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“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”
John Maynard Keynes
"Life is a school of probabilities."
Note: Some thoughts on 2019 added on Jan 3, 2019.
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.
For the list of top articles see Recommended Links section
Aug 08, 2020 | www.zerohedge.com
Russia-China "Dedollarization" Reaches "Breakthrough Moment" As Countries Ditch Greenback For Bilateral Trade by Tyler Durden Thu, 08/06/2020 - 21:55 Twitter Facebook Reddit Email Print
Late last year, data released by the PBOC and the Russian Central Bank shone a light on a disturbing - at least, for the US - trend: As the Trump Administration ratcheted up sanctions pressure on Russia and China, both countries and their central banks have substantially "diversified" their foreign-currency reserves, dumping dollars and buying up gold and each other's currencies.
Back in September, we wrote about the PBOC and RCB building their reserves of gold bullion to levels not seen in years. The Russian Central Bank became one of the world's largest buyers of bullion last year (at least among the world's central banks). At the time, we also introduced this chart.
We've been writing about the impending demise of the greenback for years now, and of course we're not alone. Some well-regarded economists have theorized that the fall of the greenback could be a good thing for humanity - it could open the door to a multi-currency basket, or better yet, a global current (bitcoin perhaps?) - by allowing us to transition to a global monetary system with with less endemic instability.
Though, to be sure, the greenback is hardly the first "global currency".
Falling confidence in the greenback has been masked by the Fed's aggressive buying, as central bankers in the Eccles Building now fear that the asset bubbles they've blown are big enough to harm the real economy, so we must wait for exactly the right time to let the air out of these bubbles so they don't ruin people's lives and upset the global economic apple cart. As the coronavirus outbreak has taught us, that time may never come.
But all the while, Russia and China have been quietly weening off of the dollar, and instead using rubles and yuan to settle transnational trade.
Since we live in a world where commerce is directed by the whims of the free market (at least, in theory), the Kremlin can just make Russian and Chinese companies substitute yuan and rubles for dollars with the flip of a switch: as Russian President Vladimir Putin once exclaimed , the US's aggressive sanctions policy risks destroying the dollar's reserve status by forcing more companies from Russia and China to search for alternatives to transacting in dollars, if for no other reason than to keep costs down (international economic sanctions can make moving money abroad difficult).
In 2019, Putin gleefully revealed that Russia had reduced the dollar holdings of its central bank by $101 billion, cutting the total in half.
And according to new data from the Russian Central Bank and Federal Customs Service, the dollar's share of bilateral trade between Russia and China fell below 50% for the first time in modern history.
Businesses only used the greenback for roughly 46% of settlements between the two countries. Over the same period, the euro constituted an all-time high of 30%. While other national currencies accounted for 24%, also a new high.
As one 'expert' told the Nikkei Asian Review, it's just the latest sign that Russia and China are forming a "de-dollarization alliance" to diminish the economic heft of Washington's sanctions powers, and its de facto control of SWIFT, the primary inter-bank messaging service via which banks move money from country to country.
The shift is happening much more quickly than the US probably expected. As recently as 2015, more than 90% of bilateral trade between China and Russia was conducted in dollars.
Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences, told the Nikkei Asian Review that the Russia-China "dedollarization" was approaching a "breakthrough moment" that could elevate their relationship to a de facto alliance.
"The collaboration between Russia and China in the financial sphere tells us that they are finally finding the parameters for a new alliance with each other," he said. "Many expected that this would be a military alliance or a trading alliance, but now the alliance is moving more in the banking and financial direction, and that is what can guarantee independence for both countries."
Dedollarization has been a priority for Russia and China since 2014, when they began expanding economic cooperation following Moscow's estrangement from the West over its annexation of Crimea. Replacing the dollar in trade settlements became a necessity to sidestep U.S. sanctions against Russia.
"Any wire transaction that takes place in the world involving U.S. dollars is at some point cleared through a U.S. bank," explained Dmitry Dolgin, ING Bank's chief economist for Russia. "That means that the U.S. government can tell that bank to freeze certain transactions."
The process gained further momentum after the Donald Trump administration imposed tariffs on hundreds of billions of dollars worth of Chinese goods. Whereas previously Moscow had taken the initiative on dedollarization, Beijing came to view it as critical, too.
"Only very recently did the Chinese state and major economic entities begin to feel that they might end up in a similar situation as our Russian counterparts: being the target of the sanctions and potentially even getting shut out of the SWIFT system," said Zhang Xin, a research fellow at the Center for Russian Studies at Shanghai's East China Normal University.
Aug 08, 2020 | www.strategic-culture.org
As commentators focus on the hospitalisations of two Gulf monarchs, and permutate likely succession issues, they may miss the wood for the succession trees: Of course, the death of either the Emir of Kuwait (91 years old) or King Salman of Saudi Arabia (84 years old) is a serious political matter. King Salman's particularly has the potential to upturn the region (or not). Yet Gulf stability today rests less on who succeeds, but rather on tectonic shifts in geo-finance and politics that are just becoming visible. Time to move on from stale ruminations about who's 'up and coming', and who's 'down and out' in these dysfunctional families.
The stark fact is that Gulf stability rests on selling enough energy to buy-off internal discontents, and to pay for supersized surveillance and security set-ups.
For the moment, times are hard, but the States' financial 'cushions' are just about holding-up (albeit only for the big three: Saudi Arabia, Abu Dhabi and Qatar). For others the situation is dire. The question is, will this present status quo persist? This is where the warnings of shifts in certain global tectonic plates becomes salient.
The Kuwaiti succession struggle is emblematic of the Gulf rift: One candidate for Emir, (the brother), stands with Saudi Arabia and its Wahhabi-led 'war' on Sunni Islamists (the Muslim Brotherhood). Whereas the other, (the eldest son), is actively backed by the Muslim Brotherhood, Qatar and Turkey. Thus, Kuwait sits on firmly on the Gulf abyss – a region with significant, but disempowered Shi'a minorities, and a Sunni camp divided and 'at war' with itself over support for the Muslim Brotherhood; or what is (politely called) 'autocratic secular stability'.
Interesting though this is, is this really still so relevant?
The Gulf, perhaps more significantly, is held hostage to two huge financial bubbles. The real risk to these States may prove to come from these bubbles, which are the very devil to prick-down into any gentle, expelling of gas. They are sustained by mass psychology – which can pivot on a dime – and usually end catastrophically in a market 'tantrum', or a 'bust' – and with consequent risk of depression, should Central Banks ever try to lift the foot off the monetary accelerator.
The U.S. ubiquitous 'asset bubble' is famous. Central Bankers have been worrying about it for years. And the Fed is throwing money at it – with abandon – to keep it from popping. But as indicated earlier, such bubbles are highly vulnerable to psychology – and that may be turning, as the celebrated V-shaped, expected economic recovery recedes into the virus-induced distance. But for now, investors believe that the Fed daren't let it implode – that the Fed has absolutely no option but go on throwing more and more money at it (at least until November elections & then what?).
Less visible is that other vast 'asset bubble': The Chinese domestic property market. With its closed capital account, China has a huge sum (some $40 trillion) sloshing around in collective bank accounts. That money can't go abroad (at least legally), so it rotates around between three asset markets: apartments, stocks, and commodities somewhat whimsically. But investing in apartments is absolutely king! 96% of urban Chinese own more than one: 75% of private wealth is represented by investments in condos – albeit with 21% standing empty in urban China, for lack of a tenant.
Long story, short, the Chinese massively chase property valuations. Indeed, as the WSJ has noted "the central problem in China is that buyers have figured out the government doesn't appear to be willing to let the market fall. If home prices did drop significantly, it would wipe out most citizens' primary source of wealth, and potentially trigger unrest". Even during the pandemic – or, perhaps because of it as the Chinese piled-in – prices rose 4.9% in June, year on year. The total value of Chinese homes and developers' inventory hit $52 trillion in 2019, according to Goldman Sachs; i.e. twice the size of the U.S. residential market, and outstripping even the entire U.S. bond market.
If it sounds just like America's QE-inflated asset markets, that's because it is. As things stand, both the Chinese residential and the U.S. equity bubbles are unstable. Which might fracture fist? Who knows but bubbles are also vulnerable to pop on geo-political events (such as a U.S. naval landing on one of China's disputed South Sea islands, to which China is promising , absolutely, a military response).
No one has any idea how Chinese officials can manage the property bubble, without destabilizing the broader economy. And even should the market stay strong, it creates headaches for policy makers, who have had to hold off on more aggressive economic stimulus this year – which some analysts say is needed, partly because of fears it will inflate housing further.
Ah there it is: Out in plain view – the risk. The condo-trade has hijacked the entire Chinese economy, tying officials' hands. This, at the moment when Trump's trade war has turned into a new ideological cold war targeting the Chinese Communist Party. What if the Chinese economy, under further U.S. sanctions, slides further, or if Covid 19 resurges (as it is in Hong Kong)? Will then the housing market break, causing recession or depression? It is, after all, China and Asia that buy the bulk of Gulf energy: Demand shrinks, and price falls. The fate of the Gulf States' economies – and stability – is tied to these mega-bubbles not popping.
Bubbles are one factor, but there are also signs of the tectonic plates drifting apart in a different way, but no less threatening. Bankers Goldman Sachs sits at the very heart of the western financial system – and incidentally staffs much of Team Trump, as well as the Federal Reserve.
And Goldman wrote something this week that one might not expect from such a system stalwart: Its commodity strategist Jeffrey Currie, wrote that "real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge".
What? Goldman says the dollar might lose its reserve currency status. Unthinkable? Well that would be the standard view. Dollar hegemony and sanctions have long been seen as Washington's stranglehold on the world through which to preserve U.S. primacy. America's 'hidden war', as it were. Trump clearly views the dollar as the bludgeon that can make America Great Again. Furthermore, as Trump and Mnuchin – and now Congress – have taken control of the Treasury arsenal, the roll-out of new sanctions bludgeoning has turned into a deluge.
But there has also been within certain U.S. circles, a contrarian view. Which is that the U.S. needs to 're-boot' its economic model with a Tech-led, 'supply-side' miracle to end growth stagnation. Too much debt suffocates an economy, and populates it with zombie enterprises.
In 2014, Jared Bernstein, Obama's former chief economist said that the U.S. Dollar must lose its reserve status , if such a re-boot were to be done. He explained why, in a New York Times op-ed:
"There are few truisms about the world economy, but for decades, one has been the role of the United States dollar as the world's reserve currency. It's a core principle of American economic policy. After all, who wouldn't want their currency to be the one that foreign banks and governments want to hold in reserve?
"But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar's reserve-currency status."
In essence, this is the Davos Great Reset line . Christine Lagarde, in the same year, called too for a 'reset' (or re-boot) of monetary policy (in the face of "bubbles growing here and there) – and to deal with stagnant growth and unemployment. And this week, the U.S. Council on Foreign Relations issued a paper entitled: It is Time to Abandon Dollar Hegemony .
That, we repeat, is the globalist line. The CFR has been a progenitor of both the European and Davos projects. It is not Trump's. He is fighting to keep America as the seat of western power, and not to accede that role to Merkel's European project – or to China.
So why would Goldman Sachs say such a thing? Attend carefully to Goldman's framing: It is not the Davos line. Instead, Currie writes that the soaring disconnect between spiking gold price and a weakening dollar "is being driven by a potential shift in the U.S. Fed towards an inflationary bias, against a backdrop of rising geopolitical tensions, elevated U.S. domestic political and social uncertainty, and a growing second wave of covid-19 related infections".
Translation: It is about U.S. explosive debt accumulation, on account of the Coronavirus lockdown. In a world where there is already over $100 trillion in dollar-denominated debt, on which the U.S. cannot default; nor will it ever be repaid. It can therefore only be inflated away. That is to say the debt can only be managed through debasing the currency. (Debt jubilees are viewed as beyond the pale.)
That is to say, Goldman's man says dollar debasement is firmly on the Fed agenda. And that means that "real concerns around the longevity of the U.S. dollar as a reserve currency, have started to emerge".
It is a nuanced message: It hints that the monetary experiment, which began in 1971, is ending. Currie is telling U.S. that the U.S. is no longer able to manage an economy with this much debt – simply by printing new currency, and with its hands tied on other options. The debt situation already is unprecedented – and the pandemic is accelerating the process.
In short, things are starting to spin out of control, which is not the same as advocating a re-boot. And the debasement of money is inevitable. That's why Currie points to the disconnect between the gold price (which usually governments like to repress), and a weakening dollar. If it is out of the Fed's control, it is ultimately (post-November) out of Trump's hands, too.
Should confidence in the dollar begin to evaporate, all fiat currencies will sink in tandem – as G20 Central Banks are bound by the same policies as the U.S.. China's situation is complicated. It would in one way be harmed by dollar debasement, but in another way, a general debasement of fiat currency would offer China and Russia the crisis (i.e. the opportunity), to escape the dollar's knee pressed onto their throats.
And for Gulf States? The slump in oil prices this year already has prompted some investors to bet against Gulf nations' currencies, putting longstanding currency pegs with the dollar under pressure. GCC states have kept their currencies glued to the dollar since the 1970s, but low oil demand, combined with dollar weakness would exacerbate the threat to Gulf 'pegs', as their trade deficits blow out. Were a peg to break, it is not clear there would be any obvious floor to that currency, in present circumstances.
Against such a backdrop, the royal successions underway in Gulf States might perhaps be regarded a sideshow.
Aug 02, 2020 | www.moonofalabama.orgvk , Aug 2 2020 15:04 utc | 8
TikTok ban demonstrates barbaric act of rogue US: Global Times editorialChina has never banned US high-tech companies from doing business in the country. What the Chinese government demands is that what they do in China should comply with Chinese law. That's all . It was some US companies that refused to comply with Chinese laws. Google used to have a position in the Chinese market. It itself pulled out of China a decade ago, while other companies were accused in the US of kowtowing to China when they tried to design their specific versions for the Chinese market. This leaves no US internet giant currently operating in China.
TikTok operates in the US in full compliance with US laws and is completely cut off from Douyin, its Chinese equivalent. Users in the Chinese mainland cannot register for TikTok even if they bypass the so-called great firewall . TikTok does not violate any US law but fully cooperates with the US administration.
The US claim that TikTok threatens its own national security is a purely hypothetical and unwarranted charge - just like the groundless accusation that Huawei gathers intelligence for the Chinese government. This is fundamentally different from China's refusal to allow the original versions of Facebook and Twitter to enter China and require them to operate in accordance with Chinese laws.
In just three paragraphs, the Global Times killed two myths: that a "great firewall" exists and that China censorship things from the West (i.e. that the Chinese people is "living in the darkness").
I had a teacher who traveled to China recently. He went to a local bar (100% Mainland Chinese) as soon as he landed. He was having difficulty accessing Google (I think it was either Gmail or Google Drive). He tried, tried, tried but couldn't do it. When the locals there realized he was trying to access Google products, they promptly and calmly told him he should use VPN because Google didn't operate in China. No drama, no fear of a local police officer suddenly coming to the place to arrest them.
They know what Apple, Google and Facebook are. It's just that China has better local options for the same product.
New cold war will not stop US decline
donkeytale , Aug 2 2020 20:25 utc | 45ptb , Aug 2 2020 20:28 utc | 46
Not that globalization is a one way street by any means.
It comes to light that at least 125 US companies owned or invested in by Chinese entities, including Chinese SOE, received hundreds of millions in PPP loans backed by the US SBS.
This level of capitalust interconnection between elite investors and governments belies all the heated talk of cold war by politicians on both sides as well as useful idiots the world over.
Why even favorite Chinese PR flack Pepe Escobar recently characterized the Stupidity Trap aka Thucydides Trap as childish nonsense.
"If this is also national security, then US national security is synonymous with hegemony."
That is precisely the problem. Unfortunately, the current US economy has become dependent on advantages arising from unrivaled geopolitical power. Take it away too suddenly, and there would be a painful economic transition to become a normal nation again.
... ... ..
Aug 02, 2020 | turcopolier.typepad.com
"James Murdoch, the younger son of media mogul Rupert Murdoch, has resigned from the board of News Corporation citing "disagreements over editorial content".
In a filing to US regulators, he said he also disagreed with some "strategic decisions" made by the company.
The exact nature of the disagreements was not detailed.
... ... ..,
I watch a lot of TeeVee news on all the major networks including the two Foxnews channels.
It has become apparent to me over the last year or so that there is an internal ideology contest at Fox between the hard core conservatives like Dobbs. Carlson, Mark Levin, Bartiromo, Degan McDowell, etc. and a much more liberal set of people like Chris Wallace, Cavuto and the newer reporters at the White House. I expect that the departure of James Murdoch will result in more uniformly conservative reporting and commentary on Fox. I say that presuming that James Murdoch was a major force in trying to push Foxnews toward the left.
I am surprised that Murdoch sent his son to Harvard. pl
Deap , 01 August 2020 at 12:19 PMDeap , 01 August 2020 at 12:22 PM
Been noticing a lot of irresponsible reporting of late in the WSJ - not on the opinion page, but in some pretty sloppy reporting with a lot of editorial bias in what is included and what is intentionally left out.
Case in point, reporting today on the newly disclosed Ghisline Maxwell documents only mentioned Prince Andrew and not a word about Bill Clinton . Doesn't WSJ know its readers draw from multiple media sources that have provided original content? Everyday there are several similar, bias by omission, articles.
One can only hope newly constituted management team will finally get rid of Peggy Noonan.
I believe James Murdoch was part of the "we are all gonna die in <11 years" Green New Deal school of thought.
Aug 02, 2020 | finance.yahoo.com
I don't have much in savings and feel lost. What can I do? Dear Wondering in Alamo, You bring up a question I think a lot of people have been asking themselves lately.Continue reading
https://s.yimg.com/rq/darla/4-2-1/html/r-sf.html Start survey U.S. Your retirement distributions won't be taxed in these states: AARP Ann Schmidt , Fox Business • July 31, 2020
If you want to make your retirement savings last even longer, it could be worth moving to a state that won't tax your retirement distributions .
There are 12 states that won't tax your distributions from 401(k) plans, IRAs or pensions, according to a recent report from AARP .
Of those states, nine -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming -- don't have state income taxes.
Meanwhile, Illinois, Mississippi and Pennsylvania don't tax retirement distributions, AARP reported.
According to the nonprofit, pensions aren't taxed in Alabama or Hawaii, but those states do have taxes on 401(k) and IRA distributions.
4 RETIREMENT PLANNING STRATEGIES TO LEAN ON IN UNCERTAIN TIMES
Some states only partially tax retirement distributions, AARP reported. In Colorado, taxpayers over 65 can remove $24,000 from their federal AGI for their state taxes, according to AARP.
Other states have policies for taxes on retirement distributions that depend on your occupation before retirement. For example, in Connecticut, teachers can subtract 25 percent of their retirement income from federal AGI.
WHY THIS IS THE RIGHT AGE TO TAKE SOCIAL SECURITY
There are also 29 states that don't tax military retirement income at all, AARP reported. Those states include Alabama, Arkansas, Connecticut, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maine, Massachusetts, Missouri, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, West Virginia and Wisconsin.
The remaining 21 states tax some or all of military retirement income, according to AARP.
One exception is in Virginia, where only recipients of the Congressional Medal of Honor are exempt from taxes on their military retirement income, AARP reported.
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But if your state has low income taxes, other taxes, like property or sales tax, might be higher, according to AARP.
CLICK HERE TO READ MORE ON FOX BUSINESS
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Aug 01, 2020 | crookedtimber.org
J-D 07.30.20 at 9:16 am
When I read this, I got the idea that there'd been a related discussion here at Crooked Timber before, and indeed there was!
Tim H. 07.30.20 at 11:21 am ( 8 )CHETAN R MURTHY 07.30.20 at 1:08 pm ( 11 )
Racism from my perspective, looks like an unwillingness to evaluate people on an individual basis, whether it's from sloth, contempt or disability and it's a terrible look for an intellectual.SamChevre 07.30.20 at 1:25 pm ( 13 )
JQ @ 1: The sort of "lose your job for engaging in speech" thing happens in other contexts, too. Companies routinely censor their employees' speech in ways small and large, and this includes completely non-political speech about purely technical matters.
I know of a case where a famous chip designer got up at a conference and said "none of you people talking about Itanium [Intel's ia64 chip that was the future of microprocessors once upon a time] actually think it's going to succeed -- why don't any of you admit it?"
Within moments he was covered in PR and lawyers basically taping his mouth shut. When I worked in global enterprise IT, I didn't post blog comments (neither political nor technical) b/c it was clear that there would always be the possibility of career repercussions for making statements that would have post-hoc repercussions
Companies censor their employees speech before-and-after-the-fact for lots of reasons, sometimes political. This is a fact of life, and you're very right to point out that if people actually cared about this [as opposed to getting bent-out-of-shape that they can't be raging bigots] they'd support strong unions.Musicismath 07.30.20 at 1:42 pm (16 )
This is mainly a problem in the US because of employment at will.
Employment at will may contribute, but a larger part of the problem is that the US laws around free speech are odd. Technically, the government cannot regulate speech at all (with very limited exceptions, not relevant here.) In practice, though, what has happened (via so-called "antidiscrimination" law) is that the government severely punishes employers whose employees speak in ways the government/the identity politics left (they are working together here) dislike, and so effectively outsources speech regulation to employers.
The concern about cancel culture is in my observation largely driven by this dynamic: the frequent tagline right-leaning speech is violence, while left-leaning violence is speech" reflects the fact that getting some particular approach to a topic defined as "discrimination" means that it is severely punished by government, at second-hand.Anon For Obvious Reasons 07.30.20 at 5:31 pm (
One thing that might be useful is distinguishing "cancel culture" as a phenomenon from cancellation more narrowly defined as a tactic . So many of the discussions I've seen recently about the issue seem content to operate at the big-picture level, asking whether such a thing as cancel culture even exists (the New Statesman approach) or (if it does) whether it's a good thing or a bad thing. Focussing in on actual cases, and thinking about who (precisely) benefits from individual instances, might instead help us think about the specific function of cancel culture, and the role that language plays in it.
Think about Rebecca Long-Bailey's recent demotion from the Labour shadow cabinet over a tweet she made. Last month, she retweeted a newspaper interview with prominent Labour-supporting actress Maxine Peake, calling her an "absolute diamond." The interview included an inaccurate claim from Peake ( based apparently on information in a Morning Star article, and which Peake subsequently withdrew when she was challenged on it) that the specific knee restraint used on George Floyd had been taught to Mineapolis police by Israeli secret police consultants.
Long-Bailey lost the Shadow Education role, and her political career is likely over, ostensibly on the basis of this one tweet. This, to me, is a fairly clear instance of cancellation at work, but it would be inadequate to leave it at that. The complete lack of commensurability between the transgression and the outcome would be incomprehensible without asking how RLB's cancellation fits into Labour Party politics; that is, the function of cancelling in this specific instance. Absolutely no one I know thinks this tweet proved Long-Bailey was genuinely antisemitic, or that it was even the primary reason she was demoted. Instead, it's been broadly (and, I think, correctly) interpreted as a signal from the Starmer wing of the party that the Corbyn faction with which RLB is aligned has no future in Labour. Cancellation, in this case, is a naked piece of power politics: a way of getting political opponents out of the way.
The RLB case also throws a spotlight on language. The various rationales for cancelling listed in the OP -- racism, transphobia, or (in this case) antisemitism -- are rarely clear-cut in real-world instances. In fact, there's a kind of homeopathic logic at work, where the more tendentious the attribution is, the more cut-through it often seems to have.
This, I would suggest, is also related to power. The purpose of an accusation like this is to demonstrate the power or dominance of the cancelling agent, and to intimidate others by example. ("If RLB got cancelled for this , then how little would I need to do to suffer the same fate?") As Jonathan Dollimore has pointed out, there's a certain in-built "linguistic imprecision" in many of the terms that cancellation depends on, and it's from that imprecision that the capacity for intimidation or fear generation stems from.
These concepts are capable of apparently endless linguistic elasticity. Indeed, it's when they're at their most extended or diffuse, that these grounds for cancellation seem to have the most signifying power.
23 )Anarcissie 07.30.20 at 8:35 pm ( 30 )
I find this deliberately misleading. "Cancel culture" in practice refers to the idea that you shouldn't be ostracized by your peers, friends, or professional field for holding and voicing ideas that are essentially mainstream.
Everyone thinks that if you insult someone with a racial slur, there should be consequences.
But after that, what should be the proper "bound" that discourse should not cross? I would argue that "any idea which can be studied rigorously" and "any idea held by a reasonably broad cross section of society" is clearly within the bound, and we do ourselves a huge disservice by refusing to countenance ideas in those sets. Further, as a commenter above notes, most people in the world are not left-wing activists. Setting the norm that you shouldn't be friends with/work with/hire/buy from people with ideas you find acceptable, but which are not extreme, will be and has been a disaster for gay people, atheists, and many others.
Everyone working in academia, the non-profit sector, and journalism is aware that there are many ideas broadly held which people hesitate to say because they are worried a group of their strident colleagues will try to destroy their career. The Shor example comes up because, as Matt Yglesias pointed out yesterday, it is so obviously ridiculous to lose your job for linking to a paper in APSR by a prominent (young, black) political scientist, and yet there really are many people in that world, progressive political campaigns, who would refuse to work with you if you hired Shor . It wasn't just his boss or "workplace protections" – he was kicked out of the listserv that is the main vector for finding jobs in that sphere, and his new employer remains anonymous on purpose!
And yes, this is not just a lefty thing. I'm sure that right-wing media sites, and church groups, and the rest all have similar cases. Trump clearly "canceled" Kaepernick, with the NFL's help. Yet we all agree that is bad! And in the sphere many of us are in, academia, it is unquestionable that "canceling from the left" is a bigger threat from the right.kinnikinick 07.30.20 at 9:08 pm (
Trader Joe 07.30.20 at 2:17 pm @ 17 --
Remember that the academic institutions in which controversies about 'cancel culture' exist are bourgeois institutions, pretty much like corporations. It is a world of authority, hierarchy, and carefully controlled behavior. Obviously there is little expression which may not have adverse consequences.
As the power and prestige of the bourgeoisie shrink, the inmates of that particular cage will fight more fiercely for what's left. One way of fighting is to get someone's job by turning up something disreputable, such as the use of an apparently racist epithet.
This didn't start yesterday. There is a certain spillover into popcult as students emerge from academia into the outer, also declining world and repeat the patterns which they have observed. Numerous stories are available, but I'll spare you. Anyway, Mr. Taibbi has been ranting well, and you can go there.
34 )Kiwanda 07.31.20 at 12:00 am ( 45 )
Surprising to see so little emphasis on social media as the main catalyst. Tribalism is the driver of "engagement" online, and if righteous anger at the out-group gets the clicks, so be it. Consider how any Twitter post can become a tiny gleaming tableau, a battle flag, an allegory of sin or virtue. Context and interpretation cannot be arbiters, and must only serve the self-evident cause of loyalty to one's synthetic tribe. Faith and bad faith merge; that's just optimal use of an app's system of influence. "We shape our tools and then our tools shape us".
It seems to me that "cancel culture" is based on the infosphere's equivalent of the technological progress that now allows a small group of determined people with AK-47s to render a region ungovernable. This does not imply that the region's current government is a good one. It does not imply anything about the group's views, except that debating them is not likely to be on the agenda when they visit your village. There will no doubt be some unpleasant people among the casualties; perhaps that counts as a silver lining.
The arms dealers don't care – they sell to everyone, and the more ammunition they sell, the more you'll need.J-D 07.31.20 at 12:05 am ( 46 )
"But the fact that the same example (David Shor) is cited every time the issue is raised " here is one attempt to tabulate cancellations, at least on the left identitarian side; I am not endorsing any particular example. (NB: Sophie Jane in this case, not Sophie Grace.)
I would be curious about whether Henry approves of the suppression of speech as much as the OP does.
Whether justified or not, a significant minority of Americans, across multiple lines, are fearful that their political opinions could endanger their jobs; this suggests the problem might be more than just people getting "bent-out-of-shape that they can't be raging bigots" .
Purveyors of what-aboutery will probably appreciate that Steve Salita now makes a living as a bus driver ; I have no reason to think that the Harpers Letter signers (even Bari Weiss) would regard that situation as any more just than other examples.de Pony Sum 07.31.20 at 2:16 am ( 48 )
There have been occasions in my life when I have justly and rightly experienced adverse consequences as a result of things that I have said. The proposition that nobody should ever experience adverse consequences as a result of statements made is utterly indefensible.Andres 07.31.20 at 3:07 am ( 49 )
Discussions over "cancellation" can make things unnecessarily difficult because it's a very hard term to define- exactly how badly does your public reputation have to be before you are cancelled. All too often debates turn into "well so and so wasn't cancelled because they still have a job/they still have a platform/they're still living their life." (Although your post does avoid this by describing it in terms of an attempt instead of outcome) So to avoid ambiguities that attend "cancellation", I prefer "opprobrium"
My position on this is that individuals shouldn't face public opprobrium unless there is 1) Clear and convincing evidence they are motivated by fundamentally malicious ends and 2) They have no remorse about it. Even when these conditions are met the opprobrium they receive should be clearly proportional to the wrong they've committed. We should relax these rules somewhat for celebrities, and a great deal for politicians, who have implicitly agreed to face criticism as a consequence of their role.
I support this anti-opprobrium position because being shamed publicly is extremely painful. I would rather lose a limb than be widely publicly shamed and reviled, and I think a lot of people feel the same way, so, by the golden rule and all of that
In terms of the position you outline it seems to me that we're going to agree on a lot of issues. Pre-meditated use of racial slurs, for example. But I think there are a lot of instances of cancel culture that we won't agree on.
Here's some people I think have been unfairly subject to vast amounts of pubic opprobrium that some people would call cancel culture:
The p**nstar ( I won't spell it out because I'm at work) who killed herself in part because of the criticism she received when tweeted out (homophobically) that she didn't want to work actors who had done gay male scenes. While criticism would have been appropriate, the torrent of backlash she received was disproportionate.
The woman who went to the Washington Post's cartoonist party in blackface in a very misguided but not malicious attempt to satirize blackface and subsequently lost her job when the Washington post named her in their paper. Natalie Wynn of Contrapoints – for many different things.
Glenn Greenwald over the age difference between him and his partner
Now I'm picking cases of opprobrium that came from the left broadly construed, because I think of this as an internal conversation on the left. However, one thing that frustrates me about this debate is that no one is acknowledging that the right are masters of excessive opprobrium. Some examples:
- Steven Salaita
- Diane Abbott
- Norman Finklestein
- Matthew Bruenig
But maybe my position amounts to a silly apolitical wish that people would be nice to each other, unless there's a very, very good reason not to.Aubergine 07.31.20 at 3:14 am ( 50 )
Chris: An interesting case can be made in favor of cancel culture if we start thinking of most political cults including communism, fascism, maga-Trumpism and other types of fake populism as pandemics.
For starters, there is the testing. A positive test result is indicated by
(a) the talking points or analysis are exclusionary toward one or more social groups that are being "othered" based on any common aspect other than political actions that are unethical by some well-defined criterion; the extent indicates the severity of the symptoms, and
(b) the speaker or commenter is repeating someone else's talking points or writing rather than their own attempts to understand the issue; the extent indicates the degree of infectiousness.
In that testing sense, cancel culture can be seen as a type of supplementary social defense mechanism compared to the standard immune system response of trying to prove the political cult wrong in the eyes of unbiased observers; in too many historical cases, the immune response is weakened by factors such as adverse economic or geopolitical circumstances (e.g., a lost war).
Cancel culture then works as (a) tracking and removal in the form of boycotts and ostracism, in that the infected cells(individuals) are removed from positions of influence, and (b) as a type of lockdown measure (censorship) that is warranted when the infected individual is transmitting patently false versions of current events or past history, and is starting to infect others around him.
I am not in complete agreement with the above political cults-as-pandemics theory, but it has some compelling aspects in exceptional situations. Normally, the political-economic-cultural discourse is sufficiently healthy that the standard "cure for bad speech is more good speech" response is sufficient. Commenters above such as Peter Dorman are assuming that the "body politic" has a healthy and undisrupted immune system, but I would argue that is far from being the case right now; the U.S. is afflicted by oligarchic politics, highly unequal and quasi-feudal economics that make appeals to the free market laughable, and by standard of living deterioration in a large number of inner urban areas as well as mid-tier and small cities. So the patient is immuno-compromised and additional interventions are called for.
As to Peter's argument that cancel culture disfigures the left, I would add that the only cases where the radical left has seized power took place in the brutal aftermath of right-wing pandemics: e.g. the hyper-nationalism that led Germany and Russia among others to war in 1914, or KMT/warlord attempts to violently and brutally suppress peasant demands in the case of China. In such situations, it is no surprise that the radical left becomes infected with political cultism.
The important thing is to know when to apply cancel culture (and other resistance measures including mass disobedience) to left-wing movements that are "infected". Post-1989 Eastern Europe is a good example, though now it is right-wing pandemics that are taking hold. That is, cancel culture is not just for Lost Cause racism and proto-fascism, but for all political movements that cross the border into cultism and "othering".
Much of the pushback against cancel culture has come from prominent journalists and intellectuals who perceive every negative reaction from ordinary people on social media as an affront.
I don't think this is fair. As EB says @22:
The (wealthy, high profile) signers of the Harper's letter were not complaining on their own behalf; they were complaining on behalf of the millions of people with no power or money who are also threatened with mobbing if they voice divergent (not racist, not transphobic, not misogyist) views.
JK Rowling is pretty hard to cancel; she has a mountain of cash, and her books are still selling. But people who don't have a mountain of cash are going to look at examples like children's author Gillian Philip, who appears to have been "let go" by her publisher after being targetted by a cancellation campaign for tweeting "#ISTANDWITHROWLING", and think very carefully about whether they can afford to stick their head over the parapet. Personally, I've made a number of comments on Crooked Timber which I don't think were at all outside the bounds of acceptable discourse – certainly not in the same category as the racist speech you refer to (and at least one moderator must have agreed, because they were posted) – but which I simply couldn't risk making without a pseudonym.
I often detect a bit of motte-and-bailey in the anti-anti-cancel culture argument. The outer bailey is something like "cancel culture isn't the problem it's made out to be; it's just how norms of acceptable behaviour are worked out these days"; the motte is "it's okay to deplatform hardcore racists and holocaust deniers".
Between those two positions there's a large space where people get harassed, threatened, ostracised and silenced for minor slips, reasonable disagreements, details that were lost in translation and failures to recite the correct thought-terminating cliches with sufficient conviction – basically, things that don't threaten anyone else's ability to speak. Often this is done with the assistance of the false-flag social media "activist" accounts that right-wing agitators use to pick away at fault lines on the left.
Even when there are no serious real-world consequences this tends to create a narrow, stifling intellectual environment, which is what a large part of the opposition to "cancel culture" is trying to prevent. You do realise, don't you, that Crooked Timber's willingness to acknowledge heterodox views, on certain subjects, from the broad left puts it radically out of step with most of the "progressive" Western Internet?
(There are other parts where cancel-culture tactics are used against different targets, such as apostates and feminists in general (not just the wrong kind of feminists), which hopefully we can all agree is not good.)
Basically, I don't think it's an adequate response to critique of cancel-culture to pick out the cases where relatively mild tactics were used against acceptable targets, without acknowledging that the critique is much broader than that.
Aug 01, 2020 | www.moonofalabama.org
uncle tungsten , Aug 1 2020 0:39 utc | 39
Thank you for those John Helmer reports. I note that the new head of MI6 is a lover of all fine Turkish things including Erdoghan. "Richard Moore, currently a third-ranking official of the Foreign Office, an ex-Ambassador to Turkey; an ex-MI6 agent; and a Harvard graduate".
Perhaps he was even the initiator of the White Helmets? My take away from those reports is that Cummings and Johnson have commenced a transition strategy within the UK and that the future of Integrity Initiative and its bogan crew may be limited.
They have also restrained the MI6 manipulators that would conspire and contrive the overt 'Hate Russia' policy. Not that Bojo and Cummings will necessarily change anything other than a superficial rearrangement in their favour (for a month or two anyway).
AtaBrit #9 includes an excellent link to a National Interest report on Turkey and is worth the read in this context of the rise and rise of Richard Moore. Thank you AtaBrit.
Caitlin Johnston has recently posted an astute analysis of the current distraction politics and why we should not be distracted by Covid19 rants from seeing the immediate rendition of the great game.
I guess the UK will be less overt re Russia but expect the Libyan war to escalate as UKUSAI use Turkey in Libya to push back against Russia and even Sisi in Egypt. They have a willing US president now and likely continuing in the next few years (be it Trump or Biden). The UK could stage yet another 'Suez incident' with this mendacious confluence of opportunities.
The USA has become the patsy for these thugs, when will they rise?
Aug 01, 2020 | www.zerohedge.com
Authored by MN Gordon via EconomicPrism.com,
Where will America's productivity miracle come from?
Public education is not teaching students what they need to know to compete in the global economy.
According to the National Center for Education Statistics, math scores of U.S. students rank 30th in the world. The East Asian peers of today's American students will eat their lunch in the growth industries of tomorrow.
Here's where Black Lives Matter has a real opportunity.
The protests. The riots. The calls for reparation payments. Social justice wealth transfers. White privilege taxes. All the nonsense. Where's the strategy? Where's the long-range 'strategery'?
No doubt, those selling BLM T-shirts in Walmart parking lots are exercising gumption. But it's not gonna cut it. Moreover, like bingo winnings, reparation payments will be quickly squandered while the unhappiness remains.
And as far as we can tell the BLM movement is empty of ideas and without direction.lay_arrow
chubbar , 14 minutes agolibtears , 40 minutes ago
"If BLM was strategic"?????? Holy ****, if they were strategic they'd be making damn sure that testing, like SAT scores, were no longer accepted as proof of accomplishment or learning. Oh, wait?.......
Let's all agree, blacks don't want a "head to head" test, EVER.
I don't give a crap what they say, they don't want to be judged on MERIT, they love the skin color test. That way they can always claim racism instead of ability.JaxPavan , 42 minutes ago
The BLM Movement is definitely empty of ideas and clear leadership. Their supposed goals are all over the map from day to day. They are rudderless mobs of filthy vagrants and criminal elements make up most of their movement.
What's going on which is credited to BLM has nothing to do with black people for the most part. Commies have co-opted this movement and are engaging in anarchy to take down the system of government. They will do whatever they want at all costs because they believe they have the moral high ground. They are radicals just like people call them.
The best thing that could happen is for these loser mayors and governors to enforce the law against these mobs of filthy scum.
How can you even reason with a mob of idiots that don't even have one, if not a hierarchy of leadership and clear goals that they agree upon?
These people are taking a page out of the Bolshevik book on revolution. And they're much weaker than the Bolsheviks, mentally and physically. One good thump on the head and these b!tches are crying.
The longer the public allows teaching institutions to promote BLM the worse this sh!t is going to get.
...quanttech , 39 minutes ago
The Ford Foundation gave BLM $100 million to engage in terrorism. Who do you think bought all those ultra high end looting vehicles?HopefulCynical , 22 minutes ago
Indeed, the BLM organization is primarily funded by mostly white-run corporations and foundations. The money rules.
And WHO is in control of the Ford Foundtion? WHO?!
Jul 31, 2020 | angrybearblog.com
July 30, 2020
Plunge in Consumption of Services Leads to Record 32.9 Percent Drop in GDP
By DEAN BAKER
The saving rate hit a record 25.7 percent level in the first quarter, indicating that few of the pandemic checks were spent.
The Gross Domestic Product (GDP) shrank at a record 32.9 percent annual rate in the second quarter. While almost all the major categories of GDP fell sharply, a 43.5 percent drop in consumption of services was the largest factor, accounting for 22.9 percentage points of the drop in the quarter. Nonresidential fixed investment also fell sharply, dropping at a 27.0 percent annual rate. Residential investment fell at a 38.7 percent annual rate.
The plunge in service consumption was expected since this was the segment of the economy hardest hit by the shutdowns. Within services, health care, food services and hotels, and recreation were the biggest factors reducing growth by 9.5 percentage points, 5.6 percentage points, and 4.7 percentage points, respectively.
Spending on health care services fell at a 62.7 percent annual rate in the quarter. This was due to people putting off a wide range of medical and dental checkups and procedures, which far more than offset the care needed by coronavirus patients. The annual rate of decline for food and hotel services was 81.2 percent and for recreation services 93.5 percent.
Consumption of nondurable goods fell at a 15.9 percent annual rate. Declines in clothing and gasoline purchases were the biggest factors, taking 1.0 percentage point and 0.9 percentage points off the quarter's growth, respectively. Demand for durable goods fell at just a 1.4 percent rate, but this followed a decline of 12.5 percent in the first quarter. Interestingly, spending on cars actually rose slightly in the quarter, adding 0.15 percentage points to growth.
Consumption expenditures by nonprofits serving households rose at 182.5 percent annual rate, adding 3.0 percentage points to the quarter's growth. This reflects the effort by private foundations and charities to ameliorate the hardships being experienced by many households.
Both structure and equipment investment fell sharply in the quarter, declining at 34.9 percent and 37.7 percent annual rates, respectively. The drop in equipment investment is especially striking since it fell at a 15.2 percent rate in the first quarter. Investment in intellectual products fell at a more modest 7.2 percent annual rate. Residential investment fell at a 38.7 percent annual rate, although this followed a jump of 19.0 percent in the first quarter.
Exports and imports both fell sharply, with exports dropping at a 64.1 percent rate and imports falling at a 53.4 percent rate. Because US imports are so much larger than exports, trade actually added 0.7 percentage points to growth in the quarter.
Federal government spending rose at a 17.4 percent annual rate, driven by a 39.7 percent increase in non-defense spending, presumably most of which is pandemic related. State and local spending fell at a 5.6 percent rate, likely reflecting school closings in the quarter.
Prices fell sharply in the quarter, with the Personal Consumption Expenditure (PCE) deflator falling at a 1.9 percent annual rate and the core PCE falling at a 1.1 percent annual rate. These declines reflected sharp drops in the price of items such as gasoline, hotels, and clothes. Many of these declines were already being reversed by the end of the quarter. They will almost certainly not continue into the third quarter.
The savings rate soared to a record 25.7 percent. This reflects the jump in disposable income attributable to the pandemic checks, coupled with the sharp drop in spending. Nominal disposable income rose at a 42.1 percent annual rate. This rise was, of course, uneven, with people who were still getting their regular paychecks or retirees seeing large jumps in income from the pandemic checks, but with many of the unemployed seeing sharp drops.
With the economy mostly reopened, despite serious outbreaks of the pandemic in large parts of the country, we are virtually certain to see strong growth in the third quarter. But even if the economy grows at a 15 or 20 percent annual rate, it would be nowhere close to recovering the losses from the last two quarters.
The shape of the rescue package currently being debated will also be hugely important. In addition to the unemployment insurance supplements that will be necessary for laid-off workers to sustain their consumption, state and local governments will need large amounts of money both to avoid layoffs and to implement programs for the safe reopening of schools, workplaces and businesses. In this context, it is very difficult to see any economic rationale for the $1,200 pandemic checks.
Jul 31, 2020 | www.nakedcapitalism.comThe Consequences of Inequality Can Be Fatal Posted on July 30, 2020 by Yves Smith
Yves here. So many of health costs of inequality are obvious, yet most people seem trained to look past them. And Congress fiddles about a new stimulus package, with the odds of getting it back on track soon not looking very good, while Americans have rent and mortgage payments looming.
By Richard D. Wolff, professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism , both available at democracyatwork.info . Produced by Economy for All , a project of the Independent Media Institute
Capitalism, as Thomas Piketty's Capital in the Twenty-First Century shows, relentlessly worsens wealth and income inequalities. That inherent tendency is only occasionally stopped or reversed when masses of people rise up against it. That happened, for example, in western Europe and the U.S. during the 1930s Great Depression. It prompted social democracy in Europe and the New Deal in the United States. So far in capitalism's history, however, stoppages or reversals around the world proved temporary. The last half-century witnessed a neoliberal reaction that rolled back both European social democracy and the New Deal. Capitalism has always managed to resume its tendential movement toward greater inequality.
Among the consequences of a system with such a tendency, many are awful. We are living through one now as the COVID-19 pandemic, inadequately contained by the U.S. system, savages Americans of middle and lower incomes and wealth markedly more than the rich.
The rich buy better health care and diets, second homes away from crowded cities, better connections to get government bailouts, and so on. Many of the poor are homeless. Tasteless advice to "shelter at home" is, for them, absurd. Low-income people are often crowded into the kinds of dense housing and dense working conditions that facilitate infection. Poor residents of low-cost nursing homes die disproportionally, as do prison inmates (mostly poor). Pandemic capitalism distributes death in inverse proportion to wealth and income.
Social distancing has destroyed especially low-wage service sector jobs. Rarely did top executives lose their positions, and when they did, they found others. The result is a widened gap between high salaries for some and low or no wages for many. Unemployment invites employers to lower wages for the still employed because they can. Pandemic capitalism has provoked a massive increase in money-creation by central banks. That money fuels rising stock markets and thereby enriches the rich who own most shares. The coincidence of rising stock markets and mass unemployment plus falling wages only adds momentum to worsening inequality.
Unequal economic distributions (of income and wealth) finance unequal political outcomes. Whenever a small minority enjoys concentrated wealth within a society committed to universal suffrage, the rich quickly understand their vulnerability. The non-wealthy majority can use universal suffrage to prevail politically. The majority's political power could then undo the results of the economy including its unequal distribution of income and wealth. The rich corrupt politics with their money to prevent exactly that outcome. Capitalists spend part of their wealth to preserve (and enlarge) all of their wealth.
The rich and those eager to join them in the U.S. dominate within both Republican and Democratic parties. The rich provide most of the donations that sustain candidates and parties, the funding for armies of lobbyists "advising" legislators, the bribes, and many issue-oriented public campaigns. The laws and regulations that flow from Washington, states, and cities reflect the needs and desires of the rich far more than those of the rest of us. The peculiar structure of U.S. property taxes offers an example. In the U.S., property is divided into two kinds: tangible and intangible. Tangible property includes land, buildings, business inventories, automobiles, etc. Intangible property is mostly stocks and bonds. Rich people hold most of their wealth in the form of intangible property. It is thus remarkable that in the U.S., only tangible property is subject to property tax. Intangible property is not subject to any property tax.
The kinds of property (tangible) that many people own get taxed, but the kinds of property (intangible) mostly owned by the richest minority do not get taxed. If you own a house rented to tenants, you pay a property tax to the municipality where the house is located. You also pay an income tax on the received rents to the federal government and likely also the state government where you live. You are thus taxed twice: once on the value of the property you own and once on the income you derive from that property. If you sell a $100,000 house and then buy $100,000 worth of shares, you will owe no property taxes to any level of government in the United States. You will only owe income tax on dividends paid to you on the shares you own. The form of property you own determines whether you pay property tax or not.
This property tax system is excellent for those rich enough to buy significant amounts of shares. The rich used their wealth to get tax laws written that way for them. The rest of us pay more in taxes because the rich pay less. Because the rich save money -- since their intangible property is not taxed -- they have that much more to buy the politicians who secure such a tax system for them. And that tax system worsens inequality of wealth and income.
Unequal economic distributions finance unequal cultural outcomes. For example, the goal of a unifying, democratizing public school system has always been subverted by economic inequality. In general (with few exceptions), the better schools cost more to attend. The tutors needed to help struggling students are affordable for the rich but less so for everyone else. The children of the wealthy get the private schools, books, quiet rooms, computers, educational trips, extra art and music lessons, and virtually everything else needed for higher educational achievement.
Unequal economic distributions finance unequal "natural" outcomes. The U.S. now displays two differently priced foods. Rich people can afford "organic" while the rest of us worry but still buy "conventional" food for budget reasons. Countless studies indicate the dangers of herbicides, pesticides, chemical fertilizers, food processing methods, and additives. Nonetheless, the two-price food system delivers the better, safer food more to the rich than to everyone else. Likewise, the rich buy the safer automobiles, more safely equip their homes, and clean and filter the water they drink and the air they breathe. No wonder the rich live years longer on average than other people. Inequality is often fatal, not just during pandemics.
In ancient Greece, Plato and Aristotle worried about and discussed the threat to community, to social cohesion, posed by inequalities of wealth and income. They criticized markets as institutions because, in their view, markets facilitated and aggravated income and wealth inequalities. But modern capitalism sanctifies markets and has thus conveniently forgotten Plato's and Aristotle's cautions and warnings about markets and inequality.
The thousands of years since Plato and Aristotle have seen countless critiques, reforms, and revolutions directed against wealth and income inequalities. They have rarely succeeded and have even more rarely persisted. Pessimists have responded, as the Bible does, with the notion that "the poor shall always be with us." We rather ask the question: Why did so many heroic efforts at equality fail?
The answer concerns the economic system, and how it organizes the people who work to produce and distribute the goods and services societies depend on. If its economic organization splits participants into a small rich minority and a large non-rich majority, the former will likely be determined to reproduce that organization over time. Slavery (master versus slave) did; feudalism (lord versus serf) did; and capitalism (employer versus employee) does. Inequality in the economy is a root cause contributing to society-wide inequalities.
We might then infer that an alternative economic system based on a democratically organized community producing goods and services -- not split into a dominant minority and a subordinate majority -- might finally end social inequality.
Ignacio , July 30, 2020 at 10:16 am
Wow! I just can say this is very well pointed and that It must be understood we cannot expect empathy from the well off. Even if some are empathic by nature they just cannot see what's really happening given how wide is the rift.
rob , July 30, 2020 at 10:39 am
inequality is a state of nature. blame god .right.
but here in this humanistic creation, we ought not institutionalize inequality.
That is one of the big points of monetary reform.
The current federal reserve system and the banking system ,having control of the "money creation" of this country, PROMOTES wealth inequality.
The nationalization of the fed, and the ending of banks creating money; is the main essence of monetary reform. The people who have been trying to discuss the world with a different ,more equal access to the fiat created "for the people to use, for the economy to function",point to the growth of inequality by the nature of how the system currently is structured. They point to how our money is created and by whom.They point to who gets "the debt"
Some people try to dismiss the 100 year history of the fed promoting inequality as a bug . but how can someone not see it is a feature, The monetary system we have now was created by an act of law. It would be unconstitutional ,if not for the federal reserve act. Allowing the banks to create money.Instead of the congress..as the constitution explicitly stated.
But now, we are no longer a fledgling republic.
The world accepted our fiat, as created by bankers now we ought to create our own money and retire our national debt.Heal ourselves, to lead forward in the future. Time to write a new law .
Anonymous , July 30, 2020 at 10:53 am
Pessimists have responded, as the Bible does, with the notion that "the poor shall always be with us."
The Bible does not say that, it says:
However, there will be no poor among you , since the Lord will surely bless you in the land which the Lord your God is giving you as an inheritance to possess, if only you listen obediently to the voice of the Lord your God, to observe carefully all this commandment which I am commanding you today. Deuteronomy 15:4 [bold added]
But just a few verses later:
For the poor will never cease to be in the land ; therefore I command you, saying, 'You shall freely open your hand to your brother, to your needy and poor in your land.' Deuteronomy 15:11 [bold added]
Taken together, these verses are not about the inevitability of poverty but the inevitability of poverty from DISOBEDIENCE to what is being commanded – especially, i suppose, wrt economic justice.
So though we might never completely eliminate poverty, it can certainly be reduced to the extent we are willing to obey – per the Bible.
And as anyone who has read the Old Testament should know, the US is far from obedience wrt economic justice (e.g. Deuteronomy 23:19-20, e.g. Leviticus 25).
Alternate Delegate , July 30, 2020 at 3:39 pm
Yes the Bible most certainly does say that.
Mark 14:7 For ye have the poor with you always, and whensoever ye will ye may do them good: but me ye have not always.
Matthew 26:11 For ye have the poor always with you; but me ye have not always.
Anonymous , July 30, 2020 at 4:43 pm
Those statements are indictments of injustice, not excuses for poverty (cf. Deuteronomy 15:4).
TomDority , July 30, 2020 at 1:27 pm
"If you own a house rented to tenants, you pay a property tax to the municipality where the house is located."
the above means that you are already up the income ladder enough to not qualify as being low income _ most of the country is low income since the word Low is comparative – it is comparative to the cost of living –
So the above property tax is paid by the tenant – the carry costs by the tenant and the profit – by the tenant.
So the rent is a high cost of living due to the bidding up or asset inflation that most "investment goes into today"
A key way to reduce inequality is through a tax system that penalizes activities that tend to raise the cost of living – tax heavier the investments that inflate asset prices (assets are things already created).
Taxing something is to put a burden upon an activity
Why we tax labor so much – who knows
Michael Fiorillo , July 30, 2020 at 4:43 pm
The Great Depression of the 1930's prompted social democracy in Europe?
The professor skipped an episode or two there, no?
Susan the other , July 30, 2020 at 2:59 pm
When it comes to the value of money everything is skewed. If Picketty were analyzing money as merely a medium of exchange and not a store of wealth he'd have much less inequity. When the value of money is considered in on-the-ground finance operations "lost opportunity" is considered into the interest rate. Lost opportunity is totally ignored on a human level. You'd think that money itself was a person.
Jul 31, 2020 | www.moonofalabama.org
Ashino , Jul 30 2020 21:09 utc | 16
Another 1.416 million Americans filed new claims for unemployment benefits last weekOur politicians want to encourage people "to go back to work", but for millions upon millions of Americans the jobs that they once had are gone forever.
52 million Americans have filed new claims for unemployment benefits over the past 18 weeksBut many people that live in rural communities are feeling pretty good aboutthings right now. Even though more than 52 million Americans have filed new claims for unemployment benefits over the last 18 weeks, the official unemployment rate in many rural counties is still in the single
New York's unemployment rate rose to 20.4% last month, according to state-level data issued
Friday by the Bureau of Labor Statistics that detailed figures for some large metro areas. That'sup from 18.3% in May and 15% in April.
Los Angeles, the second-largest U.S. city, has seen a similar level of joblessness.Its unemployment rate recovered slightly in June but remains startlingly high -- at 19.5%, versus 20.6% in May, according to data published Friday by California's Employment Development Department.
Census Bureau says that things are particular dire for Black and Hispanic renters This month (JUNE), nearly 28% of Black renters say they haven't paid last month's rent, and \about 46% say they have slight or no confidence they'll be able to pay next month's rent, according to figures from the Census Bureau's Household Pulse Survey. Hispanic renters face similar economic strain: 22% say they missed last month's rent and 46% fear they won't make rent next month.
In April, 78% of those in households experiencing job loss felt that that situation would be temporarily. But now, 47% think that job loss is likely to be permanent, according to The Associated Press-NORC Center for Public Affairs Research.
19 percent of all U.S. small businesses were closed, According to Jefferies,
Nearly a quarter of all small businesses in the entire country are closed
And the really bad news is that many of them will never end up reopening
As many as 76,000 small businesses in New York City – a third of the 230,000
citywide – may never reopen after forced to close during the COVID-19 lockdown,
business leaders have warned.
Nearly half of all small-business members of the San Francisco Chamber of Commerce lost 100% of their sales or closed down completely.
Yelp says that a whopping 60 percent of the restaurants that were initially listed as"temporarily closed" on their site are now classified as permanetly
Air travel is another industry that is being absolutely devastated by this pandemic.After a modest bounce in June, the number of air passengers is starting to fall again.The resurgence of coronavirus infections is derailing the travel industry's modest recovery. The number of air passengers processed through TSA security lines fell during the week ended July 20, compared with the prior week, according to Bank of America. This metric is down more than 70% from a year ago.
United (UAL) CEO Scott Kirby told CNBC on Wednesday that the airline doesn't "expect to get anywhere close to normal until there's a vaccine that's been wiely distributed to a large portion of the population" !! (Hello Big Pharma Inc.)
(Whatever one might think about that blog, but most numbers are proberly back up
with so callled serious sources aka links.)
Peter AU1 , Jul 30 2020 21:48 utc | 21psychohistorian , Jul 31 2020 0:05 utc | 38
The cost of herd imunity.
"The US economy has shrunken at a dizzying 32.9 per cent annual rate in the April–June quarter.
It is by far its worst quarterly plunge, and has thrown tens of millions out of work and sent unemployment surging to 14.7 per cent, the US Government said on Thursday (local time).
The Commerce Department's estimate of the second-quarter decline in the gross domestic product marked the sharpest such drop, according to records dating back to 1947."
@ b who wrote
The economic damage the pandemic has caused in the U.S. is extreme:
The pandemic is a set up for the economic damage more than it caused itself, IMO. The economic system started crashing last September. Empire has been in frantic mode. in case you hadn't noticed, to find a patsy to blame for the economic crash. I believe that response to the pandemic was designed to project the most economic impact to cover for the financial structural deficiencies underneath. Jobs going away to automation is not a new trend, nor is reduction of consumption due to less disposable income.....there really has been no economic recovery for the masses since 2008.
And that great Man for Humanity, as some here still believe, Trump has been proposing things like suspending the payroll tax which would kill the Social Security Insurance program, pushing back the election to a better time`and deflecting responsibility for the hundred thousand and counting dead because Empire is designed for profit, not people and comparison with China's results are telling.
This is what living under the dictatorship of global private finance provides for the masses which pales in comparison with public finance centered nations.
Jul 30, 2020 | www.theamericanconservative.com
ll eyes are on the declining number of unemployed. The May and June jobs reports chronicle the reabsorption of 5.3 million who lost their jobs in the COVID-19 pandemic. Twelve million jobs to go to reach pre-pandemic employment.
Yet prior to the pandemic, there were 18 million Americans missing from the economy. These persons were neither employed nor seeking employment -- nor retirees, students or in-home caregivers -- and therefore were excluded from the Bureau of Labor Statistics count of the workforce. In order that America emerge from the pandemic stronger than before, a concerted initiative by federal and state governments to move them back into the economy -- using existing resources -- must begin now.
Research on the social determinants of health finds that employment has a very strong correlation with positive health outcomes. To exist as a non-participant in the economy is thus an invitation to dire health outcomes including premature death.
What's more, these individuals are needed as contributors to our national commonweal, fueling increased economic and social progress. And people engaged in productive activities are much less likely to engage in negative and destructive behaviors.
... The USDA's food stamp program has a robustly funded, though underutilized, employment and training grant. States use the excuse of USDA's partial match requirement as a reason to opt out.
Jul 29, 2020 | crookedtimber.org
steven t johnson 07.29.20 at 3:14 pm (50 )likbez 07.29.20 at 3:30 pm
PS likbez@46 reminded me of a line from the movie Reds. Warren Beatty's John Reed spoke of people who "though Karl Marx wrote a good antitrust law." This was not a favorable comment. The confusion of socialism and what might be called populism is quite, quite old. Jack London's The Iron Heel has its hero pointing out even before the Great (Class) War that the normal operations of capitalism, concentration and centralization, destroyed the middle class paradise of equal competition. It wasn't conspiracies.
@steven t johnson 07.29.20 at 3:14 pm (51)
Jack London's The Iron Heel has its hero pointing out even before the Great (Class) War that the normal operations of capitalism, concentration and centralization, destroyed the middle class paradise of equal competition.
I think the size of the USA military budget by itself means the doom for the middle class, even without referring to famous Jack London book (The Iron Heel is cited by George Orwell 's biographer Michael Shelden as having influenced Orwell's most famous novel Nineteen Eighty-Four.).
Wall Street and MIC (especially intelligence agencies ; Allen Dulles was a Wall Street lawyer) are joined at the hip. And they both fully control MSM. As Jack London aptly said:
"The press of the United States? It is a parasitic growth that battens on the capitalist class. Its function is to serve the established by moulding public opinion, and right well it serves it."
― Jack London, The Iron Heel
Financial capitalism is bloodthirstily by definition as it needs new markets. It fuels wars. In a sense, Bolton is the symbol of financial capitalism foreign policy.
It is important to understand that finance capitalism creates positive feedback loop in the economy increasing instability of the system. So bubbles are immanent feature of finance capitalism, not some exception or the result of excessive greed.
Jul 29, 2020 | www.bloomberg.com
- A weekly survey showed food insecurity at a high in July
- Millions are out of work as Congress debates new stimulus
People wait in their vehicles to receive food at a drive-thru food
distribution event in Chula Vista, California, on May 1.
Food insecurity for U.S. households last week reached its highest reported level since the Census Bureau started tracking the data in May, with almost 30 million Americans reporting that they'd not had enough to eat at some point in the seven days through July 21.
In the bureau's weekly Household Pulse Survey, roughly 23.9 million of 249 million respondents indicated they had "sometimes not enough to eat" for the week ended July 21, while about 5.42 million indicated they had "often not enough to eat." The survey, which began with the week ended May 5, was published Wednesday.
The number of respondents who sometimes had insufficient food was at its highest point in the survey's 12 weeks. The number who often experienced food insufficiency was at its highest since the week ended May 26.
This follows deep recession resulting from the pandemic, which put millions of Americans out of work. Unemployed Americans have been receiving an extra $600 per week benefit, which is set to expire at the end of July as Congress debates a new relief package.
Other high-frequency data, including Household Pulse jobs numbers, indicate that the U.S. economic recovery may be stalling out at virus cases spike around the country and states roll back their reopening plans.
Jul 29, 2020 | www.moonofalabama.org
Richard Steven Hack , Jul 28 2020 5:39 utc | 122
Meanwhile, great line from an infosec researcher and teacher here in San Francisco about whether university classes will reopen:
Sam Bowne @sambowne Jul 26
Q: "When will this class be offered?" A: "Difficult to say, because there's a critical budget crisis at the college, city, state, and national level, and most if not all the officials at every level appear to be corrupt, incompetent, and insane."
Jul 29, 2020 | www.moonofalabama.org
A Significant Decline Is Coming For The U.S. james , Jul 27 2020 18:10 utc | 1
by Passer by
In response to several comments in the last open thread (slightly edited).
Actually there is even some real, and not only relative, decline for the US, for example US life expectancy is dropping. This is a pretty bad sign for a developed country. Same for the UK by the way.
On the issue of China gaining during the Covid crisis, they gained in raw power, for example gained in GDP relatively to the US. And they gained in debt levels too, relatively, as US debt levels exploded due to the crisis. Now you have V-shaped recovery in China and poor, W-shaped double dip recovery in the US. With far more debt added.
Of course there is the issue of public relations and soft power. On the one hand the US blamed China for the pandemic, but on the other hand it embarrassed itself due to its poor performance in containing the pandemic, compared to other countries. And the US lost points around the world due to rejecting WHO right in the middle of the pandemic. Europe and developing countries did not like that at all. Don't forget that Covid also weakened the US military, they have problems with it, including on ships and overseas bases, and even broke the biggest US exercise planned in Europe for the last 30 years. And the pandemic in the US is still raging, its not fixed at all and death rates are increasing again.
Here for example, the futurologists from Pardee Canter that that China gained during the crisis, in raw capabilities. Future research and relative power between countries is their specialty :Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer use IFs (International Futures) to explore the long-term impact of COVID-19 in China in this Duck Of Minerva blog post" "Where broad measures of material capabilities are concerned, the picture is clear: COVID-19 is closing the gap in relative capabilities for the U.S. and China and accelerating the U.S.-China transition. Through multiple long-term forecast scenarios using the International Futures tool, Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer explain on the Duck of Minerva blog that China is likely to gain approximately one percent of global power relative to the U.S. by 2030 due to the economic and mortality impacts of COVID-19. This share of global power is similar to the relative capabilities of Turkey today.
On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.
On the chip/semiconductor issue. David Goldman is skeptical that the US will be able to stop China on this :The chip ban gives the world an enormous incentive to circumvent the USBasically Huawei still has advanced suppliers, from South Korea and Japan. And some of them are refusing to yield. The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world , which gives enormous initiative for private businesses to circumvent US made equipment in order to export to China. Then also China is stashing large quantities of chips. By 2025, it should be able to replace foreign production with homegrown. So these bans are lose lose situation for both the US and China - yes, this will cause come costs to China up to 2025. But it will also lead to US companies, such as Qualcomm, to lose the Chinese chip market, which is the largest in the world, and there is nothing to replace it.
These are hundreds of billions of losses for the US due to gradually losing the most lucrative market. Thus, in relative terms, China does not lose from these games, as the US will pay a large price just as China. It is lose-lose situation, but in relative terms the same. US loses just as China loses. And do not forget that China warned that a full US attack on Huawei will lead to Boeing being kicked from the country, which is becoming the biggest aviation market in the world, and will lead to hundreds of billions of losses for that company too, and will probably burry it under Airbus. China needs lots of planes up to 2028, when they will replace them with their own, worth hundreds of billions of dollars. Elevating Airbus over Boeing, which already has big troubles, will be a significant hit for the US aerospace industry.
So China has cards to play too. On the issue of the US getting some countries to ban Huawei, it is again lose - lose situation - that is both the US and some of its allies will lose due to using more expensive 5G equipment and will lose more time to build their networks. So China loses, and US and some allies lose, but in relative terms things remain the same between them power-wise, as they both lose. Do not forget that Germany said that it will continue to use Huawei equipment, and this is the biggest economy in Europe:Germany's three major telecommunications operators Deutsche Telekom, Vodafone and Telefonica have been actively promoting 5G in recent years. They implement the "supplier diversification" strategy and use Huawei equipment in their networks among other vendors. Peter Altmaier, German minister of economy, told the Frankfurter Allgemeine Zeitung on July 11 that Germany would not exclude Huawei from the country's 5G network rollout. "There can only be an exclusion if national security is demonstrably at risk. However, we will strengthen our security measures, regardless of which country the products come from," said Altmaier. "There is no change in Germany's position," a spokesperson of the country's Interior Ministry told local broadcaster ARD on July 16.
So we can say that probably half of Europe will be using Huawei. Still, as you said, a large part of the world will exclude it. Maybe half of world's GDP. Unfortunately things are not perfect. One bright spot in that is that Huawei is betting on emerging markets, and emerging markets have higher growth rates than western markets - that is, they will matter more in the future.
I would agree that the US is harming China, but the damage is not large IMO, as these are mostly lose lose situations where relative power stays the same. And with time, there will be significant damages for the US too, such as losing the biggest chip and aviation markets and the empowerment of Boeing competitors such as Airbus.
So its not too bad in China. Thus, after mentioning all of this, I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis.
On Hong Kong China had no options. It was a lose-lose situation. If they allowed everything to stay as it is there would be constant color revolution there and they will be constantly in the media. Maybe it is better to stop this once and for all. They hoped that the Covid crisis will give them cover to do this. It did not work very well.
Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them.
I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway.
The data shows a significant decline incoming for the US.
- 2019 China 1,27 times bigger in GDP/PPP
- 2030 China 1,8 times bigger in GDP/PPP
- US debt to GDP 2019 80%
- US debt to GDP 2030 125%
- US debt to GDP 2050 230 %The Highway Trust Fund (HTF) will be depleted by 2021, the Medicare Hospital Insurance (HI) trust fund by the beginning of 2024, the Social Security Disability Insurance (SSDI) trust fund in the 2020s, the Pension Benefit Guarantee Corporation (PBGC) Multi-Employer fund at some point in the mid-2020s, and the Social Security Old-Age and Survivors Insurance (OASI) trust fund by 2031. We estimate the theoretically combined Social Security OASDI Trust fund will run out of reserves by 2031.
- Military budget (before Covid estimates, Trump budget) 2019 3,2 % of GDP - 2030 2,5 % of GDP (Could drop to 2,3 % of GDP due to Covid)
- Civilian discretionary spending (before Covid estimates) 2019 3,2 % of GDP - 2030 1.8 % of GDP (drop to all time low) (Could drop further due to Covid)
That is not to mention the big divide in US society, and the ongoing Covid crisis, which is still not fixed in the US. But is largely fixed in China. Do you see the decline now? They have a big, big reason to be worried. A significant decline is coming for the US.
Posted by b on July 27, 2020 at 17:53 UTC | Permalink
thanks for highlighting 'passer by's post b... i agree with them for the most part... it reminds me of a game of chess where pieces are being removed from the board.. it is a lose- lose, but ultimately, it is a bigger loss for the usa down the road... for whatever reason the usa can't see that the financial sanctions, bullying and etc, only go so far and others work around this as we see with russia, iran, venezuala and china in particular...
the one comment i would view differently then passer by is this one - "Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them." i think the usa is losing it's position in terms of soft power and world opinion but you won't be reading about it in the western msm.. that is going to come out later after the emergence of a new reality is very clear for all to see... the trump strategy is really more of the same and it is like a medicine that loses it's power over time and becomes ineffective - sort of like antibiotics...
O , Jul 27 2020 18:34 utc | 7Kadath , Jul 27 2020 18:46 utc | 8
In other words the western oligarchs will lose out to the eastern oligarchs in the Great Trade War under the cover of a fake pandemic.
Or perhaps the global oligarchs in general just want the world to follow more in the Chinese model where the population is more agreeable to total surveillance, social credit scores and even more out right fascistic government/corp model under the cover of a fake pandemic.O , Jul 27 2020 19:10 utc | 16
Re: James #1,
With respect to "bullying works", in international diplomacy it usually does since weaker powers have more to lose in a direct diplomatic crisis with a larger power. This is not to say that they won't push back, but they will be far more strategic in where they do. In essence, weaker powers have fewer "red lines" but they will still enforce those, while greater powers have more "red lines", because they have more power to squander on fundamentally insignificant issues. However, weaker states will still remember being abused and oppressed, so when the worms turns while they won't be the first to jump ship, they will be more than eager to pile on and extract some juicy retribution once it is clear they will not be singled out. I suspect the Germany will be the bellwether, when (if) Germany breaks from the US on a key aspect on the transatlantic relationship that will be the signal for others to start jumping ship. If Nordstream 2 go through, then there will be a break within 5 years; if Nordstream is killed, then the break might be delayed for 5 years or more but there will still be a break when the US pushes Germany to support the next major US regime change war in the Middle East.blum , Jul 27 2020 19:11 utc | 17
The engineered collapse is being called the "Great Reset" by many outlets already. The covid nonsense is just a cover for it. Instead of Saudi Arabian terrorist it is a basically a harmless coronavirus. Just in the days immediately following 911 the "terrorist'' threat was so overhyped that security theater was employed everywhere. Now sanitation theater is the new act in town.karlof1 , Jul 27 2020 19:24 utc | 19
Where does anyone get these numbers about military spend as a % of gdp? Have you listened to Katherine Austin Fitts on Corbett Report?
Posted by: oglalla | Jul 27 2020 18:27 utc | 4
If you could dig through the linked Committee for a Responsible Federal Budge links for me. I'd appreicate it a lot. ;)
Long time not heard anything from Katherine. You feel I should check both her and Corbert on Gates, I suppose?Jackrabbit , Jul 27 2020 20:48 utc | 29
Article discussing political fallout from info provided @11.
Good to see your comment. Lots of anecdotal evidence nationwide about store closures and many vacancies in business centers, particularly within economic engines of NYC and elsewhere along the East Coast. IMO, lots of self-censorship by business media while the reality reported by Shadowstats goes ignored. As for losing the status of #1 economy, that was always going to occur once China or India became a moderately developed economy. It just happened that China is far more efficient politically which allowed it to become #1. And until India improves politically, it will continue to lag behind numerous smaller nations. Too bad there isn't a place where one can bet on the great likelihood that the Outlaw US Empire will outperform all nations in the production of Bullshit and Lies.Mark2 , Jul 27 2020 21:13 utc | 39
I also disagree with the comparison between USA and China gdp and other statistics.
China is not simply competing against USA but against the Empire: 5 eyes, NATO, Euro poodles, Israel and the Gulf States and others like Mexico, Columbia, Brazil, India.
Anyone that is minimizing the conflict and the advantages of one side vs another is doing a disservice.
Cold War I lasted 40 years.
!!jadan , Jul 27 2020 21:50 utc | 54
CitizenX @ 26
Agree with your tone and content.
Particularly the third from last paragraph. I think people are missing by choice the growing ground-swell of public opinion US wide as this blog shows, a multi-faceted detereation of US political morals and legality.
Combined with a world wide growing awareness of how deranged American leaders now are.
Haterd consumes itself as dose greed.
My ear to the ground tells me, the protests at present are growing some in full sight some not.
This is not buseness as usual. Then return to normal. The mood now is -- -- - let's settle this thing once and for all, let's get the job done.
So my personal opinion ? we will see a US regime chainge faster than a lot here predict. Much faster.O , Jul 27 2020 22:23 utc | 68
Passer by is correct, no doubt, thanks to incompetent leadership in the US, but this economic horse race doesn't matter.
What matters above all is that nations should hold it together, "it" being sustainable, survivable support systems capable of providing for mass populations.We have failed that test here in our encounter with this pandemic. We have failed to develop a sustainable financial system. We have failed to meet any sort of environmental goals. We don't even have environmental goals! Our electoral system doesn't work, either, proof being the election of this idiot atavistic rich boy. If anyone thinks the election of Trump reflects the will of the majority of Americans, they are part of the problem.
China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse. Those groups not satisfied with life in the PRC have no outlet for their voices to be heard. They cannot protest. They are under the strict control of an increasingly sophisticated but tiny elitist clique that is only 6.5% of the total population. This clique will not relinquish power and permit more democratic expression. On the contrary, more and more suppression of dissidence of any sort will happen. The social scoring system is an especially insidious program of social control. China's collectivism has turned the country into an ant hill. It is extremely productive, but people are not ants.
Passer by is looking at the world through a keyhole.O , Jul 27 2020 22:28 utc | 69
Nightmare' conditions at Chinese factories where Hasbro and Disney toys are made
Investigators found there were serious violations at the factories which were endangering workers.
In peak production season, employees were working up to 175 overtime hours per month. Chinese labour law restricts monthly overtime to 36 hours per month, but the report alleged factories would often ask local governments to implement a "comprehensive working hour scheme" to override existing legislation.
https://www.cnbc.com/2018/12/07/nightmare-at-chinese-factories-making-hasbro-and-disney-toys.htmlJackrabbit , Jul 27 2020 22:39 utc | 72
One wonders if China will run into the same problems of the US in the not too distant future?
"The End of Sweatshops? Robotisation and the Making of New Skilled Workers in China"
Over the past four decades China has undergone a process of massive industrialisation that has allowed the country to achieve remarkable economic growth. Because of its large manufacturing capacity based on a seemingly unlimited supply of cheap migrant labour in light industries, China has come to be known as the 'workshop of the world'. However, since the early 2000s the country's labour market has experienced a remarkable transition from labour surplus to a shortage of labour, which has led to sustained increases in the wages of ordinary workers. In such a context, since 2015 robotisation has become a driving policy for industrial upgrading for manufacturing in China, with the slogan 'replacing human workers with industrial robots' (机器换人) frequently appearing in media reports and official policy documents.
karlof1 , Jul 27 2020 22:59 utc | 74
karlof1 @Jul27 21:50 #55
Thank you for clarifying that.
The early date of "full spectrum dominance" (1996 not 2010) suggests to me that the doctrine was related the "end of history" thinking of that time. USA Deep State believed its own propaganda.
It also strengthens my case for the proximate cause for the current conflict originating in 2014 when the US Deep State suddenly realized the threat that Russia and China Alliance posed to their plans for global domination.
Not only had they believed their own propaganda but they had overreached with their attempt to force Russia to capitulate and had been distracted by Israel interests that wanted to use USA for the greater Israel project.
!!When I wrote my economic analysis paper on China in 1999, it was quite clear that the 21st Century was going to become the Asian Century as the Outlaw US Empire would be eclipsed by Asia's economic dynamism. 20+ years later, my prediction holds true, and it's even stronger now than then with Russia's resurgence. Both outcomes clearly go against the 500+ years of Western Global Hegemony and goads numerous people. For students of history like myself, what's occurring isn't a surprise thanks to the West's adoption of--or should I write forced indoctrination into--the Neoliberal political-economic philosophy, which is akin to that of Feudalism since it benefits the same class as that of the Feudal Era. China too was once Feudal and suffered a massive Civil War that destroyed much of its structure, a conflict known to the West as The Taiping Rebellion that lasted almost 14 years, from 1850-1864. One might say that was the first half of China's overall effort to overthrow Feudalism and Western Imperialism, as the second half began in 1927 and finally concluded in 1949. That amounts to a large % of years for a newbie nation like the USA; but for a nation like China inhabited by humans for over 1.3 million years and with 4,500 years of recorded history, it's really just another Dynastic Rollover--something inconceivable to non-Asians.Hoarsewhisperer , Jul 27 2020 23:00 utc | 75
In reality, China's a conservative nation, culture and society with a several thousand year ethos of Collectivism, although that allowed a significant divergence in social stratification due to the ruling Feudal ways. Those who have read The Good Earth have an excellent grasp on the nature of Chinese Feudalism, which was embodied by the Kuomintang or KMT--as with Feudal lords, KMT leaders were deemed "Gangsters" by US Generals and diplomats during and after WW2. General Marshall wrote in 1947 it was clear to him that the KMT would lose to the CPC, that there was no good reason to throw good money after bad, and it would be best for the USA and the West to accept the fact of a Communist China (all noted by Kolko in his Politics of War ). Contemporary China when compared to China as depicted in 1931 by Pearl Buck is one of the most amazing human achievements of all time, and the conservative Chinese government intends to keep it that way through a series of well thought-out plans. That's the reality. It can be accepted and worked with as numerous nations realize, or it be somehow seen as unacceptable and fought against in what will prove to be a losing effort since all China need do is parry the blows and reflect them back upon its opponent using skills it developed over several thousand years. It would be much easier to join China than fight.It's misleading to assess the National Military Capability of various countries in $US terms. The West's M-IC is privately owned and puts shareholder profit before all else. And the owners of the Western M-IC also own the politicians who facilitate and approve the rip-offs.VietnamVet , Jul 27 2020 23:40 utc | 83
China and Russia's M-IC are owned and controlled by The People via the government and can therefore get $2+ of value for every $1 invested. For example, one can buy some very nifty twin-engine bizjets for less than half the price USG pays for a flying Batmobile (F-35) - a glorified hot-rod with guns.Jackrabbit , Jul 28 2020 0:26 utc | 87
There is definitely a decline in the USA. Deaths of despair and from the coronavirus are too great to ignore anymore. 150,000 dead and counting are not nothing. The Western Empire has fallen. The U.S. federal government failed. The Imperialists are quarantined at home.
The question is if the 19th century North American Empire from Hawaii to Puerto Rico survives. The Elite have bet it all on a vaccine or patentable treatment to give the Pharmaceutical Industry billions of dollars. However, quick cheap paper monoclonal antigen tests would make testing at home before going to work or school practical.
This would end viral transmission and the pandemic. No drug jackpot for the 10%. Instead public health is ignored as Americans die. The silence is deafening. The protests in the Pacific Northwest are not about slavery. They are about the 90% of Americans being treated as disposable trash.Richard Steven Hack , Jul 28 2020 0:37 utc | 89
VietnamVet | Jul 27 2020 23:40 utc | 83150,000 dead and counting are not nothing. The Western Empire has fallen.
No offense VV but I can't help thinking that you (and maybe some others) are talking past the issue.
To be clear, the issue is this: Will the West's decline play a role in the US/Empire's ability and willingness to confront Russia-China? Or is the oft-heard refrain that US/Empire can not 'win' against China (implying that they shouldn't/won't bother trying!) because of its decline (usually attributed to 'late-state capitalism') just wishful thinking?
Virtually everyone here has agreed that the West - especially USA - hasn't fought the virus correctly and with vigor. And virtually everyone agrees that there has been a relative decline in USA/West and in some areas an absolute decline.
IMO what is ignored is that:
- from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -
In fact, deliberate mistakes and mounting only a token effort (as we've seen) is exactly what we should expect from a craven power-elite that want to further their interests;
- the overall decline, while troublesome - especially to the ordinary blokes who get the short end of that decline - is not yet significant enough to prevent USA/Empire from countering the Russia-China 'upstarts' aggressively.
I likened the hopefulness of the anti-Empire crowd about Western decline to their hopefulness they previously expressed regarding Turkey. "Erdogan is turning east!" proved to be wrong.
!!Richard Steven Hack , Jul 28 2020 1:12 utc | 92
Posted by: Andrei Martyanov | Jul 27 2020 19:01 utc | 14 Within last 10 years China built surface fleet which in terms of hulls (and "freshness") rivals that of the US. US economy would have it bottom falling off if it tried to accomplish a similar task.
Nice to see you here again. Yes, I mentioned the relative navy building in the previous open thread. China's navy will exceed US capability by 2050 and be on parity by 2030-2040 according to reports I've read. That's just ten years to twenty years from now.
Result: US gets kicked out of the South China Sea and has to share the Pacific, Indian Ocean (as will India with gnashing of teeth) and even the Med with China. China will undoubtedly project naval power all the way to the Med in support of BRI in the Middle East.jadan , Jul 28 2020 1:30 utc | 95
Posted by: Jackrabbit | Jul 27 2020 20:43 utc | 27 There is decline, and while it has been mostly relative it is also accelerating - but that hasn't significantly constrained USA/Empire's response to the upstarts.
I agree. US military power isn't going away in ten years or twenty. China may achieve parity at some point (and can do serious damage now). But that doesn't obviate the fact that, short of nuclear war, the US is still in a position to throw its weight around and will continue to do so until forced back by a (hopefully conventional) military defeat of serious proportions, i.e., not just "give up and go home". And economic woes won't change that as long as the taxpayer can be fleeced - and they will be, for at least a few more decades.Seer , Jul 28 2020 1:40 utc | 96
@ 62 A.L. "Would it be a surprise to you than there are many many protests in China at the grass root level everyday?"
There are indeed protests all the time, which is the fire under the local Party leaders that keeps them dancing. Usually the protests are against local corruption or mismanagement and are not serious. People can get what they want this way. Each year at the general Party gathering, however, special note is taken of "mass incidents", that is, protests on a larger scale, and overtly political events such as those in the Uighur province of Xinjiang and in Hong Kong. Any protest that challenges the control of the Party is not permitted. The current protests in the US could not happen in China because they challenge political orthodoxy. The Chinese don't just roll over on command for the CCP to scratch their bellies and the Party knows just how volatile the political situation could be if mishandled. China is developing into the ultimate surveillance state. There are lots of Chinese like that little guy that stood down the tank at Tienanmen in 1989. Eventually that guy is going to say: "There is some shit I will not eat!" The Party knows this.Cyril , Jul 28 2020 1:43 utc | 98
Several years ago (close to 10) I noted that the US would be bringing back US companies from China, that it would actually subsidize their relocation. It's only logical. I saw China as becoming hostile to US corporations: in light of how things are going today it's the US govt becoming hostile toward US companies in China. Make huge profits and then get free money to return back to the US: and be welcomed as victorious troops arriving back from some glorious war.
It's Musical Chairs. As the music plays more and more chairs are being removed. Capitalism has been the most efficient economic system in which to trigger an economic collapse. WTF did people think would happen with basing economic systems on the impossible, basing on perpetual growth on a finite planet. All of this was readily foreseeable using SIMPLE MATH.
Economies of scale in reverse...Daniel , Jul 28 2020 1:51 utc | 101
@jadan | Jul 27 2020 21:50 utc | 54
China is in deep trouble. The CCP's greatest challenge is simply to hold "it" together. The Party has to perform economic miracles or the country will collapse.
How do you square your dire prediction of China's collapse with the Edelman trust barometer of 2019 (warning: PDF file), where China scores 88 on the trust index and the US scores 60?O , Jul 28 2020 1:51 utc | 102
The COVID-19 pandemic revealed that all the "leading" western countries are unable to handle even a relatively moderate public health crisis. The neoliberal economic model considers any aspect of society that isn't generating a profit as ideologically unsound and targets these areas for "reform" (i.e. privatization).
Sometimes this is done outright, as when a public utility or service is sold to a private, for-profit operator (e.g. British Rail in the UK). But when the government thinks the public will resist and push back it is done by stealth, usually by starving the targeted service/organization of funds and then farming out parts of it to for-profit companies in the name of "efficiency", "innovation", "resilience" or some other neoliberal doublespeak concept (they all mean only one thing of course: PROFIT). This is currently happening to the US Postal Service.
Every public healthcare system in the so-called "advanced" nations encompassed by the EU/NATO and Five Spies has been underfunded and subjected to stealth privatization for decades. Furthermore, people in neoliberal societies exist to serve as fodder and raw material for "the economy" (i.e. the plutocrat or oligarch class) and there is no mechanism to deal with emergencies that can't be milked for a profit. Hence, the half arsed, incompetent, making-it up-as-they-go-along response to COVID-19 that simply writes off older and sick people as expendable.
Neoliberalism began as a US/UK project, that's why poverty, crime, inadequate health care and social services etc. and governmental and societal dysfunction generally is more advanced there than in, say, Canada and Germany.
So, yes, the US is in decline, maybe even collapsing, but that doesn't mean the imperial lackey countries are immune to the forces tearing apart the United States. They are just proceeding down that road at a slower pace. If the US falls, the west falls...globalization takes no prisoners.
I live in Canada where sometimes people get a bit smug about how great everything is here compared to the US. In British Columbia, for example, opiate overdose deaths are at a record high and have killed many many more people than COVID-19 since the pandemic began. Housing in cities like Vancouver is increasingly unaffordable, there aren't enough jobs that pay a living wage, permanent homeless camps exist in city parks, there are entire blocks where people who live in their vehicles park etc.etc.
The reality is that it's the west that is in decline, not only the United States.Schmoe , Jul 28 2020 2:04 utc | 105
China is developing into the ultimate surveillance state.
Posted by: jadan | Jul 28 2020 1:30 utc | 95
But don't you see, dear jadan, it is for the good of the people, if only the rest of the world could see the benevolence of Big Brother we would all be much happier at least that is what the thought police has told me to think. One government, one heart, one mind. Long Live the PRC revolution./sPeter AU1 , Jul 28 2020 2:54 utc | 108
Amidst all of the nonsense in the discussion section of the following link, I believe there are some germane comments from individuals that work in the semiconductor space that touch on some of the challenges China's chip industry faces. link
This article notes the substantial challenges TSMC and Samsung would face it they tried to build a cutting edge chip facility without US cooperation: can-tsmc-and-samsung-build-a-production-line-for-huawei-without-us-equipment
I hope their hiring of 3,000 experienced chip engineers accelerates their learning curve. Developing a chip industry on a moment's notice, let alone competing with Samsung and TSMC, is no small chore.
One item not mentioned in the above article is whether China could build many consumer components based on domestic 14nm (or larger) technology. Given China used to spend more importing chips than oil, I assume that even less advanced chips used for TVs, etc. as opposed to cellphones, would be very helpful for China's consumer electronics manufacturing.
They are also making some strides in the flash memory and CPU space, but production quantities are still very low.ptb , Jul 28 2020 2:55 utc | 109
Lose lose China loses less?
Health, education, infrastructure, research and development. The backbone of prosperity. These will all continue no matter trade war or cold war but barring hot war. There must be a doubling time for this - something like an R0. Cold war and sanctions will only serve to increase R&D
US mistakes, hubris ect move in the opposite direction, mistakes multiplying mistakes.Peter AU1 , Jul 28 2020 3:20 utc | 113
thanks, interesting. Here is a complementary tho less detailed article on some of the same topics I ran across recently: China Speeds Up Advanced Chip Development [semiconductorengineering.com]
One important point, clearly visible in the tables in the seekingalpha article linked by Schmoe, is that the ultra-small 14nm/7nm stuff is for specialized (but strategically important) applications. Most consumer electronics, industry, and everything else is 40-60nm and up, although of course smaller has benefits to older applications in improve power (i.e. mobile applications and servers) and cost (higher density/wafer)
gepay , Jul 28 2020 3:46 utc | 114
US as an one excuse for its current hostilities against China is 'intellectual property' theft. Makes me think of ninja Chinese sneaking around removing peoples brains.
But back to semiconductors. One of China's biggest imports is chips, mostly made by machines using US tech. Many industries are highly specialized and it often makes sense from small community level to national and global level to by a product from those that specialist in that product.
China has been content to buy chips, but that will now change due to necessity. Yankistan can now expect to get its brains hacked, but I am also reminded of the Scientists in the Manhattan Project being the ones to pass on much information to the Soviet Union.
Yankistan will be leaking like a sieve. I guess that's why both oz and the poms are beefing up their secret police laws. Wont be long before we are getting shot trying to run through checkpoint charlie to the free east.John A Lee , Jul 28 2020 4:04 utc | 115
It is clear that the US is in decline. It is clear the US military is bloated and overpriced but it can still turn most countries into rubble (even without using nuclear weapons) and has done a few recently. Mostly the US uses its reserve currency status and control of financial networks to punish countries that do not go along with its program. Can you say sanctions. but as Hemingway said about bankruptcy - it happens slowly and then all at once - is probably how it will continue to go. It is even losing its technological advantage. Boeing used to be the leader and made reliable planes. Now they sometimes fall out of the air. Things like high speed railways used to be the kind of thing the US did well. Now California can't get one built. China has built thousands of miles of them. Russia built a 19 kilometer bridge to Crimea in 2 years after 2 years of planning. It appears to be competently built on time and on budget. Do you really think this could happen in the USA now? In the 70s the US was the leader in environmental actions. I wonder if the present day Congress could even pass bills comparable to the Clean Air ACT or the Clean water bill. US national politics are a mean joke. Our choice this year for President - two 70+ old white men with mental issues. Our health system is overpriced. Medical bills are one of the main reasons for personal bankruptcies. As others mentioned the US life expectancy is falling. As Dmitri Orlov who watched the Soviet Empire fail said - Empire hollowed out the Soviet Union till it failed, I see it doing the same thing in the US.Peter AU1 , Jul 28 2020 4:31 utc | 116
The current 'adjustment' in the USD & living standards is just what the doctor ordered to allow elites to roll out "tech wave 2" - there is precious little gain to be had from further staffing & wages cuts to the average shit-kicker, so now the bourgeoisie, medicos, architects, academics, writers plus all the rest of the tertiary educated types who blew hundreds of thousands on an education guaranteed to keep them employed, are about to be tossed on the scrap heap.
We already know from previous stunts such as 911 & the 2008 'global financial meltdown' that those most disadvantaged by this entirely predictable destruction of lives will be easily diverted into time-wasting and pointless arguments about the real cause of the mess.
This will allow the elites to use that diversion to funnel all federal funds into subsidising the capital costs of the retooling, as both parties have begun to with the despicable CARES Act, supported by the mad christian right in the senate, as well as the so-called socialists in the Congress squad.
All the Cares Act does is inject capital into big corporations, boosting their stock price & leaving citizens to lose most of their unemployment benefit. Citizens get evicted from their homes. This time it will be tenants as well as home owners.
Both of those factions of elite enablers are going to create a great deal of noise and crass finger pointing. The squad will jump up and down about this being a deliberate attack on citizens by the elite while senate fundies will claim that this 'retooling' is the result of unreasonable pay & working conditions demands by the communist unions.
What should be a universal expression of disgust will be reduced to just another culture war.
Neither will ever admit that it is far too late to be worrying about cause, it is time to concern themselves with effect, because to do so would create focus back on where the money was going at time when it is important to be saying "everyone is hurting, including the elites". Fools.
Eventually when the deed has been done assorted scummy senators & creepy congress people will announce "It is time to move on" That will be a signal that treasury tanks are dry, the elites have gotten everything which wasn't nailed down so now the citizens can roll clawing & scratching in the mud.
I have no doubt that will be the direction of discussion here as well, it is much easier to sit at a keyboard digging out obscure 'facts' that 'prove' one point of view or another, than it is to leave the keyboard behind and put work into resisting the elites and in doing so forcing a change that is more citizen friendly.Antonym , Jul 28 2020 5:29 utc | 119
With the return of Russia to the geo-political arena, US can no longer destroy counties at will through conventional weapons nor color revolutions and AQ freedom fighters.
Trump decided to go nuclear, so Russia placed its nuclear umbrella over it allies.
US can no longer destroy countries at will. It can attack a country and risk ensuring its own destruction.
So back to hybrid war and proxie war ... but now the field is narrowed down to five-eyes and in the case of China - India.
So to keep Russia out, yankistan has to rely on conventional war and hybrid war, though we are looking at a country where the lunatics are in charge of the asylum so anything could happen.aquadraht , Jul 28 2020 5:36 utc | 121
5G, who wants this?
The MNCs producing it, the MSS, NSA and GCHQ, the IoT idiots and all authoritarians on the globe. Consumers are happy with 3G: many don't even have 4G reception - give that to them.
With IoT more unemployment, more electricity and Internet dependency, more chance of hacks or natural disruptions (solar flares), more 1984.
More is not always better at all.Antonym , Jul 28 2020 5:40 utc | 123
Just read an "opinion piece" demonstrated how remote from reality are not only people like Pompeo from a"liberal" commentator:
https://www.msn.com/en-us/news/world/pompeos-surreal-speech-on-china/ar-BB17bk0tThe Chinese Communist Party wants a tributary international system where smaller countries are deferential to larger powers, instead of a rules-based international order where small countries enjoy equal rights.
HAHAHA!William Gruff , Jul 28 2020 16:19 utc | 160
The US/UK declining won't bother most billionaires with those passports: they just buy any other. Stuck are the millions of others.
Equally "China" ascending brings joy for all billionaires around the globe holding stock depending on Chinese near monopolies, including Anglo-es.
Some middle class Chinese are beginning to see that dying "rich" is is very limited goal, as zero can be taken to the Here After and the price for this Now is too high. Money is not everything. Welcome to this select club, Chinese brothers and sisters. Sure, a bit is good to live but amassing is a waste of precious time and attention.juliania , Jul 28 2020 16:23 utc | 161
The US lacks the capacity to erect an "economic wall" that can stop China's development. Trump's "trade war" was an attempt to do just that, and America got steamrolled.
To be sure, the US can attempt even more irrational and desperate acts such as trying to seize assets owned by Chinese people and organizations in the US, but that would be America shooting itself in the head rather than just the foot.
The US simply does not posses the ability to "take the wind out of China's sails" . That is not something that is within America's power to accomplish without going kinetic by, for instance, trying to enforce a naval blockade of China's maritime transport routes. At this point there are no economic measures America can take that will not do vastly more damage to America than to China. Both trade war and bio attack were the best options America had, and America has suffered grievously from those efforts with relatively minimal impact on China. China's economy remains fundamentally strong while America's economy is devastated.
As for disrupting China's international development efforts, America has been trying its hardest for years now with the only impact being minor delays in China's plans. The only way to truly disrupt China's international development efforts would be to offer a better deal, but America no longer has anything to offer that is better. The only option left to America to delay the BRI for longer would be a kinetic one, and the door is closing on that.foolisholdman , Jul 28 2020 16:38 utc | 165
jack rabbit @ 81,
Your item 1. reads:from the perspective of the US 'Deep State' or Western power-elite the failure to fight the virus is a net positive if the repercussions are blamed on China (in addition to other 'positives' from their perspective: saving on cost of care to elderly, boosting Big Pharma profits, etc.) -
It will not be possible to blame China, simply because no one believes the US press any longer, and there is no convincing the woman or man on the street that US handling of the virus has been in any way competent. We may not understand its virulence, and we perhaps don't understand yet how to cope with it, but the example of China has been clear from the earliest moments, and that speaks louder than any false rhetoric can claim.
We know what we have been experiencing in comparison with others who acted with celerity, and that basically was what was needed. The US chose to go it alone, at its peril. It stuck by a set of rules it had made for itself in these last years - rules which have not benefited the people at large. It all comes down to that.uncle tungsten , Jul 29 2020 2:13 utc | 197
O | Jul 27 2020 21:33 utc | 49https://en.wikipedia.org/wiki/2010_Chinese_labour_unrest
Care to comment on that.
I would not quote a Zionist dominated source like Wikipedia on anything politically sensitive and the article you refer to is in any case 10 years out of date. However if you read it it refers to two foreign-owned firms, and it mentions that there are (In 2010)plans to double wages in the next ten years which has happened. The article also states"Strikes are not new in China. Chinese authorities have long tolerated limited, local protests by workers unhappy over wages or other issues. The Pearl River Delta alone has up to 10,000 labor disputes each year. In the spring of 2008, a local union official described strikes as "as natural as arguments between a husband and wife". The Chinese government sought balance on the issue; while it has recently repeated calls for increased domestic consumption through wage increases and regulations, it is also aware that labour unrest could cause political instability.Which indicates to me that the suicides alerted the government to the fact that these firms were making the lives of their workers miserable and took steps to improve the control of them. They obviously realized that the Union officials had been bought by the management. I wonder how the British government or the USG would have reacted? What I am certain about is that the MSM would have been much less enthusiastic about reporting it.
In response to the string of employee suicides at Foxconn, Guangdong CPC chief Wang Yang called on companies to improve their treatment of workers. Wang said that "economic growth should be people-oriented". As the strikes intensified, Wang went further by calling for more effective negotiations mechanisms, particularly the reform of existing trade unions. At the same time, authorities began shutting down some websites reporting on the labour incidents, and have restricted reporting, particularly on strikes occurring at domestic-owned factories. Guangdong province also announced plans to "professionalize union staff" by taking union representatives off of company payroll to ensure their independence from management influence.Antonym , Jul 29 2020 5:07 utc | 198
karlof1 #86IMO, taking a good look at Brazil's situation provides close to a mirror image for those within the Outlaw US Empire having trouble seeing clearly. Too often we forget to look South at the great sewer and its misery US Imperialism's created. It may be getting defeated in Eurasia, but it's winning in Latin America.
That sewer of misery was running full flush during Susan Rice's rise through the ranks.
National Security Adviser to Obummer 2013 - 2017,
US Ambassador to the UN 2009 - 2013
Do read the rest:
And well beyond South America.
Now she is close to seizing the prize of VP to Biden. She is a iron war horse of formidable capacity and mendacity given her past roles. She has few redeeming features. She will conform exactly to the dictats of the permanent state and she will easily step right over Joe Biden as he either falls or is taken down at the most opportune time.
What drole sense of humour thought of this - the hapless Trump squeezed between two black American presidents. Seems like something the Clintons dreamed up.kiwiklown , Jul 29 2020 5:39 utc | 200
David Dayen's New Book Exposes the Dirty Hands of Wall Street Driving Monopoly Power in U.S. https://wallstreetonparade.com/2020/07/david-dayens-new-book-exposes-the-dirty-hands-of-wall-street-driving-monopoly-power-in-u-s/
New York Times Rewrites the Timeline of the Fed's Wall Street Bailouts, Giving Banks a Free Pass
Posted by: karlof1 | Jul 28 2020 22:30 utc | 191
"It was asked upthread if the US citizenry would trade its no-longer existing Superpower status for decent living standards.... There're only two forces keeping the American people from attaining freedom from the above fundamental fear and having lifelong security: The Duopoly and its Donor Class, the Rentier Class of Feudalistic Parasites that are the enemy of virtually all humanity."
The US citizenry will choose decent living standards in a heartbeat, but the present arrangement for eating off the labour of deplorables is just too profitable for the Duopoly & Donor Class to be permitted to change for a couple decades more.
Perhaps they will move on when there is no more meat on the American corpse, or when they have built up a sufficiently large group of useful idiots in China to begin eating off the backs of deplorables with Chinese characteristics.
Anything is possible, with the right amount of moolah, even overcoming Confucian morals. Joshua Wong comes to mind, who not only does idiotic, but actually looks idiotic.
Jul 29, 2020 | www.moonofalabama.org
ptb , Jul 27 2020 18:26 utc | 3
On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.
Quibble on the significance of US dollar; from the cited article "Roach is calling for the dollar to soon decline 35% against its major rivals". That would take the EURUSD back to its 2008 high. Not something that changes the balance of power.
But I think the rest of the story is true.
Certainly in the US we have everything we need to reverse our decline, build a better life for everyone living here, and stop trying to "compete" by sabotaging everyone else. Sadly zero sign of this being a priority on either side of the mainstream political spectrum.
O , Jul 27 2020 19:25 utc | 20vk , Jul 27 2020 19:35 utc | 21
Are We Heading for a Historic Economic Collapse? Why the U.S. GDP Could Fall by 40%.
"The most horrific number I've seen is J.P. Morgan economists' estimate that U.S. gross domestic product is collapsing at a 40% annual rate, a revision from their previous calculation of 25%. It has been said that economists use decimal points in their forecasts to show they have a sense of humor. These numbers are nothing to joke about."
If JP Morgan, Gold Sacks and other major asset managers are betting on this 'bear' you can be damn certain that they are doing everything in their power to make it a reality. They will shakedown every gutless, spineless politician/health official/scientist they can find to ensure their profits keep rolling in.O , Jul 27 2020 19:56 utc | 22
Yes, the conclusion we must take from this crisis is that the USA (and most of the West, if not all the West) is now declining in absolute terms, not only in relative ones. That's what makes this 2020 crisis special for the time period analyzed.
Relative decline is nothing special for the Americans. During the High Cold War itself (1945-1969), the USA itself declined relatively to Japan, which simply grew even more. You can even talk about a relative decline in relation to Germany during the same period, at least in some areas. The difference lied in the fact that Germany and Japan were minuscule countries under full military control and were fellow capitalist nations. When necessity came, the USA simply ordered both countries to value their currencies in relation to the USD and decades of geopolitical gain evaporated in five years. This is not the case with China.
But what fascinates me more is the flux of History. The USSR was better than China in almost every single relevant aspect in the 1950s-1960s, but it lost the Cold War because it had the bad luck to face the capitalist powers at their historical best. China, being much inferior, is being able to gain terrain over the capitalist powers for more than 40 years and counting for the simple fact they were able to survive and live to see capitalism in its decline.
That's why Putin correctly stated the end of the USSR was the biggest catastrophe of the 20th Century. If it could survive for mere 17 years more, it would've lived to face capitalism on all fours, after the 2008 meltdown, and get a second chance.Digital Spartacus , Jul 27 2020 20:03 utc | 23
China, being much inferior, is being able to gain terrain over the capitalist powers for more than 40 years and counting for the simple fact they were able to survive and live to see capitalism in its decline.
Posted by: vk | Jul 27 2020 19:35 utc | 21
I would say it was that China began opening itself up more to capitalist oligarchs and intergrating itself into the world economy beginning with the Nixon years. In particular the western oligarchs shipping their manufacturing base to china. That cheap Chinese labor was too hard to pass up.
The engine of capitalism is cheap labor, slave labor if possible.
Now China has a decent size consumerist/middle class which gives it the leverage along with the manufacturing. It not magic
sad canuck , Jul 27 2020 20:29 utc | 24
Andrei @ 14
Exactly so. Anyone can massage those data points to say anything they want. And that is precisely what's being done by the USG. Since admitting that they are in decline is a non starter for them, these types of numbers are always trotted out. That isn't to say though, that everybody isn't massaging their numbers as well to cast them in a shining light for whomever the audience for which it is intended.Sakineh Bagoom , Jul 27 2020 20:41 utc | 25
I cannot take seriously any analysis that suggests another crippled fiat currency will somehow supplant the USD. The Euro? That is laughable. Cleanest dirty shirt analogy still holds true. Look at Japan over the past 30 years of debt accumulation to see how long this can go on. The yuan is no better given China's own debt frenzy since 2008. The only economy that is structured to weather the next 20 years of decline is Russia with abundant land, ample hydrocarbons, a functioning domestic industrial/agricultural base, effective military deterrence, little debt and ample gold reserves. Putin is is far from perfect but he's done an incredible job preparing his country for what comes next.
All fiat is set for a dramatic decline against real assets. You need only look at all fiat currencies dropping against the price of gold which is a surrogate for all hard asset prices. Dirty fiat shirts one and all.
You can also just search for the Kitco Gold-Currency Price page if you do not wish to click on the shortened link (but I confirmed destination on checkshorturl).
It's no longer the grand chess board in Eurasia. It is now a whack-a-mole policy.
The hydra's head (BRI) that is flowing out of the dragon will be popping up here and there. Wherever it does, it has to be whacked like a mole. There is so much whacking (no pun intended) that can be done before the empire exhausts itself. In a logistics game, the empire will always lose, to the local actor with enough resources to devour it.
We've also seen that other local actors /empire lackeys (I'm looking at you India) can't be much help stopping the hydra either.
Jul 28, 2020 | www.moonofalabama.org
O , Jul 27 2020 18:51 utc | 10On Roach's comments, when a Yale University senior fellow and former Morgan Stanley Asia chairman tells you that the USD is about to drop precipitously, you can bet he's working behind the scenes to make that exact event happen. Of course it's logical. He's part of the creation of the chain of logic.
Posted by: Anonymous | Jul 27 2020 18:48 utc | 9
Bingo! Engineered collapse under the guise of a fake pandemic.
karlof1 , Jul 27 2020 18:54 utc | 11Nice review. Recall Global Times reported China's GDP rose 3.2% in 2Q versus a 5-9% drop for Outlaw US Empire. Also recall the need to deal with Real GDP, not the falsified numbers provided by USG that count negatives as positives. The following are Shadowstats "Economic Headlines" :Andrei Martyanov , Jul 27 2020 19:01 utc | 14
"Second-quarter 2020 Real New Orders for Durable Goods plunged an annualized 55% (-55%), down 22% (-22%) year-to-year / June Cass Freight Index® continued bottom-bouncing, running counter to the 'recovered' Retail Sales / June Building Permits and Housing Starts saw some rebound in the month having collapsed respectively at annualized rates of 56% (-56%) and 76% (-76%) in the quarter / Not-credible inflation-adjusted headline June Retail Sales recovered pre-Pandemic levels in a stronger than expected real 6.9% monthly gain (nominal sales gain of 7.5% held just shy of recovery) / Contracting for the third consecutive quarter, second-quarter real Retail Sales fell at a 24.2% (-24.2%) annualized pace / On top of downside revisions, June Industrial Production gained 5.4% in the month, fell 10.8% (-10.8%) year-to-year, with Second-Quarter 2020 activity collapsing at a 42.6% (-42.6%) annualized pace, following a first quarter drop of 6.8% (-6.8%)."
From the sidebar comment of 23 July:
"Reporting of Deepest-Ever GDP Decline Looms on July 30th • Annualized 49.1% (-49.1%) Quarterly Plunge in Household Survey Employed Was Consistent With a Real Second-Quarter 2020 GDP Annualized Collapse of 50% (-50%) and Year-to-Year Drop of 16.1% (-16.1%) • Potential Third-Quarter 2020 GDP Annualized 20% Rebound Still Would Be Down 12.7% (-12.7%) Year-to-Year, Rivaling Great Depression Depths and Post-World War II Readjustment."
Although it's yet to be updated for 2Q figures, here's the GDP chart , which in Real Terms is worse than the blue line depicts
So, contrary to JR's assertions, the Outlaw US Empire is in economic freefall. And unless the eviction moratorium is extended nationally, a massive crisis awaits as noted by the article I linked to in the Week in Review thread. Add the fact that most of China's ASEAN trade partners have recovered from COVID while BRI Eurasian projects continue, China's economy will continue to grow, which is where its focus is at as reiterated almost daily by China's media and reported here.
As for the US Dollar, this William Pesek item reviews the many times it was predicted to drown but didn't, although this time may be different:
"More recently, Stephen Roach of Yale University has hit the speaking circuit to argue that the 'TINA defense' – 'there is no alternative' – is no longer operative.
"'If TINA is the dollar's only hope, look out below,' Roach wrote in a recent Bloomberg column . 'America's saving and current-account problems are about to come into play with a vengeance. And the rest of the world is starting to look less bad.
"'Yes, a weaker dollar would boost US competitiveness, but only for a while. Notwithstanding the hubris of American exceptionalism, no leading nation has ever devalued its way to sustained prosperity.""
There're others cited by Pesek who provide decent reasoning for downgrading the dollar which he balances against past history, thus leading to this conclusion:
"Yet the risk of a reckoning is rising along with awareness of how the Trump era is exacerbating all of America's imbalances, and creating new ones few could have predicted."
What's certain--a great many US citizens are going to experience incredible financial pain for a considerable length of time, which may or may not alter the basic political situation within the Outlaw US Empire.2019 China 1,27 times bigger in GDP/PPP
Absolutely false numbers since actual Chinese economy is much larger than American one. With or w/o PPP adjustments. I would go out on a limb here and state that at this stage in 2020 real size of Chinese economy is about 2.5-3 times larger than that of the US. In other words--it already dwarfs US economy.Military budget (before Covid estimates, Trump budget) 2019 3,2 % of GDP - 2030 2,5 % of GDP (Could drop to 2,3 % of GDP due to Covid)
These are also meaningless numbers since they do not account for actual military capability, especially when based on a fraudulent US GDP numbers. Within last 10 years China built surface fleet which in terms of hulls (and "freshness") rivals that of the US. US economy would have it bottom falling off if it tried to accomplish a similar task.
Jul 28, 2020 | crookedtimber.org
Amid all the strange, alarming and exciting things that have happened lately, the fact that real long-term (30-year) interest rates have fallen below zero has been largely overlooked. Yet this is the end of capitalism, at least as it has traditionally been understood. Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk.
If there is no real return to capital, then then there is no capitalism. In case it isn't obvious, I'll make the point in subsequent posts that there is no reason to expect the system that replaces capitalism (I'll call it plutocracy for the moment) to be an improvement.
But first let's look at the real 30-year bond rate. The US Treasury is currently offering an inflation-protected 30 year bond at a rate of -0.3 per cent. That is, if you buy the bond at say, age 35, you can get your money back, less a 10 per cent reduction in real value, when you are 65. This rate has fallen from 2 per cent, when the bond was introduced in 2010, and started declining sharply in late 2018, before the pandemic, and while the Federal funds rate was rising.
In thinking about the future of the economic system, interest rates on 30-year bonds are much more significant than the 'cash' rates set by central banks, such as the Federal Funds rate, which have been at or near zero ever since the GFC, or the short-term market rates they influence. These rates aren't critical in evaluating long-term investments.
The central idea of capitalism is, as the name implies, that of capital. Capital is accumulated through saving, then invested in machines, buildings and other capital assets to be used by workers in producing goods and services. Part of the value of those goods and services is paid out as wages, and the rest is returned to capital, as interest on loans and bonds or as profits for shareholders. Some of the return to capital is saved and reinvested, allowing growth to continue indefinitely. Workers, on this account, can become capitalists too, by saving and investing some of their wages. At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement.
But what happens if there is no return to capital? The collapse of interest rates on government means that's already true for anyone who wants a secure investment. And the situation isn't any different for the two remaining AAA-rated corporate borrowers, Microsoft and Johnson and Johnson. Microsoft is currently offering a rate of 2.5 per cent on 30-year bonds, and has exchanged lots of outstanding debt for new bonds at that rate (paying a 40 per cent premium for higher-interest bonds). That's a real return of 0.5 per cent if you assume that the Fed sticks to its current 2 per cent target and hits it on average. (There's a lot more room for inflation to surprise on the upside, in my view). If you allow a 15 per cent risk that Microsoft will go bankrupt some time before 2050, the expected real return falls to zero.
To complete the picture of returns to capital, we need to look at stock markets and corporate profits. That'll be the subject of another post.
John Quiggin 07.26.20 at 3:32 am (no link)John Quiggin 07.26.20 at 3:33 am ( 2 )
It's tempting to link all of this to the long-term historical decline in interest rates that led 19th century economists, most notably Marx, to talk about the declining rate of profit. But that decline came to an end in late C19. Real interest rates bounced about in the 20th century with no obvious trend. Much of the earlier decline may be have been due to a reduction in default risk as capitalism became established, but that's just speculation on my part.bruce wilder 07.26.20 at 4:20 am ( 3 )
Also, I plan to talk more about Keynes' thoughts on the euthanasia of the rentier, which seems to be happening, although without much in the way of anaesthesia.Hidari 07.26.20 at 9:10 am (no link)
There is capital and then there is capital -- calling different things by the same name to avoid (!?) confusion.
The process of capital investment -- using money to mobilize resources to strategically alter the costs of production well in advance of sale or consumption -- that process has always depended directly on the ability to assemble and exercise essentially political power. There is nothing pure about it, and nothing at all, should you exclude any return to monopoly power, corporate control, managerial skills or compensation for risk. The most substantial returns from capital investment are only available to the fount of political power, the state. The debility or senility of the state as provider of public goods might have something to do with the inability to earn a return on investment.
Money, qua money -- "wealth" of the purely nominal sort unrelated to mobilizing resources to productive purpose -- has only one purpose: insurance. "Insurance" in this very broad sense can include cruel uses of money, facilitated by deflation: usury, debt peonage -- even the words are cruel.
Central banks have been trained to flood the markets with "liquidity" to stave off the day of reckoning for fraud and foolishness. It is as if the want to prove every bad thing the Austrians ever said about them.
The true heart of capitalism is "other people's money". Borrowing money to lend money. For this purpose, there is no one interest rate. There is borrowing at 0% to lend at 27% or 400% or whatever horrific rate can be baked into a private equity deal or some crazy scheme of insurance bound to drive up the cost of whatever services the purchase of which they finance parasitically.Paul 07.26.20 at 9:34 am ( 7 )
If anything, this understates the matter, and understates what extraordinarily unusual times we live in.
According to this site (and yes, it looks a bit dodgy, and no I have no idea who these people are, so caveat lector) interest rates are the lowest, worldwide, generally speaking, than they have been in 670 years.
This other dubious site makes the even more dubious claim (based on rather questionable evidence), that current world wide interest rates are the lowest they have ever been .
The first site suggests some opinions as to why this might be the case (assuming it is the case), which I lightheartedly put forward as semi-serious 'solution' to this mystery.
1: Productivity Growth. As everyone has noticed, in the 'advanced' capitalist states, productivity is dropping, as is 'inventiveness' broadly defined (this can be measured by patents). Have you all noticed that when you were growing up, there was a life changing technology development almost ever year or so, and since the development of the smartphone, it's all basically stopped? (Electrification of existing commodities, e.g. cars, don't count, and nor do things that don't exist and which will never exist, like genuinely self-driving cars or moonbases/trips to Mars). CF John Horgan's The End of Science, and the concept of 'low hanging fruit' which all seem to have been pretty much picked by now. No new products means no new firms to sell them, means less tax money, means less growth.
2: Demographics. Some 'optimists' have predicted that population will begin to drop this century. Even assuming they are correct, which is dubious, have you ever considered what that means? Old people are more conservative than young people, less productive, more sick, need more care. Ageing societies are not politically liberal vibrant societies. What we are likely to have is the worst of both worlds, in which population continues to increase for the next few decades in the Global South, increasingly ravaged by climate change, and drops in the Global North, meaning more conservatism, more Trumps, more of a 'gerontocracy', and of course whipping up hostility to immigrants facing their burning countries might keep them in power.
3: Economic Growth. Capitalism needs new markets, and now, as Branko Milanovic has pointed out in 'Capitalism, Alone', there are no new markets. Everywhere is capitalist so there are now no mechanisms available to 'pump prime' growth. There's no new source of cheap labour, no new source of new consumers (China previously supplied that, keeping the global economy booming in the 1990s and until 2008 but that effect seems to be failing).
Also, of course, climate change, the 'death of birth' the ongoing ecopalypse etc.
So, by the mid to late 21st century (science fiction, prediction alert!), negative interest rates might be the norm. Indeed, this has already begun in Japan, which in many ways shows the way ahead to our future: an ageing, conservative, sick population, in a low growth country, where there is very little political or cultural change for decades, and where the major political 'debates' are how best to keep out foreigners.
As John will presumably go onto argue, this will more strongly resemble societies from the ancient world more than post-Renaissance capitalist societies, with gigantic inequality, little scientific or economic growth (or change), huge swathes of the population kept controlled and constrained via debt peonage (a sort of modern feudalism), increasingly hollowed out and pointless 'democratic' polities, and real power remaining with a de facto aristocratic class who made their money by inheriting it and kept it not by building things and making them, but by tax dodging and other 'financial' tricks, in a mediatised world that spends billions persuading the populace that none of this is happening (this is essentially the story of Trump).
So, lots to look forward to!reason 07.26.20 at 9:49 am ( 8 )
It seems to me that you are talking from the perspective of the financier, or saver, who buys bonds and receives little, no, or negative return. But the capitalist is a borrower, not a saver; a seller of bonds, not a buyer of bonds. She borrows money in order to make investments in productive, as opposed to financial, capital.
So low interest rates suit the capitalist just fine. What can be a problem for the capitalist is a low return on investment. Low growth – which we also have in the rich economies – is therefore a problem for capitalism because it tends to imply a low average return on investment. But in a world of zero interest rates, of course, you only need a minimal return on your investment in order to make it profitable. So capitalists and capitalism are still doing fine.
Put another way: when talking about 'the return on capital', at a minimum we have to distinguish between the return on financial capital and the return on investment.
Final note: as you know, Larry Summers and co-authors have been writing about the secular decline in interest rates and its causes for a few years now, as part of the discussion of secular stagnation.reason 07.26.20 at 9:52 am ( 9 )
Will somebody finally admit that the Washington consensus (that a policy mix consisting of tight fiscal policy and loose monetary policy) has been failure, on it's own terms. All it has done has inflated asset prices to such an extent that nobody trusts their value (hence negative expected return).
Secularly increasing the level of private indebtedness doesn't make the system more resiliant. When you express it in those terms it sounds ridiculous, and yet that is what has been official policy for thirty years.
We need to be aiming ot increase government debt at a rate sufficient to maintain the money supply and should be aiming to gradually reduce the level of private indebtedness.reason 07.26.20 at 10:03 am ( 10 )
Small correction – to maintain the money supply doesn't mean to keep it constant, it should be rising in parallel with desired nominal GDP.Tim Worstall 07.26.20 at 10:32 am (no link)
I need to make my macro policy ideas more complete I think before people misunderstand what I mean.
1. to run moderate deficits and securarly monetarise at least a significant fraction of them
2. actively redistribute income
3. remove the tax incentives encouraging debt over equity
4. discourage speculative lending on a no redemtion basis (especially lending to risky debters on the basis of expected asset inflation).BenK 07.26.20 at 11:34 am ( 12 )
I think it's Tyler who says never reason from a price change?
"But first let's look at the real 30-year bond rate. The US Treasury is currently offering an inflation-protected 30 year bond at a rate of -0.3 per cent."
How about a minor corollary, be careful of reasoning from a manipulated price?
What is the purpose of QE? To lower the risk free interest rate. We've a lot of QE at present – some $7 trillion on the Fed balance sheet, something like that? That risk free rate is definitely manipulated.
We can, of course, assume that the manipulation is going to last forever. But that would be a strong assumption. If we're trying to think about the underlying structure of the economy, rather than the current surface state of it, perhaps we might want to consider what the risk free interest rate would be without the manipulation. What would the 30 year inflation protected bond be paying in the absence of the $7 trillion of QE?
At a guess I'd say rather more than it currently is. Which is the same statement as QE works at its declared aim. It being that absenceofQE interest rate that should inform this speculation about capitalism.
Maybe.steven t johnson 07.26.20 at 4:26 pm (no link)
Capitalism, briefly described, is the 'the rewards of saving, organized' or 'the principle of indefinitely deferred consumption.' Everything else is the results of that. If you repudiate that completely – then what are the implications? In the extreme, everyone must consume everything immediately. One major motivation for this is that if nothing lasts or is at high risk of being confiscated – in infinite regress.MisterMr 07.26.20 at 5:43 pm ( 15 )
As is so usual, there is a handy coincidence: https://thenextrecession.wordpress.com/2020/07/25/a-world-rate-of-profit-a-new-approach/
"The central idea of capitalism is, as the name implies, that of capital. Capital is accumulated through saving, then invested in machines, buildings and other capital assets to be used by workers in producing goods and services. Part of the value of those goods and services is paid out as wages, and the rest is returned to capital, as interest on loans and bonds or as profits for shareholders. Some of the return to capital is saved and reinvested, allowing growth to continue indefinitely. Workers, on this account, can become capitalists too, by saving and investing some of their wages. At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement."
Sentence by sentence
" central idea " is not capital, I think, but capital markets. Perhaps a subtle difference, but important nonetheless. Capital in this sense was held by Roman bankers I think.
" capital is accumulated through saving " Historically capital was accumulated by robbery, taxation, expropriation of church lands, state efforts to create currency -- accumulate gold -- and a national market. Currently, capital is largely credit, from central banks, ordinary banks and shadow banking institutions too numerous to name.
" invested in machines, buildings and other capital assets " I do not think a medieval lord building a water mill was doing capitalism nor a central bank isn't. I don't think a peasant in Tang China was doing capitalism nor do I think a George Washington buying property claims on the frontier wasn't.
" Part of the value of those goods and services is paid out as wages " The labor is borrowed first, then paid later. Currently that's usually two weeks later, but it has been quarterly or even annually if I remember correctly.
" the rest is returned to capital, as interest on loans and bonds or as profits for shareholders." Interest long predated capitalism so it's not even clear how this relates. But if it does, interest historically was a kind of guaranteed profit, where risk was annulled by a property claim in default of re-payment. But if memory serves, there were capitalist enterprises predating a shares market, called partnerships, where ownership of the enterprise and the ongoing profits may be conceptually distinct but weren't in practice.
"Some of the return to capital is saved and reinvested " Credit. Also, the difference between a peasant saving and buying the neighbors' land when they fall on hard times is different from a Rockefeller buying oil companies, much less a mutual fund buying stocks.
" allowing growth to continue indefinitely." In a fully developed capitalist economy, growth is never indefinite, but always goes in cycles. If physical plant was a destructible as money, stocks, bonds, etc., humanity might be back in caves?
"Workers, on this account, can become capitalists too, by saving and investing some of their wages." A practical definition of capitalist would be someone who someone who invests, in a factory or a hedge fund, to make a profit. There is a difference between a worker who buys a house to live in and a capitalist who buys a house to rent out.
"At a minimum, they should be able to save enough, while working, to finance a decent standard of living in retirement." This is a kind sentiment, which I approve. But given that capitalist countries like imperial Britain in the nineteenth century did not provide enough food for the majority of the working class to reach modern-day stature, this doesn't seem to have much to do with economics. Pious wishes are not useful analysis in my opinion.
Anyone who actually read may think, quibble, quibble, quibble. But framing the issue like this is misleading I think.J-D 07.27.20 at 4:53 am (no link)
Normally (by which I mean during booms) in a capitalist economy part of aggregate demand comes from net investment.
Continuous net investment requires more and more workers, which lowers unemployment and increases the wage share; at some point profits fall too much, capitalists stop investing but they don't buy consumer goods either, so this causes a paradox of thrift effect and a crash.
The specific level of wages where this happens is not fixed though, and in recent times the wage share fell throughout the cycle.
This means that through the cycle and even towards the peak the profit share is quite high, but since capitalists don't want to invest in real capital anymore they invest in speculative capital like houses, bitcoins etc..
Speculative capital reacts to increased demand in terms of price instead than in terms of quantity (in the 19th century this speculative capital was mostly land), so as the profit share increases throughout the cycle the wealth to income ratio increases. This increased wealth with fixed income necessariously lead to lower returns on wealth (note, on wealth, not on physical capital, as the profit share is still high).
This bubbly effect is needed to keep demand up so the government has to get along (e. G. If the fed increased the interest rate now it would cause a huge crisis).
This is not really different from what happened pre WW2; IMHO it is just a consequence of the winding down of the new deal, that caused the wage share to fall.
We don't know what the "natural" interest rate would be, but my understanding is that the fed can only push the interest rate up, not down.
In the end the interest rate reflects the expected return on new investment, but if nobody wants to invest that rate is 0?John Quiggin 07.27.20 at 5:45 am ( 24 )
There's production of real goods and services, and then there's money. The relationship between the amount of the first and the amount of the second is not straightforward, nor even present in many cases (eg the roughly half of production that takes place in the non-monetised sectors of the 'economy').
I'm not sure what difference it makes to your general point (maybe it makes none), but since you refer in that easy way to 'production of real goods and services', I want to point out that there's production of goods and then there's production of services.
Consider, as one example of each category, candles and haircuts.
Candles can be produced without being being consumed. The production of candles can easily be understood as distinct from the consumption of candles. Some candles get produced and then never get consumed. It makes sense, when referring to a business which sells candles, to ask how many candles it has available for sale.
Haircuts cannot be produced without being consumed. The production of a haircut and the consumption of a haircut are most easily understood as being the same event. It does not make sense to refer to a haircut as produced but not consumed. It does not make sense, when referring to a business which sells haircuts, to ask how many haircuts it has available for sale.John Quiggin 07.27.20 at 5:48 am ( 25 )
Paul @7 A capitalist is an owner of capital: therefore a direct investor or lender. Someone who operates on borrowed capital, seeking a profit over and above the market return, is an entrepreneur. This, at least is the standard terminology.
In the standard classical or neoclassical model, the super-profits of the entrepreneur are ultimately competed away. The things that matter, in the long run, are labour and capital.
Risk and uncertainty change this, and I'll talk more about that soon.Tim Worstall 07.27.20 at 8:23 am ( 26 )
Tim W. If the central bank can determine the rate of return to capital indefinitely into the future, capitalism really is finished. The point of QE was to reduce short-term rates in the emergency conditions of the GFC, The emergency has now become permanent, it seems.Tim Worstall 07.27.20 at 8:52 am ( 27 )
@20 "If either US party genuinely cared about innovation or small businesses as the engine of growth, we'd have had universal health insurance, "
A point Dean Baker has been making for many years. Although it's not quite as slam dunk as he puts it as being. The US has a low rate of new business formation as a whole. And a high rate for businesses designed or funded to expand into reasonably sized workforces. The bit the US is missing is the small company that opens as and intends to remain small.
Which rather supports Baker's point actually. As such larger, better funded start ups etc will have the money to be able to provide health care. In a manner in which the one man bands the US is deficient in don't.
@25 " The point of QE was to reduce short-term rates in the emergency conditions of the GFC,"
We seem to disagree on that point. The traditional tools work rather nicely in determining short term interest rates. We do, generally, say that the central bank controls them after all. It's the longer term that is more market influenced and that longer term that QE was aimed at.nastywoman 07.27.20 at 10:46 am ( 28 )
@25 I also disagree with this:
"If the central bank can determine the rate of return to capital indefinitely into the future, capitalism really is finished."
"Amid all the strange, alarming and exciting things that have happened lately, the fact that real long-term (30-year) interest rates have fallen below zero has been largely overlooked. Yet this is the end of capitalism, at least as it has traditionally been understood. Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk."
It poses a difficulty, perhaps a decisive one, for investment, yes. But investment and capitalism are not synonymous.
Well, assuming that we agree on hte following. A workers' cooperative is not capitalism. Do we agree? But a workers' cooperative faces all the same decisions about how much of current income should be put by for investment in future production and output. That it's the income of the workers making the decision doesn't change the difference that the absence of interest makes. It's still the same change in how much be given up now in order to gain whatever in the future.
Investment, that is, not being the defining feature of capitalism. So changes in the terms of investment don't, to me at least, seem to kill it off. Whatever it is that will be changed is much wider than capitalsim – it would seem to be the terms of investment in whatever socioeconomic system we've got.
As to what is the defining feature of capitalsim I take that to be that the investors – the capitalists – are not part of whatever organisation is being invested in. I don't see a zero interest rate as changing the desirability – say, investor diversification, possibly limited liability, the possibility of mobilising the assets of tens of thousands, millions, into a project – nor the undesirability – anomie and all that of capitalism.
A zero interest rate changes all calculations about investment, not merely capitalist ones.rjk 07.27.20 at 12:03 pm ( 29 )
"To complete the picture of returns to capital, we need to look at stock markets and corporate profits".
and at some "Capitalists" – who always look at the whole "Picture" in order to only play only the Casinos which offer the highest returns.
Like "the Stock" or the Real Estate Casino – and as the Real Estate Casino is tanking BIGLY again -(even more "bigly" than in 2008) – there are only Stocks (kind of) left –
and if – there – the gamblers will realise that the Party is over – too – soon "the Utmost Clever Capitalist will have to go back to the "Liquidation Casino" where y'all get EVERYTHING "for peanuts" – (Bugattis – Ferraris – Golden Toilets – Whole Hotels and Casino – some tacky Chandeliers) – from the STUPID -(and overextended) – Capitalist – like Trump.
As I hope that everybody here knows – that Trump already is bankrupt and after he will be send back to golfing – he will have a very difficult time – finding one of his golf courses – who still is profitable – and where his employers don't stare at him – when he cheats – and behind his back tell each other:
"There golfs the Cheating Loser".
AND nothing – NOTHING hurts a Capitalist more -(besides losing all of his Capital) –
than considered to be a really bad golfer!Alex SL 07.27.20 at 1:19 pm ( 30 )
Tim @ 11
I think it's Tyler who says never reason from a price change?
The phrase originates with Scott Sumner, though Tyler has definitely used it.reason 07.27.20 at 2:09 pm ( 31 )
One of the most frustrating aspects of any discussion of capitalism is that no two people seem to mean the same thing with that term. The most common equivocation is, of course, its redefinition into free markets plus democratic elections, cleverly allowing the No True Scotsmanning of anti-communist dictatorships and monopolies as "not capitalism at all" and enabling the person using this definition to tally the victims of capitalist expansion up to a nice round zero.
To me, capitalism is a system where a minority of people own the means of production, and the rest are legally free but forced to sell their labour to the former class to earn their living. A few decades of very poor returns on bonds does not mean that there is a new system of "no capitalism" with social arrangements as comparably different to capitalism as the slave economies of antiquity, tribal societies, or Medieval feudalism, just as not having free elections does not change the economic system into "not capitalism".
Regarding the reason for low returns, I get the problems of constantly reinflating bubbles, but I would take one step further back and ask why they exist in the first place when they had not existed for several decades c. 1940-1980ish. It seems to me as if the underlying problem is low wage growth and inequality. It is a situation of too much money sloshing around in the hands of billionaires and large companies, desperately trying to find some worthwhile investment opportunity but coming up largely with (1) loaning it out or (2) chasing speculative bubble after speculative bubble.
Why? Because most of that money is NOT being moved through the hands of the working class, who therefore cannot buy enough stuff, and therefore investment into producing additional stuff for the working class is not profitable. Too much money is constantly extracted from the economy, so the economy regularly stalls and has to be kept from crashing by the next injection of new money. But that injection goes to those who have enough money already to lobby for getting more, and only rarely to those who would immediately spend it on a new car, renovations, travel, clothes, better food, etc., so the downward spiral continues. (I see that MisterMr has expressed a very similar view.)
But even if that were all resolved by returning to an economically sustainable high tax, high wage system, we would next have to talk about sustainable consumption and limits to economic growth.
So: what Hidari said, only I would use more present tense than future.
Climate change is now. Population grows and aging populations in one place combined with too many young people with too little water and fertile land in another place is now. Very nearly the whole world already having been turned into capitalist market is now.
Perhaps most importantly, because it is what stands in the way of solving any of these problems: the malaise of contemporary politics in the richest countries seems to be precisely that it is dominated by well-off retirees who more reliably vote than young and poor citizens and who very reliably vote conservative. And it is not even only voting. When I was a young adult in my home country I was very politically active. As I remember our meetings, the local SPD (~labour) chapter was 2% young, progressive activists, 18% teachers and public servants in their 50s, and 80% pensioners who would reliably elect the most conservative of the second group to be chapter president, mayoral candidate, etc. The composition of the Tory party membership in the UK is another case in point, as is the primary electorate of the two large parties in the USA.
We are living in the world Hidari envisions for the second half of the century.
I am a bit puzzled by your point "Regulations, zoning, government control, unions, socialization of private financial losses, rent-seeking ("socialism" in the current parlance)". Union power is at the moment extremely weak, and while the other factors are stronger you are mixing extremely different things into one. I don't understand, for example, how socialisation of losses would inhibit innovation, as it would allow an investor to take more risks without going broke. Conversely, "regulations" is the exact opposite in that they aim to keep investors from socialising losses.William Meyer 07.27.20 at 3:17 pm ( 32 )
I'm just curious why nobody addressed this sentence:
"Secularly increasing the level of private indebtedness doesn't make the system more resiliant. When you express it in those terms it sounds ridiculous, and yet that is what has been official policy for thirty years."
Are you all missing the wood for the trees? Seems to me everybody is looking for something complicated when it is staring them in the face.nastywoman 07.27.20 at 3:52 pm ( 33 )
Pointing to negative interest rates on 30-year Treasuries doesn't mean that "capitalism" is over. Capitalism is a whole series of political acts (laws, regulations, incentives) that force the population to behave in a certain way. None of that has gone away, despite low or negative interest rates. If you doubt it, note that–at least in the USA–bankruptcy courts are about to have a world-historical run, dealing with an order of magnitude increase in business and personal bankruptcy cases. How will society handle the "social costs" of Covid-19? By putting people through a legal proceeding that largely imposes those costs on those directly involved–because in the USA the legal system (AKA the "real capitalism") absolutely believes in atomistic individualism, and all the manipulations of the Federal Reserve do nothing about any of that.
What this does show is that the economics profession as a ridiculous tendency–without which it would collapse back into the more realistic subject "political economy"–to try to focus on "the economy" as if that were an entity completely divorced from, independent of, and possibly epistemically prior to the political/legal framework surrounding it. In the economics profession, an awful lot of work is done by the phrase "all else being equal," where the most important causal pieces–which are political–are studiously ignored.Andres 07.27.20 at 5:05 pm ( 34 )
"–at least in the USA–bankruptcy courts are about to have a world-historical run"
and this morning I went through Stresa – where. it doesn't look a lot better –
BUT in between all the emptiness and the closed symbols of Capitalism there was one
infinity pool – absolutely BEAUTIFUL -(as Trump would say) – with a BEAUTIFUL view over the Lake and not a chaise empty – and when I came back to the Isola Pescatore there wasn't a place empty at lunch – with all the usual joyful Lunchers from the Homeland Italy and Switzerland, France, Germany – and I even saw an Old Dude with a Oxfors University T-Shirt.
AND the two Mahogany Rivas in Front of the restaurant proved that Capitalism isn't dead (yet) and that it will take a lot more to kill at least "Italian Capitalism".Trader Joe 07.27.20 at 5:32 pm ( 35 )
John: It's not an easy step to equate long-term bond rates (e.g. the 30-year Treasury) to overall capitalist profits. According to Dead Bearded German Guy Who Must Not Be Named in Economics, the following is incorrect:
"Interest is the pure form of return to capital, excluding any return to monopoly power, corporate control, managerial skills or compensation for risk."
Interest, monopoly power, corporate control, managerial skills, and compensation for risk are determinants of profits from the point of view of individual capitalists, but Marx would stress that these are superficial aspects of capital and that what matters in the end is first, surplus labor converted into surplus value, and second the ability to realize surplus value in a macroeconomic setting. Interest, dividends, rents, plus corporate profit and proprietor/partner income taxes are all redistribution of surplus value according to him. I am not in full agreement with Marx, as I think resource extraction and non-human labor are also sources of economic surplus, but that is tangential to this point.
I would argue that the downward trend in long term interest rates over the past decade is caused by an increased realization difficulty. Part of this difficulty is under-consumption: the wage share of income has fallen over the past two decades, real median incomes have been stagnant and in many regions real incomes lower than the median have fallen. The only way to prop up consumer spending in such an environment, especially spending on longer-term durable items such as houses and cars and longer-term intangibles such as education, is to have lower interest rates.
Second, the falling long-term rate may be indicative of what some macroeconomists call secular stagnation. As in perceived higher risk for investment projects due to lower productivity growth (in fact, the main driver of equipment investment is to ratify new technologies: potential productivity growth drives investment which drives actual productivity growth). With low potential productivity growth, perceived investment projects are riskier, causing a greater balance of capital to move to safe assets -- Treasuries -- thus driving down the T-bond rate.
What drives potential productivity growth is a black box, but the simplified heterodox economics argument is that strong aggregate demand correlates with strong consumer spending, which correlates with high relative wage costs, which correlates with increased productivity gain searches looking for either Fordist or Marx-specific (i.e. labor-saving) innovations, or niche-specific productivity gain searches where increased use-value for new commodities translates into increased nominal productivity.
Overall, a Marxist or Marx-influenced economist would point to the low labor share as pulling down productivity growth and thus pulling down long-term interest rates for safe assets such a Treasuries, whereas a secular stagnation analyst would point to the lack of epoch-making innovations (e.g., the end of geographical widening and capacity increasing for electronic technologies as opposed to data processing deepening) plus reduced business confidence in the post-2008 period and reduced global financial confidence in quick-flowing capital post-1997 as depressing business investment and thus pushing down on safe asset interest rates. The two explanations are not mutually exclusive.
None of this should point to either a coming end to capitalism or to Keynes's fairy tale euthanasia of the rentier; as long as there is capitalism (and possibly even after capitalism) there will be rentiers. But the trend in interest rates does point to the need for global capitalism to have a new regime that discards neoliberalism. Low interest rates correlate with stagnant or even falling real labor income, which correlates with populist demagogy and increased international instability. Only when the international and domestic political instability is sorted out is it possible to shift back to a non-neoliberal capitalist regime and to usher in another 1945-1970 type growth period in which rentiers are subdued but definitely not euthanized.Michael Connolly 07.27.20 at 6:35 pm ( 36 )
This is somewhat teased by JQs last comment up above, but real 30Y rates are not below zero. Real rates including the risk and liquidity premium attached to Treasuries are below zero and that's a different thing entirely.
From an investment market perspective – which is what's being measured in the rates JQ cites – ever since Dodd Frank there has been an actual scarcity of UST paper of most kinds. That seems hard to believe in the context of +20T of government debt, but in fact from a supply/demand standpoint there is not near enough.
The reason is various collateral and settlement requirements imposed on banks post GFC. It used to be that collateral was anything a counterparty was willing to accept, now its only government paper – full stop. Accordingly the +$20T of debt (not all of which is held in a way that can be used as collateral) is collateralizing several times that amount of commercial and personal borrowing.
When economies grow the demand for Treasuries rises. When the economy contracts uncertainty rises, demanding more collateral and increasing the demand for Treasuries. There is no steady state that produces a liquidation. This is what 50bp of US10T means to the investment markets and why its probable that it will eventually hit zero.
Whether that spells the end of capitalism or not seems dubious since JPM, Goldman, Citi et all seem to have several Trillion of capital and lending acitivity that suggests things are just fine.
Finally, as a practical matter, there is an over-abundance of money or money like instruments. Everything from Bit-coin to collateralized debt all is available to fund the capitalist, the entreprenuer, idiots and fools. This is what will end badly – not government debt at Zero real coupon.Tm 07.27.20 at 7:52 pm ( 37 )
When reading about the past, present, and anticipated development of our political economies, I have taken to substituting the neologism "Investorism" for "Capitalism." Marx lies decades back in my reading, but I remember him saying that he was describing social systems. Not religions or ideologies, except as they functioned in social systems. Capitalism / Investorism is the social system in which private investors – who, per #27, "are not part of whatever organisation is being invested in" – call the shots. That the interest rate has dropped below zero has many implications, many of which are opaque to me. But I expect that the investing class is going to have 90% of the input (and a veto over) the responsesLee A. Arnold 07.28.20 at 1:54 am ( 38 )
I don't think I understand capitalism more than superficially. And as both the OP and the comments demonstrate, neither does anybody else. I think nobody really has much of a clue, neither the capitalists, the bankers, the Corporate Leaders, the economists, nor unfortunately the anticapitalists, socialists and anarchists.Dr. Hilarius 07.28.20 at 3:47 am ( 39 )
Alex SL #30: "I am a bit puzzled by your point "
I was trying to make a comprehensive list of all of the reasons, given by both the left and the right, for the perceived lack of jobs and business opportunities, despite the decline of interest rates since around 1980. Whether the reasons are logical or not. So I gathered disparate and opposite reasons under broad categories. Safety nets (Fake Dave #30) is a good addition to the list: the left says we need them to reduce risk, the right says they slow down growth.
Labor unions, always blamed by conservatives for impeding business, saw a decline since around 1980 but of course their decline did not increase the rate of business startups. Public sector unions are still under attack today for making government "inefficient" thus a presumed drag on growth and opportunity. Libertarians e.g. Rand Paul even blame the socialization of losses: I don't understand that, any more than you do. (Although they scarcely practice what they preach.)
My point is that I don't think that any of the reasons, nor all of them together, will explain what has been going on for 40 years. If you smooth out the graphs of 10-year, 30-year Treasury rates and new business formation since around 1980, the declines look almost linear. Maybe capitalism has been massively successful, so successful that it is putting itself out of business, and we are growing out of it, just like Keynes and Schumpeter said we would.
While we are sorting it out, I would suggest creating a government monopsony that guarantees human needs which will still allow private entrepreneurialism for innovations.nastywoman 07.28.20 at 5:18 am ( 40 )
Not being an economist of any kind I can only offer my 2 cents worth for consideration. There is so much money floating around in the upper reaches of the economy that interest rates are of little concern to its denizens. Their problem is one shared with drug dealers; where do you stash your money to keep it safe? Investing in zero or negative interest bonds is like paying a small fee for a safety deposit box for your valuables. Having more money than you could possibly spend makes it reasonable to buy luxury real estate and let it sit empty. Property taxes and maintenance represent negative cash flow, but who cares?nastywoman 07.28.20 at 6:29 am ( 41 )
"I don't think I understand capitalism more than superficially. And as both the OP and the comments demonstrate, neither does anybody else".
I did – as I read the definition of "Capitalism" before commenting – and as the definition says:
"An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state".
AND the Virus now made sure that even in the utmost "capitalistic" countries "the economic and political system" HAS to be controlled by "the state"-(at least for the time being) "Capitalism" is dead -(for the time being)
Killed by the Virus.
and let's NOT forget how the hunt for "good" returns – motivated all of these people getting into the Stock Casino – during the lockdown – as there was nothing else to do – for a lock downed Capitalist) – than calling his or her broker –
And did you guys ever see the numbers of new "Investors(gamblers) during the lockdown? It included ALL these retirees of my family who NEVER EVER would play with Stocks if there (still) would be "decent" returns from saving accounts.
So in a very (ironius?) way the low interest rates created a whole new "class" of InvestmentCapitalist who NOW pray that sooner than later "Capitalism" -(in accordance to the words definition) returns to "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state".
Jul 27, 2020 | www.rt.com
By Dr. Karin Kneissl , who works as an energy analyst and book author. She served as the Austrian minister of foreign affairs between 2017-2019. She is currently writing her book 'Die Mobilitätswende' (Mobility in transition), to be published this summer. A confrontation between the two NATO states France and Turkey continues to trouble the Mediterranean region; Egyptian forces are mobilizing. And many other military players are continuing operations there.
In March 2011, during a hectic weekend, the French delegation to the UN Security Council managed to convince all other member States of the Council to support Resolution 1973. It was all about a "humanitarian corridor" for Benghazi, which was considered the "good opposition" by the government of Nicolas Sarkozy. One of his whisperers was the controversial philosopher Bernard-Henri Levy, who supported a French intervention. Levy, fond of the "humanitarian war," found a congenial partner in Sarkozy.France was at root of crisis
Muammar Gaddafi had been received generously with all his tents in the park of the Elysée, but suddenly he was coined the bad guy. The same had happened to Saddam Hussein in Iraq. It was not the Arab dictator who had changed; it was his usefulness to his allies. The Libyans had been distributing huge amounts of money in Europe, in particular in Rome and Paris at various levels. In certain cases they knew too much. Plus, the Libyans had been protecting the southern border of the Mediterranean for the European Union.READ MORE
So, the French started the war in 2011, took the British on board, which made the entire adventure look a bit like a replay of the Suez intervention of 1956, the official end of European colonial interventions. A humanitarian intervention changed into regime change on day two, which was March 20, 2011. Various UN Security Council members felt trapped by the French.
The US was asked to help, with then-Secretary of State Hillary Clinton and many other advisers in favor of joining that war. President Obama, however, was reluctant but, in the end, he gave in. In one of his last interviews while still in the White House, Obama stated that the aftermath of the war in Libya was his "worst mistake."
Libya ever since has mostly remained a dossier in the hands of administrative officials in Washington, but not on the top presidential agenda anymore. This practice has been slightly shifting in the past weeks. US President Donald Trump and France's Emmanuel Macron had a phone conversation on how to deescalate the situation there. Trump also spoke on that very topic with Turkish President Recep T. Erdogan. Paris supports General Haftar in his war against the Turkish-backed Government of National Accord, which is also supported by the European Union, in theory
The triggering momentum for the current rise in tensions was a naval clash between French- and Turkish-supported vessels. Both nations are NATO members, and an internal alliance investigation is underway. But France decided to pull out of the NATO naval operation that enforces the Libya arms embargo, set up during the high-level Berlin conference on Libya in mid-January 2020. Without the French vessels it will be even more toothless than its critics already deem it. This very initiative on Libya was the first test for the new European commission headed by Ursula von der Leyen and claiming to be a "geopolitical commission." The EU strives to speak the language of power but keeps failing in Libya, where two members, namely Italy and France, are pursuing very different goals. Rome is anxious about migration while Paris cares more about the terrorist threat. But both have an interest in commodities.ALSO ON RT.COM France, Germany & Italy threaten 'sanctions' against countries that interfere in Libya It's about oil and gas
When Gaddafi was reintegrated in the "community of the good ones" in early 2004 after a curious British legal twisting on the Lockerbie attack of December 1988, a bonanza for oil and gas concessions started. The Italian energy company ENI and BP were among the first to have a big foot in the door. I studied some of those contracts and asked myself why companies were ready to accept such terms. The answer was maybe in the then rise in the oil price of oil and the proximity of Libya to the European market.
Interestingly, in September 2011, the very day of the opening ceremony of the Paris conference dubbed "Friends of Libya," a secret oil deal for the French company Total was published by the French daily Libération. The "good opposition" had promised the French an interesting range of oil concessions. Oil production continuously fell with the rise of the war, attracting sponsors, militias and smugglers from all horizons. The situation in Libya has since been called 'somalization,' but it would become even worse, since many more regional powers got involved in Libya than ever was the case in hunger-ridden Somalia.READ MORE
In exchange for its military assistance, Turkey recently gained access to exploration fields off Libya's shores. Ankara had identified an "exclusive economic zone" with the government in Tripoli, which disregards the UN Convention on the Law of the Sea. Actually, Israel made the same bilateral demarcation with Cyprus about ten years ago, when Noble Energy started its delineation of blocs in the Levant Basin. So Turkey is infringing on Greek and Cypriot territorial waters, while President Macron keeps reminding his EU colleagues of the "other actors" in the Mediterranean Sea. Alas, it is nobody's "mare nostrum" as it was 2,000 years ago in the Roman era. In principle, all states which have ratified the UN Convention on the Law of the Sea should simply comply with their legal obligations.
The crucial question remains: who has which leverage to de-escalate? Is it the US President, who seemingly has acted more wisely on certain issues in recent times? Or will Russian and Turkish diplomacy be able to negotiate and implement a truce? The tightrope-walk diplomacy between these last two countries is a most interesting example of classical diplomacy: interest-based and focused; able to conduct hard-core relations even in times of direct military confrontation and assassinations (remember the Russian Ambassador Karlov, shot by his Turkish bodyguard in Ankara in December 2016?).
Meanwhile, yet another actor could move in to complicate everything even more. On July 20, the Egyptian parliament voted unanimously for the deployment of the national army outside its borders, thereby taking the risk of direct confrontation with Turkey in Libya. Egyptian troops would be mobilized in support of the eastern forces of General Khalifa Haftar. Furthermore, Cairo would thereby compete even more obviously with Algeria, spending a fortune on military control of its border with Libya. Algeria in the past could rely on US support in the region, but with the gradual decline in US engagement in that part of the world, the country faces a fairly existential crisis.
There are currently two powers, among those involved in Libya, that can still contain the next stage of a decade of proxy wars started by a French philosopher and various EU oil interests: Russia and the USA.
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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
Quizblorg 48 minutes ago Does anything here make sense? No, because France this, Italy that is not how the world is run. The parties involved here go far beyond countries. Also no mention of Saudi-Arabia/Israel. Who engineered the "Arab Spring"?
Jul 27, 2020 | consortiumnews.com
It's difficult to understand what's going on in the world because powerful people actively manipulate public understanding of what's going on in the world.
Powerful people actively manipulate public understanding of what's going on in the world because if the public understood what's going on in the world, they would rise up and use their strength of numbers to overthrow the powerful.
The public would rise up and use their strength of numbers to overthrow the powerful if they understood what's going on in their world because then they would understand that the powerful have been exploiting, oppressing, robbing, cheating and deceiving them while destroying the ecosystem, stockpiling weapons of Armageddon and waging endless wars, for no other reason than so that they can maintain and expand their power.
The public do not rise up and use their strength of numbers to overthrow the powerful because they have been successfully manipulated into not wanting to.
Jul 26, 2020 | www.unz.com
Anonymous  Disclaimer , says: July 24, 2020 at 5:30 pm GMT@Supply and DemandSupply and Demand , says: July 24, 2020 at 7:07 pm GMT
Young male tradesmen I've met are the smartest of the bunch. Most of them have high test scores and could easily go to college, but they see the writing on the wall. They, rightfully, see no point in wasting 4 years of their life for a low paying office job in an environment of outright discrimination. I know several kids that finished highchool in 3 years and are making real money at the age of 18 with no debt involved. They don't have to worry about the system being stacked against them because none of the affirmative action types want to do actual work anyway.@Anonymous
1. There is no "real money" -- this is all fiat currency and the gravy train is ending very soon.
2. Trump supports H1B visas being extended to "essential trades". These young men will be pushed out of these fields within 3-5 years by Indians and legalized aliens, DACA recpients, etc. My colleagues at my university think tank who advise our Republican Senator on public policy are advocating for explicitly this.
3. Unionized trade workers average between 84-97IQ nationally on the Stanford-Binet test. They are the definition of "Low IQ", which is what I asserted they were.
As the youth would say, "cope".
Jul 25, 2020 | www.moonofalabama.org
vk , Jul 24 2020 21:09 utc | 46
The American Revolution was a catastrophe for its economy, which had to endure decades of reconstruction. In order to neutralize the threat of the British Empire, it stroke multiple trade deals with it.
The USA is home to the father of protectionism: Alexander Hamilton. He stated that a national industry in its infancy should be protected from its more mature competition. The USA followed his advice and protected its nascent industry from the British threat.
When the British Empire begun to degenerate, the Americans used the cheap British capital in excess in the financial markets to build up their infrastructure, specially their railways. Australia did the same.
The Founding Fathers did what they had to do in order to protect their country and make it flourish. When the ideology of the time stated they shouldn't, they invented a new ideology that stated they should. And the could: when the British and French tried to destroy the USA through a sea embargo, they responded in kind (Embargo Act of 1807) and prevailed; they did not cave in to the then imperial powers.
So, I don't understand why so many Americans are offended with China. The capitalist world tried to keep China poor and as a raw material exporter, sweatshop conglomeration. China didn't accept this, and decided to fight back. The result is here for all of us to see.
Jul 19, 2020 | japantimes.co.jp
Another revision by the IMF (the first one was some -2%, and I called here it was "too optimistic").
I think a -6.6% fall in GDP is plausible for the USA. The USA, as the HQ of capitalism, has tools and weapons that the rest of the world doesn't have, so, if they get lucky, a mere 6.6% fall is possible.
But, all in all, I still think it's still too optimistic. For example, the IMF still refuses to admit a second wave will come to the West.
Jul 19, 2020 | crookedtimber.org
Larry Hamelin 07.18.20 at 9:37 am (no link)MisterMr 07.18.20 at 10:11 am ( 4 )
The MMTers reading your article will take umbrage at your use of finance .
According to MMT, all government spending is financed by creating money. The problem of where to get the money is a non-problem.
Once the government has spent money into existence, the real problem is how to distribute the social opportunity cost of the spending, especially if the government has spent money to allocate real resources away from the production of private goods and services.
MMT makes this distinction precisely because they (we?) want to eliminate the rich as a veto point for spending. We don't need to get their money in order to spend it, and they cannot (or we should not let them) essentially restrict spending by obstructing the government's taxation of their wealth.
If we want to get the money belonging to the rich (and we do!), we want to do so because we don't want them to have it, for whatever reason.
There's another reason to be explicit about the difference between financing and distributing opportunity costs. If the rich have a lot of money that is not in circulation (in the national economy), and the government taxing that money to "pay for" its spending will do nothing to control inflation or distribute opportunity costs. Removing money that is not circulating has no effect on prices. It seems theoretically possible to balance the budget financially but still see price-level inflation.
I haven't done any specific investigation into the GND, but it seems uncontroversial that it will involve allocating substantial real resources to the creation of a nonpolluting power, transportation, and agricultural infrastructure. However, the effect on the real economy and the price level seems uncontroversially complicated. Some of the real resources will be previously unallocated, and we will simply be transferring demand from welfare-supported to work-supported, with no effect on the price level. Some of the demand created will indirectly cause an increase in private production, putting unused industrial capacity to work; the increase in circulating money will cause a corresponding increase in real private production, and again have no net effect on the price level. And some of the real resources will indeed be transferred from private production with no corresponding offset; taxes, "enforced" borrowing, and other monetary interventions will be needed to keep price inflation manageable.
I don't know of (and, like Lee A. Arnold above, would very much like to see) a model showing what effect something like the GND would have on the real economy. Under normal circumstances, the fiscal impact is a good proxy for the real impact. But circumstances are far from normal, so think that the fiscal impact is no longer a valuable proxy for modeling the real impact.Bradley C Kuszmaul 07.18.20 at 10:38 am ( 5 )
"The ultimate constraint on money creation is inflation. That hasn't been a problem lately and (as I'll argue in more detail later) the world is in need of a fair bit of inflation, probably at an annual rate of about 4 per cent for the foreseeable future. It's unclear how much expansion of the monetary base would generate this outcome, while avoiding the risk of a resurgence of inflation like that of the 1970s"
I don't agree that this is the problem: IMO the direct cause of [keynesian] inflation is the wage-price spiral, and not money creation per se (this also implies a problem, which is that if we want an high level of employment because we want an higer bargaining power for workers we can't really avoid wage-price spirals and therefore inflation).
Money creation by itself creates wealth, not income, and the kind of economic policies we had in recent decades caused an increase in the wealth/income ratio (or in other words the creation of a lot of fictitious capital) more than inflation.
So the real problem of "money creation" today is that it generates financial bubbles, rather than inflation.
The difference between money printing and government debt, from this point of view, is just that money is a 0% interest financial asset, whereas bonds bear at least some interest, so money creation pushes the general interest rate down more than bond creation, but this again is a consequence of the increase of the wealth/income ratio (since more wealth extracts profits from the same quantity of income).
"Substantial reductions in private consumption and investment will be needed to make room for the required public expenditure, and that can only be achieved through a combination of taxation and debt."
In my view the problem is that taxation is needed to avoid bubbles, and therefore what we need is to tax income from wealth and wealth itself (in order to push down the wealth/income ratio).
To put it in more familiar keynesian terms, the problem is that the ex-ante saving rate is too high, so that currently we need an increase in debt levels (bubbles) to ricycle ex-ante savings into consumption; we need taxation to push down the ex-ante saving rate.
But, the problem is, is it possible to have a capitalist economy running without economic crises while the wealth/income ratio goes down (which means that a lot of people see their relative wealth go down)?
IMO this is really difficult, and also explains the political problem for policieswhose purpose is to push down the wealth/income ratio, since these policies look like just some way to be mean against wealth owners, without an immediate economic reason, and when the bubble pops everyone blames the banks and the financial sector, not the excessively high ex-ante saving rate, that is instead perceived as a virtue.John Quiggin 07.18.20 at 10:40 am ( 6 )
Recent quantitative easing of only 2% of GDP doesn't provide much of a bound on how much can be tolerated without causing too much inflation. Inflation is still up against the zero lower bound, and it seems plausible that we could get more than a factor of two more money creation. Which does get us into the green new deal range.Lee A. Arnold 07.18.20 at 11:27 am ( 7 )
@1 The Green part is (comparatively) easy and low cost. It's the New Deal (free college tuition, Job Guarantee, single-payer health etc) that will require a bit transfer of resources.bob mcmanus 07.18.20 at 11:50 am ( 8 )
@6 Transfers of real resources or financial resources? Single-payer requires an expansion of suppliers in the healthcare sector to meet the uncovered demand, and those suppliers will be new taxpayers. College learning will be going more on-line, a tendency accelerated by this pandemic and anticipating the next pandemic, so we need, not many more buildings, but more professors, but they too will be new taxpayers. The jobs guarantee could be structured to generate sector expansions, not merely makework. So couldn't all of these eventuate in expanded sectors, ergo more taxes? Government investment at rock-bottom interest rates?Alan White 07.19.20 at 1:21 am (no link)
How much is enough (to pay for our policy goals)?
Only too much is enough, we want to print and spend enough to change expectations.
Currently, the dollar is the reserve currency I think largely for "safe haven" reasons, i.e. the oligarchs who have all the assets believe the US will be the last place to inflate, devalue, or elect an expropriating left-wing gov't.
After 40+ years of capital share gains and worker immiseration in terms of real and social wages and labour solidarity, and assuming we have under President S Kelton control only of printing and spending but no ability to raise progressive redistributive taxes how much MMT financed spending will it take to have the average worker believe that her real wages, social wages, standard of living, opportunities etc will improve relative to capital and the rich for the next forty years? And have the oligarchs also believe it?
That's how much.J-D 07.19.20 at 2:03 am ( 14 )
John, what say you about US/global military spending, which if cut and reallocated in the low double digits could transform society? Do you think it's just politically untouchable? If the US cut its military budget by say 25% it would still be formidable, especially given its nuclear deterrent. For the life of me I can never understand why military budgets are sacrosanct. Is it just WW2 and Cold War hangover? Couldn't the obvious effects of climate change and the fragility of the economy subject to natural threats like the pandemic change attitudes about overfunding the military (like the debacle of the F-35 program)?John Quiggin 07.19.20 at 3:50 am ( 15 )
@Tim Worstall: The political poles shifted, but less than you might think. Southern pols were overwhelmingly opposed, and nearly all of them were D (the entire old Confederacy had only 11 R Reps and only 1 R Senator). Northern pols, including Dirksen, were overwhelmingly in favor, and they were split between the two parties. But if you break it down by party and region, a larger percentage of Ds than Rs voted for the bill within each region. https://www.theguardian.com/commentisfree/2013/aug/28/republicans-party-of-civil-rights
An interesting example of Simpson's paradox.
I don't know about the Democratic Party, but there was an important shift in the Republican Party: the thing is, that shift took place in the nineteenth century, not the twentieth. At the end of the Civil War, the Republican Party really was the party of civil rights, with champions of equality prominent within it; after the end of the Reconstruction this ceased to be true. Of course the Republican Party has changed further since then, because everything changes; but it hasn't changed as rapidly since the late nineteenth century as it did after the Civil War.eg 07.19.20 at 4:08 am ( 16 )
Alan White @13 Military spending is about 3.4 per cent of US GDP, compared to 2 per cent or less most places. So that's a significant and unproductive use of resources that could be redirected to better effect. But the income of the top 1 per cent is around 20 per cent of total income. If that was cut in half, there would be little or no reduction in the productive services supplied by this group. If you want big change, that's where you need to look.
@Alan White #13
I think some of the reluctance to cut military spending in the US is the extent to which it acts as a politically unassailable source of fiscal stimulus and "welfare" in a country where such things are otherwise anathema. Well, that and all of the grift it represents for the donor class.
Jul 17, 2020 | news.yahoo.com
U.S. Secretary of State Mike Pompeo said on Friday the United States was "deeply disappointed" in a ruling on Thursday by Europe's highest court that a trans-Atlantic data transfer deal is invalid because of concerns about U.S. surveillance.
Pompeo said in a statement that the United States would review the consequences and implications of the decision by the Court of Justice of the European Union that could disrupt thousands of companies that rely on the agreement.
"We are deeply disappointed that the Court of Justice of the European Union ... has invalidated the EU-U.S. Privacy Shield framework," Pompeo said.
"The United States will continue to work closely with the EU to find a mechanism to enable the essential unimpeded commercial transfer of data from the EU to the United States," he added.
The ruling effectively ends the privileged access companies in the United States had to personal data from Europe and puts the country on a similar footing to other nations outside the bloc, meaning data transfers are likely to face closer scrutiny.
The so-called Privacy Shield was set up in 2016 by Washington and Brussels to protect personal data when it is sent to the United States for commercial use after a previous agreement known as Safe Harbour was ruled invalid in 2015.
More than 5,000 companies have signed up to it but the Privacy Shield was challenged in a long-running dispute between Facebook and Austrian privacy activist Max Schrems, who has campaigned about the risk of U.S. intelligence agencies accessing data on Europeans.
(Reporting by Daphne Psaledakis; editing by Jonathan Oatis)
Jul 18, 2020 | www.zerohedge.com
by Tyler Durden Fri, 07/17/2020 - 19:45 Twitter Facebook Reddit Email Print
With tens of millions of Americans out of work, people fleeing cities for rural communities, others working from home, online shopping flourishing, and the virus remerging in many states forcing governors to pause or reverse reopenings, consultancy firm KPMG International has some bad news for those betting the economy is going to "rocket ship" recovery as President Trump boasts about at press conferences and on Twitter. The consultancy firm warns "social-distancing measures" will "dramatically cut the amount of miles Americans travel by car" (fewer miles driven is terrible news for an economy driven by consumer spending).
The effects of COVID-19 will be felt for years. The response to the virus has accelerated powerful behavioral changes that will continue to shape how Americans use automobiles. We believe the changes in commuting and e-commerce are here to stay and that the combined effect of reduced commuting and shopping journeys could be as much as 270 billion fewer vehicle miles traveled (VMT) each year in the US. -KPMG
Jul 16, 2020 | thenewkremlinstooge.wordpress.com
MOSCOWEXILE July 15, 2020 at 7:58 amMOSCOWEXILE July 15, 2020 at 7:59 am
Fat bully boy speaks for Bully Boy state:
"Today the Department of State is updating the public guidance for CAATSA authorities to include Nord Stream 2 and the second line of TurkStream 2. This action puts investments or other activities that are related to these Russian energy export pipelines at risk of US sanctions. It's a clear warning to companies aiding and abetting Russia's malign influence projects and will not be tolerated. Get out now or risk the consequences".
Pompeo speaking at a press conference today.
CAATSA -- Countering America's Adversaries Through Sanctions Act
So Russia and Turkey are "adversaries" of the USA?
In what way?
Do these states wish to wage war against the USA?
Is it adversarial to United States interest to compete economically with the hegemon?MARK CHAPMAN July 15, 2020 at 3:51 pm
Link to above:
Who cares? Really, is Pompeo still scary? If he has a functioning brain, he should realize that all these blatant efforts to reserve markets for America by sanctioning all its competitors out of the picture is having the opposite effect, and frightening customers away from becoming dependent on American products which might be withheld on a whim when America wants political concessions. 'Will not be tolerated' – what a pompous ass. Sanction away. The consequence is well-known to be seizure of assets held in the United States or an inability to do business in the United States. That will frighten some into submission – like the UK, which was threatened with the cessation of intelligence-sharing with the USA (sure you can spare it?) if it did not drop Huawei from its 5G networks. But others will take prudent steps to limit their exposure to such threats, in the certain knowledge that if they work, they will encourage the USA to use the technique again.
Jul 14, 2020 | www.zerohedge.com
As Joe Biden tries to split the difference between the midwestern swing-state voters and the Sanders faithful, he's released an economic plan - a plan that bears the imprimatur of his one-time foe Bernie Sanders - that, in its attempt to be everything to every one, effectively promises everything to every one.
Buy American. Green New Deal. Corporate tax hikes. Trillions of dollars spent on infrastructure to install the latest eco-nonsense with money that should be going to roads, bridges, rails and airports. Docks and highways. Things people actually need and use. And who knows? Depending on his running mate, maybe we'll get a massive student-debt jubilee, too. All on the federal government's tab.
Now that MMT has gone from fringe idea to mainstream, making Stephanie Kelton, a cryptomarxist who believes that the link between value and money can be completely severed, so long as we tax the wealthiest among us enough to keep inflation low. It doesn't take a genius to suspect that an 'economic theory' grounded in the idea that governments can take on unlimited amounts of debt and never stick anybody with the tab sounds absurd - even dangerous.
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We say dangerous because Kelton's greatest sin is offering pandering politicians more cover to encourage their spendthrift ways. During a recent interview with Macro Hive, former Central Bank of India Governor and University of Chicago Professor Raghuram Rajan delivered a succinct and insightful explanation of why MMT is so dangerous.
"We talked about sustainability and one of the big topics in markets at least is this whole idea of QE MMT infinity, the ability of sovereigns to borrow. Now in developed countries, they have historical capital they've built up and credibility," Rajan's interviewer began. "But you're starting to also see this idea...you're starting to see more emerging market countries experiment with it, including Indonesia and several others."
But at the same time "yields are very low, and if you look at emerging market spreads, they're very low...so markets are telling you that they aren't worried. Yet we know debt levels are high, and there's more talk in debt markets of QE and MMT."
Does the fact that markets seem content with the status quo (at least for now) validate Kelton's argument?
Of course not, Rajan explained. Because while the complexities of the global financial system, and the dollar's role within it, have allowed the Fed to spearhead this great monetary, as the veteran central banker explained, there's no such thing as a free lunch.
"We know that markets can be complacent until a certain point and then they turn on a time. We are at this point in a benign phase supported by an enormous amount of central bank liquidity emanating from the primary reserve currencies, the euro area, the US Fed and to some extent the Bank of Japan and the Bank of England."
"But we must also recognize is that there are no free lunches. If there's one statement you want to keep to pound into the head of every policy maker, it's that there are no free lunches. If you borrow today, there is a presumption that it will be repaired at some point, so you are in a sense taking away resources from somebody else in the future."
" Now it may be a generation or two down the line will be on the hook for this ...whether they can pass it on to their children is an open question...but you're definitely taking away their ability to borrow by borrowing today."
.While burdening future generations doesn't seem to come up much in cryptomarxist essays about the moral imperative of expansive fiscal spending - some have gone so far as to argue that the federal government has a moral obligation to forgive student debt - Rajan acknowledges that the idea is "seductive" for all the wrong reasons.
"So the idea that there are free lunches...which certainly is what the lay person takes away from MMT...is very sort of attractive, seductive - but it's absolute nonsense."
If that's the message that's going to be communicated, then that's wrong.
Asked to elaborate, he continued...
"There are times when you can spend a little bit more, but you are still making a trade off and evaluating this trade off well...I think that's the right thing to do. If that's the message from MMT, then I'm fine with that. There are periods where you have more leeway."
"The message can't be 'Don't Worry, Be Happy' it has to be 'yes take advantage of periods when you have a little more spending capacity but use it wisely, because there's no such thing as a free lunch and you will have to repay it at some point... that's what any sensible economic theory will tell you, and I think that's what we understand now."
"When banks aren't lending, when inflation is low, it is possible for the central bank to expand its balance sheet somewhat ...and finance more activities that the government wants to undertake. That doesn't mean it's free debt it's equivalent to debt issued by the government - think of the central bank issuing debt as the same as the government issuing debt: it's the consolidated balance sheet you're looking at."
"Somebody is responsible for payment, it's either the central bank or the government."
"At low interest rates it doesn't really matter who it is, but as inflation picks ups it does matter a little more who it is because the central bank often is financing itself with effectively forced loans from the banking sector, and there's a limit to how much the banking sector is willing to do that, especially as economic activity picks up."NEVER MISS THE NEWS THAT MATTERS MOST
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"So my sense is yes there is some room now but it doesn't mean the debt level doesn't matter and it doesn't mean that we should just keep spending without thought of who's going to repay. And I think the big philosophical issues are how much are you going to bail out companies...why should Joe Schmoe...why should his taxes go to bail out a capital owner? After all, neither of them saw the pandemic coming...neither is responsible for the pandemic...so why should one bail out the property rights of another?"
"It strikes me these guys who want to open up the government wallet and spend to protect everybody from the consequences of the pandemic don't realize that there's one person who's bearing the hit: it may not be you, but it might be your children."
"And the question is: Why do they have to pay when they have no part in this?"
Remember: As Rajan explains, we must recognize that our resources are limited and use them wisely. Keep that in mind when Democratic politicians are trying to spend trillions of dollars of public money to outfit private buildings with solar panels or whatever 'Green New Deal' infrastructure travesty AOC & Co come up with.
* * *
Source: Macro Hive
Jul 14, 2020 | www.moonofalabama.org
Tod , Jul 13 2020 20:05 utc | 18
The good news is that the unstoppable juggernaut of globalization has fallen to it's knees. Countries and societies around the world will have to look at ways they came become independent and self sufficient,at least to some degree. It's like "War of the Worlds" really, the best effort of humanity to contain the plague fails, but a random natural occurrence saves humanity from the brink of destruction. Hopefully some real scientists will be allowed to mitigate the medical disaster, but one thing is for sure, the grand plan of turning everyone into a nomad competing for pennies on the international market, for the sole benefit of the richest among the rich, is dead. Some really hard times are coming for the international nomads/ parasites, and hopefully humanity will move to some more beneficial culture, and have a real chance to survive as a species, in the long term.
Jul 14, 2020 | www.zerohedge.com
Even the good news for the world's auto market seems to be bad news right now.
Day ago, when detailing China's passenger auto sales plunge for the month of June, we noted that the China Association of Automobile Manufacturers has been predicting for the last few months that auto sales would fall between 15% and 25% for the year.
Those predictions have now been adjusted slightly upward , to a drop of 10% to 20%, despite the fact that China's auto market still appears to be leading the global market into several more years of deep recession. Recall, the auto market was already facing headwinds and China's market specifically was already contracting for several years before the pandemic.
And while passenger vehicles fell 6.5% in June , as we noted , total vehicle sales rose 11.6% for the month to 2.3 million units, likely helping lead to the revised predictions for the year. The driving force behind total vehicles rising was a 63% surge in commercial vehicles, which also saw a 8.6% rise in the first half of 2020, likely due to vehicles being used to manage the spread of the virus in the country
... .... ....
This news comes despite better than expected results in May, where sales showed a 12% increase year over year.
According to The Detroit Bureau , premium and luxury passenger car retail sales led the charge in May, rising 28% last month compared with year-ago results. Luxury vehicles maintained their strength in June.
The Chinese government continues to try to spur demand with new policies aimed at enticing buyers.... but as we showed yesterday, it's not working.
Recall, we have recently noted that U.S. auto manufacturers are also teeing up sizeable incentives to get buyers back into showrooms. Europe is following suit, with Volkswagen starting a sales initiative to revive demand, including improved leasing and financing terms.
Jul 14, 2020 | www.moonofalabama.org
vk , Jul 13 2020 18:57 utc | 2
Funny how the visa-free map from before the COVID-19 pandemic is roughly equal to the extent of the American Empire itself.
And the loss of foreign students signifies much more than the mere loss of income for the American universities: it also means the loss of grip over the provinces' regional elites.
Most of the foreign students in the USA are sons and daughters of the regional elites. They live the American way of life, get westernized, and go back to their countries (which they will likely rule) with a liberal ideology ingrained in their minds. They are the rough equivalent to what the hostage was during Antiquity. To lose 263,000 hostages in less than one year would be a devastating blow to American diplomacy.
Peter AU1 , Jul 13 2020 19:09 utc | 4vk
One commenter mentioned a brain drain in relation to foreign students no longer coming to America but I guess the brain drain will occur when out of work professors start heading off to other countries like China in search of work.
Jul 11, 2020 | news.slashdot.org
Posted by msmash on Friday July 10, 2020 @02:45PM from the closer-look dept. Technology startups have been laying off tens of thousands of workers to cope with the economic fallout of the coronavirus pandemic, potentially blunting a key innovation pipeline for the enterprise information-technology market, according to industry analysts. From a report: "Startups are a great source of innovation in the IT industry, but are now especially cash constrained," said Max Azaham, a senior research director at research and consulting firm Gartner. Mr. Azaham said the coronavirus has made startup investors far more risk averse, resulting in a sharp downturn in investment capital for IT companies looking to raise less than $100 million. As of last week, nearly 70,000 tech-startup employees world-wide had lost jobs since March, led by ventures in the transportation, financial and travel sectors, according to a report by U.K.-based brokerage BuyShares.co.uk.
Startups in the San Francisco region, including Silicon Valley, have shed more than 25,500 jobs, including layoffs at high-profile companies such as Uber, Groupon and Airbnb, the report said. Uber in May announced more than 6,500 layoffs, cutting roughly a quarter of its workforce. A month earlier, Lyft said it would cut about 17% of its workforce, furlough workers and slash pay in cost-cutting efforts to cope with lost sales during the coronavirus pandemic. Startups developing artificial intelligence and other emerging digital tools fall under the category of tech-sector employers, which have cut jobs for four consecutive months, said Tim Herbert, executive vice president for research and market intelligence at IT industry trade group CompTIA. The cuts included a record 112,000 layoffs in April, as tech companies scrambled to slash costs, according to CompTIA's analysis of federal employment data.
Jul 10, 2020 | www.zerohedge.com
During the pandemic, readers may recall several of our pieces describing what life would be like in a post corona world.
From restaurants to flying to gambling to hotels to gyms to interacting with people to even housing trends - we highlighted how social distancing would transform the economy.
As the transformation becomes more evident by the week, we want to focus on automation and artificial intelligence - and how these two things are allowing hotels, well at least one in California, to accommodate patrons with contactless room service.
Hotel Trio in Healdsburg, California, is surrounded by wineries and restaurants in Healdsburg/Sonoma County region, recently hired a new worker named "Rosé the Robot" that delivers food, water, wine, beer, and other necessities, reported Sonoma Magazine .
"As Rosé approaches a room with a delivery, she calls the phone to let the guest know she's outside. A tablet-sized screen on Rosé's head greets the guest as they open the door, and confirms the order. Next, she opens a lid on top of her head and reveals a storage compartment containing the ordered items. Rosé then communicates a handful of questions surrounding customer satisfaction via her screen. She bids farewell, turns around and as she heads back toward her docking station near the front desk, she emits chirps that sound like a mix between R2D2 and a little bird," said Sonoma Magazine.
Henry Harteveldt, a travel industry analyst at Atmospheric Research Group in San Francisco, said robots would be integrated into the hotel experience.
"This is a part of travel that will see major growth in the years ahead," Harteveldt said.
Rosé is manufactured by Savioke, a San Jose-based company that has dozens of robots in hotels nationwide.
The tradeoff of a contactless environment where automation and artificial intelligence replace humans to mitigate the spread of a virus is permanent job loss .
Jul 10, 2020 | www.zerohedge.com
Real-Time Data Shows That After Peaking In Late June, Consumer Spending Is Now Declining
by Tyler Durden Fri, 07/10/2020 - 14:49 Twitter Facebook Reddit Email Print
When we last looked at real-time consumer spending data one month ago , we saw a stunning rebound in Bank of America credit and debit card spending trends, with total card spending ex-autos essentially recovering pre-covid levels by early June.
No doubt, a big part of this was due to the surge in Personal Income since the start of the current recession, which as we explained earlier was a function of the extremely generous fiscal stimulus which meant that on a per capita basis, claimants received roughly $788/week ($41k annualized) on average, well above the usual amount of roughly $300 in a normal labor environment ($15-$16k annualized).
Let it Go , 6 minutes agoScalNeCus , 2 hours ago
What consumers buy matters a great deal. When looking at the policies flowing out of Washington it is clear many politicians seem to have no idea that all consumer spending and purchases are not created equal. The fact is, consumers should take a long look at how their purchases will impact the economy over time.
Where money flows and who it enriches is a key component of economics, the failure to consider this is a blind spot many people have. The article below delves into this important issue.
https://The Importance Of Where And What Consumers Buy.htmlLet it Go , 44 seconds ago
People are stupid.
Me, I have money in the bank, but a low income, so I spend less than my income, my bank-account grows. That is me, in Old skool Europe. My bank-account = > 750.000€.
But I don't need it, I'm a minimalist, always was, but I like the thought that I have it, to fall back when I'm tired.
America, credit cards, spends all you want. Even if you don't get it.
I remember that interview with a woman, after the sacking of Lehman Brothers. She made a super-high figure income (more than I wish for), but she spend it all while it lasted.
And now she was on the streets and homeless. How is that even possible?
She worked for Lehman, but she was utterly stupid? "Can I apply for that job, coz I'm so much smarter."
It happens here in the old continent too, but the impact is lessened, because of our social systems.
I rest my case.Steven Vincent , 2 hours ago
Yes they are stupid! It is difficult to reconcile the fact that 60% of the millennials surveyed say they believe they will be wealthy "within 1 to 10 years" considering that 59% of those in this age group said they still live paycheck to paycheck . Making this even harder to understand is it appears many people now feel that in order to be "rich," they need to be worth an average of $2.3 million.
This amount is more than 20 times the actual median net worth of U.S. households. More on the subject of wealth in America in the article below.
https://The Mind Of The Common Millionaire Is Worth Studying .html
We are in, or transitioning to, an entirely new systemic paradigm. Metrics of the past will not behave according to expectations.
Understanding The Apparent Mismatch Between Current Economic Conditions and the Financial System
- Existing theories of economics and the financial system cannot match successfully with current conditions.
- Long term data on stock index breadth, corporate earnings, Treasury yields and S&P 500 dividend yield strongly suggest a fundamental break with the past is in progress.
- Past economic and financial system models, analytical tools and metrics will have to be entirely reconsidered and reconstructed.
- The Secular Systemic Shift now underway is so profound and so far-reaching and so all-encompassing that it is probably analogous to the shift occasioned by the Age of Enlightenment, the Scientific Revolution, the American Revolution and (later) the Industrial Revolution.
Recently, in the wake of the dramatic, catalyzing events associated with the COVID-19 pandemic, analysts have struggled to match the action in the Economy with that of the Financial System. Existing disparities of inequality and maldistribution have been dramatically exacerbated as the financial indices have soared. In no quarter is there found any real explanation for the utter failure of all existent theories to anticipate or explain our current experience. The general reaction is one of befuddled annoyance. Irrespective of viewpoint, left or right, economists and market analysts are trying to figure out why the emergent reality does not conform to their model of how things should be and the default tendency is to wag a finger of blame at the other side of the aisle.
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Jul 09, 2020 | turcopolier.typepad.com
In the Eisenhower era, corporations paid over 1/3 of the federal budget. Tariffs on imports also paid a large percentage. The top marginal personal income tax rate was 70%.
In the 1960s, my father worked for Bell Aerosystems. The CEO made $120K managing 20,000 employees and building surface ship and rocket engines for Gemini and Apollo. Dad made $12K in an administrative role and experienced machinists made $18K.
The system WORKED for most everyone.
Today, chief executives make 300X the earning of peons. Corporations pay only 6% of the federal budget. Amazon paid ZERO corporate income tax. Apple paid 2%. Lockheed Martin paid 14%.
And where are they going to move, Colonel? Maybe LM will go to Russia or China? Maybe Amazon will move to Alexandria and make life miserable there? Microsoft to Bangalore or Little Rock?
Race to the bottom pandering to corporations, which has been the case for 40+ years now. There is absolutely nothing wrong with expecting corporations to pay taxes. I have no idea what is the basis of the objection. Do any of the readers here pay more than corporations? I sure do!
Posted by: upstater | 09 July 2020 at 05:49 PM
Jul 09, 2020 | www.zerohedge.com
by Tyler Durden Thu, 07/09/2020 - 02:45 Twitter Facebook Reddit Email Print
Germany eased strict social distancing restrictions on April 20 and started the process of reopening its economy as the virus pandemic curve flatten. However, the consequence of closing businesses and forcing people to stay home, along with shutdowns of international commerce, resulted in a deep recession in the first half of the year for the exporting nation.
A new survey via the German Chambers of Commerce (reported by Reuters ) said 83% of domestic firms with high international exposure had experienced a collapse in revenues. Many of these firms, about 93% of respondents, said the global economy could improve in 2021 or beyond.
The survey is an eye-opener for Europe's largest economy, and one of the largest exporting nations in the world, suggesting a global economic recovery in the shape of a "V" is not feasible for the back half of 2020. About 15% of the 3,300 companies surveyed said their annual turnover is expected to be halved.
It was noted the impact of the virus-induced downturn, whereas at the start of the pandemic, crushed travel and tourism, has now impacted other sectors and rippled through the economy in the form of a demand shock.
Fifty-nine percent of respondents this month (July) warned of slumping demand for their products and services, up from 57% in April.
Under such conditions, firms are unwilling to invest - more than half of the respondents said they're cutting CapEx abroad, compared with 35% in April.
We noted on Tuesday, global CapEx is expected to be slashed, on average, 12%, which is much larger than the 11.3% decline during the global financial crisis in 2008-09. Global capital expenditure weakness suggests a weak recovery is ahead.
German Chambers of Industry and Commerce released a report on Wednesday indicating exports will drop by 15% in 2020 with a slight recovery in 2021.NEVER MISS THE NEWS THAT MATTERS MOST
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The German government has unveiled a $146 billion stimulus package to jump-start the severely damaged economy. However, it appears the recovery, so far, has been a dead cat bounce that will not revert to 2019 growth activity levels for the next several years, or longer...
German industrial production has a long ways to go...
So what must be done to supercharge a recovery? Well, we offer insight here .
Jul 09, 2020 | www.zerohedge.com
Authored by Wolf Richter via Wolf Street,
With Covid-19 cases surging in the US and in other countries, airline industry ticket sales for both domestic and international flights are declining again, as demand has turned south, according to a presentation to employees by United Airlines, filed with the SEC on July 7.
UA's presentation included the two charts below of new ticket sales for future travel, by "all carriers and sales channels," based on data by Direct Data Solutions (DDS) through July 2. They show the percentage decline in industry-wide ticket sales for domestic and international travel from the same period last year (in a 7-day moving average). The charts are titled, "Increase in Covid-19 cases negatively impacting industry demand":
The first chart shows the decline in ticket sales for domestic flights, in terms of the number of passengers (blue line) and dollar revenues by the industry (purple line):
This second chart shows the decline in international ticket sales in terms of the number of passengers:
So that's the end of any pretense of a "V-shaped" recovery of ticket sales. And it's likely that not just airlines are impacted by this resurgence in Covid-19 cases. But airlines are already teetering on the edge.
Yesterday, United Airlines announced that 36,000 employees in the US, or 45% of its US workforce, could face "involuntary furloughs" on on or after October 1. That's the day after the restrictions attached to the $25 billion in payroll aid under the CARES act expire.
United's memo of the layoffs went out to employees in order to comply with a federal law that requires employers to give employees at least 60 days' prior warning before mass layoffs, the so-called WARN notices.
The "involuntary furloughs" would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1, the company said.
"The reality is that United simply cannot continue at our current payroll level past October 1 in an environment where travel demand is so depressed. And involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising," the company said.
Delta Airlines told pilots in late June that it would send WARN notices to 2,558 pilots, or nearly 20% of its pilots, notifying them of potential furloughs. Last week, Delta said that it may cut the number of flights it had scheduled for August due to lack of demand. A month ago, Delta issued the mother or all revenue warnings .
All airlines have been trying to cut their workforce with voluntary measures and have been offering severance packages and early retirement packages to nudge employees out the door without having to lay them off. Over the next few weeks, as the 60-day period before October 1 approaches, more airlines will follow United in announcing mass layoffs.
The drama of the dropping ticket sales due to the Covid-19 resurgence is not yet reflected in the TSA's checkpoint screenings at US airports – a measure of how many people are getting on a plane. They were still down 74.4% yesterday, compared to the same weekday last year. They have risen since the low point in April, but at a painfully slow pace.
The TSA checkpoint screenings are a lagging indicator. These people bought their tickets often weeks or months ago. The declining ticket purchases in recent days will be reflected in future TSA screenings:
Four months into the crisis, airlines are still only flying a quarter of the passengers that they flew last year at this time, and they're having trouble hanging on.
United told reporters today that despite the radical cost cuts and capacity reductions, it is still burning $40 million per day. That's $1.2 billion a month, month after month. And it said that it could not count on further government support to cover payroll costs from October 1 forward. The company said that 26,000 employees had already taken part in the voluntary severance programs so far this year.
The V-shaped recovery of airline stocks is also funny looking. The WOLF STREET airline index of the seven largest US airlines – Alaska, American, Delta, JetBlue, Southwest, Spirit, and United – remains in dismal territory, down 49% from the Good Times in mid-January 2020, and down 60% from the Better Times in January 2018 (market cap data via YCharts ):
The market cap of all seven airlines has plunged since mid-January, but with different nuances, as of the close today:
It's going to be a long tough slog for passenger traffic to recover. In addition to the issues related to the Pandemic, there is now a structural issue: Business travelers, the most profitable segment for airlines, may not fully recover in a very long time because companies have now discovered that video conferencing and video chats can effectively replace many trips.
Sure, there will be some business travel after the Pandemic disappears as an issue, but a lot less than there was before. This is a huge savings in time and money for companies. But it's a deep long-term hole for airlines.
* * *
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Jul 09, 2020 | www.zerohedge.com
Almost 50 Million Americans Have Now Filed For First-Time Jobless Benefits Since Lockdowns Began by Tyler Durden Thu, 07/09/2020 - 08:34 Twitter Facebook Reddit Email Print
Despite the hope-restoring nonfarm payrolls "recovery" and the over-hyped bounce in retail sales (ignoring the lack of 'V' in industrial production) and 'soft' sentiment surveys (which are biased by their nature as diffusion indices to bounce back hard), for the sixteenth week in a row, over 1 million Americans filed for unemployment benefits for the first time (1.314mm was slightly better than the 1.375mm expected).
Texas, New Jersey, and Louisiana suffered the biggest increases in jobless claims in the prior week...
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Accountability Might Be an Issue as Data Shows 500,000 Businesses Retained No Jobs Yet Received PPP Loans
Pick your own fruit: Thousands of Finns replace foreign workers save summer strawberry harvest
UK Chancellor Rishi Sunak slashes VAT on tourism and hospitality from 20% to 5% until January
Meal deal among new UK £30 billion stimulus plans
That brings the sixteen-week total to 49.993 million, dramatically more than at any period in American history. However, as the chart above shows, the second derivative is slowing down drastically (even though the 1.314 million rise this last week is still higher than any other week in history outside of the pandemic)
Continuing Claims did drop very modestly but hardly a signal that "re-opening" is accelerating! And definitely not confirming the payrolls or sentiment data...
And as we noted previously, what is most disturbing is that in the last sixteen weeks, far more than twice as many Americans have filed for unemployment than jobs gained during the last decade since the end of the Great Recession ... (22.13 million gained in a decade, 49.993 million lost in 16 weeks)
Worse still, the final numbers will likely be worsened due to the bailout itself (and its fiscal cliff): as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31.NEVER MISS THE NEWS THAT MATTERS MOST
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Finally, it is notable, we have lost 378 jobs for every confirmed US death from COVID-19 (132,309) .
Was it worth it?
The big question remains - what happens when the $600 CARES Act bonuses stop flowing?
Jul 08, 2020 | www.zerohedge.com
Authored by Alicia Kelso via RestaurantDive.com,
New research from Yelp shows that as of June 15, there were nearly 140,000 total business closures on the website since March 1. When compared to similar research released in April, which showed more than 175,000 business closures, these latest numbers indicate that more than 20% of businesses closed in April have reopened.
In March, restaurants had the highest numbers of business closures listed on the app compared to other industries, and the rate of closure has remained high. Of the businesses that closed, 17% are restaurants, and 53% of those restaurant closures are indicated as permanent on Yelp. Retail, however, is the hardest hit overall.
During the peak of the pandemic, the number of diners seated across Yelp Reservations and Waitlist dropped essentially to zero. In early June, numbers of diners seated are down 57% of pre-pandemic levels.
Predictions about the restaurant industry's fate in a post-pandemic world have been abundant throughout the crisis . The National Restaurant Association estimated that 15% of restaurants could close, while Barclay's estimate is more optimistic, predicting approximately 10% of restaurants will shutter permanently.
Though it's hard to find a silver lining in Yelp's data, some predictions have been more dire still. In May, OpenTable said one in four restaurants were at risk for closure, for example, though those numbers focus on restaurants that use the reservations platform. Casual or fine dining sit-down restaurants and mom-and-pop concepts that are not well capitalized are expected to experience the brunt of this crisis. The Independent Restaurant Coalition , for example, forecast that as many as 85% of independent restaurants could permanently close by the end of the year.
Yelp's data does illustrate how some restaurants have been able to weather the storm, however, reporting a 10-fold increase in searches for takeout since March 10, for example. Takeout and delivery searches are up 148%, with Yelp predicting this off-premise trend could be here to stay.
The research also shows that restaurants catering to group dining are making a comeback, with fondue searches up 123%, tapas bars up 98%, hot pot up 49% and buffets up 17%. Conversely, searches for cuisines that were popular during the past three months have begun to wane, including pizza (down 28%), Chinese (down 26%) and fast food (down 18%).
While the pendulum has swung toward group dining, perhaps due to pent up demand after three-plus-months of safer at home orders and dining room closures in some markets, this interest could be short lived. This data was released before a number of states -- New Jersey , New York and California among them -- have delayed or re-closed some or all of their restaurants due to spiking coronavirus cases. Extended closures will further challenge operators who are burning through cash to maintain rent, labor and other costs. Restaurants with the strongest balance sheets and best access to capital have the best chance to endure sustained closures. The industry will favor the haves and weed out the have-nots, a trend that has become clearer as major chains like Taco Bell, Domino's and McDonald's have announced massive hiring sprees .
Jul 08, 2020 | www.zerohedge.com
The virus pandemic and socio-economic shockwave across the US (read ad hoc protests and riots), and more specifically in top metro areas, has created much uncertainty for city dwellers who are now fleeing for suburbs.
Over the past several months, we have documented city dwellers leaving big cities for suburbs, small towns and communities to isolate from the virus and socio-economic tensions unfolding in many metros. While the exodus from cities is still in the early stages, it's now believed by at least one expert, that city dwellers could continue to flee US metros for the next 18-24 months.
"I think the next 18 to 24 months are going to show a lot of exodus out of central business districts, as you can expect," Hessam Nadji, president and CEO of Marcus & Millichap, who spoke with CNBC on Tuesday.
"We're seeing there's a lot of office vacancy, for example, in the suburbs that have now been absorbed; there's a lot of demand for rental homes that we're seeing because people are fleeing especially hot spots like New York, but ... you just have to keep a long-term view on it," Nadji said.
He said over the next several years - suburban areas will see exponential demand. Already, real estate searches for suburban zip codes surged 13% in May, according to data via Realtor.com.
We've already noted that New York and the Bay Area are seeing residents migrate to suburbs.
- Murders Spike In NYC As Residents Flee For Suburbs
- San Francisco Rent Drops Most On Record As People Flee For Suburbs
- US New Home Sales Plunge To 10 Year Low As Exodus From Cities Accelerates
Nadji said people are also fleeing to the outskirts of Seattle and Miami.
"It was a trend that was starting to happen already over the last two or three years. You have to remember that 60% of millennials are now in their 30s," Nadji said. "While they really enjoyed the lifestyle of central business districts and the lack of commuting ... we were beginning to see them migrate back out as they were getting married and having kids," and the "health crisis has really accelerated that pattern."
He said the outbound migration from cities would also result in businesses chasing employees to the suburbs. Nadji said people won't "permanently" lose interest in cities - at the moment, this is an "overreaction" to the ongoing virus pandemic.
"We saw that [demand sap] post 9/11 and those tragedies, of course, because of the reluctance to want to locate in high-visibility high rises in downtown[s]," Nadji explained. "Eighteen to 24 months later, that [concern] began to dissipate. So, it's a normal reaction. I just don't think we should count out the long-term prospects of the benefits of central business districts."
What's different today is that the country has stumbled into one of the worst public health crises in decades, tens of millions of people are unemployed, and the entire transformation of the economy, which includes working remotely will lead to permanent population loss for city centers - where living standards are in declines - as well as cost of living as a Manhattan studio costs the same as a "mansion" in the suburbs.
Guess who is most excited about this exodus? Well, baby boomers, because they bought/built oversized McMansions , with brick on front and stucco on back, in the late 1990s and early 2000s - and whose attempts to offload this real estate has been met with poor demand... until now.
yellowsub , 8 hours ago
It can't last for 2 years, the property bubble in many areas outside of NYC on the NJ side is already close to peak prices before the crash... Most of these areas are not places where you want to raise your child in their schools.
Jul 08, 2020 | www.zerohedge.com
Authored by Charles Hugh Smith via OfTwoMinds blog,
Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy.
Now that the pandemic is over and the economy is roaring again--so the stock market says--we're heading straight back up into the good old days of 2019. Nothing to worry about, we've recovered the trajectory of higher and higher, better every day in every way.
Everything's great except the fatal rot at the heart of the U.S. economy hasn't even been acknowledged, much less addressed: every sector of the economy is nothing but one form of neofeudal extortion or another.
Let's spin the time machine back to the late Middle Ages, at the height of feudalism, and imagine we're trying to get a boatload of goods to the nearest city to sell. As we drift down the river, we're constantly being stopped and charged a fee for transiting one small fiefdom after another. When we finally reach the city, there's an entry fee for bringing our goods to market.
Note that none of these fees were payments for improvements to transport or for services rendered; they were simply extortion. This was the economic structure of feudalism : petty fiefdoms levied extortionate fees that funded the lifestyles of nobility.
This is why I have long called America's economy neofeudal : we pay ever higher fees for services that are degrading, not improving. This is the essence of extortion: we don't get any improvement in goods and services for the extra money we're forced to pay.
Consider higher education: costs are soaring while the value of the "product"--a college diploma--declines. What extra value are students receiving for the doubling of tuition and fees? The short answer is "none." College diplomas are in over-supply, and studies have found that a majority of students learn remarkably little of value in college.
As I explain in my book The Nearly Free University and the Emerging Economy , the solution is to accredit the student, not the institution . If the student learned very little, he/she doesn't get credentialed.
Were students to have access to the best classroom lectures online (nearly free), and on-the-job apprenticeships in the workplace, (nearly free or perhaps even paid), learning would be significantly improved and costs reduced by 80% to 90%.
In this structure, there's no need for costly campuses or administration; the entire structure of higher education could be largely automated with software, except for the workplace apprenticeships which focus on case studies and real-world projects that are creating value in the here and now.
Consider healthcare: has the quality of healthcare doubled along with costs? Are Americans significantly healthier as the costs of healthcare have tripled? The aggregate health of Americans has arguably declined, while the stresses placed on frontline care providers by the ever-heavier burdens of compliance and paperwork have increased.
What about the $200 hammers and $300 million F-35 aircraft of the defense industry? Once again, as costs have soared, the quality and effectiveness of the products being supplied has arguable declined.
How about state and local government services? Are they improving as taxes and junk fees rise? Once again, government services are often declining in quality as taxes and fees increase by leaps and bounds.
In sector after sector, the quality of the goods and services has declined while costs have soared. This is the acme of neofeudalism: insiders and the New Nobility are skimming fortunes as prices skyrocket and the quality of the goods and services provided plummet.
Look at the cost increases in higher education, healthcare and childcare and ask yourself if the quality of those services have risen in lockstep with price increases.
This is nothing but neofeudal extortion. The cartels raise prices and we're forced to pay them, just as feudal commoners were forced to pay.
But extortion isn't the only feature of neofeudalism that is leading to collapse. Just as important is the slow erosion of commoners' self-rule and ownership of meaningful, productive capital.
This dynamic is explored in depth in The Inheritance of Rome: Illuminating the Dark Ages 400-1000 .
This gradual, almost imperceptible erosion is the essence of neofeudalism, a process of transferring political and economic power from commoners to a new Financial Aristocracy/Nobility.
If we examine the "wealth" of the middle class/working class (however you define them, the defining characteristic of both is the reliance on labor for income, as opposed to living off the income earned by capital), we find the primary capital asset is the family home, which as I have explained many times, is unproductive--in essence, a form of consumption rather than a source of income.
In a globalized, financialized economy, the only capital worth owning is mobile capital, capital that can be shifted by a keystroke to avoid devaluation or earn a a higher return.
Housing and pensions are "stranded capital," forms of capital that are not mobile unless they are liquidated before crises or expropriations occur.
I am also struck by the ever-rising barriers to starting or even operating small businesses, a core form of capital, as enterprises generate income and (potentially) capital gains. (The pandemic has only increased barriers that were already high.)
The capital and managerial expertise required to launch and grow a legal enterprise is significant, which is at least partly why a nation of self-employed farmers, shopkeepers, artisans and traders is now a nation of employees of government and large corporations.
What sort of capital can be acquired by the average commoner now? Enough to match the wealth and political power of financial Nobility?
As for political influence: a recent study found that voters had very little power in the U.S., which is effectively an oligarchy: Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens .
Summary: "The U.S. government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful, a new study from Princeton and Northwestern universities has concluded."
Neofeudalism is not a re-run of feudalism. It's a new and improved, state-corporate version of indentured servitude. The process of devolving to feudalism required the erosion of peasants' rights to own productive assets, which in an agrarian economy meant ownership of land.
Ownership of land was replaced with various obligations to the local feudal lord or monastery-- free labor for time periods ranging from a few days to months; a share of one's grain harvest, and so on.
The other key dynamic of feudalism was the removal of the peasantry from the public sphere. In the pre-feudal era (for example, the reign of Charlemagne), peasants could still attend public councils and make their voices heard, and there was a rough system of justice in which peasants could petition authorities for redress.
From the capitalist perspective, feudalism restricted serfs' access to cash markets where they could sell their labor or harvests. The key feature of capitalism isn't just markets-- it's unrestricted ownership of productive assets --land, tools, workshops, and the social capital of skills, networks, trading associations, guilds, etc.
Our system is Neofeudal because the non-elites have no real voice in the public sphere, and ownership of productive capital is indirectly suppressed by the state-corporate duopoly.
Our society has a legal structure of self-rule and ownership of capital, but in reality it is a Neofeudal Oligarchy. The decline is visible, and so is the trajectory to collapse.
My recent books:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF) .
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook ): Read the first section for free (PDF) .
The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).
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Jul 08, 2020 | www.zerohedge.com
Retail Apocalypse Accelerates - 8,700 Stores Closing, Number Set To Rise by Tyler Durden Wed, 07/08/2020 - 17:25 Twitter Facebook Reddit Email Print
The unprecedented implosion of U.S. commercial real estate during the coronavirus pandemic is likely to get worse as newly delinquent CMBS loans are surging as the list of retail store closures continues to rise.
Trepp's June CMBS remittance report showed CMBS delinquencies hit a high of 10.32%, not seen since 2012. It was noted that that retail CRE loans were in rough shape.
Many retail shops are heavily indebted, some have already declared bankruptcy, while others are quickly shrinking their operating size, by reducing store footprint to rein in cost as the virus-induced recession, blended with a plunge in consumption, along with a shift to online, is resulting in a rapid acceleration of the retail apocalypse.
Coresight Research's latest forecast has upwards of 25,000 retail stores could close by year end.
Forbes has released an updated list of confirmed store closures. So far, it looks like 8,708 store units have or will shutter operations this year, and could quickly surpass 2019 totals of 9,302, in a matter of months.
- Forbes' Store Closure List In 2020
- Chuck E Cheese: 54 U.S. stores (bankruptcy)
- Destination Maternity: 90 stores (bankruptcy)
- GNC: 1,200 stores (bankruptcy)
- J. Crew: 54 stores (bankruptcy)
- JCPenney JCP: 154 stores (bankruptcy)
- K-Mart: 45 stores (bankruptcy)
- Modell's Sporting Goods: 153 stores (bankruptcy)
- Neiman Marcus (Last Call): 20 stores (bankruptcy)
- Papyrus: 254 stores (bankruptcy)
- Pier 1 Imports PIR : 936 stores (bankruptcy)
- Sears: 51 stores (bankruptcy)
- Signet Jewelers SIG : 232 stores
- Stage Stores: 738 stores (liquidating)
- Tuesday Morning: 230 stores (bankruptcy)
- AC Moore: 145 stores
- Art Van Furniture: 190 stores
- AT&T: 250 stores
- Bath & Body Works: 50 stores
- Bed Bath & Beyond: 44 stores
- Bloomingdale's: 1 store
- Bose: 11 stores
- Chico: 100 stores (estimated)
- Children's Place: 200 stores
- Christopher Banks: 30-40 stores
- CVS Pharmacy: 22 stores
- Earth Fare: 50 stores
- Express: 66 stories
- Forever 21: 15 stores (estimated)
- GameStop GME: 320 stores
- Gap: 230 stores
- Guess: 100 stores
- Hallmark: 16 stores
- Lord & Taylor: 30 or 40 stores
- Lowe's Canada: 34 stores
- Lucky Market: 32 stores
- Macy's M : 125 stores (over 3 years)
- Microsoft: 77 stores
- New York & Co: 27 stores
- Nordstrom: 16 stores
- Office Depot: 90 stores
- Olympia Sports: 76 stores
- Party City: 21 stores
- Starbucks SBUX: 400 stores (over 18 months)
- Victoria's Secret: 250 stores
- Walgreen: 100 stores (estimated)
- Walmart: 2 stores
- Wilson Leather & G.H. Bass: 199 stores
- Zara: 1,000 stores worldwide (over 2 years)
With thousands of retail stores closing and the economy contracting, the next conversation Wall Street will have is about deep economic scarring and permanent job loss.
Already, 3 million jobs have been eliminated from the economy, some of which have come from the closure of retail stores. The bad news about permanent job loss is that it's a consumption killer, resulting in less spending at retailers, suggesting an even greater amount of store closures beyond anyone's wild guess could be seen over the next 12-24 months.
This all suggests there's no V-shaped recovery this year - one might want to hunker down for a prolonged downturn, as explained here .
Jul 06, 2020 | crookedtimber.org
bruce wilder 07.06.20 at 4:11 am (45 )
mainstream Democrats recognize the need for radical change, and Biden will align with the mainstream position as he always has done
You said you would leave this, your third assumption, to comments, so here is my comment.
The U.S. is in the midst of a deep legitimacy crisis and contrary to popular belief among liberals, it is not Trump particularly whose legitimacy is being called into question. Oh, sure, there have been relentless attacks on him -- from partisan opponents and from much of mainstream media -- but like the "anti-racism" of the recent protests -- much of it is dissembling and distraction. Charges of colluding with Putin to win the 2016 election turned out to be fake news -- rather obviously so from the beginning -- but a big enough mob went down that path with no self-awareness. I am not saying Trump is not an egregiously bad President; he is. But, notice please, before you go assuming that mainstream Democrats are going wake up in 2021 wanting to govern in the real world , that they have not shown much inclination toward truth-telling or critical realism these last 20 years.
It is July. By January 2021, the U.S. economy will have suffered a structural collapse in multiple sectors. That is the economic consequence of the pandemic. Restaurants, shopping malls, bars, colleges, hotels, airlines, cruise lines -- easily 15% of the workforce will be unemployed and another 25% seriously underemployed.
Did I mention that the U.S. is undergoing a legitimacy crisis?? Whose legitimacy is being called into question?
I would submit that the legitimacy of the elite professional and managerial classes is being called into question, for want of performance or any sense of responsibility. The urban PMC are the core constituency of the establishment Democratic Party. The vestigial working class elements and the ideological Left are distant memories and oppressed minorities seeking social justice, mere props.
I would say the Party establishment is confident they can put the re-animated corpse of Biden into the White House. And look how gleefully they welcome Republican never-Trumpers into the clubhouse! If you were one of the fools and tools who thought Obama did not want Republicans to control Congress, you are getting another chance to see how the Obama Alumni Association works with the Lincoln Project, how happy they are to deliver the kind of policy that appeals to rich, old, suburban Republican women.
The thing is, the political classes -- the millionaire media pundits, the politicians, the lobbyists, the generals, the journamalists, the manipulative political operatives and propagandists, the pious policy "experts", the highly paid executives and financial managers running monopolies into the ground and non-profits into irrelevance -- they have enacted their neo-liberal agenda and it doesn't work.
We have just watched the once highly touted CDC completely botch the great Pandemic. They could not devise a test. They screwed up the rules on who could or should be tested. They lied early on about the need to wear masks. They staged a moral panic over a need for ventilators, when ventilators are a terrible therapeutic alternative. In the new Puritanism, they shut down public beaches but they watched passively as liberal heroes like Cuomo set off a holocaust by sending COVID-19 patients to nursing homes.
This in a country that cannot manufacture PPE. Or win a war. Trump, in his fumbling way, might get the U.S. out of Afghanistan, but the NY Times -- who brought us WMD not that long ago -- reports the Russians are paying bounties on American soldiers killed. No report on the treatment of Julian Assange though. Boeing is going to get the 737 Max in the air real soon now. Citibank is borrowing at 0.03 from the Fed and lending to credit card users at 27% and may be insolvent.
So, let us assume the Democrats, after nominating an elderly SOB who had a hand in the crime bill that gave the U.S. the highest incarceration rate in the world, the bankruptcy bill that saddled tens of millions with credit card and student debt that cannot be discharged, and every stupid war of the last nearly twenty years, will suddenly see the necessity of radical change. And, after making an alliance with conservative Republicans hostile to even Trump's fake populism in order to elect Biden, seeing the light on radical reform is so likely! So plausible.
And, what's the play? The carrot of bi-partisan cooperation coupled with the fearful stick of abolishing the filibuster someday somehow if they don't play nice. You do realize that only Republicans are allowed to manipulate the filibuster and only in ways that favor their agenda of, say, stacking the courts? And, the strategic vision? Reinforcing the Rube Goldberg contraption which is Obamacare? You do know Biden is on record as adamantly opposed to Medicare4all? And, that Medicaid is a need-based nightmare of controlled deprivation? In a country where public health is such a shambles that a pandemic is running out of control.
You can do better.
Hidari 07.06.20 at 9:59 am ( 51 )
'All the attention in this thread so far has been on the political dimension of uncertainty, but it seems to me the public health dimension is also crucial and quite up in the air. What will the trajectory of the virus look like in the US over the next several months? Will infections continue to explode out of control?'
Not just the public health, but the economic effects of the public health. As I pointed out in a previous thread, it's not difficult to work out why Trump looked like he was going to win in January: the stock market was booming, unemployment was low, crime was low, there were no new wars it's not a mystery.
People vote with their wallets.
If Trump someone manages to face down the neo-liberals in his own party and arrange for a gigantic stimulus bill (bigger than the last one) and keeps 'benefits' going past August, he is in with a shout. If he doesn't, and if the economy continues its path to free fall, he will lose.
People vote with their wallets. It is not difficult. You don't need to invoke Russia and etc. to work out why Trump won in 2016 (the impact of the Obama stimulus package, which was too small, hadn't et 'percolated through' to people's bank balances at that point). And, if Trump loses in 2020, the reasons will be self-evident and nothing to do with 'people seeing through him' or 'brave liberals averted a turn to fascism'. If he loses it will be because he screwed up on the 'good' economy.
People vote with their wallets.
Jul 06, 2020 | www.zerohedge.com
Via Greg Hunter's USAWatchdog.com,
Three time best-selling book author Nomi Prins says long before the Covid 19 crisis, the global economy was faltering big time. The Fed stepped in with the start of massive money printing in late 2019 to save the day.
Prins explains, " We were already in crisis mode as I mentioned at the end of my last book going into 2019."
"What did we see at the end of 2019? We saw this pivot, and I call it phase two. . . . Central banks had pivoted to easing mode . . . . Come September, October, November and December, the Fed is producing repo operations. Those are short-term lending operations that are supposed to be the purview of the banks . . . . The Fed is not supposed to get involved, but it did. The Fed had all kinds of excuses. It said it was not QE, but it was. . . . The debt at the end of 2019 for the world was three times GDP. For every $3 borrowed, only $1 of economic activity occurred. That's what we started 2020 with. Throw a pandemic into that . . . and you have a long drawn out financial and economic crisis."
Now, the money printing has gone into overdrive to save the system from the virus crisis. The social and economic damage, according to Prins, is profound and not going away. Prins points out,
"We are not going to pay back this debt, and this is global. Nobody is even considering trying to pay back the debt that has been created. Let's think about why that debt has been created. It's not just because the economy slowed down. That's one reason and kind of an excuse. The reality is the Fed is on steroids, and other central banks are on steroids . . . throughout the world in a larger number and larger magnitude than in the wake of the financial crisis of 2008. This means all this new debt created is even cheaper than the debt created going into the 2008 crisis. So, more debt, created more cheaply, means less incentive to pay it back and more incentive to push it down the road and grow it. You've got this snowball of debt rolling down this high mountain, and it's rolling and growing and getting bigger. The mountain, which is the main street economy, is coming down as the snow ball is coming down, and the main street economy itself, that foundation, is really shaky. . . . How does this end? It ends with us, the foundation, which is the main street economy, by both that snowball of debt and the avalanche of the mountain. That's going to be a multi-decade problem. "
Prins says this next stage has a brand new name and explains,
" I call this a 'Permanent Distortion.' I have not used this term in prior books, but I am using it because . . . the disconnect between financial assets, equity markets and the real economy . . . has become massive ...
There is going to be this endless supply of artificial stimulation into the markets. . . . Former New York Fed President Bill Dudley said the Fed's balance sheet is going to $10 trillion. That's what I have been saying, and now he finally said it. That's not going away anytime soon. That's not being unwound anytime soon. That becomes permanent lift to financial assets . . . . In the wake of that, less real capital gets used for infrastructure, research and development, growth and retooling the economy and getting jobs into this new period."
Prins says gold prices are going to "follow the expansion of the Fed's balance sheet." It is that simple, and Prins predicts,
"As we saw in the wake of the financial crisis of 2008, gold and silver will have the ability to go up quite substantially as the Fed's book increases in size, which we know it is going to do. We have been told that multiple times by many different words by Federal Reserve Chairman Jerome Powell."
In closing, Prins says, " We are continuing to drive up asset bubbles where we don't have the real economy to back it up..."NEVER MISS THE NEWS THAT MATTERS MOST
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"The more this 'Permanent Distortion' gets bigger, the more the likelihood the next crisis will happen... and it will be from a higher height. It will be from a larger bubble, a bigger snowball accelerating downward more quickly. I don't think we are out of this crisis. I think the markets are going to have a bumpy ride as the economy has a bumpier ride ."
Join Greg Hunter as he goes One-on-One with three time best-selling author Nomi Prins.
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Posa , 6 minutes agohugin-o-munin , 20 minutes ago
The Central Banks will buy up the debt and then liquidate it. Some currencies may be re-issued. Get over it. Not the end of the world.algol_dog , 35 minutes ago
I used to listen closely to what Nomi said before but now it is only more of the usual talk. The world is a very slow place and it takes a long time until new realizations spread but when they do there is little possibility to stop it. Right now the USD is dying as a world reserve currency. It is slow and strictly kept away as a talking point in media.
The US behaves and continues down a path that is only accelerating this process because it is not up to the US what happens to the USD, it is up to the rest of the world. This is a truth that no American wants to accept but it is a fact. The more aggressive and arrogant the US becomes the faster this will happen and a part of me thinks that is precisely the plan. It will not matter what either the Fed or Treasury does.
Nomi talks about price inflation hitting smaller and poorer nations right now but doesn't even come close to the fact that this is also happening in the US right now albeit much slower. Greg Hunter was too stuck on finding ways to praise Trump as usual to even push this question, if he even recognized it. The gospel from Wall Street and most certainly Goldman Sachs that the USD can never be questioned is all over this interview and which is why these 'former' truth tellers are just that - former.Motorhead , 40 minutes ago
Futures at new highs tonight. This week will break S&P highs for the year. Amazing time ...Balance-Sheet , 54 minutes ago
We've been hearing the same old stuff for easily 10-15 years from Jim Willie, Eric King, Peter Schiff, various/numerous gold bugs. et al., ad nauseam. Yeah, one day, they might be right, but repeating the same mantra for over a decade, one is bound to be right eventually.indus creed , 58 minutes ago
If it is permanent it is reality not a distortion and this is the point. The 1900s are long over and will not be returning nor will the 1800s be returning for that matter.
Will the National Debt ever be paid off? No and there was never any intention to do so.
The Fed is in charge and does not need to account to anyone other than Congress and its Banking and Budgeting committees therefore provides explanations it hopes people can understand though this might be ill advised in and of itself.
Will the Fed balance sheet go to 10T? It might but only if it seems necessary and that depends of future circumstances which in very fluid conditions cannot be forecast accurately especially when politicians snap the economy on and off again and again.
Do taxpayers have to pay back the Fed balance sheet? No.
Does the US Treasury or the Fed crowd out private investment making it less available or at higher interest rates. NO! and obviously not, right? Everyone can see that.
The Gold Standard is o-v-e-r and there are no practical limitations to the amount of dollars that can be authorized by Congress to the level deemed necessary.
Doesn't this mean the USG will issue unlimited e-dollars? No, anything can happen in a thought experiment of course but the target is to make sure that the supply of USD is just a little more than enough.
If a mistake is made can excess USD is issued can the excess be withdrawn? Yes, billions of dollars die every day anyway as loans mature and all UST issues like bonds that mature in Fed custody simply disappear automatically upon maturity. All of the 'dollars' and the bonds are electronic and are simply deleted electronically invisibly and with no PR issues.
Does Nomi Prins know this? Probably but, hey, she is trying to make a living here so must slightly overfulfill your existing expectations. That is just excellent marketing- you want the customer- that's you- to get a slightly heavy pour. :-)
Prins has co-hosted the TYT (The Young Turks) program on Youtube. In case you are wondering, TYT are deluded, woke supporters of AOC/The_Squad types.
Jul 04, 2020 | www.bloomberg.com
The coronavirus is inflicting a price shock on low income Americans that risks further driving up inequality.
In a study released this week, Bloomberg Economics estimated higher grocery and housing costs for lockdown necessities meant those households whose incomes are in the bottom 10% currently face inflation of 1.5% compared with 1.0% for the top 10% and the official 0.1% overall average recorded in May.
The explanation for the difference lies in how the Covid-19 pandemic has changed consumption patterns by forcing households to buy more food while spending less on transportation or recreational activities.
"In a period of protest and increasing anger about inequality, the differential inflation rate experienced by low- and high-income households is a concern," said Bloomberg Economics' Björn van Roye and Tom Orlik.
The suggestion the virus is less disinflationary than many economists believe poses a challenge for the Federal Reserve which is eyeing a slower inflation rate than that experienced by lower earners, who are instead facing a steady erosion of their purchasing power.
"Taken together with concerns about central banks bailing out investors ahead of firms and workers, and the benefits rich, asset-owning households gain from quantitative easing, it adds to the sense that central banks are unintentional contributors to the problem of inequality," van Roye and Orlik said.
Jul 04, 2020 | crookedtimber.orgJ-D 07.04.20 at 7:59 am ( 2 )Lee A. Arnold 07.04.20 at 5:20 pm ( 12 )
The more you tie your analysis of economic consequences to the assumption of a Democratic victory in the Presidential election and a Democratic majority in the Senate, the more of it will be at risk of being rendered moot by the Republicans retaining either the Presidency or a Senate majority or both, but I guess you know that and are implicitly accepting the risk of having to do a lot of rewriting in that event (if the book is supposed to appear after the elections) or of the book rapidly losing value after the elections (if it’s supposed to appear earlier).
By the same logic, the more you tie your analysis of economic consequences to one particular the way the political strategic battle will play out following the election of a Democratic President and Congressional majority, the more of it will be at risk of being rendered moot by the Democrats pursuing a different strategy. Given the initial assumption of a Democratic President with Democratic majorities in both houses of Congress, I suggest you would do better with a short discussion at a very high level of generality about why
- (a) you expect the Democrats to have the necessary political determination to overcome obstructionism by a Senate minority and/or the Supreme Court and
- (b) you believe there are strategic and procedural options available (not necessarily just one option) by which the Democrats could overcome Senate and/or Supreme Court opposition to a substantial extent if not entirely. You may be right in advising the selection of health care as the issue to fight on, but if the Democrats choose a different one and achieve a similar procedural victory, the economic consequences will be much the same, surely?
I’m assuming that the title is supposed to be a genuine indication of the main topic of the book and not a way of disguising a real topic of ‘What’s Going to Happen Next’ or ‘What Should Happen Next’, which would not be quite the same.
If the Democrats take the White House and Congress they’ll have a very short window to get anything done. The plutocracy will react by weakening the dollar e.g. by moving small amounts into the euro, cryptocurrencies and/or even the renmimbi. Interest rates will rise, and this will frighten many (or most) of the Democrats into austerity measures to reduce the budget deficit.
Thus will arise the old propaganda refrain that Democrats don’t know what they are doing, and the resulting frustrations, and Fox News falsehoods, might prompt voters to return Congress to Republican control in the midterms.
Therefore the Democrats should adopt a strategy of getting a few irreversible things done at the very beginning by ditching the filibuster and passing some popular programs which might ALSO help the party against Republican propaganda in future elections. This can be done in healthcare, comprehensive immigration reform, infrastructure, and new constitutional amendments.
- Healthcare — Push for a public option so people can choose to join a national single payer: “Health Care National Choice.” 70% of the people want this. This can grow to subsume and finally eliminate Medicaid, which is a tough sell to many state governments and their voters because they have to pick up half the Medicaid costs after several years.
- Immigration — Pass the total package: improved border security (including fencing) and an expanded immigration court system + immediate citizenship for DACA and a path to citizenship for the 11 million other illegals. “Comprehensive Immigration Reform.” 70% of the people want this, too. It has been proposed a half-dozen times in one form or another since Bill Clinton’s presidency, and the moderate Republicans come on board, but the rightwing fringe opposes it so it doesn’t get passed, and then the Republicans lie in the very next election that the Democrats want open borders. This insanity has to stop — stop being victims of the rope-a-dope, and get rid of the filibuster!
- Constitutional amendments — 1. Amendment against anonymous property holdings: A. End to dark money campaign contributions. B. End to anonymous shell corporations. C. Any candidate for US President must release the last ten years of tax returns.
Amendment against executive misconduct: A. Executive branch inspectors general shall not be removed but by Congressional approval. B. Not complying with Congressional subpoenas is an impeachable offense. C. In the case of House impeachment, “executive privilege” is automatically voided. D. If a President is removed from office, all of his or her pardons are automatically voided and the miscreants returned to jail.
likbez 07.05.20 at 2:29 am
So called “Democrats”, especially Biden himself, and Biden entourage are sellouts to financial oligarchy. They represent defeated in 2016 wing of the US neoliberal elite — adherents to classic neoliberalism and neoliberal globalization.
To expect them to attempt anything of value other the kicking the neoliberalism can down the road is extremely naive.
In this sense Lee A. Arnold post ( 07.04.20 at 5:20 pm #12) is completely detached from reality.
Jul 03, 2020 | www.youtube.com
John Smith , 7 months ago
Crazy lady: Math is discriminatory!
Mia Light , 8 months ago (edited)
Sometimes I wonder if the world is some kind of sitcom for aliens.
Johnny West , 7 months ago
Comprehending mathematics requires IQ ! Not equality. Lord, this woman lives in a rabbit hole.
Ruttigorn Logsdon , 7 months ago
And son that's how America became a third world country over night!
L0nN13 , 8 months ago
The bottom line is, they want to take away any problem solving skills that might build character, because someone might get hurt! Victimhood culture run amuck.
Sal Pacheco , 8 months ago
Mathematics is the cornerstone of all forms of trade, communications, home economics and every other aspect of life. Truth is they're dumbing everyone down to control populations!
Oprah and Michael Jordan are black billionaires , 4 days agoJewel Heart , 7 months ago
As a black American, this is so ignorant and offensive to me
The brilliant NASA mathematician Katherine Johnson just proves what a load of bx this latest rubbish is.
Mach 1 , 2 years ago
I have Master's Degree in Mechanical Engineering and I'm 62-years old. I have never once cared about the history of mathematics, other than a curiosity. Knowing the history of mathematics never helped me once to solve an ordinary second order differential equation.
Aric Lyles , 8 months ago
When a person lies while giving an interview they should be shocked or something. This lady is sitting there lying trying to prove a point. I have been in enough arguments to kow when someone is just arguing to keep the discussion going. She has already lost the argument deflected and differed responsibility when confronted with the legitimacy of the paper.
Go exercise healthy body makes a healthy mind not the other way around.
Jul 03, 2020 | www.moonofalabama.org
Seer , Jul 3 2020 10:34 utc | 125
NemesisCalling @ 28
I agree that globalism is/will be heading into the dumpers, but I see no chance that US-based manufacturing is going to make any significant come-back.
The world's economy is in contraction. Although capital, what actual capital exists, will have to try and do something "productive," it is confronted by this fact, that everything is facing contraction. During times of contraction it's a game of acquisition rather than expanding capacity: the sum total is STILL contraction; and the contraction WILL be a reduction in excess, excess manufacturing and labor.
What market will there be for US-manufactured goods? US "consumers" are heavily in debt and facing continued downward pressures on income. China is self-sufficient (enough) other than energy (which can be acquired outside of US markets). Most every other country is in a position of declining wealth (per capita income levels peaked and in decline). And manufacturing continues to increase its automation (less workers means less consumers).
There will certainly be, especially given the eye-opener of COVID-19, a big push to have medical (which includes associated tech) production capacities reinvigorated in the US. One has to look at this in The Big Picture of what it means, and that's that the US population is aging (and in poor health).
More "disposable" income goes toward medical expenditures. Less money goes toward creating export items; wealth creation only occurs through a positive increase in balance of trade. And on the opposite end of the spectrum, death, the US will likely continue, for the mid-term, to export weaponry; but, don't expect enough growth here to mean much (margins will drop as competition increases, so figure downward pressure on net export $$).
Lastly, and it's the reason why global trade is being knocked down, is that the planet cannot comply with our economic model's dependency on perpetual growth: there can NOT be perpetual growth on a finite planet. US manufacturing requires, as it always has, export markets; requires ever-increasing exports: this is really true for all others. Higher standards of living in the US (and add in increasing medical costs which factor into cost of goods sold) means that the price of US-manufactured goods will be less affordable to peoples outside of the US.
And here too is the fact that other countries' populations are also aging. Years ago I dove into the demographics angle/assessment to find out that ALL countries ramp and age and that you can see countries' energy consumption rise and their their net trade balance swing negative- there's a direct correlation: go to the CIA's Factbook and look at demographics and energy and the graphs tell the story.
I'll also note that the notion of there being a cycle, a parabolic curve, in civilizations is well noted/documented in Sir John Glubb's The Fate of Empires and Search for Survival (you can find electronic bootlegged copies on the Internet)- HIGHLY recommended reading!
All of this is pretty much reflected in Wall Street companies ramp-ups in stock-buy-backs. That's money that's NOT put in R&D or expansion. I'm pretty sure that the brains in all of this KNOW what the situation is: growth is never coming back.
MANY years ago I stated that we will one day face "economies of scale in reverse." We NEVER considered that growth couldn't continue forever. There was never a though about what would happen with the reverse "of economies of scale."
Make no mistake, what we're facing is NOT another recession or depression, it's not part of what we think as a downturn in the "business cycle," as though we'll "pull out of it," it's basically an end to the super-cycle.
We will never be able to replicate the state of things as they are. We are at the peak (slightly past peak, but not far enough to realize it yet) and there is no returning. Per-capita income and energy consumption have peaked. There's not enough resources and not enough new demand (younger people, people that have wealth) to keep the perpetual growth machine going.
Jul 01, 2020 | www.reddit.com
Petition against Prof Priyamvada Gopal now off line. Additionally I noticed earlier today that the comments given on the site voicing why they were signing had all been removed, but not on other petitions. As of yesterday evening these comments were peaceful, and not personal, just things like 'because it is racist' and 'do I even need to give a reason'?
The petition had nearly 25,000 signed supporters earlier today, and new signings were flooding in at over 1/sec when I checked.
In addition in an affront to common decency the University/College promoted her whilst they had stated earlier they were aware of the controversial nature of her tweets.
Her original tweet was deleted by Twitter as a breach of community guidelines. She also reports that, in spite of senselessly provoking people at a delicate time with racist tweets, that the extremely racist responses she got from some far right people was being looked at by the Police.
All in all this establishes a systematic problem. Being deliberately vague means you cannot use context as a defence, and the context of all her tweets shows some extreme patterns of thinking against certain groups that casts very considerable doubts on the validity of such a defense. Moreover, context hasn't been a defence when others have been prosecuted for far less. Nobody, including Cambridge academics, should be above the law.
To those people that think that what she said was justified because she was trying to defend BLM from supposed alternative movements, all she in fact did do was to achieve the opposite of that.
If one wishes to convey complex ideas a teacher of English in her position *must know* that this requires a long form medium to provide argumentation, and that Twitter is no such place to do it due to its character count. But taking in all the other comments she has made, its very clear the double standards and overall bias that really does amount to overt prejudice.
At the very least she is so contradictory, immature and incompetent as to make a mockery of her college and for that reason at minimum, she should lose her job. I'm sorry to say that as well.
But something about this whole episode feels like a jumping the shark moment. I don't think this is going away all that easily.
Jul 01, 2020 | www.unz.com
Jeff Stryker , says: June 30, 2020 at 5:59 pm GMT@Rev. Spooner bout the Bill of Rights or the Constitution or community. Those are a joke to people whose money is made transnational.
The lumpens who have never traveled out of their state have no concept of geographic dimensions. They have never even left home. They think everyone is as patriotic as them and will fight and die for their country and their community.
I assure none of the elite care a whit. Penthouses look the same from Manhattan to Tokyo.
Ask the Boers in South Africa or Polish in Detroit who did not "sniff the wind" in time.
The guy who has a gun loaded in his pocket as an insurance policy has a plan and it does not end well for the person who hit him.
The elites have two or three passports, own businesses overseas, own houses.
Jul 01, 2020 | www.amazon.com
J.L. Populist Top Contributor: Guitars
The Close Relationship Between the Rich and Politics.
5.0 out of 5 stars The Close Relationship Between the Rich and Politics. Reviewed in the United States on January 15, 2009 Verified Purchase In this large book Kevin Phillips takes the reader on a lesson of economics and politics. Much of the history in WEALTH AND DEMOCRACY is of the American variety. He does, however, examine Spain, Holland,and Britain and the commonality these past governments have with the current American political and economic scene. The biggest common thread is the shrinking of the middle class a/k/a stratification of wealth.
One of Mr. Phillips observations is that in the 1990s transnational corporations posted record earnings while hiring few Americans. Sometimes slashing employment to boost the bottom line.
Along that line he quotes Peter Cepelli, a professor at Wharton School of Business- "Today, a CEO would be embarrassed to admit he sacrificed profits to protect employees or a community."
He also describes the shifting of the tax burden from corporations to low and middle income individuals through FICA taxes.
His quote on page 242 sums up American politics of the 1890s- "For two or three decades, then, democracy was corrupted at its constitutional core. Control of the Senate secured not just that chamber but the federal courts, the U.S.Supreme Court, and the U.S. Army to the service of American industry and finance."
He demonstrates in this book that wealth has been a factor in the politics of the United States from the very start. Finance (banking) has had it's proponents like Hamilton and some presidents through time while it has also had it's opponents; most notably Thomas Jefferson and Andrew Jackson.
The author takes a look at the worth of some former Cabinet members, Warren Harding's especially, although he wasn't the only president to tap the wealthy for his service.
Another interesting point that Mr. Phillips makes is that globalization can be, and has been in the past, reversed.
One of the curious inclusions in this book is found on page 71. It's an excerpt of a letter from FDR to Col. Edmund Mandell House. (House is a rather controversial, mysterious figure in American political history and the subject of conspiracy theories. He was a close adviser to Woodrow Wilson during his presidency). "The real truth... is, as you and I know, that a financial element in the larger centers has owned the government ever since the days of Andrew Jackson- and I am not wholly excepting the Administration of W.W. The country is going through a repetition of Jackson's fight with the Bank of the United Sates- only on a bigger and broader basis."
The author also quotes such figures as John Kenneth Galbraith and Thorstein Veblen
The moral of WEALTH AND DEMOCRACY as I take it, is that our economic ills now are nothing more than a recurring pattern that has been experienced by various powerful governments in their heydays. Part of the problem is hubris or the belief that it can't happen again.
This is a large book and some sections are laborious to read, but the message of the book is comprehensible and detailed very well. It may just be the most detailed book on the subject of wealth and it's adverse affect on government, especially a democratic form of government.
Jul 01, 2020 | www.unz.com
The imposition of the nationwide lockdowns required elite consensus. There's no way that a project of that magnitude could have been carried out absent the nearly universal support of establishment elites and their lackeys in the political class. There must have also been a fairly-detailed media strategy that excluded the voices of lockdown opponents while– at the same time– promoting an extremely dubious theory of universal quarantine that had no basis in science, no historical precedent, and no chance of preventing the long-term spread of the infection. All of this suggests that the lockdowns were not a spontaneous overreaction to a fairly-mild virus that kills roughly 1 in 500 mainly-older and infirm victims, but a comprehensive and thoroughly-vetted plan to impose "shock therapy" on the US economy in order to achieve the long-term strategic ambitions of ruling class elites. As one sardonic official opined, "Never let a crisis go to waste."
It was clear from the beginning, that the lockdowns were going to have a catastrophic effect on the economy, and so they have. As of today, 30 million people have lost their jobs, tens of thousands of small and medium-sized businesses have been shuttered, second quarter GDP has plunged to an eye watering -45.5 percent (Atlanta Fed), and the economy has experienced its greatest shock in history. Even so, pundits in the mainstream media, remain steadfast in their opposition to lifting the lockdowns or modifying the medical martial law edicts that have been arbitrarily imposed by mainly-liberal governors across the country. Why? Why would the so-called "experts throw their weight behind such a sketchy policy when they knew how much suffering it was going to cause for ordinary working people? And why has the media continued to attack countries like Sweden who merely settled on a more conventional approach instead of imposing a full-blown lockdown? Swedish leaders and epidemiologists were unaware that adopting their own policy would be seen as a sign of defiance by their global overlords, but it was. Elites have decided that there can be no challenge to their idiotic lockdown model which is why Sweden had to be punished, ridiculed, and dragged through the mud. The treatment of Sweden further underscores the fact that the lockdown policy (and the destruction of the US economy) was not a random and impulsive act, but one part of a broader plan to restructure the economy to better serve the interests of elites. That's what's really going on. The lockdowns are being used to "reset" the economy and impose a new social order.
But why would corporate mandarins agree to a plan that would shrink their earnings and eviscerate short-term profitability?
Why? Because of the the stock market, that's why. The recycling of earnings into financial assets has replaced product sales as the primary driver of profits. As you may have noticed, both the Fed and the US Treasury have taken unprecedented steps to ensure that stock prices will only go higher. To date, the Fed and Treasury have committed $8 trillion dollars to backstopping the weaker areas of the market in an effort to flood the market with liquidity. "Backstopping" is an innocuous-sounding term that analysts use to conceal what is really going on, which is, the Fed is "price fixing", buying up trillions of dollars of corporate debt, ETF's, MBS, and US Treasuries to keep prices artificially high in order to reward the investor class it secretly serves. This is why the corporations and Tech giants are not concerned about the vast devastation that has been inflicted on the economy. They'll still be raking hefty profits via the stock market while the real economy slips deeper into a long-term coma. Besides, when the lockdowns are finally lifted, these same corporations will see a surge of consolidation brought on by the destruction of so many Mom and Pop industries that couldn't survive the downturn. No doubt, the expansion of America's tenacious monopolies factored heavily into the calculation to blow up the economy. Meanwhile, the deepening slump will undoubtedly create a permanent underclass that will eagerly work for a pittance of what they earned before the crash. So, there you have it: Profitability, consolidation and cheap labor. Why wouldn't corporate bosses love the idea of crashing the economy? It's a win-win situation for them.
We should have seen this coming. It's been clear since the Russiagate fiasco that elites had settled on a more aggressive form of social control via nonstop disinformation presented as headline news based on spurious accusations from anonymous sources, none of who were were ever identified, and none of whose claims could ever be verified. The media continued this "breathless" saturation campaign without pause and without the slightest hesitation even after its central claims were exposed as lies. If you are a liberal who watches the liberal cable channels or reads the New York Times, you might still be unaware that the central claim that the emails were stolen from the DNC by Russia (or anyone else for that matter) has not only been disproved, but also, that Mueller, Comey, Clapper etc knew the story was false way back in 2017. Let that sink in for a minute. They all knew it was a lie after the cyber security team (Crowdstrike) that inspected the DNC computers testified that there was no evidence that the emails had been "exfiltrated". In other words, there was no proof the emails were stolen. There was no justification for the Mueller investigation because there was no evidence that the DNC emails had been hacked, downloaded or pilfered. The whole thing was a hoax from the get go.
There's no way to overstate the importance these recent findings, in fact, our understanding of Russiagate must be applied to the lockdowns, the Black Lives Matter protests and other psychological operations still in the making. What's critical to grasp is not simply that the allegations were based on false claims, (which they were) but that a large number of senior-level officials in law enforcement (FBI), intel agencies, media and the White House knew with absolute certainty that the claims were false (from 2017 and on) but continued to propagate fake stories, spy on members of the new administration and use whatever tools they had at their disposal to overthrow an elected president. The guilty parties in this ruse have never admitted their guilt nor have they changed their fictitious storyline which still routinely appears in the media to this day. What we can glean from this incident, is that there is a vast secret state operating within the government, media and the DNC, that does not accept our system of government, does not accept the results of elections and will lie, cheat and steal to achieve their nefarious objectives. . That's the lesson of Russiagate that has to be applied to both the lockdowns and the Black Lives Matter protests. They are just the next phase of the ongoing war on the American people.
The lockdowns are an Americanized version of the "Shock Doctrine", that is, the country has been thrust into a severe crisis that will result in the implementing of neoliberal economic policies such as privatization, deregulation and cuts to social services. Already many of the liberal governors have driven their states into bankruptcy ensuring that budgets will have to be slashed, more jobs will be lost, funding for education and vital infrastructure will shrink, and assistance to the poor and needy will be sharply reduced. Shutting down the US economy, will create a catastrophe unlike anything we have ever seen in the United States. US Treasuries will likely loose their risk-free status while the dollar's as days as the "world's reserve currency" are probably numbered. That "exorbitant privilege" is based on confidence, and confidence in US leadership is at its lowest point in history.
It's not surprising that the Black Lives Matter protests took place at the same time as the lockdowns. The looting, rioting and desecration of statues provided the perfect one-two punch for those who see some tactical advantage in intensifying public anxiety by exacerbating racial tensions and splitting the country into two warring camps. Divide and conquer remains the modus operandi of imperialists everywhere. That same rule applies here. Here's more background from an article at the Off-Guardian:
"It is no coincidence that another Soros funded activism group Black Lives Matter has diverted the spotlight away from the lockdown's broader impact on the fundamental human rights of billions of people, using the reliable methods of divide and rule, to highlight the plight of specific strata's of society, and not all.
It's worth pointing out that BLM's activity spikes every four years . Always prior to the elections in the US, as African Americans make up an important social segment of Democrat votes. The same Democrats who play both sides like any smart gambler would. The Clintons, for example, are investors into BLM"s partner, the anti-fascist ANTIFA. While Hilary Clinton's mentor (and best friend) was former KKK leader Robert Byrd.
BLM is a massively hyped, TV-made, politicized event, that panders to the populist and escapist appetite of the people. Blinding them from their true call to arms in defense of the universal rights of everyone . Cashing in on the youths pent-up aggression . And weaponising the tiger locked in a rattled cage for 3-months, and unleashed by puppet masters as the mob
As a general rule of thumb, it is safe to assume that if a social movement has the backing of big industry, big philanthropy or big politics, then its ideals run contrary to citizen empowerment." (" The Co-opting of Activism by the State ", Off-Guardian)
Black Lives Matter protests provide another significant diversion from the massive destruction of the US economy. This basic plan has been used effectively many times in the past, most notably in the year following the invasion of Iraq. Some readers will remember how Iraqis militants fought US occupation forces following the invasion in 2003. The escalating violence and rising death-toll created a public relations nightmare for the Bush team that finally settled on a plan for crushing the resistance by arming and training Shia death squads. But the Bushies wanted to confuse the public about what they were really up to, so they concocted a narrative about a "sectarian war" that was intended to divert attention from the attacks on American soldiers.
In order to make the narrative more believable, US intel agents devised a plan to blow up the Shia's most sacred religious site, the Golden Dome Mosque of Samarra, and blame it on Sunni extremists. The incident was then used to convince the American people that what was taking place in Iraq was not a war over foreign occupation, but a bitter sectarian conflict between Sunnis and Shia in which the US was just an impartial referee. The killing of George Floyd has been used in much the same way as the implosion of the mosque. It creates a credible narrative for a massive and coordinated protests that have less to do with racial injustice than they do with diverting attention from the destruction of the economy and sowing division among the American people. This is a classic example of how elites use myth and media to conceal their trouble-making and escape any accountability for their actions.
Check out this excerpt from a paper by Carlo Caduff, an academic at King's College London, in a journal called Medical Anthropology Quarterly. It's entitled "What Went Wrong: Corona and the World After the Full Stop":
" Across the world, the pandemic unleashed authoritarian longings in democratic societies allowing governments to seize the opportunity, create states of exception and push political agendas. Commentators have presented the pandemic as a chance for the West to learn authoritarianism from the East. This pandemic risks teaching people to love power and call for its meticulous application . As a result of the unforeseeable social, political and economic consequences of today's sweeping measures, governments across the world have launched record "stimulus" bills costing trillions of dollars, pounds, pesos, rand and rupees . The trillions that governments are spending now as "stimulus" packages surpass even those of the 2008 financial crisis and will need to be paid for somehow. . .. If austerity policies of the past are at the root of the current crisis with overwhelmed healthcare systems in some countries, the rapidly rising public debt is creating the perfect conditions for more austerity in the future. The pandemic response will have major implications for the public funding of education, welfare, social security, environment and health in the future." ( Lockdownskeptics.org )
This is precisely right. The country has been deliberately plunged into another Great Depression with the clear intention of imposing harsh austerity measures that will eviscerate Social Security, Medicare, Medicaid and any other social safteynet programs that benefit ordinary working people, retirees, or anyone else for that matter. None of it is random, spontaneous or spur-of-the-moment policymaking. It's all drawn from a centuries-old Imperial Playbook that's being used by scheming elites to implement their final plan for America: Tear down the statues, destroy the icons and symbols, rewrite the history, crush the populist resistance, create a permanent underclass that will work for pennies on the dollar, pit one group against the other by inciting racial hatred, political polarization and fratricidal warfare, promote the vandals who burn and loot our cities, attack anyone who speaks the truth, and offer unlimited support to the party that has aligned itself with the corrupt Intel agencies, the traitorous media, the sinister deep state, and the tyrannical elites who are determined to control the all the levers of state power and crush anyone who gets in their way.
Jul 01, 2020 | www.unz.com
animalogic , says: June 30, 2020 at 10:04 am GMT
I think there's a lot to what Mike says. However, if we accept his premise we must also accept dangers of that premise.
Essentially, Mike is saying that Elites have used Covid & BLM etc shenanigans to advance a political/economic purpose: ie that the Fed/Treasury will blast huge chunks of liquidity to them via buying up any equities & bonds however dubious or junk they are. Secondary benefits include across the board austerity & working people desperate enough to almost sell themselves into slavery.
Elites have therefore bet BIG. Big returns but a potential for big losses Elites may have to contend with a real economy which becomes so bad it affects the fictitious economy of equities & bonds. An economy that no amount of Fed injections can save. And in trying to save it, maybe the Fed will finally injure the dollar to the point where is effectively loses it reserve status.
Jun 26, 2020 | www.zerohedge.comAuthored by Ryan McMaken via The Mises Institute,
Manufacturing company 7-Sigma made headlines when it decided to leave Minneapolis as a result of the company's plant being burned by rioters. "They don't care about my business," 7-Sigma owner Kris Wyrobek old the Star-Tribune . After more than 30 years in the city, the company isn't staying, nor are any of the company's fifty jobs. But the costs of being victimized in protests is just one of many reasons homeowners and businesses may be realizing life and business in central cities has lost its luster. The ongoing threat of more business lockdowns, more riots, higher taxes, and failing schools may induce many Americans to flee, once again, to the suburbs as their parents or grandparents did.
This goes well beyond the fear of the disease many journalists have assumed is behind the observed beginnings of an exodus from cities. Yes, many in the upper classes have fled the cities for their mountain homes and yachts for "health reasons." But these people are relatively few in number and their thinking quixotic. They can afford to drop everything and leave cities overnight.
But the larger impacts are likely to be felt as middle class homeowners and business owners conclude they'd simply rather avoid the edicts and neglect of mayors and city councils in central cities who thinking nothing of issuing job-destroying "stay-at-home" orders while allowing rioters and vandals free rein.
The real cost to cities is likely to emerge over time. It will come in the form of families and shop owners who decide it's best to move their businesses ten miles down the road to a neighboring city that will actually do something about rioters. It will come in the form of families which decide their next home will be just a little bit farther from the urban dictator-mayors who have the heaviest hands in enforcing lockdowns and business closures. It will come in the form of potential new business owners and homeowners will be decide to never purchase property to start a business in central cities in the first place.The Decline of Cities at Mid-Century
We may be seeing something reminiscent what happened in America's large central cities during the 1970s and 1980s. Many Americans concluded these cities had become unlivable and crime infested. Many concluded these were places that were quite inhospitable to doing business. So they left. (Forced busing for "integration" purposes was a factor as well.)
In some cases, there were dramatic events that illustrated the trend. The late sixties in New York saw several strikes by city workers. Transit and sanitation in the city became a disaster. The 1977 blackout in New York City ended in widespread riots that induced many businesses to pack up and never return. Many households followed.
But for the most part, cities saw an exodus that took many years and slowly hollowed out the finances and tax revenues of big cities. Areas of Detroit fell into ruin. By the mid seventies, New York City was lurching from one fiscal crisis to another.
"Nearly half of large cities lost cities shrank by at least 10 percent" during the 1970s, according to the Kansas City Fed :
St. Louis, Cleveland, Buffalo, and Detroit each shrank by more than 20 percent. Vast stretches of urban land were left virtually deserted.
More than half of large cities lost population from 1950 to 1980.
There were other factors at work as well, of course. The central cities were often hit the hardest as the old Rust Belt went into decline after the region was destroyed by labor unions and city and state laws that made business in the region inefficient and uncompetitive. Business owners and workers who possessed any real ambition or entrepreneurial spirit had good reason to leave the region altogether.
City centers, built on an old manufacturing-based working class never recovered.
The situation today is a bit different. During the 1990s, core cities began to recover from their mid-century decline and many officials and intellectuals in these areas began cultivating the so-called " creative class " (also known as the " bohemian bourgeoisie ") with the idea that young artists, engineers, architects, and tech workers might be convinced to move into city centers and and revitalize local urban economies. It appears to have worked in many cases.
But in 2020 America the hey day of the new techno-city may be over.Civil Unrest
The case of the Sigma-7 closure in Minneapolis is just the most famous case of central cities' hostility to businesses within their borders. We're not hearing about the many small less-notable businesses that won't re-open in the wake of riots. In other cities, such as Chicago, city officials are now begging retailers to not leave the city.
Meanwhile, a number of small businesses now within the "CHOP" zone in Seattle is suing the city for abandoning businesses to the whims of the leftist mob.
As reported by the local NBC affiliate, local businesses have been threatened and harassed by the bosses of the "Capitol Hill Occupation Protest" (CHOP) zone in the city. The city government, the plaintiffs have concluded, essentially have abandoned these businesses to the new "government":
The City's decision has subjected businesses, employees, and residents of that neighborhood to extensive property damage, public safety dangers, and an inability to use and access their properties.
Minneapolis and Seattle aren't the only cities the prospect of continued civil unrest. with forty million new unemployment filings in recent months, the US faces a worrisome period of highly elevated unemployment. Many of the worst-affected workers will be lower-income populations living in core cities. This won't help the prospect of a speedy return to placid city environments.Regime Uncertainty
As government experts and media pundits emphasize growth in reported COVID-19 cases, the prospect of renewed lockdowns now looms, as well. This is a threat at the state level and in many suburban local governments. But experience strongly suggests that those political jurisdictions controled by political leftists are likely to embrace the longest and harshest lockdowns. In many states, such as Texas and Colorado and California and Pennsylvania, local governments in big cities embraced lockdowns more enthusiastically than the surrounding regions and at the state capitols. "Regime uncertainty" -- uncertainty about what business-killing regulations a government might embrace next -- appears to be greater in central cities.
Business owners are likely to remember this. In the medium- and long-term, business owners and potential business owners will gravitate to those areas where the threat of harsh lockdowns is smaller.The Rise of the "Work-at-Home" Trend
If the work-at-home trend persists, core cities will have lost one of their main draws: namely, the prospect of a shorter commute for those who can afford a home close-in to the employment centers. Even if daily commutes are just reduced -- say, to a three-days-per-week schedule -- the commute-time cost of a home in the suburbs falls dramatically. Without the need to sit in traffic five days per week, more expensive city homes and the congrestion and crime of city centers becomes far less attractive.Declining Tax Revenue and Urban Blight
On top of it all will come big cuts to city budgets as COVID lockdowns decimated tax revenues . All cities and states will be impacted , but if the most productive taxpayers move out of the core cities, it is these areas that will feel the brunt of revenue shortfalls. In other words, a shift of productivity toward the suburbs and small cities will hollow out big city budgets and school district budgets as well. This will only encourage businesses and families to stay away in even larger numbers. Families will seek to avoid school districts and decline, and employers won't want to become part of a shrinking tax base where tax increases are frequently eyed by politicians as a way out.The Beginnings of a Trend?
All of this will take time to play out. Yes, we've started to see those with means leave big cities already. The New York Times has reported on numerous former residents of New York City who have left for the surrounding regions. The Times asks "is New York City worth it anymore?" and points out "the pandemic send young New Yorkers packing."
Meanwhile, some real estate agents report a "mad rush" of wealthy buyers to get out of the city center and into the wealthy suburbs of San Francisco. These are just the early movers. The exiles of more modest means will come later. Not surprisingly, the median rent in San Francisco for a one-bedroom apartment dropped 9.2 percent in May, compared year-over-year.
But these remains a small percentage of the overall population. Most homeowners, families, and business owners need time to move their businesses, sell their properties, and be convinced it's time to move on.
None of this should be interpreted, however, as a trend away from metropolitan areas overall. There appears to be little risk that large numbers of Americans will be quitting metro areas for rural villages and towns. Some will. But most will notice that metro areas still have most of the jobs, most of the cultural institutions, and most of the health care services. What can't be said is that core cities have a monopoly on these resources. In recent decades, suburbs and small cities have increasingly become places that host a wide variety of sports teams, museums, convention centers, hospitals, and more. Metro areas are still a good place to be. But old core cities? Not so much.
Jun 28, 2020 | www.moonofalabama.orgDeutsche Lufthansa Deal Shows How Bailouts Should Be Done karlof1 , Jun 26 2020 18:47 utc | 5
The corona pandemic has brought many companies to the brink of bankruptcy. Some can and should be saved by the government.
Lufthansa, the 94 years old Germany airline, just made a deal with the German government that shows how this should be done.
Yesterday the shareholders of Lufthansa voted to accept the government bailout:Lufthansa (LHAG.DE) shareholders on Thursday backed a 9 billion euro ($10 billion) government bailout, securing the future of Germany's flagship airline after it was brought to the brink of collapse by the COVID-19 pandemic.
The plan, backed by 98% of the shareholder capital that cast a vote at the online meeting, will see Berlin take a 20% stake in Lufthansa and two board seats.
Shares in the company, which employs around 138,000 people, closed 7.1% higher, having risen strongly earlier after top shareholder Heinz Hermann Thiele dropped objections to the deal.
Also on Thursday, European Union regulators approved Lufthansa's 6 billion euro recapitalisation, part of the bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid .
The deal structuring is interesting and quite favorable for the government.
The government bought newly issued Lufthansa shares for a total of $300 million which will give it 20% of the ownership of the company. These shares were valued at a quarter of their current value. The government will additionally provide €5.7 billion in 'silent capital'. That is a loan structured as a form of preferred shares that are entitled to a preferred dividend. This will have to be paid back before other shareholders will again get dividends. Lufthansa has a right to pay back the silent capital. But the 20% of the ownership via shares will stay with the government until it decides to sell it.
An additional 3 billion euro credit line is provided by a government owned bank.
This is a much better deal for the taxpayer than in the U.S. where the airlines which were bailed out only had to provide stock warrants which allow the government to buy some shares if it chooses to.
The Lufthansa deal prevents the bankruptcy of the company and a potentially unfriendly foreign takeover. Lufthansa was quite profitable before the onset of the coronavirus crisis. It is a good airline and it is now likely to survive. In a few years it will again make profits.
Seeking Alpha has more technical details of the deal and says that the current Lufthansa share price is too high :Currently, the share price is about €10.4, which corresponds to a very generous valuation of about 4 times estimated book value. It is also way higher than the €2.56 per share the German government paid. This discount of more than 75% suggests shares of Deutsche Lufthansa are way overvalued.
The share price may currently be overvalued and may well sink. But without the bailout deal the shares would have been worthless.
There is also a deal that will keep most of Lufthansa's employees in their jobs :[T]ough decisions lie ahead, with Lufthansa working on a restructuring plan in which up to 22,000 jobs could be at risk - although CEO Carsten Spohr told Bild newspaper that hours and wages could be reduced by a fifth instead of axing a fifth of jobs .
This sounds like a company wide introduction of a four day work week though with only 80% of the former full pay.
The cabin crew union has already agreed to such a deal and the pilot and ground worker unions will likely also do so. There currently ain't many airline jobs available elsewhere so for most of the employees this is a better deal than a potential long term unemployment.
I really like how this has turned out. A good company has been saved. The government has set the right conditions and it may even profit from the deal. The shareholders have taken a large haircut but will not lose all of their money. The employees will keep their jobs but with a reduced time and pay.
It would have been better if all this had not been necessary. But in the current situation it is the best that can be done.
All parties have taken a "we are all in the same boat" attitude to make this happen.
This should be an example for those bailout deals that will still have to be made.
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Posted by b on June 26, 2020 at 18:13 UTC | Permalink Yes, a Galaxy of difference between the cash giveaways called bailouts by the Outlaw US Empire and the partial nationalization of the airline that gains something for the German public in exchange for the infusion of capital. I expect to see more of this sort of activity as the EU begins to overthrow Neoliberalism.
Et Tu , Jun 26 2020 18:31 utc | 2No comment on the shocking US corporate theft. Actually, here's one: that country is looking worse than the USSR in the late 80's and the Marie Antoinette class will have to offer much more than cake to avoid a revolution...MegaMicro , Jun 26 2020 19:20 utc | 9
However, a quick look at Lufthansa's figures for 2019 on Wikipedia reveals:
Revenue Increase €36.42 billion (2019
Operating income Decrease €2.0 billion (2019
Net income Decrease €1.21 billion (2019
Total assets Increase €42.66 billion (2019
Total equity Increase €10.15 billion (2019
So the German Gov't paid 10 billion for a 20% stake in a company that yielded only a 3-4 % net profit at 100% of its total equity value. Never mind share valuations... can someone explain how that is actually a good deal for the German Govt please? Perhaps i am just giving the numbers a simplified look. Perhaps, given the immense power of private equity these days, everything has become relative.Better deal ?TG , Jun 26 2020 19:39 utc | 11
Lufthansa CEO compensation
"According to our data, Deutsche Lufthansa AG ...
... and paid its CEO total annual compensation worth
€4.4m over the year to December 2018"
Did our carsten spohr CEO:
take a cut, help the TEAM effort, fall on the sword ?
~4,400,000 EUR = carsten's take
Perhaps carsten provide the example to take a 90% cut of ~3,960,000 EUR, leaving him with a "paltry"
~~~440,000 EUR ( ~10 x average_German_salary )
@~~~44,000 EUR salary, then employee cost = ~80,000 EUR
49.5 = ( 3.96 Mega EUR ) / ( 80 k EUR )
therefore carsten alone, by taking a pay cut
can save the jobs of
~49.5 average Germans
and still earn ~10x more than average German employee.
PS: i'll do it for 440 k EUR
( there are studies showing that CEOs have almost no impact )Granted, the Lufthansa deal is far less toxic than the corporate bailouts we have seen in the United States, which are really just theft, and encouraging financially sloppy behavior and effectively subsidizing stock-buy back programs and other financial engineering rubbish.TG , Jun 26 2020 19:39 utc | 11
But I am still skeptical that it's all THAT good a deal. I mean, don't forget, if a company goes bankrupt its assets don't go up in smoke. It goes into receivership, the stockholders lose money, and the management that steered the company onto the rocks get fired, and replaced with hopefully better managers. The planes are still there, the employees are still working, etc. Granted that a government has a vested interest in not letting it get chopped up and dispersed, there is no need to preserve either stockholders or current management to keep the airline functioning.
The essence of capitalism is that people who make bad investments should lose money.Granted, the Lufthansa deal is far less toxic than the corporate bailouts we have seen in the United States, which are really just theft, and encouraging financially sloppy behavior and effectively subsidizing stock-buy back programs and other financial engineering rubbish.Hoarsewhisperer , Jun 26 2020 20:35 utc | 15
But I am still skeptical that it's all THAT good a deal. I mean, don't forget, if a company goes bankrupt its assets don't go up in smoke. It goes into receivership, the stockholders lose money, and the management that steered the company onto the rocks get fired, and replaced with hopefully better managers. The planes are still there, the employees are still working, etc. Granted that a government has a vested interest in not letting it get chopped up and dispersed, there is no need to preserve either stockholders or current management to keep the airline functioning.
The essence of capitalism is that people who make bad investments should lose money.QANTAS CEO Alan Joyce took home A$23.9m in 2018.BG13 , Jun 26 2020 20:39 utc | 16
In March 2020 he offered to work for free for the rest of the year ...
the Financial Year ...
which ends June 30, 2020.If somebody still calls this "market economy" the normal way would be: bankruptcy, first are served the employees, second the creditors. Shareholders lose, risk doesn't pay off all the time (except you own the government). The trade mark "Lufthansa" would be part of the insolvency estate, as well as all the planes. Used planes would be very cheap following the market rule of high offer vs. low demand. Personal is available as well. Good conditions for creating a new airline ... What exactly is the reason to throw billions of Euros into this? The gouvernement could for a part of this money create a national state owned carrier out of the insolvency estate.psychohistorian , Jun 26 2020 20:56 utc | 17The roadway to hell is paved with the best of intentions.A.L. , Jun 26 2020 21:08 utc | 18
If a government is going to subsidize the transportation industry in its country to the benefit of the most public, why start with airlines that serve the top few of the public.
Is this deal better than what is happening in the US? It is too soon to tell but I think it is quite possible that the shift to fast train increases and airlines are reduced to more intercontinental.
Without this action being done within a larger context of nationalization (partial or otherwise) of segments of core economic sectors, I question its efficacy. Where is the public discussion about bigger picture futures for countries?....crickets!!!A similar deal as Lufthansa was done between the Hong Kong government and its flag carrier Cathay Pacific. Even though Cathay's employees were some of the most vocal and organisers of strikes and various anti-government protests and riots.vk , Jun 26 2020 21:14 utc | 19
talking about biting the hand that feeds it....And, to top it off, this bail out violates one of the most sacred moral principles of capitalism/liberalism: the risk is the onus of the entrepreneur by definition; that's what justifies his absorption of the entire lucre if it pans out.BraveNewWorld , Jun 26 2020 21:30 utc | 20
The worker gave up his freedom of enterprise in exchange for the security and constancy ("fixity") of the wage. Therefore it is his right within the capitalist moral code that he/she be weathered from risk taken by his/her entrepreneur. Those Lufhansa workers should've never have come to the point of taking a 20% cut in their salaries to cover for their bosses' risks. Pandemics are natural disasters, and, for natural disasters, the capitalist system has the insurance industry - which was created exactly for situations like these (as is well historically documented).
Curious fact: in the 2008 meltdown, the USG had to bail out the world's biggest insurance company - AIG - because it flat out went bust (too many of its clients went bankrupt at the same time). Ironies of ironies - or, as I like to say, the farce of the "self-regulating" myth of the "free market".Yup, all around the world this is where the real fleecing of the poor and middle class will happen. Take ungodly sums of money from the poor and give it to the rich and then the rich can use loop holes not to pay it back. Any poor person not paying their taxes will go to jail. Any CEO who finds a loop hole to not pay back will be obscenely rewarded. Welcome to the real world Neo.arby , Jun 27 2020 0:43 utc | 39Whatever happened to Austerity?A User , Jun 27 2020 1:05 utc | 40Similar to the model the Clark government came up with on Air NZ after the idiot private shareholders nearly destroyed the airline in the noughties. Except the government insisted on a complete takeover, then during the Natz term in office the shareholding by government has been reduced to 52%. Everyone else was meant to be kiwi shareholder for such a 'strategic' asset but of course the right left plenty of loopholes and the foreign ownership increased dramatically.Bob , Jun 27 2020 1:07 utc | 41
The reason governments even neolib ones move to protect national airlines is simple. They are needed in times of disaster or war to be used for emergency transport but the big one is the way that landing rights were allocated back in the old days still holds largely. Losing an airline to an overseas buyer can mean the destruction of the reciprocal basis upon which international landing rights are allocated, if one allows their national carrier to be bought by an external airline hell can be wrought with tourism.
Lufthansa may have 80 slots a week for landing in NY then departing. Emirates buys into Lufthansa, get controlling stake, then then decides that all the NY slots be routed through Dubai, then Germany loses access for tourists from amerika to Germany. Emirates hooks up the new slots with the China timetable establishing new big route and Lufthansa goes down the gurgler.
This stuff is common because slots at major airports are very hard to come by, no nation state wants to lose them.I dont wish to go deep in the numbers. But im sure the german government is not as corrupt as usa in bailouts. Thats why its citzens still trust in its governing. Here in good o usa no one trust government or even each otherDeimetri , Jun 27 2020 1:14 utc | 42So, please, get off your high horse.Deimetri , Jun 27 2020 1:34 utc | 43
Posted by: Yeah, Right | Jun 26 2020 23:40 utc | 34
Choosing winners/losers has worked out so well in the case of Amtrak to name one example, pointing this out is riding a high horse?
But as you say, it has always been this way, it will always be this way, so we should just ignore the fraud and incompetence that .gov bailout encourage and be a happy little debt slaves..-got it,good point /sarcFor more see:A User , Jun 27 2020 1:36 utc | 44
https://mises.org/wire/never-ending-story-bailouts-moral-hazard-and-low-economic-growthThe so called market purists who believe that capitalism is some thing sacred which must be left free of interference from the people who use it pay for it and depend upon it always miss the basic point especially if they are amerikan where high levels of selfish corruption have endured for centuries. Not all administrations are that dissolute, the trick of separating citizens from their government is advanced in amerika so far that most see government as separate entity from citizens, whereas in Germany where standards are decaying they have not decayed to the point that no one trusts all politicians all the time.Antonym , Jun 27 2020 2:00 utc | 45
Therefore government ownership can be seen as citizen participation which is vital at a time like this because the effects of a national airline failing extend well beyond a few wealthy shareholders losing some wealth.
In the case of Air NZ the board was sacked, most senior execs were shown the door without abnormal compensation & the shareholders were bought out at close to current market valuation, they got pennies for their greedy investment.
I do not know the structure of the Lufthansa buyin but the fact that shareholders resisted indicates that they don't feel as though they are going to do well from the deal.Perhaps they had buyers for Lufthansa's international landing slots already lined up on the side and hoped to make big bucks on that - screw German workers, small businesses dependent on tourism or the public faced with uncertain travel routes.Lufthansa might have been viable before Covid19 but their stock was and is over valued. US companies like Boeing and banks were zombies in August 2019 and got their first financial IVs already then: Evidence Suggests U.S. Financial Crisis Started on August 14, 2019vk , Jun 27 2020 2:41 utc | 47
One difference is the brand of the fiat notes (money): while Germany has the Euro - fairly ok -, the US has the magic dollar, the world's trade and finance medium, so they can print them almost scot-free.
The German central government deal with Lufthansa is indeed better than the self payment of the privatized FED to its owner banks and friends for all Germans. Democratic governments are openly elected every 4-5 years by the public; not so the FED directors.@ Posted by: A User | Jun 27 2020 1:36 utc | 44
The problem is that Germany is a capitalist State. That's not how a capitalist State should work. This is a sign worse things are yet to come (decline). Take for example the human body: you can feel the signs of old age, and you know they mean permanent decline, not the beginning of something new. There is no alchemy in the real world.
I didn't propose Lufthansa to go down: I proposed for Lufthansa management to go down. Chop some upper-management heads off and you get your solvency back. EUR 18 billion is nothing for a company of that size: I'm sure if they gave up one year of their profits would already be more than enough to cover for the hole.
Unless, of course, the hole is bigger than the officially declared.
The management of a company is not the company: the soul of a company is its infrastructure, its organization and its workers - specially its highly specialized workers (the ones with the "know-how"). The first hydroelectric dam of the USSR was built with American engineers - not American management or American money. You don't have to have a bunch of executives to build civilization and wealth; it is the worker who is the soul of civilization and progress.
As I said: if Lufthansa was in such a good shape and only needed mere EUR 18 billion, there would be a line of private banks offering the loan with generously low interest (as it would be an automatic win for the bank, no matter how low the "return on capital"; and wins are rare in today's world, so you can't be too picky). Either it did resort to the government because it could (a show of strength to the German people) or its finances are not so great as the owner of this blog state they are. I hope, for the general welfare of the German people, that it was just a show of strength, because if it is dire finances, then those EUR 18 billion are just the amuse-buche.
P.S.: Governments owning some share of the key national companies is common practice in the First World nations. In France, if I'm not mistaken, there's a Law where the government must be the owner of at least 16% of the shares of every "strategic" companies. The UK frequently nationalizes bankrupt companies it deems strategic - only to re-privatize them later, when they are profitable again (the Thatcher method). If State ownership of shares was equal to socialism, we would've been living in a socialist world many decades ago.
Jun 27, 2020 | www.zerohedge.comVia InternationalMan.com,
International Man : Recently, Fed Chairman Jerome Powell said the central bank's money printing is designed to help average Americans, and not Wall Street.
What's your take on this?
David Stockman : Yes, and if dogs could whistle, the world would be a chorus!
The truth is, in an economy encumbered with nearly $78 trillion of debt already -- including $16.2 trillion on households, $16.8 trillion on business, $23 trillion on governments -- the last thing we need is even lower interest rates and even bigger incentives to take on debt and leverage.
In fact, in a debt-saturated system, the Fed's massive bond purchases never transmit anything outside the canyons of Wall Street. This money-printing madness only drives bond prices higher and cap rates lower -- meaning relentless and systematic inflation of financial assets' prices.
As a practical matter, of course, the bottom 90% don't own enough stock or even inflated government and corporate bonds to shake a stick at. Instead, what meager savings they have accumulated languish in bank deposits, CDs or money market funds earning exactly what the Fed has decreed -- nothing!
So, when Powell says he's only trying to help the average American, you have to wonder whether he is just stupid or the greatest lying fraud yet to occupy the big chair at the Fed.
Then again, it doesn't really matter why.
The Fed is now a completely rogue institution that is a clear and present danger to the future of prosperity and liberty in America. The tragedy is that the clueless speculators on Wall Street and politicians in Washington don't even get the joke.
International Man : So far, the Fed has been able to successfully manipulate interest rates to historic lows.
What are some catalysts that could cause the Fed to lose control and interest rates to spike?
David Stockman : They are chasing their tail, faster and faster. The more they expand their balance sheet, thereby injecting into the bond pits a massive artificial bid for governments, corporates, munis, commercial paper and junk, the lower the yields go, and the demand for more debt becomes greater.
Needless to say, when incomes drastically shrink due to the folly of Lockdown Nation, debt should be liquidated, not massively increased. So, the Fed and its fellow-traveling global central banks are setting up our Humpty-Dumpty economy for a very great fall.
That is to say, what will cause the central banks to lose control is the greatest wave of debt defaults in recorded history. On that score, the Fed just issued its Flow of Funds data for Q1, and it leaves nothing to the imagination. Total public and private debt on the US economy now stands at $77.6 trillion, or 3.5X GDP, and we'll be lucky to post at $21 trillion for the full year of 2020 GDP.
Recall that we supposedly got a wakeup call back in 2008, when the economy plunged into financial crisis and the worst recession since the 1930s; way too much debt was widely identified as the fall guy. But back then, total debt outstanding was just $52.6 trillion, meaning that during the last decade of purported recovery, the US economy actually took on $25 trillion of new debt -- a 48% increase.
Moreover, big-spending politicians were not the only culprit. That's because when the central banks drastically falsify interest rates to sub-economic levels, everyone is incentivized to borrow hand-over-fist. And, most often, it's for unproductive purposes, such as more transfer payments in the government sector and more financial engineering among the C-suites.
On the eve of the Great Recession, for example, total business debt (corporate and non-corporate) stood at $10.1 trillion and has subsequently soared to $16.8 trillion. That $6.7 trillion gain represents fully 98% of the $6.85 trillion increase in nominal GDP during the same period.
This orgy of borrowing also means that business debt over the past 13 years has grown by 66.5% -- far more than the 46.7% expansion of nominal GDP. Accordingly, the business debt burden on GDP has now gone off the charts, and at 78% of GDP, is more than double the pre-1970 level:
Business Debt as Percent of GDP:
- 1955: 31%
- 1970: 47%
- 1980: 49%
- 1995: 55%
- 2007: 69%
- 2020: 78%
Stated differently, chronic financial repression and clubbing of interest rates by the central bank have amounted to a slow-motion burial of the business sector in debt; debt that in recent decades has been overwhelmingly allocated to shrinking the equity base of business enterprises, thereby cycling wealth from the productive economy to the rent-capturing precincts of Wall Street.
Indeed, the Fed's cheap credit never really leaves the canyons of Wall Street, where it fulsomely rewards carry-traders and risk asset speculators because zero cost money is always and everywhere the mother's milk of leveraged speculation.
It also causes corporate C-suites to become maniacally obsessed with goosing their stock options via financial engineering gambits like stock buybacks, leveraged recaps and wildly over-priced M&A deals as a substitute for organic growth. Yet these maneuvers merely supplant equity and financial resilience with debt and financial fragility.
So when business bankruptcies soar to unprecedented levels in the month ahead as the economy reels from the folly of Lockdown Nation, the financial fragility part will become crystal clear.
But it also needs to be recalled that even as the interest rate clubbers at the Fed fostered a massive explosion of business debt after the 2008 financial crisis, it did not translate into any growth in productive investment at all.
In fact, real business CapEx minus current capital consumption (depreciation and amortization charged to current period production) is today barely a tad higher than it was 20 years ago on the eve of the dotcom bust.
In short, the Fed has fostered a zombie economy, and it is the collapse of the zombies that will eventually take it down.
International Man : The Fed has printed more money in recent months than it has for its entire history. The government is spending as if trillion is the new billion .
What is going on here?
David Stockman : Here's an eye-opener to put this madness in perspective. Annual federal outlays posted at $3.896 trillion in 2014 and were the product of 225 years of relentless expansion by the Leviathan on the Potomac.
But it now appears quite certain that the annual deficit in FY 2020 will actually be larger than the total spending level that took more than two centuries to achieve.
That's right. Owing to the mushrooming coast-to-coast soup lines hastily erected by Washington in response to the collapse of jobs, incomes and business cash flows brought on by Lockdown Nation and the evaporation of tax revenues, Uncle Sam will borrow more this year than the total spending just six years ago.
Stated differently, back in the day, we struggled to keep total federal spending during 1981 under $700 billion. By contrast, the Donald has borrowed nearly 4X that in the last 90 days!
So, yes, perhaps Trump's one truthful boast is that he is indeed the king of debt.
Needless to say, there is nothing remotely rational, plausible or sustainable about an FY 2020 budget that's going to end up with revenue south of $3 trillion and spending north of $7 trillion.
That's not even banana republic league profligacy; it's just sheer stupidity and madness, bespeaking a bipartisan duopoly in Washington that has had its collective brains turned into sawdust by the relentless, egregious money pumping of the central banks.
For want of doubt, just consider what has happened since March 11 on the eve of the Lockdown Nation's commencement.
- The public float of federal debt has soared from $17.85 trillion to $20.24 trillion, gaining $2.39 trillion;
- The Fed's balance sheet has exploded from $4.31 trillion to $7.17 trillion, gaining $2.86 trillion.
- The Fed has, therefore, effectively monetized 119% of the gain in the publicly traded Treasury debt.
Of course, you can't blame the Donald alone for this insanity; he's been enabled by two of the greatest crackpots to hold high economic policy positions in American history -- Treasury Secretary Mnuchin and Fed Chairman Jay Powell.
As it has happened, we have closely observed every combination of Fed chairman and US treasury secretary since 1970, when we headed off for our first job in the Imperial City, eager to better the world and our own prospects, too.
So, we can say without reservation that the current duo is the worst combo of spineless, principle-free empty suits to plague the nation during the last half-century. And it's not a close call -- even against a ship of fools, which include John B. Connally, G. William Miller, Ben Bernanke, Hank Paulson Jr., Timothy Geithner and Janet Yellen, among considerable others.
After all, if the Treasury Secretary and Fed Chairman are utterly clueless about the grave dangers of the fiscal and monetary bacchanalia now rampant in the imperial city, how in the world will it stop except in some fiery collapse?
* * *
Unfortunately there's little any individual can practically do to change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible. That's precisely why New York Times bestselling author Doug Casey just released an urgent new report on how to survive and thrive an economic collapse. Click here download the free PDF now .
Jun 28, 2020 | www.zerohedge.com
"Restaurant Of The Future" - KFC Unveils Automated Store With Robots And Food Lockers by Tyler Durden Fri, 06/26/2020 - 22:05 Fast-food chain Kentucky Fried Chicken (KFC) has debuted the "restaurant of the future," one where automation dominates the storefront, and little to no interaction is seen between customers and employees, reported NBC News .
After the chicken is fried and sides are prepped by humans, the order is placed on a conveyor belt and travels to the front of the store. A robotic arm waits for the order to arrive, then grabs it off the conveyor belt and places it into a secured food locker.KFC Moscow robotic-arm takes the order off the conveyor belt
Customers use their credit/debit cards and or the facial recognition system on the food locker to retrieve their order.KFC Moscow food locker
A KFC representative told NBC News that the new store is located in Moscow and was built months before the virus outbreak. The representative said the contactless store is the future of frontend fast-food restaurants because it's more sanitary.KFC Moscow storefront
Disbanding human cashiers and order preppers at the front of a fast-food store will be the next big trend in the industry through 2030. Making these restaurants contactless between customers and employees will lower the probabilities of transmitting the virus.
Automating the frontend of a fast-food restaurant will come at a tremendous cost, that is, significant job loss . Nationwide (as of 2018), there were around 3.8 million employed at fast-food restaurants. Automation and artificial intelligence are set displace millions of jobs in the years ahead.
As for the new automated KFC restaurant in Moscow, well, it's a glimpse of what is coming to America - this will lead to the widespread job loss that will force politicians to unveil universal basic income .
Jun 25, 2020 | www.zerohedge.comAuthored by Charles Hugh Smith via OfTwoMinds blog,
Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting, monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable.
The pandemic lockdown will be blamed for the Greater Depression, but the lockdown only toppled all the dominoes that were already lined up. The lockdown would have been survivable if the economy hadn't been over-indebted, over-leveraged, burdened by insanely high costs, stripmined by greedy monopolies, dependent on stock market fraud, destabilized by extreme inequality, corrupted by political pay-to-play and addicted to speculation.
The apologists always blame depressions on central banks not printing money fast enough, while overlooking the real drivers: debt, high costs and dependence on speculative bubbles. As noted here many times, revenues and income can quickly slide lower, but debt must be serviced regardless of revenues and income.
Once debt payments dominate expenses, any wobble in revenues / income / cash flow triggers default.
Regarding unbearably high costs that only go higher, year after year: as noted here many times, Sickcare Will Bankrupt the Nation all by itself , never mind soaring higher education / student loan debt serfdom, skyrocketing rents, junk fees, taxes, etc.
U.S. Lifestyle + "Healthcare" = Bankruptcy (June 19, 2008)
How Healthcare Is Dooming the U.S. Economy (Three Charts) (May 2015)
The truth is the cost of living is unaffordable but we can't even acknowledge this obvious fact because even acknowledging it would threaten the entire house of cards. So instead we play-act as if we believe the bogus "inflation is dead" narratives.
The top 5% technocrat/managerial class have done very well for themselves in the speculative run-up of destabilizing inequality, and since they run the narrative machines, we're swamped with happy stories about the economy, all of which boil down to this absurd fantasy: since I'm doing so well, everyone else must be doing well, too.
Since the top 5% own the lion's share of the nation's productive assets--stocks, bonds, business equity, investment real estate, etc.-- the enormous asset bubbles have greatly boosted their wealth and income. This has enabled the wealthy to service their debt or pay it off. The bottom 95% aren't quite so well-placed to survive a decline in income.
Everyone who was barely keeping their head above water in making their debt payments is already in default or will soon be in default. Since the banks and shadow-banking lenders have gorged on the profits skimmed by loaning huge sums to marginal borrowers, now that these marginal borrowers are defaulting en masse the banks and lenders are about to be crushed by one wave of catastrophic losses after another.
Student loans--already in mass default. Credit cards--the wave is rolling in as we speak. Auto loans--looking like Waimea Bay on a big day. Mortgages--better not to look.
Corporate debt has exploded to unprecedented levels, and this is what will break the financial system. Zombie corporations are rushing to borrow billions of dollars (thanks to the Federal Reserve) but increasing their debt is only doing more of what created their fragility in the first place .
Being able to borrow more to service your old debts is not solvency, it's merely the semblance of solvency. We're in the eye of the hurricane right now, as everyone holds their breath and hopes some sort of magic will make all the debt that has to be serviced every month vanish.
It's worth recalling that every dollar of debt is someone else's asset and the source of their income. So when the defaults and bankruptcies sweep through the financial system, they'll obliterate all the "wealth" of those holding bundled student and auto loan securities, mortgage backed securities, corporate bonds, and destroy the income streams these trillions in debt generated.
All the linked fragilities and dependencies of our economy are like lines of dominoes: one default topples the entire line of dominoes of debt, leverage, derivatives, counterparty risk, credit default swaps and most devastating of all, any certainty that borrowers won't default in the future.
If banks and lenders can't lend with a high degree of certainty, lending dries up and profits collapse, along with the consumer spending that was enabled by the borrowing.
Despite their high incomes and net worth, some consequential percentage of top 5% households bringing in $300,000 a year are one layoff away from default: never mind their pristine 830 credit score; that was last month. Next month,next quarter, next year--all bets are off.
Once you allow your economy to become dependent on extremes of debt, leverage, inequality, legalized looting , monopoly, pay-to-play politics and speculative asset bubbles, a depression is inevitable. The only question is "when," and that's been answered, though nobody wants to hear it: 2020 and beyond.
It didn't have to end this way. If our leadership / Power Elites had acted to reduce all these painfully obvious speculative extremes, dependencies and fragilities and made even modest efforts to limit the exploitation of predatory parasites that generated unprecedented inequality and corruption over the past 12 years, the economy would have been much less brittle / fragile.
Unfortunately, the pandemic chart I composed on February 2, 2020 is still playing out, increasing uncertainty.
What's the price of systemic fragility and uncertainty? I fear it will be steeper than we're prepared to pay.
* * *
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Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF) .
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook ): Read the first section for free (PDF) .
The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).
* * *
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Jun 26, 2020 | www.zerohedge.commad rush " of people leaving the San Francisco Bay Area for rural communities, for Marin County, Napa wine country, and south to Monterey's Carmel Valley.
Despite a plunge in existing home sales in May - Lawrence Yun, National Association of Realtors' chief economist, confirmed the outbound trend of migration from cities to suburbs :
"Relatively better performance of single-family homes in relation to multifamily condominium properties clearly suggests migration from the city centers to the suburbs," Yun said.
" After witnessing several consecutive years of urban revival, the new trend looks to be in the suburbs as more companies allow greater flexibility to work from home ."
And second-home buyers surged...
Individual investors or second-home buyers, who account for many cash sales, purchased 14% of homes in May, up from 10% in April 2020 and from 13% in May 2019. All-cash sales accounted for 17% of transactions in May, up from 15% in April 2020 and down from 19% in May 2019.
Readers now know that wealthy folks aren't just fleeing cities for rural communities - these folks are leaving the country for the Caribbean as America implodes from within.
Jun 23, 2020 | nationalinterest.org
Even to an inveterate bull-like Cramer, it is obvious that the post-coronavirus American economy is as brittle as Faberge eggs.Here's How to Know 72 Hours in Advance Which Stocks to Pick VantagePoint x Ads by Revcontent Find Out More > 72,199
Such economic fragility could mean that November's presidential election may not be the game-changer many assume it will be. What is becoming clearer by the day is that the virus is more of an accelerant than a prime mover, an added layer of malodorous excrement on a dung heap already piercing the nostrils. Long before social-distancing went into effect pension systems were teetering, rents and mortgages were unaffordable, real unemployment was higher than the Bureau of Labor Statistics reported, industrial production was anemic, and inflation dwarfed Consumer Price Index (food and energy is excluded). Worse, the most reliable consumers in the U.S. economy heretofore have been Baby Boomers, now the most susceptible demographic to the virus.
The fitness of U.S. employers was unsteady as well. The 2010s saw C-suites skeletonize their companies by spending profits on stock buybacks rather than CapEx, never mind setting funds aside for a rainy day. As a result, many firms–large and small–are long overdue for restructuring or liquidation, a Darwinian process that could hamper economic growth for years, possibly even a decade.
Against these headwinds, the next administration is facing monstrous storms ahead. Contrary to the soothsayers of "V" shaped recoveries, the prospects for a robust rebound are fading by the month. All this is to say that it might not matter who wins in November as much as previously thought. If Biden wins his chances at stimulating economic recovery, then soothing Washington's dysfunctional rancor, and speedily recalibrating U.S. trade vis-à-vis China et al in a deglobalizing world are slim to none. A seasoned Trump second term might fair better but whoever is elected president will experience far less freedom of maneuver as economic turbulence resets the policy agenda.
Trump's struggles might be encouraging to the soporific septuagenarian Joe Biden whose political fortunes appear ascendant, at least for the moment. As the Trump administration scrambles to suppress the coronavirus brush fire and more incendiary economic conflagrations spread democrats are foaming at the mouth. However, while the situation may oust a wobbly Trump the economic woes of the country are severe enough to bury the Democratic Party the way the Great Depression slaughtered the Republicans.
... ... ...In a sense, elections are often lagging indicators that the unrealized ambitions of bungled administrations allow presidential winners to right the ship by riding the swing of public sentiment from trough to peak. For the next U.S. president, however, it may be a trough-to-trough tenure. Hundreds of billions in federal funds may have saved the economy in 2008 but this time around the economic crisis is far deeper and Washington's tools are far more limited despite Jerome Powell's optimism.Urologist Try This if You Have Enlarged Prostate (Watch)NewhealthylifeHow Dogs Cry For Help: 3 Warning Signs Your Dog Is Crying For HelpDr. MartyToxic Enzyme Reveals Root Cause of Hair Loss and How to Fix It TodayRevital Hair"They Almost Killed Me" Why Tommy Chong Doesn't Trust CBDTommy Chong T
On these points, it seems to me that history does not rhyme as much as clarify. It appears as though U.S. politics is headed for a permutation, a fundamental restructuring that will change how Americans are governed every bit as much as it reshapes the economy. Thomas Kuhn's classic The Structure of Scientific Revolutions reminds us that "crisis often proliferates new discoveries," ones that often result in "paradigm destruction." Regardless of who is elected in November, it is very likely the next president is fated to defend a besieged paradigm, a twentieth-century government that lacks the policy tools, financial resources and transmission mechanisms required to solve twenty-first-century economic puzzles.
As the election fast approaches Treasury Secretary Steven Mnuchin and Chairman Jerome Powell–the dynamic duo of the wryly dubbed "Feasury"–are pulling out all the stops to mitigate economic fallout. Many sectors are begging for federal help as are municipalities who fear that recovery without federal money is doubtful. At their request, trillions more in relief are likely on their way. The question is: will there be any ammunition left for the next president, whoever he is, to govern effectively?
Cameron Macgregor is an entrepreneur, blogger and writer. He is the CEO of Ad Actum, a Global Free Speech Alliance.
Nepemnr , says: Website Show Comment June 22, 2020 at 6:47 am GMT
Jun 23, 2020 | www.unz.com
Exchange traded funds are bought and sold like shares but operate as index-tracking funds, passively following specific indices such as the S&P 500, the benchmark index of America's largest corporations and the index in which most people invest. Today the fast-growing ETF sector controls nearly half of all investments in US stocks, and it is highly concentrated. The sector is dominated by just three giant American asset managers – BlackRock, Vanguard and State Street, the "Big Three" – with BlackRock the clear global leader. By 2017, the Big Three together had become the largest shareholder in almost 90% of S&P 500 firms, including Apple, Microsoft, ExxonMobil, General Electric and Coca-Cola. BlackRock also owns major interests in nearly every mega-bank and in major media.
In March 2020, based on its expertise with the Maiden Lane facilities and its sophisticated Aladdin risk-monitoring software, BlackRock got the job of dispensing Federal Reserve funds through eleven "special purpose vehicles" authorized under the CARES Act. Like the Maiden Lane facilities, these vehicles were designed to allow the Fed, which is legally limited to purchasing safe federally-guaranteed assets, to finance the purchase of riskier assets in the market.
Blackrock Bails Itself Out
The national lockdown left states, cities and local businesses in desperate need of federal government aid. But according to David Dayen in The American Prospect , as of May 30 (the Fed's last monthly report), the only purchases made under the Fed's new BlackRock-administered SPVs were ETFs, mainly owned by BlackRock itself. Between May 14 and May 20, about $1.58 billion in ETFs were bought through the Secondary Market Corporate Credit Facility (SMCCF), of which $746 million or about 47% came from BlackRock ETFs. The Fed continued to buy more ETFs after May 20, and investors piled in behind, resulting in huge inflows into BlackRock's corporate bond ETFs.
In fact, these ETFs needed a bailout; and BlackRock used its very favorable position with the government to get one. The complicated mechanisms and risks underlying ETFs are explained in an April 3 article by business law professor Ryan Clements, who begins his post:
Exchange-Traded Funds (ETFs) are at the heart of the COVID-19 financial crisis . Over forty percent of the trading volume during the mid-March selloff was in ETFs .
The ETFs were trading well below the value of their underlying bonds, which were dropping like a rock . Some ETFs were failing altogether. The problem was something critics had long warned of: while ETFs are very liquid, trading on demand like stocks, the assets that make up their portfolios are not. When the market drops and investors flee, the ETFs can have trouble coming up with the funds to settle up without trading at a deep discount; and that is what was happening in March.
According to a May 3 article in The National , "The sector was ultimately saved by the US Federal Reserve's pledge on March 23 to buy investment-grade credit and certain ETFs. This provided the liquidity needed to rescue bonds that had been floundering in a market with no buyers."
Prof. Clements states that if the Fed had not stepped in, "a 'doom loop' could have materialized where continued selling pressure in the ETF market exacerbated a fire-sale in the underlying [bonds], and again vice-versa, in a procyclical pile-on with devastating consequences." He observes:
There's an unsettling form of market alchemy that takes place when illiquid, over-the-counter bonds are transformed into instantly liquid ETFs. ETF "liquidity transformation" is now being supported by the government, just like liquidity transformation in mortgage backed securities and shadow banking was supported in 2008.
Working for Whom?
BlackRock got a bailout with no debate in Congress, no "penalty" interest rate of the sort imposed on states and cities borrowing in the Fed's Municipal Liquidity Facility, no complicated paperwork or waiting in line for scarce Small Business Administration loans, no strings attached. It just quietly bailed itself out.
It might be argued that this bailout was good and necessary, since the market was saved from a disastrous "doom loop," and so were the pension funds and the savings of millions of investors. Although BlackRock has a controlling interest in all the major corporations in the S&P 500, it professes not to "own" the funds. It just acts as a kind of "custodian" for its investors -- or so it claims. But BlackRock and the other Big 3 ETFs vote the corporations' shares; so from the point of view of management, they are the owners. And as observed in a 2017 article from the University of Amsterdam titled " These Three Firms Own Corporate America ," they vote 90% of the time in favor of management. That means they tend to vote against shareholder initiatives, against labor, and against the public interest. BlackRock is not actually working for us, although we the American people have now become its largest client base.
In a 2018 review titled " Blackrock – The Company That Owns the World ", a multinational research group called Investigate Europe concluded that BlackRock "undermines competition through owning shares in competing companies, blurs boundaries between private capital and government affairs by working closely with regulators, and advocates for privatization of pension schemes in order to channel savings capital into its own funds."
Daniela Gabor, Professor of Macroeconomics at the University of Western England in Bristol, concluded after following a number of regulatory debates in Brussels that it was no longer the banks that wielded the financial power; it was the asset managers. She said :
We are often told that a manager is there to invest our money for our old age. But it's much more than that. In my opinion, BlackRock reflects the renunciation of the welfare state. Its rise in power goes hand-in-hand with ongoing structural changes; in finance, but also in the nature of the social contract that unites the citizen and the state.
That these structural changes are planned and deliberate is evident in BlackRock's August 2019 white paper laying out an economic reset that has now been implemented with BlackRock at the helm.
Public policy is made today in ways that favor the stock market, which is considered the barometer of the economy, although it has little to do with the strength of the real, productive economy. Giant pension and other investment funds largely control the stock market, and the asset managers control the funds. That effectively puts BlackRock, the largest and most influential asset manager, in the driver's seat in controlling the economy.
As Peter Ewart notes in a May 14 article on BlackRock titled "Foxes in the Henhouse," today the economic system "is not classical capitalism but rather state monopoly capitalism, where giant enterprises are regularly backstopped with public funds and the boundaries between the state and the financial oligarchy are virtually non-existent."
If the corporate oligarchs are too big and strategically important to be broken up under the antitrust laws, rather than bailing them out they should be nationalized and put directly into the service of the public. At the very least, BlackRock should be regulated as a too-big-to-fail Systemically Important Financial Institution. Better yet would be to regulate it as a public utility. No private, unelected entity should have the power over the economy that BlackRock has, without a legally enforceable fiduciary duty to wield it in the public interest.
Ellen Brown is an attorney, chair of the Public Banking Institute , and author of thirteen books including Web of Debt , The Public Bank Solution , and Banking on the People: Democratizing Money in the Digital Age . She also co-hosts a radio program on PRN.FM called " It's Our Money ." Her 300+ blog articles are posted at EllenBrown.com .
Ad70titusrevenge , says: Show Comment June 22, 2020 at 12:46 am GMTWonder who runs BlackRock?Mustapha Mond , says: Show Comment June 22, 2020 at 4:00 am GMTTo paraphrase a famous line from The Who's, "Won't Get Fooled Again":Ultrafart the Brave , says: Website Show Comment June 22, 2020 at 4:26 am GMT
Meet the new Squid, same as the old Squid@jadanPft , says: Show Comment
The rich do not understand the concept of "public interest" or "public utility".
Of course they do. They just don't care for it.
Those for whom the American economy is a cash cow & a play thing would quite simply never allow nationalization.Desert Fox , says: Show Comment June 22, 2020 at 1:43 pm GMT
The covid-19 scam was created to bailout wallstreetBrian O'Brien , says: Website Show Comment June 22, 2020 at 2:16 pm GMT
@jadan I believe Ellen Brown has long called for nationalization of the Fed.Mike321 , says: Show Comment June 22, 2020 at 3:39 pm GMT
She has been a tireless advocate for state banks and for public control of the money supply, and a leading critic of the private control of the issuance of money through debt.
The Federal Reserve Act was created in conspiracy and its passage was a great crime against the American people.
"You gotta hand it to the conspiracy theorists, because, in fact, there was a conspiracy," Roger Lowenstein told Ky Ryssdall during an interview on NPR about Lowenstein's book "America's Bank."
The men who wrote the Federal Reserve Act even wore disguises and snuck off in the night to a Victorian mansion on the ominously named Jekyll Island where they did their dirty work:
@Anonymous Read "Web of Debt" by Helen Brown. I may be a dumb Alabama hic, but I think she went after the Fed in that book .Just sayin'.
Jun 22, 2020 | www.moonofalabama.org
Trailer Trash , Jun 20 2020 3:13 utc | 87> Americans have trouble deciding what's fake and what's not
> until reality personally bites them on the ass.
> Posted by: jadan | Jun 20 2020 2:00 utc | 79
They know the economic devastation is real. There are 50,000 unpaid unemployment claims -- just in Kentucky. The establishment press has found a shiny new object called "Juneteenth" but the catastrophe for 30 million unemployed workers is steady getting worse.
For the county I live in, out of 72,000 people, ten got sick and one died, for the past six months. Meanwhile, about 350 people die every six months from all causes (about 1%). So no one here knows anyone sick or dead from the virus, but the crisis, including getting food, is everywhere.
Jun 21, 2020 | www.nakedcapitalism.com
BRADLEY L MAYER , , June 18, 2020 at 6:49 pm
Today's NYT backs up Yves virtually verbatim:
A Tidal Wave of Bankruptcies Is Coming
By Mary Williams Walsh
Almost any passage is quotable, but this caught my eye:
"Expect "a Covid-19 cliff" in the next 30 to 60 days, he said."
It's only a question now of reorg or liquidation bankruptcy.
Jun 21, 2020 | www.rt.com
'I used to push for working class kids to go to university, but no longer: they are toxic institutions of prejudice' Dr Lisa McKenzie Dr Lisa McKenzie is a working-class academic. She grew up in a coal-mining town in Nottinghamshire and became politicized through the 1984 miners' strike with her family. At 31, she went to the University of Nottingham and did an undergraduate degree in sociology. Dr McKenzie lectures in sociology at the University of Durham and is the author of 'Getting By: Estates, Class and Culture in Austerity Britain.' She's a political activist, writer and thinker. Follow her on Twitter @redrumlisa . Dr Lisa McKenzie is a working-class academic. She grew up in a coal-mining town in Nottinghamshire and became politicized through the 1984 miners' strike with her family. At 31, she went to the University of Nottingham and did an undergraduate degree in sociology. Dr McKenzie lectures in sociology at the University of Durham and is the author of 'Getting By: Estates, Class and Culture in Austerity Britain.' She's a political activist, writer and thinker. Follow her on Twitter @redrumlisa . 21 Jun, 2020 07:11 Get short URL
Jun 21, 2020 | www.nakedcapitalism.com
grhabyt , , June 18, 2020 at 7:35 pm
Professor/Administrator in California State University here. I'm on the campus team trying to respond and thus reading everything current in Higher Ed on this. The conclusion is that high end and low end will be OK, but private colleges in the middle are screwed.
Students go to college for four reasons:
c) skills acquisition; and
With instruction online, b) and d) disappear. The elite universities can coast because of a) and endowments, the lower cost state universities like mine are seeing enrollment *increase* because, in a recession, many students on the line about attending college choose c) over unemployment. And as our tuition is only $7K ($12K for out-of-state/international), plenty of the cash-strapped middle class will dial down to us.
But expensive, tuition-driven (eg little endowment) private colleges are going to be hit very hard if they can't offer the whole traditional in-person experience. Most of these have announced that they will be meeting in-person, but the unspoken assumption is that they are lying to their prospective students, and will pull the football away at the last minute.
The media will dwell on "the death of higher education" at length, because these were the colleges that many of them went to.
But the reality is that their share of the pie is relatively small. State universities have a much larger enrollment (the California State system has 23 campuses with an average of 22K students each) and the elites have featherbedded the Ivies, so both will survive, even if the former have some belt-tightening.
Democrita , , June 19, 2020 at 7:16 am
To label 'd' partying is unfair. D is being with their peers, building their first independent relationships, falling in love.
Mine will be a soph in UC system, and is processing the announcement from the school yesterday that only some students will have classes, the rest will be online. They all read that to mean STEM majors will get the in person experience.
He and his friends are all deciding whether they will bother or take a term or two off -- because zoom school sucks. Or, as he put it, "why would we pay $20,000 for me to rent an apartment in Santa Cruz and attend Phoenix University?" Universities may find students not willing to waste resources on distance learning. Especially if there's no job at the end of the rainbow.
BUT if he skips a term, what to do in that time? Jobs hard to come by and risky.
I feel for the kids. Unlike that family blogger Joe Biden.
Re small biz and recovery: my employer got some PPP money, although the impact has not hit our magazine in a big way. Yet.
But we, like other business-niche publishers, made a good bit of money from conferences and such live events. Partly, it's direct earnings, but there are other ways live events fueled our biz. I believe Institutional Investor had basically ditched publishing for the conference business. We hadnt gone that far (we weren't that good at it).
Also, the boss is drooling over the idea that he can ditch the monthly rent for our manhattan offices. Our ship is so tight that I do not worry about getting laid off, only that the entire enterprise could go under. So far that's not happening, but past performance etc.
Yves Smith Post author , , June 19, 2020 at 1:04 am
I'm not as certain as you are that big name unis will not suffer too. I think this is them believing their own PR.
Harvard is already trying to get employees to take early retirement. And in a long interview, Larry Summers went on in a long Business Insider interview about how universities (clearly including Harvard) should close down entire operations that were losing money. He advocated that Harvard should largely abandon live instruction and instead should become a MOOC, since it could easily get 20 million students.
Jun 20, 2020 | angrybearblog.com
likbez , June 20, 2020 10:42 pm
With this "improvement" we hopefully might see the collapse of some of the most reckless hedge funds the next year, or earlier. Adding to them a couple of private equity sharks would be an icing on the cake, but this scum tends to be pretty resilient. They are masters of offloading losses on public.
Disconnect between the stock market casino and the status of the USA manufacturing is real and it can't last forever. The FIRE sector which dominates the USA GDP is parasitic in nature, and parasite usually weakens the host to the point of collapse.
Moreover, Covid19 serves as a powerful catalyst for further degrading the neoliberal globalization even in areas that are not connected with the role of China.
As Herbert Stein put it on a different subject, but which now is fully applicable to the neoliberal globalization:
If something cannot go on forever, it will stop.
Per table 1 in https://fas.org/sgp/crs/misc/R45090.pdf , real wages for USA men at the 50% percentile level are down -5.1% over the 1979 to 2018 time frame. Now we can probably talk about over 10%.
That's another sign that the USA financial casino might eventually go the way of Trump's Taj Mahal.
And many middle class lemmings who are completely indoctrinated into neoliberalism and connected with it deification of markets might be mercilessly fleeced. Especially those who recklessly play with the stock market having zero understanding of the economics, and relying on some crazy "chartist" recommendations :-)
Or who stupidly preserved overweighed stocks allocation in the 401K plans after retirement. That might includes some "Vanguard loving" folk, who posts here.
Jun 20, 2020 | www.nakedcapitalism.com
4. Colleges will have a lot of trouble this fall . First, they are losing nearly all their full-freight-paying Chinese students, between concern over US Covid-19 risks, Administration hostility, and travel restrictions. That alone is a big blow.
On top of that, some are planning to reopen but MIT's announcement yesterday, that it will not allow all students to return to campus, probably represents a new normal. Well-placed MIT alumni read the university's decision as driven significantly by a desire to protect faculty and staff; I hear from sources with contacts at other universities that administrators that they see no way to put kids in dorms without running unacceptably high Covid risks.
Remember, even though kids almost never die of Covid-19, but there is a risk of serious damage. 1/2 the asymptomatic cases on the Diamond Princess now show abnormal lungs. And remember those cruises have half the people on board as crew, and the crew skews young. College is a lot less appealing if you don't stay in a dorm.
Just as diminished activity in central business districts has negative knock-on effects to nearby business, so to do hollowed-out colleges and universities have for their communities, as described in more depth in a recent Bloomberg story .
Krystyn Podgajski , June 18, 2020 at 7:52 am
The coming college semester is a big question mark. The influx of students is entangled with real estate, shopping and the biggest in my town, restaurants and bars. Not to mention the college sports season which supported so many AirBnB's here.
They are starting the year early here (UNC Chapel Hill) and ending it early as well, on Thanksgiving! And up to 1000 new students will be learning from home instead of coming to campus.
Vastydeep , June 18, 2020 at 11:30 am
Big question mark -- MIT's president Reif yesterday noted that
"At least for the fall, we can only bring some of our undergraduates back to campus." and "Everything that can be taught effectively online will be taught online."
Courses are comparatively easy, but labs, research, and sports look doubtful if/when case counts start marching up again.
Jun 19, 2020 | www.nakedcapitalism.com
flora, June 19, 2020 at 1:36 am
Thanks for this post.
"What's being protected? The social order that feeds the wealthy at the expense of the working poor. " -- Neuberger
In the aftermath of these movements, the police increasingly presented themselves as a thin blue line protecting civilization, by which they meant bourgeois civilization, from the disorder of the working class. -- Mitrani
I think this ties in, if only indirectly, with the way so many peaceful recent protests seemed to turn violent after the police showed up. It's possible I suppose the police want to create disorder to frighten not only the protestors with immediate harm but also frighten the bourgeois about the threate of a "dangerous mob". Historically violent protests created a political backlash that usually benefited political conservatives and the wealthy owners. (The current protests may be different in this regard. The violence seems to have
John Anthony La Pietra, June 19, 2020 at 2:20 am
Sorry, but the title sent my mind back to the days of old -- of old Daley, that is, and his immortal quote from 1968: "Gentlemen, let's get the thing straight, once and for all. The policeman isn't there to create disorder; the policeman is there to preserve disorder."
Adam1, June 19, 2020 at 7:39 am
LOL!!! great quote. Talk about saying it the way it is.
It kind of goes along with, "Police violence is focused overwhelmingly on men lowest on the socio-economic ladder: in rural areas outside the South, predominately white men; in the Southwest, disproportionately Hispanic men; in mid-size and major cities, disproportionately black men. Significantly, in the rural South, where the population is racially mixed, white men and black men are killed by police at nearly identical rates."
I bang my head on the table sometimes because poor white men and poor men of color are so often placed at odds when they increasingly face (mostly) the same problems. God forbid someone tried to unite them, there might really be some pearl clutching then.
run75441, June 19, 2020 at 8:23 am
Great response! I am sure you have more to add to this. A while back, I was researching the issues you state in your last paragraph. Was about ten pages into it and had to stop as I was drawn out of state and country. From my research.
While not as overt in the 20th century, the distinction of black slave versus poor white man has kept the class system alive and well in the US in the development of a discriminatory informal caste system. This distraction of a class level lower than the poorest of the white has kept them from concentrating on the disproportionate, and growing, distribution of wealth and income in the US. For the lower class, an allowed luxury, a place in the hierarchy and a sure form of self esteem insurance.
Sennett and Cobb (1972) observed that class distinction sets up a contest between upper and lower class with the lower social class always losing and promulgating a perception amongst themselves the educated and upper classes are in a position to judge and draw a conclusion of them being less than equal. The hidden injury is in the regard to the person perceiving himself as a piece of the woodwork or seen as a function such as "George the Porter." It was not the status or material wealth causing the harsh feelings; but, the feeling of being treated less than equal, having little status, and the resulting shame. The answer for many was violence.
James Gilligan wrote "Violence; Reflections on A National Epidemic." He worked as a prison psychiatrist and talked with many of the inmates of the issues of inequality and feeling less than those around them. His finding are in his book which is not a long read and adds to the discussion.
A little John Adams for you.
" The poor man's conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind takes no notice of him. He rambles unheeded.
In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar.
He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable ."
likbez , June 19, 2020 at 3:18 pmThat’s a very important observation.
Racism, especially directed toward blacks, along with “identity wedge,” is a perfect tool for disarming poor white, and suppressing their struggle for a better standard of living, which considerably dropped under neoliberalism.
In other words, by providing poor whites with a stratum of the population that has even lower social status, neoliberals manage to co-opt them to support the policies which economically ate detrimental to their standard of living as well as to suppress the protest against the redistribution of wealth up and dismantling of the New Deal capitalist social protection network.
This is a pretty sophisticated, pretty evil scheme if you ask me. In a way, “Floydgate” can be viewed as a variation on the same theme. A very dirty game indeed, when the issue of provision of meaningful jobs for working poor, social equality, and social protection for low-income workers of any color is replaced with a real but of secondary importance issue of police violence against blacks.
This is another way to explain “What’s the matter with Kansas” effect.
Carla , June 19, 2020 at 12:39 pm
MLK Jr. tried, and look what happened to him once he really got some traction. If the Rev. William Barber’s Poor People’s Campaign picks up steam, I’m afraid the same thing will happen to him.
I wish it were only pearl-clutching that the money power would resort to, but that’s not the way it works.
km , June 19, 2020 at 11:56 am
In most countries, the police are there solely to protect the Haves from the Have-Nots. In fact, when the average frustrated citizen has trouble, the last people he would consider turning to are the police.
This is why in the Third World, the only job of lower social standing than “policeman” is “police informer”.
cripes , June 19, 2020 at 3:35 am
The anti-rascist identity of the recent protests rests on a much larger base of class warfare waged over the past 40 years against the entire population led by a determined oligarchy and enforced by their political, media and militarized police retainers. This same oligarchy, with a despicable zeal and revolting media-orchestrated campaign–co-branding the movement with it’s usual corporate perpetrators– distorts escalating carceral and economic violence solely through a lens of racial conflict and their time-tested toothless reforms. A few unlucky “peace officers” may have to TOFTT until the furor recedes, can’t be helped.
Crowding out debt relief, single payer health, living wages, affordable housing and actual justice reform from the debate that would benefit African Americans more than any other demographic is the goal.
The handful of Emperors far prefer kabuki theater and random ritual Seppuku than facing the rage of millions of staring down the barrel of zero income, debt, bankruptcy, evictions and dispossession. The Praetorians will follow the money as always.
I suppose we’ll get some boulevards re-named and a paid Juneteenth holiday to compensate for the destruction 100+ years of labor rights struggle, so there’s that..
Boatwright , June 19, 2020 at 7:51 am
Homestead, Ludlow, Haymarket, Matewan — the list is long……
Working men and women asking for justice gunned down by the cops. There will always be men ready to murder on command as long as the orders come from the rich and powerful. We are at a moment in history folks were some of us, today mostly people of color, are willing to put their lives on the line. It’s an ongoing struggle.
MichaelSF , June 19, 2020 at 12:18 pm
Jay Gould, a U.S. robber baron, is supposed to have claimed that he could hire one half of the working class to kill the other half.
rob , June 19, 2020 at 7:58 am
So how can a tier of society(the police)…. be what a society needs…?
When as this story and many others show how and why the police were formed…. to break heads.
When they have been “the tool” of the elite…forever.
when so many of them are such dishonest,immoral ,wanna be fascists.
and the main direction of the US is towards a police state and fascists running the show…. both republican and democrat. With technology being the boot on the neck of the people… and the police are there to take it to the streets.
Can those elusive “good apples” turn the whole rotten barrel into sweet smelling apple pie? That is a big ask.
Or should the structure be liquidated, sell their army toys. fill the ranks with people who are not pathological liars and abusers and /or racists; of one sort or another. Get rid of the mentality of overcompensation by uber machismo. and make them watch the andy griffith show. They ought to learn that they can be respected if they are good people, and that they are not respected because they seek respect through fear and intimidation.
Is that idiot cry of theirs, .. the whole yelling at you; demanding absolute obedience to arbitrary ,assinine orders, really working to get them respect… or is it just something they get off on?
When the police are shown to be bad, they strike by work slowdown, or letting a little chaos loose themselves. So the people know they need them… So any reform of the police will go through the police not doing their jobs…. but then something like better communities may result. less people being busted and harassed , or pulled over for the sake of a quota…. may just show we don’t need so much policing anyway. And then if the new social workers brigade starts intervening in peoples with issues when they are young and in school … maybe fewer will be in the system. Couple that with the police not throwing their family in jail for nothing, and forcing them to pay fines for breaking stupid laws. The system will have less of a load, and the new , better cops without attitudes will be able to handle their communities in a way that works for everyone. Making them a net positive, as opposed to now where they are a net negative.
The drug war is over.
The cops have only done the bidding of the organized criminal elements who make their bread and butter because of prohibition.
our representatives can legally smoke pot , and grow it in their windowboxes in the capital dc., but people in many places are still living in fear of police using possession of some substance,as a pretext to take all their stuff,throw them in jail.
but besides the cops, there are the prosecutors…. they earn their salaries by stealing it from poor people through fines for things that ought to be legal. This is one way to drain money from poor communities, causing people to go steal from others in society to pay their court costs.
and who is gonna come and bust down your door… when you can’t pay a fine and choose to pay rent and buy your kids food instead…. the cops. just doing their jobs..
Evil is the banality of business as usual
Tom Stone , June 19, 2020 at 8:20 am
The late Kevin R C O’Brien noted that in every case where the Police had been ordered to “Round up the usual suspects” they have done so, and delivered them where ordered.
It did not matter who the “Usual suspects” were, or to what fate they were to be delivered.
They are the King’s men and they do the King’s bidding.
The Rev Kev , June 19, 2020 at 10:10 am
To have a reasonable discussion, I think that it should be recognized that modern police are but one leg of a triad. The first of course is the police who appear to seem themselves as not part of a community but as enforcers in that community. To swipe an idea from Mao, the police should move amongst the people as a fish swims in the sea. Not be a patrolling shark that attacks who they want at will knowing that there will be no repercussions against them. When you get to the point that you have police arresting children in school for infractions of school discipline – giving them a police record – you know that things have gotten out of hand.
The next leg is the courts which of course includes prosecutors. It is my understanding that prosecutors are elected to office in the US and so have incentives to appear to be tough on crime”” . They seem to operate more like ‘Let’s Make a Deal’ from what I have read. When they tell some kid that he has a choice of 1,000 years in prison on trumped up charges or pleads guilty to a smaller offence, you know that that is not justice at work. Judges too operate in their own world and will always take the word of a policeman as a witness.
And the third leg is the prisons which operate as sweatshops for corporate America. It is in the interest of the police and the courts to fill up the prisons to overflowing. Anybody remember the Pennsylvania “kids for cash” scandal where kids lives were being ruined with criminal records that were bogus so that some people could make a profit? And what sort of prison system is it where a private contractor can build a prison without a contract at all , knowing that the government (California in this case) will nonetheless fill it up for a good profit.
In short, in sorting out police doctrine and methods like is happening now, it should be recognized that they are actually only the face of a set of problems.
MLTPB , June 19, 2020 at 11:00 am
How did ancient states police?
Perhaps Wiki is a starting point of this journey…
Per Its entry, Police, in ancient Greece, policing was done by public owned slaves.
In Rome, the army, initially.
In China, prefects…leading to a level of government called prefectures .
Pookah Harvey , June 19, 2020 at 10:54 am
I spent some time in the Silver Valley of northern Idaho. This area was the hot bed of labor unrest during the 1890’s. Federal troops controlled the area 3 separate times,1892, 1894 and 1899. Twice miners hijacked trains loaded them with dynamite and drove them to mining company stamping mills that they then blew up. Dozens of deaths in shoot outs. The entire male population was herded up and placed in concentration camps for weeks. The end result was the assassination of the Governor in 1905.
Interestingly this history has been completely expunged. There is a mining museum in the town which doesn’t mention a word on these events. Even nationwide there seems to be a complete erasure of what real labor unrest can look like..
rob , June 19, 2020 at 11:58 am
Yeah, labor unrest does get swept under the rug.
Howard zinn had examples in his works “the peoples history of the United States”
The pictched battles in upstate new york with the Van Rennselear’s in the 1840’s breaking up rennselearwyk…. the million acre estate of theirs . it was a rent strike.
people remembering , we have been here before doesn’t help the case of the establishment… so they try to not let it happen.
We get experts telling us…. well, this is all new… we need experts… to tell you… what to think.
It is like watching the footage from the past 100 years on film of blacks marching for their rights… and being told.. reform is coming.. the more things change, the more things stay the same. decade after decade.century after century…
time to start figuring this out people.
so, the enemy is us….
Carolinian , June 19, 2020 at 11:01 am
Doubtless the facts presented above are correct, but shouldn’t one point out that the 21st century is quite different from the 19th and therefore analogizing the current situation to what went on before is quite facile? For example it’s no longer necessary for the police to put down strikes because strike actions barely still exist. In our current US the working class has diminished greatly while the middle class has expanded. We are a much richer country overall with a lot more people–not just those one percenters–concerned about crime. Whatever one thinks of the police, politically an attempt to go back to the 18th century isn’t going to fly.
MLTPB , June 19, 2020 at 11:15 am
Perhaps we are more likely to argue among ourselves, when genetic fallacy is possibly in play.
Pookah Harvey , June 19, 2020 at 11:37 am
” the 21st century is quite different from the 19th ”
From the Guardian
“How Starbucks, Target, Google and Microsoft quietly fund police through private donations”
More than 25 large corporations in the past three years have contributed funding to private police foundations, new report says.
These foundations receive millions of dollars a year from private and corporate donors, according to the report, and are able to use the funds to purchase equipment and weapons with little public input. The analysis notes, for example, how the Los Angeles police department in 2007 used foundation funding to purchase surveillance software from controversial technology firm Palantir. Buying the technology with private foundation funding rather than its public budget allowed the department to bypass requirements to hold public meetings and gain approval from the city council.
The Houston police foundation has purchased for the local police department a variety of equipment, including Swat equipment, sound equipment and dogs for the K-9 unit, according to the report. The Philadelphia police foundation purchased for its police force long guns, drones and ballistic helmets, and the Atlanta police foundation helped fund a major surveillance network of over 12,000 cameras.
In addition to weaponry, foundation funding can also go toward specialized training and support programs that complement the department’s policing strategies, according to one police foundation.
“Not a lot of people are aware of this public-private partnership where corporations and wealthy donors are able to siphon money into police forces with little to no oversight,” said Gin Armstrong, a senior research analyst at LittleSis.
Maybe it is just me, but things don’t seem to be all that different.
Bob , June 19, 2020 at 11:40 am
If we made America Great Again we could go back to the 18th century.
rob , June 19, 2020 at 12:11 pm
While it is true, this is a new century.
knowing how the present came to be, is entirely necessary to be able to attempt any move forward.
The likelihood of making the same old mistakes is almost certain, if one doesn’t try to use the past as a reference.
And considering the effect of propaganda and revisionism in the formation of peoples opinions, we do need ” learning against learning” to borrow a Jesuit strategy against the reformation, but this time it should embrace reality, rather than sow falsehoods.
But I do agree,
We have never been here before, and now is a great time to reset everything. With all due respect to “getting it right” or at least “better”.
and knowing the false fables of righteousness, is what people need to know, before they go about “burning down the house”.
Carolinian , June 19, 2020 at 12:42 pm
You know it’s not as though white people aren’t also afraid of the police. Alfred Hitchcock said he was deathly afraid of police and that paranoia informed many of his movies. Woody Allen has a funny scene in Annie Hall where he is pulled over by a cop and is comically flustered. White people also get shot and killed by the police as the rightwingers are constantly pointing out.
And thousands of people in the streets tell us that police reform is necessary. But the country is not going to get rid of them and replace police with social workers so why even talk about it? I’d say the above is interesting….not terribly relevant.
Mattski , June 19, 2020 at 11:37 am
Straight-up fact: The police weren’t created to preserve and protect. They were created to maintain order, over certain subjected classes and races of people, including–for many white people, too–many of our ancestors, too.*
And the question that arises from this: Are we willing to the subjects in a police state? Are we willing to continue to let our Black and brown brothers and sisters be subjected BY such a police state, and to half-wittingly be party TO it?
Or do we want to exercise AGENCY over “our” government(s), and decide–anew–how we go out our vast, vast array of social ills.
Obviously, armed police officers with an average of six months training–almost all from the white underclass–are a pretty f*cking blunt instrument to bring to bear.
On our own heads. On those who we and history have consigned to second-class citizenship.
Warning: this is a revolutionary situation. We should embrace it.
*Acceding to white supremacy, becoming “white” and often joining that police order, if you were poor, was the road out of such subjectivity. My grandfather’s father, for example, was said to have fled a failed revolution in Bohemia to come here. Look back through history, you will find plenty of reason to feel solidarity, too. Race alone cannot divide us if we are intent on the lessons of that history.
Susan the other , June 19, 2020 at 1:16 pm
It’s a good argument for keeping business small and evenly distributed. Promote the distribution of small enterprises all around the countryside and it’ll be a preventative against mergers and monopolies and giant corporations. Legislate for small business everywhere. When mega corporations turn into godzilla they are no longer efficient. They just tweak the statistics to imply that they are making such a profit that that means they are efficient. Maybe their robots are. Maybe their security forces are. But rapacious capitalism is almost comical, if not pathetic, when there is nothing left to rape. Which is where we now find ourselves. They’ve been allowed to evolve into private monopolies and have sucked the life out of the rest of the economy because they provide no employment, no training, no health care, no responsible maintenance for themselves; they set up tax havens, etc. And they produce way too much crap. We need far less consumption to save the planet. If we need monopolies to create equal distribution let them be state-owned monopolies. States do a good job. I’m thinking here of the State owned liquor stores in Utah. Even tho’ it’d be nice to buy wine in the grocery store, the state does a good job of supplying booze at a good price. (They are in the process now of setting up marijuana stores. Yes, Utah.) And they hire lotsa people. And they generate a nice tax revenue. I think medical care should be the same way – but on a national scale. This way we don’t need to bludgeon the poor. Until we can turn things around, we need to give the poor a state owned and controlled place to live – commonly thought of as a house. We’re gonna need to do food stamps too. If we must put up with private enterprise at the expense of public welfare, just so that we keep a certain optimism toward “free enterprise” and keep it nurtured because: sometimes a great notion, then let’s restrict it from becoming a plague. But let’s not kill capitalism just because it almost killed society. Let’s remake it. As it is now it’s just dragging itself around like a cave troll. It is no longer fit for purpose.
K teh , June 19, 2020 at 2:48 pm
Protect and serve MMT to the 10%. And no, the answer can not be give MMT to everyone and complain about automation replacing the population. Also, slavery is not a white issue; it’s a control issue, going back to Africa, which is once again being pumped with debt.
Looking at how the term redneck was twisted to serve it’s current function is revealing. Fear, insecurity, control. Educate your own.
Jun 19, 2020 | www.unz.com
Nixon 68 is back with a vengeance, with President Trump placing himself as the guarantor/enforcer of Law & Order.
That slogan guaranteed Nixon's election, and was coined by Kevin Phillips, then an expert in "ethnic voting patterns" .
Philips makes for a very interesting case. In 1999, he became the author of a seminal book: The Cousins' Wars: Religion, Politics, and the Triumph of Anglo-America, where he tracks how a "small Tudor kingdom" ended up establishing global hegemony.
The division of the English-speaking community into two great powers -- "one aristocratic, 'chosen' and imperial; and one democratic, 'chosen' and manifest destiny-driven", as Philips correctly establishes -- was accomplished by, what else, a war triptych: the English Civil War, the American revolution and the U.S. Civil War.
Now, we may be at the threshold of a fourth war -- with unpredictable and unforeseen consequences.
As it stands, what we have is a do-or-die clash of models: MAGA against an exclusivist Fed/Wall Street/Silicon Valley-controlled system.
MAGA -- which is a rehash of the American dream -- simply cannot happen when society is viciously polarized; vast sectors of the middle class are being completely erased; and mass immigration is coming from the Global South.
In contrast, the Fed as a Wall Street hedge fund meets Silicon Valley model, a supremely elitist 0.001% concoction, has ample margins to thrive.
The model is based on even more rigid corporate monopoly; the preeminence of capital markets, where a Wall Street boom is guaranteed by government debt-buybacks of its own debt; and life itself regulated by algorithms and Big Data.
This is the Brave New World dreamed by the techno-financial Masters of the Universe.
Trump's MAGA woes have been compounded by a shoddy geopolitical move in tandem with Law and Order: his re-election campaign will be under the sign of "China, China, China." When in trouble, blame a foreign enemy.
That comes from serially failed opportunist Steve Bannon and his Chinese billionaire sidekick Guo Wengui, or Miles Guo. Here they are in Statue of Liberty mode announcing their no holds barred infowar campaign to demonize the Chinese Communist Party (CCP) to Kingdom Come and "free the Chinese people".
Bannon's preferred talking point is that if his infowar fails, there will be "kinetic war". That is nonsense. Beijing's priorities are elsewhere. Only a few neo-conned Dr. Strangeloves would envisage "kinetic war"- as in a pre-emptive nuclear strike against Chinese territory.
Alastair Crooke has masterfully shown how the geoeconomic game, as Trump sees it, is above all to preserve the power of the U.S. dollar : "His particular concern would be to see a Europe that was umbilically linked to the financial and technological heavyweight that is China. This, in itself, effectively would presage a different world financial governance."
But then there's The Leopard syndrome: "If we want things to stay as they are, things will have to change". Enter Covid-19 as a particle accelerator, used by the Masters of the Universe to tweak "things" a bit so they not only stay as they are but the Master grip on the world tightens.
The problem is Covid-19 behaves as a set of -- uncontrollable -- free electrons. That means nobody, even the Masters of the Universe, is able to really weigh the full consequences of a runaway, compounded financial/social crisis.
Russiagate, now totally debunked , has unfolded in effect as a running coup: a color non-revolution metastasizing into Ukrainegate and the impeachment fiasco. In this poorly scripted and evidence-free morality play with shades of Watergate, Trump was cast by the Democrats as Nixon.
Big mistake. Watergate had nothing to do with a Hollywood-celebrated couple of daring reporters. Watergate represented the industrial-military-security-media complex going after Nixon. Deep Throat and other sources came from inside the Deep State. And it was not by accident that they were steering the Washington Post -- which, among other roles, plays the part of CIA mouthpiece to perfection.
Trump is a completely different matter. The Deep State keeps him under control. One just needs to look at the record: more funds for the Pentagon, $1 trillion in brand new nuclear weapons, perennial sanctions on Russia, non-stop threats to Russia's western borders, (failed) efforts to derail Nord Stream 2. And this is only a partial list.
So, from a Deep State point of view, the geopolitical front -- containment of Russia-China -- is assured. Domestically, it's much more complicated.
As much as Black Lives Matter does not threaten the system even remotely like the Black Panthers in the 60s, Trump believes his own Law & Order, like Nixon, will once again prevail. The key will be to attract the white women suburban vote. Republican pollsters are extremely optimistic and even talking about a "landslide".
Yet the behavior of an extra crucial vector must be understood: what corporate America wants.
When we look at who's supporting Black Lives Matter -- and Antifa -- we find, among others, Adidas, Amazon, Airbnb, American Express, Bank of America, BMW, Burger King, Citigroup, Coca Cola, DHL, Disney, eBay, General Motors, Goldman Sachs, Google, IBM, Mastercard, McDonald's, Microsoft, Netflix, Nike, Pfizer, Procter & Gamble, Sony, Starbucks, Twitter, Verizon, WalMart, Warner Brothers and YouTube.
This who's who would suggest a completely isolated Trump. But then we have to look at what really matters; the class war dynamics in what is in fact a caste system , as Laurence Brahm argues.
Black Lives Matter, the organization and its ramifications, is essentially being instrumentalized by selected corporate interests to accelerate their own priority: to crush the U.S. working classes into a state of perpetual anomie, as a new automated economy rises.
That may always happen under Trump. But it will be faster without Trump. What's fascinating is how this current strategy of tension scenario is being developed as a classic CIA/NED playbook color revolution. An undisputed, genuine grievance -- over police brutality and systemic racism -- has been completely manipulated, showered with lavish funds, infiltrated, and even weaponized against "the regime".
Just to control Trump is not enough for the Deep State -- due to the maximum instability and unreliability of his Demented Narcissus persona. Thus, in yet another priceless historical irony, "Assad must go" metastasized into "Trump must go".
The cadaver in the basement
One must never lose track of the fundamental objectives of those who firmly control that assembly of bought and paid for patsies in Capitol Hill: to always privilege Divide and Rule -- on class, race, identity politics.
After all, the majority of the population is considered expendable. It helps that the instrumentalized are playing their part to perfection, totally legitimized by mainstream media . No one will hear lavishly funded Black Lives Matter addressing the real heart of the matter: the reset of the predatory Restored Neoliberalism project, barely purged of its veneer of Hybrid Neofascism. The blueprint is the Great Reset to be launched by the World Economic Forum in January 2021.
It will be fascinating to watch how Trump deals with this "Summer of Love" remake of Maidan transposed to the Seattle commune . The hint from Team Trump circles is that he will do nothing: a coalition of white supremacists and motorcycle gangs might take care of the "problem" on the Fourth of July.
None of this sweetens the fact that Trump is at the heart of a crossfire hurricane: his disastrous response to Covid-19; the upcoming, devastating effects of the New Great Depression; and his intimations pointing to what could turn into martial law.
Still, the legendary Hollywood maxim -- "no one knows anything" -- rules. Even running with a semi-cadaver in a basement, the Democrats may win in November just by doing nothing. Yet Teflon Trump should never be underestimated. The Deep State may even realize he's more useful than they think.
Curmudgeon , says: Show Comment June 18, 2020 at 11:28 pm GMT
An undisputed, genuine grievance – over police brutality and systemic racism…
Even Candace Owens understands that police are more likely to be killed or injured by “suspects” than the “suspects” are to be killed or injured by police. The militarization of police departments is a genuine grievance. The relatively few acts of actual police brutality out of millions of contacts in a year is not.
If there is “systemic racism”, it is systemic against White males.
There is no genuine systemic racism other than non-specific word games. Is there systemic racism in China? How about Japan?
Societies are a racial construct. They are built for the people/drivers that “invented” the society. Why would a Chinese or Japanese care about what a German or Nigerian thought should be done for their society?
Jun 19, 2020 | finance.yahoo.com
Managers of 401(k) plans now have the ability invest in private equity. In other words, your 401(k ) could soon take stakes in private companies.
The goal, according to Labor Secretary Eugene Scalia is to allow investors to "gain access to alternative investments" and "ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement ." The Department of Labor laid things out in a letter that says putting 401(k) money into private-equity funds would not "violate the fiduciary's duties" of certain retirement plan sponsors.
But some experts see a big downside.
Barbara Roper, the Director of Investor Protection at the Consumer Federation of America, said the "significant risks" associated with private equity investments haven't been adequately addressed.You 'could do much, much worse'
"By the Department of Labor's own admission, these are investments that are more complex, more opaque, less liquid, more difficult to value, with often higher costs than the investments that are traditionally offered through retirement plans," Roper said in an interview with Yahoo Finance.
The DOL letter means that a 401(k) manager could now decide to invest in private-equity funds that previously were not accessible. These funds traditionally have been reserved for the wealthiest traders and institutional investors. They typically come with higher risk since private companies are not required to disclose nearly the same about of data with the SEC as public companies do.
The new rule could be tempting for average savers who may now have a roundabout way to get a piece of a company – like SpaceX or AirBnB – that's still private. The American Investment Council, which represents the private equity industry, has lauded the change , saying it will strengthen Americans' retirement security.
One thing that remains up in the air is how quickly the managers of the big retirement plans will embrace their new options. Companies like Vanguard and Fidelity have not yet offered comment on the new guidelines. Another outstanding question is whether these plans would list private-equity funds among the options for savers to choose from, or whether private equity would simply be mixed into existing funds.
Alexis Leondis, an opinion columnist for Bloomberg, recently asked if the move is worth the risks. “Many plan sponsors don't have the sophistication or background in alternatives to fully understand the complicated structures of many private equity funds," she wrote.
Roper said that “the dispersion of returns in the private-equity fund space is huge, much broader than it is in the public markets.” And while the returns for over-performing private equity funds can, indeed, beat the public markets, “if you get in a below average fund, you could do much, much worse," she said.
An example of a big downside in private equity fund is SoftBank’s Vision fund. That fund recently announced losses of $24 billion after failed investments in WeWork and OneWeb.
According to a 2018 study by the Stanford Center on Longevity, about half of American workers are saving money through a retirement plan at work. Access to and participation in 401(k)s is much lower among younger workers. A report from the National Institute on Retirement Security found that two-thirds of working millennials have nothing saved for retirement.
A second rule change, over financial advice
A second change is coming soon and is expected to relax restrictions on the advice financial professionals give about their retirement investments.
The change, passed by the SEC last year with a compliance deadline of June 30, says brokers must act “in the best interest of the retail customer at the time the recommendation is made, without placing your financial or other interest ahead of the retail customer’s interests.”
SEC Chairman Jay Clayton has said that the change is part of "raising the standard of conduct for broker-dealers," while he has discussed in interviews how the best interest standard is different than a fiduciary standard.
According to the Consumer Federation of America, the move could lead to an understanding that investment advisers are not true fiduciaries. A fiduciary is someone legally obligated to act in the best financial interests of the clients they are advising.
Roper says that this potential new rule gives broker-dealers and investment advisers “virtually unlimited ability to act as advisers, while simultaneously failing to regulate them accordingly.” They can now “mislead their customers into believing they are getting trusted, best interest advice when they are actually getting investing recommendations biased by toxic conflicts of interest,” she said.
Roper appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans.
Consumer Federation of America is an association of non-profit consumer organizations. More than 250 groups – from local agencies like the New York City Department of Consumer Affairs to private groups across the country – participate in the federation.
All of these changes may not be noticed by certain savers who are often encouraged to take a “set it and forget it” approach to their retirement. If their 401(k) provider does end up getting involved in private equity, advocates like Roper say that "the promise of improved performance is not necessarily met by the reality."
Ben Werschkul is a producer for Yahoo Finance in Washington, DC.
Jun 18, 2020 | www.nakedcapitalism.comYves here. Meritocracy is a pet topic, or perhaps more accurately, a pet peeve. This 2007 Conference Board Review article explains why meritocracy is unattainable , so the whole idea was always problematic.
Chinese mandarins, who won their positions via performance on the imperial examination, are an early, if not the first, example of a meritocratic system. Napoleon standardized education throughout France with the explicit goal of making it possible for poor but bright boys to be identified and further schooled to become bureaucrats.
This article includes issues regularly discussed in comments, such as how higher education has come to be mainly about credentialing. It provides a high-level, accessible discussion of how whatever value the idea of meritocracy had in theory, it has become perverted in practice.
By Jomo Kwame Sundaram, a former economics professor, who was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Originally published at the Inter Press Service
How often have you heard someone lamenting or even condemning inequality in society, concluding with an appeal to meritocracy? We like to think that if only the deserving, the smart ones, those we deem competent or capable, often meaning the ones who are more like us, were in charge, things would be better, or just fine.
Since the 1960s, many institutions, the world over, have embraced the notion of meritocracy. With post-Cold War neoliberal ideologies enabling growing wealth concentration, the rich, the privileged and their apologists invoke variants of 'meritocracy' to legitimize economic inequality.
Instead, corporations and other social institutions, which used to be run by hereditary elites, increasingly recruit and promote on the bases of qualifications, ability, competence and performance. Meritocracy is thus supposed to democratize and level society.
Ironically, British sociologist Michael Young pejoratively coined the term meritocracy in his 1958 dystopian satire, The Rise of the Meritocracy. With his intended criticism rejected as no longer relevant, the term is now used in the English language without the negative connotations Young intended.
It has been uncritically embraced by supporters of a social philosophy of meritocracy in which influence is supposedly distributed according to the intellectual ability and achievement of individuals.
Many appreciate meritocracy's two core virtues. First, the meritocratic elite is presumed to be more capable and effective as their status, income and wealth are due to their ability, rather than their family connections.
Second, 'opening up' the elite supposedly on the bases of individual capacities and capabilities is believed to be consistent with and complementary to 'fair competition'. They may claim the moral high ground by invoking 'equality of opportunity', but are usually careful to stress that 'equality of outcome' is to be eschewed at all cost.
As Yale Law School Professor Daniel Markovits argues in The Meritocracy Trap, unlike the hereditary elites preceding them, meritocratic elites must often work long and hard, e.g., in medicine, finance or consulting, to enhance their own privileges, and to pass them on to their children, siblings and other close relatives, friends and allies.
Meritocracy is supposed to function best when an insecure 'middle class' constantly strives to secure, preserve and augment their income, status and other privileges by maximizing returns to their exclusive education. But access to elite education – that enables a few of modest circumstances to climb the social ladder – waxes and wanes.
Most middle class families cannot afford the privileged education that wealth can buy, while most ordinary, government financed and run schools have fallen further behind exclusive elite schools, including some funded with public money. In recent decades, the resources gap between better and poorer public schools has also been growing.
Elite universities and private schools still provide training and socialization, mainly to children of the wealthy, privileged and connected. Huge endowments, obscure admissions policies and tax exemption allow elite US private universities to spend much more than publicly funded institutions.
Meanwhile, technological and social changes have transformed the labour force and economies greatly increasing economic returns to the cognitive, ascriptive and other attributes as well as credentials of 'the best' institutions, especially universities and professional guilds, which effectively remain exclusive and elitist.
As 'meritocrats' captured growing shares of the education pies, the purported value of 'schooling' increased, legitimized by the bogus notion of 'human capital'. While meritocracy transformed elites over time, it has also increasingly inhibited, not promoted social mobility.
A Different Elite
Thus, although meritocrats like to see themselves as the antithesis of the old 'aristocratic' elite, rather than 'democratize' society through greater inclusion, meritocracy may even increase inequality and further polarize society, albeit differently.
While the old 'aristocratic' elite was often unable to ensure their own children were well educated, competent and excellent, meritocrats – who have often achieved their status and privileges with education and related credentials – have often increased their significance.
Hence, a meritocratic system – seemingly open to inclusion, ostensibly based on ability – has become the new means for exclusion, which Chicago University Professor Raghuram Rajan attributes to the digital revolution.
Meritocrats have increased the significance of schooling, with credential attainment legitimizing growing pay inequality, as they secure even better education for thus own children, thus recreating and perpetuating inequalities.
Recent public doubts about, and opposition to rising executive remuneration, MBA education, professional guild cartels and labour remuneration disparities reflect the growing delegitimization of ostensibly meritocratic hierarchies and inequalities.
High Moral Ground
To add insult to injury, meritocratic ideology suggests that those excluded are undeserving, if not contemptible. With progressive options lacking middle class and elite support, those marginalized have increasingly turned to 'ethno-populism' and other 'communal' appeals in this age of identity politics.
Unsurprisingly, their opