent of the active pharmaceutical ingredients (APIs) for the
pharmaceutical world.
Additionally, China supplies 80 percent of key starting materials (KSM's), which are the
chemicals in APIs, to India . Put together, this represents 70 percent of all APIs across the
world.
India's production is directly tied to uninterrupted supply from China:
Indian generic drugmakers may face supply shortages from China if coronavirus drags on
Feb 13 (Reuters) – Shortages and potential price increases of generic drugs from
India loom if the coronavirus outbreak disrupts suppliers of pharmaceutical ingredients in
China past April , according to industry experts.
An important supplier of generic drugs to the world, Indian companies procure almost 70%
of the active pharmaceutical ingredients (APIs) for their medicines from China.
India's generic drugmakers say they currently have enough API supplies from China to cover
their operations for up to about three months.
"We are comfortably placed with eight to 10 weeks of key inventory in place," said
Debabrata Chakravorty, head of global sourcing and supply chain for Lupin Ltd, adding that
the company does have some local suppliers for ingredients.
Sun Pharmaceuticals Industries Ltd said it has sufficient inventory of API and raw
materials for the short term and has not seen any major disruption in supplies at the
moment.
The Indian drugmaker, however, said supply has been impacted for a few API products and
the company is closely monitoring the situation. It did not identify the products.
India supplies nearly a third of medicines sold in the United States , the world's largest
and most lucrative healthcare market.
If you're dependent in any way on prescription drugs, it would be entirely rational to chase
down whether those come from China or India and, if they are, begin talks with your doctor
about alternatives or what to do if supplies get pinched.
A Fast-Moving Situation
Look, we entirely get why the authorities and media are downplaying the covid-19 pandemic.
We really do. They feel the need to manage the crisis, which means managing the public
narrative.
But c'mon. Does it make any sense for Apple's stock price to be up while its main Foxconn
manufacturing facility is all but completely shuttered?
Fewer iPhones and Airpods being made should equate with lower future earnings and thus a
lower stock price. But no, AAPL is up handily over the past month:
And this is even crazier. Does it make ANY sense for Boeing's stock to be up $12 over the
past month? As it reported its first year (2019) of NEGATIVE orders and a completely order-free
January (2020)? No, of course not.
But those are the sorts of 'signals' that the officials believe have to be sent in order to
keep the masses from catching on that something really concerning is happening.
Unfortunately, such signals work on the masses. Higher stock prices send a powerful
comforting message that "all is well".
But prudent critical thinkers, which defines those in the Peak Prosperity tribe, can readily
see through the ruse and get busy preparing themselves for what's coming.
It's Time For
Action
The situation with covid-19 is fluid, and fast-moving. Staying on top of the breaking
developments and making sense of them for you is our primary job.
But information without informed action is useless.
After all, knowing something concerning but then doing nothing about it is merely cause for
anxiety if not alarm.
The only ways to remain calm and protect your loved ones from the threat of this pandemic
are rooted in taking smart action.
Yes, we can all hope this blows over. We sincerely wish the macro-planners all the best in
shaping the narrative and keeping the macro economy somehow functioning and glued together.
But we're going to prepare as best we can, here at our micro level because that's our duty
to ourselves, to our families, and to our communities.
Creating A Resilient Defense
Against The Coronavirus
This is a huge moment in history. The first global pandemic at a time when the world economy
is sole-sourced and completely interdependent.
Nobody can predict what will happen next. Autos, drugs who knows what the next industry to
stumble will be?
Given the ridiculously high rate of infectivity of covid-19 there's really no chance of
stopping its spread. The rate is now just a equation of time, luck, and official actions to
aggressively isolate and quarantine infected individuals and communities.
Our position affords us many experienced contacts with experts throughout the world, and
those we know with deep medical training are preparing the most aggressively right now. This
outbreak has their full attention; and that informs us that it should have ours, too.
Which is why our advice is to get busy preparing yourself now.
Particularly useful for those who have recently found their way to PeakProsperity.com, it
offers both a valuable framework to use in preparing for any disaster (including pandemics) and
then details out specific action steps to take today across all aspects of your life (i.e., not
just health & hygiene) against a coronavirus outbreak in your local area.
Amidst the nonsense, folly and euphoria of the last decade long bull
market, a small beacon of hope shines in the form of Warren Buffett's business partner.
These days, the reporting of financial metrics has wandered so far off the path from normal
GAAP earnings that's it's difficult to keep up with companies and decipher their earnings
reports each quarter. The SEC has done little to create uniformity for investors in how
companies disclose their financials and, through their lack of action, have created a fertile
environment for companies to report what Charlie Munger calls "bullshit earnings".
And you know things have gotten bad when the mindless drones bidding up the market over the
last decade were forced to call out WeWork's
"community adjusted" metrics , puking the company's IPO back to its investors before
ridiculing the way the company was making its pre-IPO disclosures in the weeks after.
And now, one of the most well know investors in the world, Charlie Munger, is weighing in.
Yesterday, Munger slammed companies that use "adjusted EBITDA" to report their earnings,
calling the metric exactly what it is: "bullshit earnings".
Munger said that the metric is "ridiculous" and isn't an accurate measure of a company's
profitability,
according to a report by CNBC .
He commented: " I don't like when investment bankers talk about EBITDA. It's ridiculous.
Think of the basic intellectual dishonesty that comes when you start talking about adjusted
EBITDA. You're almost announcing you're a flake."
The conversation came up as a response to Uber, who last week said it would be raising its
"EBITDA profitability" target for the forth quarter of 2020. The stock jumped as a response.
Munger made the comments as part of a broader warning on Thursday at the Daily Journal annual
shareholders meeting.
He commented: "I think there are lots of troubles coming. There's too much wretched excess.
In China, they love to gamble in stocks. This is really stupid. It's hard to imagine anything
dumber than the way the Chinese hold stocks."
In addition, the 96 year old Munger said he believes that the innovation boom that he has
experienced over the course of nearly a century could be coming to an end.
He concluded: "I do think that my generation had the best of all this technological change.
I don't think we're going to get as much improvement in the future because we've gotten so much
already."
3 minutes ago
I'd like to hear what Charlie thinks about buybacks, consensus estimates
that are low-balled, before earnings come out. 4 minutes ago Certainly Berkshire has cash on
hand to invest when the market tanks. It makes sense that Munger would try and help things
along. I don't know that he has made that observation in days past. Why now? No one that smart
is just now figuring these things out. http://quillian.net/blog/the-most-important-thing/
4 minutes ago (Edited) Pretty soon you'll be hearing a company reporting their net profit by
saying "here is our net profit before expenses." 5 minutes ago Charlie, STFU, your're going to
ruin the party. 8 minutes ago Forty thousand grandfathers agree. This is America. 11 minutes
ago Trust business? Fastest way to lose your assets. 14 minutes ago I read a long essay by
Munger where he extols the greatness of an investment in KO (coke). Never once did he mention
any of the adverse health problems of too much sugar and caffeine in our diets. Sugar is
causing an obesity epidemic and the caffeine makes us all hyper and prone to mistakes. I used
to drink it as a programming fluid but I quickly got addicted. I started to notice that my
typing mistakes went way up due to the caffeine. I once saw a psychology textbook where they
fed caffeine to spiders to see how it affected their web building. There webs turned out a
horrible dis-organized mess. I would ban coke from the workplace.
14 minutes ago
I would observe Charlie is right and the corresponding CEOs are overpaid....
17 minutes ago
When have earnings ever been real?
Anyone remember Lucent? 17 minutes ago EBITDA is an anagram for BAITED
Make sense now?
18 minutes ago
A time of fraud. Volatility will eventually reveal the truth.
25 minutes ago
for once this old turtle head said something I agree with. EBITA is for me a
totally useless metric for turd polishers.
36 minutes ago
No respect for Munger.
He got into Harvard because of connections. He was denied, and then the dean got a phone
call from a former dean who new Mungers family.
So Munger went to Harvard law and became lawyer, which is the most corrupt profession bar
none (pun intended). Even though he didnt even have an undergraduate degree.
Then he used his Harvard law to do what they all do: start a firm, make a killing ripping
people off, and then use the money to start a hedge fund.
Guys like Munger contributed exactly zero to society, and raked in billions by circumventing
rules everyone else is forced to follow.
"... that every nation produces what oil they can produce. Production must have some relation to reserves. ..."
"... The normal R/P ratio is around 20. That doesn't mean a nation with an R/P ratio of 20 will run out of oil in 20 years. Because as their production declines, their R/P ratio will still hold at about 20 because they are producing less oil therefore their reserves will go further. So an R/P ratio of about 20 is the norm for normal size conventional fields. ..."
"... For giant and supergiant fields the R/P ratio would be greater and for smaller fields, as well as shale fields, the R/P ratio would be smaller. ..."
"... Using OPEC's reserves data for both OPEC and Non-OPEC, OPEC has an R/P of 109 while Non-OPEC has an R/P ratio of about 12. That OPEC number is absurd beyond belief. ..."
"... If we exclude the heavy oil then OPEC's share is close to the 70% I suggested. How does this square its share of the production numbers for the world. This was my original question. I would like to read what the thoughts of other posters are on this as well. ..."
What is the explanation that Non-OPEC produces more than OPEC, but OPEC has 70% of world
reserves?
Although this might have been the case in the early history of oil production, I
would think that this should not be the case near the peak. If I recall correctly, Campbell
thought that OPEC's stated reserves are actually the estimated values produced by the government for each OPEC country?
Well, 79.4% to be exact Some people really believe that unbelievable crap. Well hell,
there are still people who believe the earth is flat and that the sun revolves around the
earth. So why should we be surprised? Some people will believe anything.
I would like to think that most people on this list know that OPEC quoted reserves is
pure bullshit.
Hey, we have a president who lies every time he tweets. And sometimes he tweets 200 times
a day. And perhaps 45% of the nation believes him. The capacity of humans to believe the
absurd is unbounded.
Anyway if IEA and EIA projections are made on the basis of OPEC claimed reserves, we
have a serious problem.
Well, I have always stated, on this blog as well as The Oil Drum, that every nation produces
what oil they can produce. Production must have some relation to reserves.
The normal R/P ratio is around 20. That doesn't mean a nation with an R/P ratio of 20 will
run out of oil in 20 years. Because as their production declines, their R/P ratio will still
hold at about 20 because they are producing less oil therefore their reserves will go
further. So an R/P ratio of about 20 is the norm for normal size conventional fields.
For giant and supergiant fields the R/P ratio would be greater and for smaller fields, as
well as shale fields, the R/P ratio would be smaller.
If a giant or supergiant field is nearing the end of its life, but infill drilling,
creaming the top of the reservoir, this will throw a monkey wrench into their R/P ratio.
While in its prime, the field may have had an R/P ration of 40 or even greater, its R/P ratio
while being creamed will be much smaller, less than 20.
Using OPEC's reserves data for both OPEC and Non-OPEC, OPEC has an R/P of 109 while
Non-OPEC has an R/P ratio of about 12. That OPEC number is absurd beyond belief.
According to Hubbert methodology, at the peak production the number of years to exhaust
the reserve is N = 2/a in which "a" is the intrinsic growth rate
dQ/dt=a Q (1-Q/Q_0)
From Laherrere's reports for world peak, this is between 0.04 and 0.05. This means that
the R/P ratio is between 40 and 50 at the peak. Thus if we say that 1/2 of the reserves are
left at the peak and we take Laherre's URR = 2500, this gives R/P=1250/35=36 years. These are
ball park figures, but suggest that R/P ~ 20 is low. These numbers are for the entire world
and for example for North Sea at its peak Hubbert's analysis gave a = 0.12, so
R/P=2/0.12=16.6, and this illustrates the fact that smaller fields are closer to your number
R/P=20.
If we exclude the heavy oil then OPEC's share is close to the 70% I suggested. How does
this square its share of the production numbers for the world. This was my original question.
I would like to read what the thoughts of other posters are on this as well.
"... Haftar is a US citizen and has ties to the CIA. The USA's position on Libya is unclear to me. I am not sure the US government is supporting any side. Turkey is the only country I see providing support to Tripoli. It seems to me the usual suspects either back Haftar or are watching from the sidelines. ..."
"... W.r.t Libya, they were producing ~7% of the MENA region consumed oil in 2011, and about 3% of the total MENA production (not big, but enough income to run a country). ..."
"... Before my last post, I was thinking to myself: "Didn't Haftar secure/surround most of the oil infrastructure around 2014?" I was sure I had read it somewhere. But if memory serves he was on a major advance, and then withdrew/got pushed, and made a second comeback in the past 2 years. ..."
"... Haftar has clearly switched sides since his twenty years in Langley. Very common in the Middle East, suddenly switching sides. ..."
@casey #2
Libya was never a major producer - and their production levels fell after "the revolution"
and are still really low. Not at all clear it matters compared to say, US fracking
production.
Haftar is a US citizen and has ties to the CIA. The USA's position on Libya is
unclear to me. I am not sure the US government is supporting any side. Turkey is the only
country I see providing support to Tripoli. It seems to me the usual suspects either back
Haftar or are watching from the sidelines.
You seem to have a panache for declaring "truths" to the bar here and often seem very
agenda-driven, with all due respect.
W.r.t Libya, they were producing ~7% of the MENA region consumed oil in 2011, and about 3%
of the total MENA production (not big, but enough income to run a country).
They were producing in range of 800,000 - 1.2M bpd (wikiped says 1.65M) prior to the
NATO/US/ZIO neo-lib/con blood-lust orgy of death unleashed since 2011.
I know that 3% is not big cookies, but it seems significant to me. When taken at 'oil
production per capita, they sit in the top 10 (until Haftars' latest maneuvers) which means
more ability to spend per citizen. The US sits at 23rd place on this metric. It is
bang-for-your-buck that matters for the people on the ground.
They do hold sizeable reserves, and it is all on the heads of the West that they are not
prospering (albeit under a dictator with a crazy taste in fashion; at least he wasn't Reagan,
Bush 1&2, Clinton 1&2, Obama, or the current dumpster-fire).
If I were in the MENA axis, I would certainly have an inclination to sabotage/destroy ALL
oil infrastructure globally, via whatever means possible. Because that would turn all of
those happy little consumers in the "developed" world against their masters for breach of the
social contract (read delusion) that we live under.
Before my last post, I was thinking to myself: "Didn't Haftar secure/surround most of the
oil infrastructure around 2014?" I was sure I had read it somewhere. But if memory serves he
was on a major advance, and then withdrew/got pushed, and made a second comeback in the past
2 years.
I'm going to have to go and do some more reading on Libya, once I've finished reading
Super Imperialism.
My reading list seems to be growing faster than my ability to keep up of late, thanks to
the collective resources of all you Barflies post. :O)
"Haftar has clearly switched sides" Other some Western press making a bit of noise I see no
evidence of this. In fact the opposite. Any drone strike attempts on Haftar you can link me
to? LOL. Don't pay attention to what the press says. Pay attention to who is getting bombed
and who is not. At the end of the day that is how you tell the truth.
What Libya produced before its "revolution" isn't the issue. They used to produce 1.5M bpd -
they're supposedly producing over 1M bpd now. How much is actually exported vs. used
internally or "lost"?
Sure, 1M bpd is significant compared to world oil production of 82M bpd, but my original
point still stands: 1M bpd (a net fall of 500K bpd vs pre-revolution) is not very significant
vs. the US' increase of oil production by 6M bpd in the same period (2014-2019).
"Sure, 1M bpd is significant compared to world oil production of 82M bpd, but my original
point still stands: 1M bpd (a net fall of 500K bpd vs pre-revolution) is not very significant
vs. the US' increase of oil production by 6M bpd in the same period (2014-2019)."
Three issues arise:
(1) The fracking boom generally only produces condensates NOT OIL, especially in the Permian
basin (96%) which must be blended with heavy crude to process it at US refineries.
Furthermore, some 90% of fracking companies or their investors are losing money and the boom
appears to be short lived.
(2) The US is still a net hydrocarbon importer especially heavy crude such as the Russian
Ural blend. Little wonder why Venezuela and Iran are targets for conquest by the "Masters of
the Universe".
“Yes, fracking production has heavily benefited from cheap money.”
This is a ode word for malinvestment. As a result of poor planning these wildcat fracking
operations fail to properly plan the resource extraction stream leading to failures to plan
for such components as roads, fracking sand inputs and pipeline capacity. https://mises.org/library/malinvestment-not-overinvestment-causes-booms
“Fracking has fundamentally changed the role of imported oil in the US.”
Fracking is just a short term stopgap as wells deplete rapidly. Once the condensate boom goes
bust the US will have to invade a couple of other oil producing countries to promote
democracy and the amerikan way.
“It has fundamentally changed the energy mix in electricity generation - from coal
to natural gas.”
Yes, in the short term low natural gas prices have dramatically reduced the use of coal in
the US (excepting metallurgical coal). Currently natural gas prices are at about
$2.00/1000cuft or $71/1000m3. The price is so low that many producers are shutting down, as
they cannot make money due to the massive short-term glut (malinvestment again).
In many places such as the Permian there is massive flaring to get rid of the excess gas
rather than using it for the public good. This is not to say that no one is making money off
this problem as gas pipeline operators are charging several dollars per 1000cuft to take it
off the producer’s hands. There is a movement to use some of this gas to run well-head
operations and the larger companies are better at it due to economies of scale.
As you know, Cheniere is doing well by helping Trump sell “freedom gas” to
Europe at about $213 per 1000m3 on long term contracts. The US is covering this up by
increasing foreign aid enough to cover the additional costs of “freedom gas”.
“And the net reserves of oil and natural gas enabled by fracking is still far above
the total amount of money burned in the creation of this industry - even at the low oil and
historically low natural gas prices today.”
Please elaborate on this statement as I am missing the point. Can you post a comprehensive
paper on environmental costs into the fracking cost-benefit analysis.
“As for panic in Italy - Italy is the closest EU country to Libya. A cutoff will
affect some people, but there seems to be plenty of other sources happy to step
in.”
“As for panic in Italy - Italy is the closest EU country to Libya. A cutoff will
affect some people, but there seems to be plenty of other sources happy to step
in.”
This is a lot of oil to substitute as indicated by the recent Trump threats to Haftar to
turn on the spigot. In addition, changing the blend requires some refinery operation changes
which might be expensive depending on the substituted oil composition.
"... The thoughtless people who constructed " globalism " overlooked that interdependence is dangerous and can have massive unintended consequences . With or without an epidemic, supplies can be cut off for a number of reasons. For example, strikes, political instability, natural catastrophes, sanctions and other hostilities such as wars, and so forth. Clearly, these dangers to the system are not justified by the lower labor cost and consequent capital gains to shareholders and bonuses to corporate executives. Only the one percent benefits from globalism. ..."
"... Globalism was constructed by people motivated by short-term greed. None of the promises of globalism have been delivered. Globalism is a massive mistake. Yet, almost everywhere political leaders and economists are protective of globalism. So much for human intelligence. ..."
If the coronavirus proves to be serious, as it does not appear to be at the present time,
many economies could be adversely affected. China is the source of many parts supplied to
producers in other countries, and China is the source of the finished products of many US firms
such as Apple. If shipments cannot be made, sales and production outside of China are affected.
Without revenues, employees cannot be paid. Unlike the financial crisis of 2008, this would be
an unemployment crisis and bankruptcy of large manufacturing and marketing corporations.
This is the danger to which globalism makes us vulnerable. If US corporations produced in
the US the products that they market in the US and the world, an epidemic in China would affect
only their Chinese sales, not threaten the companies' revenues.
The thoughtless people who constructed " globalism " overlooked that interdependence is
dangerous and can have massive unintended consequences . With or without an epidemic, supplies
can be cut off for a number of reasons. For example, strikes, political instability, natural
catastrophes, sanctions and other hostilities such as wars, and so forth. Clearly, these
dangers to the system are not justified by the lower labor cost and consequent capital gains to
shareholders and bonuses to corporate executives. Only the one percent benefits from
globalism.
Globalism was constructed by people motivated by short-term greed. None of the promises
of globalism have been delivered. Globalism is a massive mistake. Yet, almost everywhere
political leaders and economists are protective of globalism. So much for human
intelligence.
At this point of time, it is difficult to understand the hysteria over coronavirus and
predictions of global pandemic. In China there are about 24,000 infections and 500 deaths in a
population of 1.3 billion people. This is an inconsequential illness. Compared to the ordinary
seasonal flu that infects millions of people worldwide and kills 600,000, the coronavirus so
far amounts to nothing. Infections outside of China are miniscule and appear to be limited to
Chinese people. It is difficult to know for certain, because of the reluctance to identify
people by race.
Perhaps the coronavirus is just warming up and much worse is to come. If so, world Gross
Domestic Product (GDP) will take a hit. Quarantines prevent work. Finished products and parts
cannot be made and shipped. Sales cannot take place without products to sell. Without revenues
companies cannot pay employees and other expenses. Incomes decline across the world. Companies
go bankrupt.
You can take it from here.
If a deadly coronavirus pandemic or some other one does erupt and there is a world
depression, we should be very clear in our mind that globalism was the cause. Countries whose
governments are so thoughtless or corrupt as to make their populations vulnerable to disruptive
events abroad are medically, economically, socially, and politically unstable.
The consequence of globalism is world instability.
It makes sense for rich countries elites to leverage poor backwards shithole countries to
manufacture the things they need because the elites then don't have to worry about anyone but
themselves. Globalism is wonder as it bypasses all that crazy western nonsense like jobs and
wages and society and hope and such.
Globalism is nothing more than the major central banks finding ways to dump off their
inflation which is the deflation of an ever increasing number countries which the major cb's
used to deflate their currencies. The older the cb you are the worse off yo are. From a since
A.D. perspective only the Sterling is what you have to worry. From my last fiat currency
perspective its the Venisthaler that is un doing everything.
To get more zero's you have to add more nine's. They can not be added as nausem like
people think zero's are. The compensation pool has been shrinking for centuries on end now.
Globalism is an attempt to keep the pool growing at all cost which results relentless asset
appreciation. We are out of nine's. The end result of that is hyper deflation for the man and
hyper reflation for the people. Easily provable at a store named Vons owned by the treasury
retired.
That ladies and gents is your simplified street fed explanation. I am not trying to even
remotely write out the longer technical version.
Having said that meet me at what is known as the small walmart around here, which is the
home of what does MU do, what does MU do at walmart it never gets old fame for a real life
walk thru of what globalism is and looks like. We will then progress to the "Big Walmart" not
even a mile away and I will show you what an out of control system looks like.
So we are clear of what I just said. I live in the only place in the world where when a
tourist ask you where Wal Mart is, you get your choice of size. Whats the difference you
ask??? The small Wal Mart has one main entrance, the big one has three. The lady almost
smacked the **** out of the guy I got that from when she asked what the difference was. The
hand came up. You really had to be there.
Regional trade blocks with relatively balanced resource and production capabilities make
more sense. Globalisation just lead to one country seeking to 'DOMINATE' in every sphere of
global activity, raising the threats of economic and military conflict, as clearly
demonstrated and this with the aim of global enslavement to multinational corporations, the
aim of Globalism, really sick psychopathic stuff.
Regional trade blocks relatively balanced for resource and production, provide stability
within each block and lesson competition for outside resource and commercial competitiveness,
and represents a far more long term stable structure.
Within each trade block, as it is economic rather than socio-political the original
identities of each distinct region can be preserved for the long term, so that future
generations can enjoy and share in the different cultures. Race ******** is race ********,
there is only one race and all of it's people are free to share in which ever culture they
choose or combinations there of. Whether you get to move to those regions and enjoy those
cultures will be done to your personal worth, character and ability to contribute to those
societies, just the way it will be.
Some economic blocks will be far more preferable to others and will attract higher worth
individuals (character and ability to contribute to society), the least and most desirable
will become more so as higher worth individuals move to the most preferable away from the
least preferable and make the most preferable more preferable by their active presence.
I would tip the Japan Australia one to be the most preferable for this century, the next
hard to tell (there are real deep problems in the Americas caused by the USA, the EU had an
bad immigrant problem as in they let in too many bad unvetted immigrants, Africa will be what
Africa will be corrupt and Russia China it depends upon how quickly the modernise and
socially advance, the middle of the middles south east to mid east it depends how long it
takes them to come together and religion is a real problem for them).
I've been wondering if this might be some kind of Globalist Drill. It doesn't make sense,
although there is always the potential it could become worse than it is.
I thought so, too. Strangely enough, Wuhan Chinese are now repatriated from Bali back to
Wuhan?!
Instability is a necessary condition to get more conflicts and then wars going. Weapons
production must be kept up; peace and stability would make make weapons production an
expensive hobby.
It should be clear on what the fight is really about in the US. It's about stopping the rise
of socialism. Regardless of party affiliation, the elites know what the populace wants and
are desperately trying to stop it. I refuse to accept that the Democrats have no idea what
they're doing.
I honestly can't see Sanders getting the nomination with all the corruption openly being
displayed. I would be pleasantly surprised if Sanders did manage to get it, but he still have
to deal with the ELECTORAL COLLEGE (EC). The Electors have the final say. Yes, one can point
out that some States have laws forcing Electors to vote what the populace wants, but that is
being challenged in court. The debate on whether such laws are unconstitutional or not,
remains to be seen. It's too late now to deal with the EC for this election, but people need
to be more active in politics at the State level as that's where Electors are (s)elected.
IF Sanders is genuine then he should prepare to run as an independent just to get the EC
attention.
RR @ 14;
Everything in the U$A today, is driven by the unofficial Party of $, and it's reach
transcends both Dems & repubs. It's cadre is the majority of the D.C. "rule makers", so
we get what they want, not what "we the people" want or need.
They own the banks, MSM media, and even our voting systems.
IMO, to assume one party is to blame for conditions in the U$A is a bit naive.
Question is, can anything the masses do, change the system? Or is rank and file America
just along for the ride?
I'm assuming us peons will get what the party of $ wants this November also.
P.S. If any blame is given, it needs to go to the American public, because " you get the
kind of Gov. you deserve" through your inactions...
It's a lot like living, death is certain, but until that occurs, I'll move forward trying
to mitigate current paradigms.
Pepe Escobar pointed out once that certain members of the "Masters of the Universe" (as he
terms the US elites who actually run things) supported Trump in 2016, and were opposed to
other "Masters" who supported Hillary Clinton. Given that Clinton disappointed her "Masters"
by losing and damaging her credibility with the whole "Russiagate" fiasco, perhaps they
switched sides to Trump - especially given that Trump can be controlled and manipulated more
easily (since he is an idiot and ignoramus) to start the wars the "masters" are yearning for
to improve their corporate profits (regardless of his alleged desire to avoid wars - a
fanciful story also told about Barrack Obama from the beginning as well, which resulted in
Obama destroying four more countries than Bush during his administration.)
So now they've decided the Dems need to be kept out of it for whatever reasons of
incompetent politicking or too much socialism for the "Masters" liking, or whatever. So
they're arranging for the Dems to self-destruct this year.
Just a speculative thought, and I wouldn't put any stock in it absent any real
evidence.
In the end, it doesn't matter. Absent Gabbard being nominated and elected, nothing will
change in US foreign policy anyway. And to quote Percival Rose from the Nikita show about
Gabbard's chances, "That ain't gonna happen."
In December the number of states in expansion was 39. Historically over the past 40 years,
that number dropping to 35 or below has (with the exception of one month in 1986) been the
marker of the onset of a recession.
Note the number is below the lowest level from 2015-16, in which weakness was generally
confined to the Oil patch. It is yet another marker of a slowdown, but not of a recession.
Later this morning we'll get the January ISM manufacturing report, and over the next 48
hours we'll get reports on January auto and truck sales. Both of these will help tell us if the
weakness in the production sector has been spreading or not.
Entrapment of Flynn and his own stupid behavior (for former chief of DIA this really
unass[eble naivity) that facilitated it is an interesting case study here...
David G. Horsman Although I am not
familar with all the players, in context to early 2017 the one part of the article I thought
exaggerated was this:'Probably the most intelligent analysis of the Deep State was written for
The Nation by Greg Grandin. Titled "What is the Deep State?", it makes many very good points
I
n 1956, C. Wright Mills wrote that "the conception of the power elite and of its unity rests
upon the corresponding developments and the coincidence of interests among economic, political,
and military organizations."
If nothing else, the "Trump v. Deep State" framings show that unity is long gone.'The three
seem generally aligned with the people on the outside looking in. Infighting is the norm.
It now appears that this massive euphoria, which culminated in the biggest one-day selloff since
August, may have been a tad excessive, hitting just as China was forced to admit it has a major
viral epidemic on its hands (although in retrospect Ray Dalio's Gartmanesque "
cash
is trash
" declaration just days earlier in Davos, may have been just as powerful a catalyst for
the derisking as the Coronavirus pandemic).
And nowhere was the investor euphoria more apparent than in the tech sector which, as the BofA
chart below shoes, was the most overbought since dotcom bubble.
Then, on Friday, as we duly reported fears that China is losing the fight to contain the
Coronavirus spread finally exploded, and sent the Dow red for the year, with the S&P 500 index now
flat for 2020 as positive early results from 4Q 2019 earnings season offset the economic concerns
of the coronavirus. In short, much of the euphoria that was unleashed by the Fed's launch of QE4 in
October to "fix" the repo market, coupled with central banks cutting rates as if "it's a crisis" in
the words of Bank of America...
... concerns that China's economy may slump to a 5% or lower GDP as a result of the viral
pandemic, have come at the worst possible time. And so, with the market finally cracking,
suddenly panicked investors are asking if what has gone up in almost vertical fashion over the past
year is about to come down.
Namely the handful of tech stocks that has been at the forefront of the S&P's tremendous ascent:
the FAAMGs.
As Goldman's David Kostin write over the weekend, picking up where
Morgan Stanley's Michael Wilson left off two weeks
ago, "today, the S&P 500 market cap is
concentrated in the five largest stocks to a degree not witnessed since the peak of the Tech
bubble.
The five firms – FB, AAPL, MSFT, AMZN, GOOGL – collectively account for 18% of S&P
500 market cap, the largest share since 2000
"...
... even as earnings are slightly less concentrated, with the top five stocks represent 14% of
profits, the highest level since 2015. During the past three months, aggregate FAAMG returns have
been double the S&P 500 index (19% vs. 8%) and generated 37% of the gain for the entire index
during that time. And with most of tech earnings roughly unchanged over the past year, the bulk of
this price increase was the direct result of multiple expansion, which in turn was made possible by
a record expansion in stock buybacks among tech companies.
So with everyone casting a fearful eye to the first tech bubble in 2000, investors are
understandably curious what happened back then, and are we about to witness the second coming of
the dot com bubble bursting.
Here, Kostin, which has a 3,400 year-end price target understandably does everything in its
power to mitigate fears that the Nasdaq is about to experience a second catastrophic plunge. Here
is what Kostin writes:
Twenty years ago, the US equity market was also dominated by five stocks:
MSFT, CSCO, GE, INTC, and XOM. In March 2000, these stocks accounted for 18% of total S&P 500
market cap and were priced at a substantial premium to the index. Collectively, the firms traded
at a forward P/E of 47x (vs. 24x for S&P 500) and 7.3x trailing EV/sales (vs. 2.7x). The
elevated valuations reflected expectations for rapid growth in aggregate earnings and sales
during 2000 and 2001.
In contrast, full-year 2001 results for the five largest stocks in March 2000 came in
nowhere near the lofty initial expectations.
In aggregate, sales fell by 7% (vs.
expectations of +15%), net margins contracted by 150 bp (from 13% to 11% vs. the original
forecast of 1100 bp of margin expansion) and net income fell by 18% (vs. forecast of +14%).
Three of the five firms actually realized negative sales growth in 2001 (INTC: -21%,
XOM: -10%, CSCO: -24%) and three reported negative EPS growth (CSCO: -72%, INTC: -68%, XOM:
-6%).
In contrast to the devastating misses suffered by the "Big Five" in 2000, Goldman claims that
"lower growth expectations, lower valuations, and a greater re-investment ratio suggest the current
concentration may be more sustainable than it proved to be in 2000." To underscore this point,
Goldman shows the following chart according to which valuations of the five largest companies now
are far more manageable compared to 2000.
But as even Goldman admits,
"in order to avoid repeating the share price collapse
experienced by their predecessors, today's market cap leaders will need to at least meet – and
preferably exceed – current consensus growth expectations,"
which, however, "seem more
achievable based on recent results and management guidance. In aggregate, consensus expects a 100
bp sales growth deceleration (from 15% in 2020 to 14% in 2021), a 20 bp margin expansion (19.5% to
19.7%), and a 600 bp EPS growth acceleration (10% to 16%)."
The good news is that at least for now, these market titans have not disappointed, as Bloomberg
pointed out in "
Like
It or Not, Trillion-Dollar Titans Lived Up to Earnings Hype
." Indeed, four of the five FAAMG
stocks reported 4Q 2019 results this week, which generally came in stronger than expected:
Apple reported a revenue and EPS beat
, with quarterly revenues of $92
billion (+9% vs. the year-ago quarter) beating consensus by 4% as demand for iPhones and
wearables better than expected. Subscriptions came in ahead of schedule, despite a deceleration
in services revenue growth to 17% year/year.
Microsoft posted positive results across every segment
. Sales grew by 14%
year/year and executives affirmed guidance for continued double-digit growth in 2020. Consensus
estimates currently forecast 12% sales growth and 11% EPS growth in 2020 and 12% and 14%,
respectively, in 2021.
FB reported strong 4Q results across almost every financial metric.
Overall
revenues jumped by 25% to $21 billion. While ad revenue beat for the fifth consecutive quarter,
slowing growth in mature markets led to some investor concern.
AMZN's Thursday report was the best of the FAAMG lot
. The company reported
4Q revenues of $87 billion (+21%), above consensus forecasts, and AMZN exceeded the high-end of
its revenue guidance for the first time since 1Q 2018.
Yet while the market leaders did not disappoint in the last quarter of 2019 when stocks exploded
higher with the blessing of the Fed's QE4, what about the current quarter and the future? What
happens to revenues and demand, to established supply chains, to profit margins, if the Coronavirus
epidemic keep spreading and tens of millions of Chinese remain under quarantine? What happens to
Apple's iPhone sales in China if the Cupertino company is unable to reopen its store for a month,
or two, or three? What happens to the already depressed global auto industry if Chinese part-makers
can't transport their parts to their core customers? What happens to China's financial system if
the local banking sector is suddenly paralyzed as the great unknown of how the pandemic
will impact the Chinese economy spreads
?
One thing is certain: with the tech sector priced to perfection, and with multiples of the IT
sector at the highest level since the dot com bubble, and the tech setor the most overbought
relative to the broader S&P500...
... anything less than perfection could lead to a violent selloff among the
massively
overbought handful of tech names that have led the market for much of the past year.
As such, it's suddenly up to China to make sure the FAAMGs in particular, and the tech sector,
and S&P500 in general, can sustain the lofty ascent that Donald Trump demands to ensure his
reelection in November. That, however, may be a big ask as the NYT writes in "
China
Kept World in Dark as Outbreak Rippled
" because, well,
why would China have to keep the
world in the dark if indeed the situation was contained, or containable?
And one lack at
the recent action in the NYSE FANG index...
... indicates that traders are increasingly starting to wonder if the mega tech party was
finally ended, not by a black swan, but a black bat...
Tags
Business Finance
I like Moon aka Bernard or whatever but he says the EU needs slightly less regulation. This
stupid giant politically correct police state has like 66,000 laws and they pass 5,000 new
ones a year. Nanny police state fascism and all they do is steal money from the taxpayers of
Europe. It is a Central Bank ponzi scheme that is going to implode.
Most recent joke today is the EU Army which has pretty much no working tanks, planes or
ships. Who are they going to fight anyway? The Russians? God help Europe - maybe Russians and
Putin might reinstate Christianity in Europe and throw off the yoke of the CIA/MIC/Operation
Gladio-Mockingbird from USA.
The impression I'm getting from comments here is that there are still many Europeans (in the
broad sense, both EU and British) in complete denial.
Europe is in decline, not in ascension. The numbers just came out yesterday: 0.1% for the
EU (with France and Italy in recession); UK's number for Q4 are still one month away, but Q3
was also pathetic.
World trade (globalization) has grown to a halt. It's all maxed out already, there are no
more free trade deals to be made.
Germany is in de facto recession. Most worryingly, its industrial output is plummeting -
with only its services sector keeping the whole thing afloat. And we know that's not how the
German economy should work.
The UK is still a capitalist economy - free from the EU or not. It will not invest in
those fabled renewable energy sources from tide, wind etc. etc. if the profit rates are not
high enough. And they are not high enough. The only way, then, for those investments to
happen is if energy prices spike up - very bad news for the British people (which, fair to
say, could happen in or out of the EU, so this is not a Brexit question).
Many countries in Europe tried to invest in those renewable, but apart from insignificant
micro-nations such as Denmark, most failed to supplant the old sources. It was reduced to a
complementary source.
The only reason to think the European Peninsula can rise from the ashes is that it rose
from the ashes before (post-war miracle). But the post-war miracle was a very exceptional
historical period, where a lot of improbable variables aligned. It will certainly not happen
again.
The European peoples should stop with their dellusions of grandeur and accept a treaty of
Eurasian integration, with a subordinate status to Russia and China. You did it before with
the USA in 1945, you can do it again now with Russia/China. That is unexceptional in European
History, and can certainly happen again.
The Commonwealth long since ceased to have any meaning for the UK other than as a
vestige of an expropriative empire, which has been a caricature since 1942[.]
If you think that the land mass of the Commonwealth represents a kind of control comparable
to the EU then you need to study the last century[.]
In that comment you have attracted Her Majesty's displeasure. Suggest a read up of the 53
Commonwealth countries' property ownership in common law - in fee simple>radical
title > The Crown's underlying title in common law. Oh, add the thirteen
colonies prior to the American revolution found unpalatable.
Fun read from George Galloway @RT. Lot's of things independent minded folk can agree with but
pay particular attention to the conclusion / ending and give it a 1 to 10 reality rating.
Think of the absolutely absurd straight line that separates Canada from the U.S. West of
the great lakes.
Now think of that artificially imposed boundary and ask yourself, "What a stupid line,
surely that line wouldn't be able to instill any cultural differences between two artificial
constructs (nations)?"
(Anecdotally, I live in the Pac NW and every time I have ever crossed the border into
Canada it literally feels like you are entering a retiring, European state.)
And then ask yourself how it is possible one country has a national healthcare system
while the other abhors the idea. Or why the U.S. has the worst gun violence in the First
World while Canada has a 1/10th of that number.
Face it, regardless of lines on a map, a national identity still gives a people the choice
to galvanize and develop independently.
I think the EU is in for more trouble in the future than the UK. By the end of this decade,
several central and eastern European countries economies will have grown sufficiently that
their EU yearly subsidies will now become EU payments. In other words, the EU cash cow will
suddenly become a cash drain for some countries. In the meantime, France and Germany will
have the pick up the financial slack caused by Brexit. Put it all together and it seems to me
some trouble ahead for the EU.
I believe you have stated the underlying facts here -
"b is correct tho that the tendency of politicians pretending to be technocrats to
centralise in order to build a trade-able power base must be halted. otherwise the national
devolution movements become superseded by a Brussels top down pyramid management structure
where citizens are too removed from decision makers and the decision makers are too removed
from the results of their decisions."
That's the reason we have to leave the EU.
The next question is how.
The central fact here is that on a key point Brussels is absolutely in the right.
Frictionless access to the Single Market - what we have now - can only go with Dynamic
Alignment - continuing adherence to EU regulations. This fact was obscured during the
vacillations of the May Premiership and may still be being obscured.
Me, I think the "regulatory ecosystem" that the EU has evolved is unsound. It also goes
well beyond the technical setting of standards (most of which are set outside the EU in any
case) and affects matters far removed from the purely technical. But it's what they have and
it's not for us to attempt to change it.
Much of the hostility from the EU derives from the belief that as we leave we are trying
to change their system, and for our own benefit. All the fears of "Cherry picking" and the
rest. But it's not that they won't change. They can't, not without an entire recasting of
that regulatory ecosystem. That would cause chaos if they attempted to do it. Engrenage is
their watchword, the gradual accumulation of regulation and prescription, not demolition or
radical rebuilding.
In short, for the reasons you have given above, we have to leave. When we consider the
"how", we see that there is no magic solution that allows us to leave while continuing
trading as if we have not left. Out really does mean out.
So where's the problem?
We've built up a good many trade links with the 27, the EU countries. They are vulnerable
links, particularly the JIT links. It's going to take time to run down these links and
replace them with new. We have other links as well - through the agencies - that will also
take time to replace.
Such changes could take several years. If Brussels insists on that process happening
overnight the result is serious disruption. On the principle that the EU is so much larger
the calculation is that that disruption would hurt the UK much more than the EU. That is
Brussels' bargaining counter.
Whether Brussels is using that counter for punitive reasons or whether it is using it in
order to retain at least some control over the UK is irrelevant. The threat is there, however
you look at it.
Some think we should face the threat down. I do - I think it is bluff. Others think we
should not face it down - they fear it is not bluff. We wait to see which course the Johnson
administration will adopt, not forgetting that the previous UK administration, and certainly
the previous Parliament, didn't much like Brexit anyway - they wanted to stay in or close -
and we're not yet sure what Johnson's position is.
.
(Note - engrenage as it works in practice explained here)
"The affirmative task we have now is to actually create a new world order."
-- Vice President Joe Biden, April 5, 2013
"Out of these troubled times, our fifth objective -- a new world order -- can
emerge."
-- President George H. W. Bush, September 11, 1990
"We saw deterioration where there should have been positive movement toward a new world
order."
-- Mikhail Gorbachev, October 19, 2011
"I think that his [Obama's] task will be to develop an overall strategy for America in
this period, when really a 'new world order' can be created. It's a great
opportunity."
Remember it was the British that basically established political Zionism as a state back
in Palestine.
It was Trump that declared Jerusalem as the 'eternal capital' of anti-Christ Judaism.
Boris Johnson is a 'passionate Zionist' by his own proclamation.
This is about a realignment of Zionist interest in the English speaking world.
The EU wasn't going to play ball on the terms of American (and British) Zionism.
The English (KJV) world of eschatology demands a pseudo-Christianity to bow down to the
interests of anti-Christ Jewish nationalism. (It is why the U.S. Senate has passed
legislation making it illegal to criticize 'Israel' as 'anti-Semitic')
American evangelicals are being misrepresented by heretics like John Hagee and a
pseudo-Christianity that cares not for Jesus Christ at all but rather maintains a focus only
on 'Israel'. A dual covenant theology mixed with heresies galore served up in a controlled
media that doesn't allow for the recognition of Christianity as the real Israel against a
history of the destruction of ancient Israel because of their rejection of Jesus Christ as
the Son of God.
The New Testament Parable of the Wicked Husbandmen is Jesus foretelling and giving clear
reason for the destruction of anti-Christ Judaism in 70 AD.
The heresies of John Darby and Cyrus Scofield (again nearly exclusively in English) have
created everything from British Israelism to fear and anxiety hustling crapola such as Hal
Lindsey and The Late Great Planet Earth end of the world heresies.
On the basis of Christian heresy has emerged anti-Christ political Zionism and its vast
adherents in the English speaking world now realigning.
The tell tale sign; debt rises much faster than GDP in the US in the 1920s.
(Japan 1980s; US, UK and Euro-zone before 2008; China after 2008)
The bankers were inflating asset prices with bank credit.
Bank credit effectively brings future prosperity into today.
The 1920s boomed on borrowed money and the 1930s were impoverished as they made the
repayments.
In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised
inflating asset prices doesn't create real wealth, they came up with the GDP measure to track
real wealth creation in the economy.
The transfer of existing assets, like stocks and real estate, doesn't create real wealth
and therefore does not add to GDP. The real wealth creation in the economy is measured by
GDP.
Inflated asset prices aren't real wealth, and this can disappear almost over-night, as it
did in 1929 and 2008.
Real wealth creation involves real work, producing new goods and services in the
economy.
Henry Simons was a founder member of the Chicago School of Economics and he had worked out
what was wrong with his beliefs in free markets in the 1930s.
Banks can inflate asset prices with the money they create from bank loans.
Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability
to create money.
"Simons envisioned banks that would have a choice of two types of holdings: long-term
bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw
this as beneficial in that its ultimate consequences would be the prevention of
"bank-financed inflation of securities and real estate" through the leveraged creation of
secondary forms of money."
"Stocks have reached what looks like a permanently high plateau." Irving Fisher
1929.
This 1920's neoclassical economist that believed in free markets knew this was a stable
equilibrium. He became a laughing stock, but worked out where he had gone wrong.
Banks can inflate asset prices with the money they create from bank loans, and he knew his
belief in free markets was dependent on the Chicago Plan, as he had worked out the cause of
his earlier mistake.
It was those bankers inflating the US stock market with margin lending.
It's not quite the same this time.
Let the bank's collapse for a Great Depression
Save the banks, but leave the debt in place for Japanification .
How did this old belief set come back again?
A new ideology, neoliberalism, was wrapped around 1920s neoclassical economics, to make it
look brand new.
The reckless bankers and robber barons had made a lot of money in the 1920s and they
rather liked the way things had been before, but after the reckless bankers and robber barons
had run riot in the US in the 1920s, beliefs in economic liberalism and the markets were in
short supply.
Just a few diehards, like Hayek, were left and they were hiding out at the LSE in the UK
in the 1930s. He was looking to put a new slant on those old ideas.
In the 1940s, Hayek put together his theories of the markets being a mechanism for
transmitting the collective wisdom of market participants around the world through pricing.
It was never going to get into the mainstream until nearly everyone had forgotten what
happened last time they believed in the markets.
At last, in the 1980s, the people were ready to believe in the markets again.
Before 1980 – banks lending into the right places that result in GDP growth
(business and industry, creating new products and services in the economy)
Debt grows with GDP
After 1980 – banks lending into the wrong places that don't result in GDP growth
(real estate and financial speculation)
Debt rises much faster than GDP
2008 – Minsky Moment
After 2008 – Balance sheet recession and the economy struggles as debt repayments to
banks destroy money. We are making the repayments on the debt we built up from 1980 –
2008.
What happened in 1979?
The UK eliminated corset controls on banking in 1979 and the banks invaded the mortgage
market and this is where the problem starts.
This is the UK, but everyone has made the same mistake.
One economics, one ideology.
Global groupthink.
At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
What Japan does in the 1980s; the US, the UK and Euro-zone do leading up to 2008 and China
has done more recently.
The tell tale sign of neoclassical economics; debt rises much faster than GDP
The PBoC saw the Chinese Minsky Moment coming and you can too by looking at the chart
above. The Chinese bankers had been loading their economy up with their debt products and it
was just about to crash.
Our experts look at public debt and consumer price inflation, but the problems develop in
private debt and asset price inflation so the "black swan" flies in under their radar.
Davos 2018 – The Chinese know financial crises come from the private debt-to-GDP
ratio and inflated asset prices
thatcher was a neoliberal. neoliberalism is both nationalism (for the long con game) and
globalist (the goal)
The Mont Pelerin Society's (Austria 1940's) favorite "economist" F. v Hayek proposed path
of "liberty" and "freedom" [only for the inbred 1% (Neoliberalism)] (Friedman, Buchanan,
"Chicago School", were later disciples)
1) Deregulate global financial markets - DONE
2) Deregulate global trade - DONE
3) Create the illusion and urgency of national bankruptcy with fake (fiat) debt (thereby
neuter a nation's capability to enforce laws - eliminate the people's ability to defend
against being overwhelmed and consumed by the 1%) - DONE
this manufactured illusion of bankruptcy is critical path for the inbred 1%'s agenda. the
"debt" is used to justify austerity measures for the people, and to tee up, the privatization
plan, which is about transforming the public debt, into private debt, where the 1% can
extract usury, ad infinitum.
#AusterityIsCode4Looting - austerity measures are plain evidence, the system has already
been looted by generational globalist wealth.
then lastly, the kill shot:
4) Privatize Everything. recreate us ALL as permanent rent payers of even the most basic
necessities of life (Air, water, food, shelter, health care). the public debt of a ntion has
been effectively eliminated, transmuted into private debt; the service of which (usury) is
FOREVER- Almost COMPLETE
#PrivatizationIsTheft - privatization today is STRICTLY about prioritizing national
productivity (work) away from the commons and general welfare, extracting and transferring it
to the inbred 1% rent-seeking parasites (Extreme Redistribution of wealth from the people TO
the Billionaires, NOTHING for the people)
"People only accept change when they are faced with necessity, and only recognize
necessity when crisis is upon them."
Same old process...Problem, Reaction, Solution
They corrupt the current system and advance their agenda as far as they can (gaining
public support using the process above). When they detect growing resistance and distrust of
the system...they then encourage and use that trend to advance their agenda further using the
same Problem, Reaction, Solution process. The crash/destruction of the current status quo and
the fear and chaos that comes with it will be blamed on populism/nationalism. The people (in
chaos and fear) will seek safety and security...and will willingly accept the solutions
offered up to them. Rinse and repeat.
The bottom line is they know that acceptance of global centralization of power and
control...is a bottoms up process (the people must willing accept/demand it). It must be
accomplished in evolutionary stages through gradualism. However, when they have reach a
certain point and want to take the next major step, they undermine the peoples trust in the
current system and encourage and use the people's blow-back. Blow-back will be blamed for all
the chaos and fear.
Now, Trump has said offhandedly that there's been talk of reinstating the deductions and
raising the mortgage cap. But for the most part, this seems like
idle talk . The federal budget deficit has exploded, but Trump and his team are still
talking up their tax-reform part 2 (though it's likely this chatter mostly a ruse to pump the
market). But suspect any tax cuts between now and November will be focused squarely on aiding
the midwestern states who handed Trump the presidency.
Since the tax-reform package was passed, what was once a trickle of blue-staters fleeing
places like California, New York, New Jersey, Connecticut and even Texas over the past two
years has become a flood.
And after a smattering of stories detailing the gradual migration from high-cost blue states
and cities like San Francisco and New York (we've paid
close attention to the trend
over the years ), two
WSJ banking reporters have published a deep dive on the trend, signaling its arrival as a
major national issue.
Just like
Carl Icahn and David
Tepper left New York and New Jersey for Florida, millions of Americans are following suit,
swapping Connecticut for Florida, Nevada or Arizona.
Two years after President Trump signed the tax law, its effects are rippling through local
economies and housing markets, pushing some people to move from high-tax states where they
have long lived. Parts of Florida, for example, are getting an influx of buyers from states
such as New York, New Jersey and Illinois.
Though the exact figures have probably changed since the tax reform was passed, this map
helps illustrate how capping SALT and lowering threshold for mortgages impacted each state.
While President Trump, Secretary Mnuchin and the rest of the administration have insisted
that they capped the deductions to end what they described as an unfair subsidy for blue states
. The average US property tax bill in 2018 was about $3,500, according to Attom Data Solutions,
a real-estate data firm cited by WSJ. But in New York, New Jersey and Connecticut, hundreds of
thousands of residents make annual property tax payments well above that level. In New York's
tony Westchester County, the average property tax bill is more than $17,000.
Most of the people interviewed by
WSJ said they had long considered moving to a more tax-friendly state. But for many,
Trump's tax plan was the catalyst to actually act on these impulses.
"It was another bucket of straw on the back of the camel," said John Lee, a
wealth-management executive and longtime resident of the Sacramento, Calif., area. Mr. Lee
and his wife, Tracy, moved their primary residence last winter to Incline Village, a resort
community on the Nevada side of Lake Tahoe.
The Lees kept their California home, where one of their six adult children is living. That
means they are still paying California property taxes. But Mr. Lee estimates the move to
Nevada, which has no state income tax, whacked his state tax bill by 90%.
The impact on housing markets in the ten most heavily taxed states has been impossible to
ignore. The
Manhattan luxury housing market is showing signs of serious distress that's provoking
anxieties among the wealthy developers who were expecting a boom in demand. According to Fitch
Ratings, home-price appreciation in these states declined almost immediately after the tax
reform package was passed. By comparison, home-price appreciation was steady for the 10 states
with the lowest property taxes and levels of mortgage interest.
Among Gen Xers and Boomers who have only recently achieved empty-nest status, plotting an
escape from taxation hell has become a simple tenant of good retirement planning.
Rick Bechtel, head of U.S. residential lending at TD Bank, lives in the Chicago area and
said he recently went to a party where it felt like everyone was planning their moves to
Florida. "It's unbelievable to me the number of conversations that I'm listening to that
begin with 'When are you leaving?' and 'Where are you going?'" he said.
Even some states known for having relatively low taxes are being affected by this trend, as
some residents opt for states with no income tax, like Florida or Nevada.
Trumps supposed tax cut was really a tax increase on many Americans. When I see multi
billion dollar corporations like Amazon paying nothing in taxes because Trump gave them a tax
cut, and working people in blue state paying for those tax cuts by having their taxes
increased, it is little wonder why voters are turning to Sanders.
There is a huge difference between extremely bright students and medicate ones. Bright students are the future of the society and
need to be nurtures and helped in any way possible for the range of specialties that are important (STEM is one example)
There is difference between the degree in computer science and the degree in some obscure nationality studies (let's say Eastern
European studies; few people that are needed can be paid by intelligence agencies ;-) Obscure areas should be generally available only
to well to do students, who can pay for their education.
Like is the case with alcoholism, some student debt is the result of bad personal choices.
Notable quotes:
"... Authored by Zachary Stieber via The Epoch Times, ..."
"... "My daughter's getting out of school, I saved all my money, so she doesn't have any student debt. Am I going to get my money back?" ..."
"... So, we end up paying for people who didn't save any money, then those who did the right thing get screwed, ..."
"... "We did the right thing and we get screwed," ..."
"... "Look, we build a future going forward by making it better. By that same logic what would we have done? Not started Social Security because we didn't start it last week for you or last month for you," ..."
"... "We don't build an America by saddling our kids with debt. We build an America by saying we're going to open up those opportunities for kids to be able to get an education without getting crushed by student loan debt." ..."
"... Sen. Elizabeth Warren (D-Mass.) campaigns in Des Moines, Iowa on Jan. 19, 2020. (Spencer Platt/Getty Images) ..."
"... "I'll direct the Secretary of Education to use their authority to begin to compromise and modify federal student loans consistent with my plan to cancel up to $50,000 in debt for 95% of student loan borrowers (about 42 million people)," ..."
"... A scholarship system awarding free tuition to the top 5% of college applicants (NOT biased by race, gender, etc) who apply to the U.S.'s best STEM programs, hell yes! Free tuition for future Democrat voters, f^%k that! ..."
Sen. Elizabeth Warren (D-Mass.) defended her plan to pay off college loans after being confronted by a father in Iowa in an exchange
that went viral.
Senator Elizabeth Warren is confronted by a father who worked double shifts to pay for his daughters education and wants to
know if he will get his money back. pic.twitter.com/t2GGbAnG08
The father approached Warren, a leading Democratic presidential contender, after a campaign event in Grimes.
"My daughter's getting out of school, I saved all my money, so she doesn't have any student debt. Am I going to get my
money back?" the man asked Warren.
"Of course not," Warren replied.
" So, we end up paying for people who didn't save any money, then those who did the right thing get screwed, " the
father told her.
He then described a friend who makes more money but didn't save up while he worked double shifts to save up to pay for his daughter's
college.
The father became upset, accusing Warren of laughing.
"We did the right thing and we get screwed," he added before walking off.
In an appearance on "CBS This Morning" on Friday, Warren was asked about the exchange.
Last night, a father who saved for his daughter's college education approached
@SenWarren and challenged her proposed student
loan forgiveness plan. @TonyDokoupil asks the
senator for her response: pic.twitter.com/jLUXPqChC6
"Look, we build a future going forward by making it better. By that same logic what would we have done? Not started Social
Security because we didn't start it last week for you or last month for you," Warren said.
Pressed on whether she was saying "tough luck" to people like the father, she said "No." She then recounted how she got to go
to college despite coming from a poor family.
"There was a $50 a semester option for me. I was able to go to college and become a public school teacher because America had
invested in a $50 a semester option for me. Today that's not available," she said.
"We don't build an America by saddling our kids with debt. We build an America by saying we're going to open up those opportunities
for kids to be able to get an education without getting crushed by student loan debt."
Sen. Elizabeth Warren (D-Mass.) campaigns in Des Moines, Iowa on Jan. 19, 2020. (Spencer Platt/Getty Images)
One of Warren's plans is to cancel student loans. According to
her website , on her first day as president
she would cancel student loan debt as well as give free tuition to public colleges and technical schools and ban for-profit colleges
from getting aid from the federal government.
"I'll direct the Secretary of Education to use their authority to begin to compromise and modify federal student loans
consistent with my plan to cancel up to $50,000 in debt for 95% of student loan borrowers (about 42 million people)," Warren
wrote.
"I'll also direct the Secretary of Education to use every existing authority available to rein in the for-profit college industry,
crack down on predatory student lending, and combat the racial disparities in our higher education system."
Sounds an awful lot like the dad above is right those that did the "right thing" are gonna get "screwed."
Warren you bitch, I paid back my student loans responsibly by working my *** off (140k) and now you want to give others a free
ride? I sure hope that I get a refund for all that money I paid back.
Obama did this kinds thing with housing. I got outbid by 100k on a house. The other bidder who got it didn't make his house
payments so Obama restructured his loan knocking off 100k from his loan and giving him a 1% interest rate on it. He again didn't
make his payments and got it restructured again but I didn't hear the terms of that one.
If student loan debt is such a crisis, force every university to use their precious endowment funds to underwrite those loans
AND let those loans get discharged in bankruptcy. Maybe then those schools would start to question whether having a dozen
"Diversity Deans" each being paid $100k+ salaries is really worth the expense (among other things).
A scholarship system awarding free tuition to the top 5% of college applicants (NOT biased by race, gender, etc) who apply
to the U.S.'s best STEM programs, hell yes! Free tuition for future Democrat voters, f^%k that!
The pissed off dad in this story has only one person to be pissed off at: himself, for being stupid. Understand something about
college degrees: 90% of them, including majors like accounting, are not worth the paper they are printed on. Anyone who works
double shifts to pay for anyone's college degree, even their own, is stupid. Look at why college costs so much: go to any state,
and you'll see that 70% or more of the highest paid state employees are employed by public colleges and universities. You need
to play these sons of bitches at their game, use their funny money to pay for the degree, and walk away. If you play the way these
sons of bitches tell you to play, you get what you deserve.
I used their funny money to get a degree that wasn't worth the paper it was printed on and walked away. I don't give a ****
if the sons of bitches grab my tax refund. Why? Because I have my withholdings set up so they get next to nothing in April. It
costs the sons of bitches more to print up the garnishment letter and send it to me than what they're stealing from me. Guess
what I use for an address? P.O. Box (can't serve a summons to a ghost).
If you're going to do what stupid, pissed off dad did, and work double shifts, you need to be trading out of all that funny
money you're being paid for those double shifts, and trading into personal economic leverage (gold first, then silver). Instead
of having bedrock to build multi-generational wealth, he has a daughter with a degree in pouring coffee, and nothing else to show
for it. He only has himself to blame for drinking the Kool Aid. I can grab overtime every Saturday at my job if I want it, and
every last penny of that OT is traded out of funny money and into gold ASAP.
Understand the US real estate market: the only reason it did not die five years ago was because we welcomed rich foreigners
to come in and buy real estate to protect their wealth. We've stopped doing that, we have an over-abundance of domestic sellers
and a severe shortage of domestic buyers. It's also where history says you need to be if you want to build multi-generational
wealth. Warren actually needs to go further than what she's proposing. Not only does she need to discharge 100% of those balances
by EO, she also needs to refund all those tax refunds stolen under false pretenses. Anything less, and we are guaranteed, for
the next 40 years, to have a real estate market and economy which resembles Japan since 1989.
Why do I buy gold? So I can play people like Warren at their game. I'll take whatever loan discharge she gives me, and have
lots of leverage in reserve to take advantage of what will be a once in a lifetime real estate fire sale.
Make those who want to be bailed out have to pay the bailout back by working every non-holiday Saturday (at the minimum wage
rate) for the government and citizens (e.g who need work done around the house, take care of the elderly - in the bathroom) until
the debt is paid back. AND let those who have not taken the debt relief supervise them - getting paid by the government at the
same rate, minimum wage. 🦞🦞🦞🦞🦞
For a decent college it's between 35-70k a year.... Why? 300k a year library professors, if it weren't for tenure the problem
would largely he self correcting as rntrillments drop...
My how times have changed. My son was a college grad circa 1996. He did the JUCO thing for 1 1/2 years , worked a part time
job for the duration, and picked up an A S while making the President's list. I aid, out of pocket all educational expenses while
he lived at home and provided for a nice lifestyle while he was in school. As promised, he finished his education, out of state,
which I paid for all along the way. 2 more years, he graduated, on the Pres list, and picked up his B S. No student debt, in his
words, was one of the the greatest gifts. Today he is debt free, (so am I ), and he is a very happy , financially secure ( until
the world goes upside down) mature adult. Hey Lizzie, send me a check.
They are all ignoring the real problem...the Federal mandated system of the guaranteed student loan program. Anyone with a
pulse can get a guaranteed student loan, thus creating a massive rise in college admissions. The colleges are guaranteed the money
for these loans, while the lender (the US gov't) is not guaranteed to be paid back by the students receiving these loans,. this
created a fool proof, risk free ability for colleges and universities across the country to jack up their tuition costs at over
a 5:1 ratio of income growth over the last 25 years. The problem is the program itself, students need to earn their ability to
enroll in college through hard work and good grades. Currently, any moron with a high school diploma can go to college on a guaranteed
student loan program and the colleges are more than willing to take on any idiot that wants to go to school despite their aspirations,
work ethics, intelligence, achievements, etc. The universities have been given a blank check to expand their campuses, drastically
inflate the salaries and pensions of professors and administrators of these schools all at the expense of this guaranteed "free"
money from the government that only achieved an immense amount of the population going to overpriced schools in order to get a
diploma in useless pursuits like african american studies, philosophy, creative writing, music, criminal justice, arts, basket
weaving, etc.. The skyrocketing costs of colleges and student debt is the direct result of this miserably failed system of the
guaranteed student loan. The majority of which have no business going to higher education because they don't have the aptitude,
work ethic and intelligence necessary to actually receive a degree in anything that benefits the economy and themselves going
forward. 30 years ago the average state college admission was roughly $4k a year for a good state school, today it is roughly
$20k or far more. Meanwhile, the average income has gone up a meaningless amount. Get rid of the guaranteed student loan program
and make the colleges responsible for accepting the responsibility of the loans for their students. I guarantee enrollment will
decrease and costs will decline making it much more affordable for the truly responsible and aspiring student to achieve their
dreams of a degree without a $250k loan needed for completion nor the lifelong strain of debt on their future incomes. The colleges
are raping the system the same as all these shoestring companies take advantage of the medicaid system and give hovarounds and
walking canes, and hearing aids for free because the gov't reimburses them at wildly inflated prices under some federally passed
mandate. The system is the problem, eliminating the debt will only exacerbate it and cost taxpayers trillions more each and every
year as "free" college will now entice every moron with a heartbeat the ability to go to outrageously priced schools with no skin
in the game on the taxpayer's dime. Elizabeth Warren is an idiot....someone needs to have a sit down with her and discuss this
rationale in her luxurious, state of the art TeePee.
While you are correct corrupting academics with huge payoffs is how you secure their votes and the votes of most of the 'students'
for decades to come.
Any group or industry can be paid off and you might think of the system as a set of interlocking payoffs until you get out
to the margins and the fringes where the cash and benefits are a lot thinner.
Everyone who continues to pay taxes to these neo-Bolsheviks is going to get screwed. The only alternative is to stop funding
these criminals completely.
What a sorry presidential canditate! She flat out LIED about being native american to get FREE college. And now this. Where
has America gone????????? Socialism sems to be what most want nowadays. It has NEVER EVER worked anywhere in the world at any
time! If yoou think therwise, just name ONE countryn it has worked in ! What a lying bunch the democrats are..........................
So all if us have to pay for it. Why did I have to pay for University and College in the 1970's if I wanted to further my education
and now that I am older I have to foot the bill for the young people of today? Pay DOUBLE? (just to buy votes for traitors?)
I think NOT! Take your theft from the people, to buy votes of everyone from young people to illegal criminals to outright criminals
in prison to dead people and resign before we decide to arrest you.
Democrats, HANG IT UP! We are NOT paying for YOUR illegitimate votes.
Notice too how all their "we're going to wipe out your debt!" promises never seem to include the big "endowments" of these
fascist colleges that jacked up tuition 1000% over what it used to cost.
No, those creepy commie profs and their freaky administrators get to keep their big TAX FREE endowments AND their big salaries.
Big Gov by Sanders/Warren don't seem to think that's obscene.
You are absolutely correct. 45 years ago you could almost work part time and actually PAY your way through college. Today you
almost need a physicians salary to pay for these OVERPRICED sewers filled with leftist propaganda.
It's obvious that Warren doesn't teach economics or even math. They weren't smart enough when they took out the loans and they
are not good with paying their bills so move the goal posts to bail them out. Has anyone given the thought that maybe they shouldn't
have gone to college at all. Sounds like they will all work for the government anyways.
Rich countries embraced trade multilateralism when it suited them, and now they're abandoning it. That may not be such a bad thing.
The World Trade Organization (WTO) is on its last legs now that the Trump administration has blocked the appointment or reappointment
of judges to the appeals court of its Dispute Settlement Mechanism -- which is the central pillar of the 24-year-old multilateral
body.
Do I regret the demise of the World Trade Organization now that Trump is on a unilateral trade rampage? No. I always saw the WTO
and unilateralism as two faces of U.S. power deployed against those countries seeking to remake the world trading order in a more
equitable and just direction.
Multilateralism and unilateralism have, since the end of the Second World War, been alternative strategies for global hegemony
preferred by competing factions of the U.S. ruling elite.
The Democrats preferred multilateralism because they felt it would both institutionalize the U.S.'s hegemonic status in the world
trading order at the same time that it would make it more legitimate by obtaining the consent of its allies. Republicans, however,
felt that the exercise of U.S. power should be as little constrained by global rules and institutions as possible.
These two views clashed head-on in 1948 during the debate over the ratification of the Havana Charter, which would have established
the International Trade Organization (ITO). After having participated in the negotiations, the Democratic administration of President
Truman did not submit it to the Senate for ratification, worried that the Republicans would successfully block it. The Republicans
argued that ratifying the Havana Charter would be unconstitutional since no legal code could stand above the U.S. Constitution, and
that a treaty governing trade would do precisely that.
Republicans and Democrats agreed to a compromise: the much weaker General Agreement on Tariffs and Trade (GATT), which had little
checks on U.S. trade practices and did not bring under its ambit the global agricultural trade that U.S. corporations dominated.
With trade making up only a small part of U.S. gross domestic product (GDP) then, the U.S. was not worried about the absence of strong
rules on global trade, and felt these would only harm the bottom line of its emerging transnational corporations.
Paradoxically, GATT allowed the rise of a number of formerly minor trading countries into major actors in global trade, which
would not have been possible within an iron-clad free trade regime. These were mainly economies from East Asia like South Korea,
Taiwan, and Malaysia that engaged in aggressive export policies while building up manufacturing industries protected by high tariffs
and import quotas. At the same time, by the 1970s and 1980s, trade accounted for a greater part of U.S. GDP than in the late 1940s,
and U.S. corporations wanted fewer restrictions on their penetration of foreign markets.
So Washington changed its mind in the 1980s, and both Republicans and Democrats agreed to push for a strengthened global trade
regime.
The U.S. was confident that it would benefit mainly its corporations which it saw as the most competitive in the world. The European
Union decided to join the bandwagon for a strengthened international trade regime mainly because, like Washington, it wanted to dump
its massive agricultural surpluses on developing countries.
Leading industries in Europe, the U.S., and Japan -- like the automobile, information, and pharmaceutical industries -- also had
a joint interest in preventing the emergence of new competitors from East and Southeast Asia by making the latter's liberal acquisition
of complex technologies (dubbed "intellectual piracy") a violation of trade rules, or by preventing them from using trade restrictions
to build up their industries.
The result was the World Trade Organization, which came into being in 1995. The WTO, from the perspective of U.S. interests, was
a set of rules and institutions that would promote, consolidate, and legitimize structures of global trade ensuring the hegemony
of US interests.
While free trade was the rhetoric of the WTO, the achievement of monopoly was actually the aim of the WTO's three most important
agreements.
The Agreement on Agriculture (AOA) institutionalized the dumping of U.S. and European surpluses on developing countries by forcing
the latter to end their import quotas and lower their tariffs. The Trade Related Intellectual Property Rights Agreement (TRIPs) sought
to institutionalize U.S. corporations' monopoly of high technology by outlawing reverse engineering and other methods used by developing
countries to get universal access to knowledge. The Trade Related Investment Measures Agreement (TRIMs) sought to prevent countries
from imitating Japan, South Korea, and Malaysia and using trade policy, like reducing imported inputs into finished goods in favor
of local inputs, to build up industries that became significant competitors both in local and global markets.
Then, in 2003, with the heft provided by India, Brazil, and China (a WTO member since 2001), the developing countries in the WTO
were able to prevent the U.S. and EU's attempt to dismantle government protection of small farmers. They foiled attempts to tighten
the already very restrictive TRIPs Agreement, and prevented the joint U.S.-EU attempt to bring investment, government procurement,
and competition policy under the ambit of the WTO.
Following this, the U.S. abandoned the multilateral route. After the Fifth Ministerial of the WTO collapsed in Cancun in 2003,
the Republican Bush administration's Special Trade Representative Robert Zoellick warned: "As the WTO members ponder the future,
the U.S. will not wait: we will move towards free trade with can-do countries."
Over the next few years, the U.S. and the EU preferred to put their efforts into forging bilateral trade agreements or limited
multilateral agreements, like the Trans-Pacific Partnership (TPP) that was the fallback position favored by the Obama administration.
So Trump did not initiate the move back to unilateralism -- he merely brought to its climax, with his trade war with China, a swing
back to unilateralism that had begun with the George W. Bush administration in 2003.
Indeed, Trump's blocking of judges to the WTO's appellate court is simply an extension of the policy of blocking the appointment
or reappointment of judges practiced earlier by the supposedly multilateralist Obama administration. The most notorious trade act
of the U.S. under Obama was its ouster in 2016 of Appellate Body Member Seung Wha Chang of South Korea on the grounds that it did
not agree with the distinguished South Korean jurist's judgments in four trade disputes involving the U.S.
The result, the current global trading system, is a hodge-podge featuring a weakened WTO, failed trade agreements like the TPP,
stalemated or slow-moving negotiations like the Regional Comprehensive Economic Partnership (RCEP), developing country trade arrangements
like Mercosur, bilateral treaties like the South Korea-U.S. free trade agreement, and non-institutionalized bilateral and unilateral
initiatives.
This may, in fact, be the least undesirable of outcomes. For many developing countries, the era of the weak GATT regime from 1948
to 1995 was a dynamic era that left them a lot of development space owing to the lack of pressure for them to open up their agricultural
and manufacturing sectors, weak trade dispute mechanisms, and the absence of anti-development pro-developed country regimes like
TRIPs.
Instead of the chaos that neoliberal ideologues warn us against, current conditions might, in fact, be moving in the direction
of a hybrid GATT-like system that would hold out a larger space for efforts at genuine sustainable development by the global South.
Share this:
One of the principal actors in the Anti-Globalization Movement, FPIF commentator Walden Bello is the author of Deglobalization:
Ideas for a New World Economy (Zed, 2000) and Revisiting and Reclaiming Deglobalization (Focus on the Global South, 2019). He can
be contacted at waldenbello@yahoo.com . This article originally
appeared in German in the German periodical Welt-Sichten, Nov 7, 2019
Clowns should be increasingly used in redundancy (layoff, firing) meetings until it
becomes the norm and employers start to compete with each other to offer the best clown
redundancy experience and promote it as a benefit.
It would also create clown jobs, which would probably require more clown schools, meaning
that the tuition prices would go through the roof and young people dreaming of becoming
redundancy clowns would either have to come from wealth or take out massive clown loans to
fund their education for clown universities and grad schools. Shareholders can only take so
much top line costs and Wall Street pressure would force corporations to improve return on
investment and reduce redundancy clown labor expenses. Sadly, redundancy clowns would find
themselves training their own replacements – HB1 clowns from "low cost" countries.
Employers would respond to quality criticisms of the HB1 clown experience by publishing
survey results showing very similar almost ex-employee satisfaction with the new clowns.
Eventually, of course, redundancy clowns will be replaced by AI and robots. It's just the
future and we will need to think about how to adapt to it today by putting in place a UBI for
the inevitable redundant redundancy clowns.
"Few economists worked at the Federal Reserve in the early 1950s. Those who were on the
staff of America's central bank were relegated to the basement, at a safe remove from the
corridors where real decisions were made.
Economists had their uses, allowed William McChesney Martin, then the Fed's chairman. But
they also had 'a far greater sense of confidence in their analyses than I have found to be
warranted'. They were best kept down with the surplus furniture and the rats." •
Indeed!
It's just too bad being elected President doesn't come with a 90-day probationary
period that many employers use, because if they did Mike Pence would be considering a 2nd
Term run right now.........
"Government set to inject more than $1 Trillion into US economy this year, but poorly
targeted and still isn't enough to improve the lives of most people".
Spot-on . Whenever I read this nonsense in the NYT or elsewhere I always ask myself the
same question ' Is this deliberate or are they really ignorant ? ' . I suspect the latter,
but I could be wrong.
Bookmark to dashboard
Claire Connelly Claire Connelly is the lead writer of Renegade Inc. An award-winning freelance journalist, speaker, and founder of subscription journalism experiment, Hello Humans.
More
Dave
says:
John Giles
says:
Alan Luchetti
says:
Hoobert Herver
says:
Bob Kaufman
says:
Youri
says:
Cliff Cobb
says:
Steven
says:
Claire
says:
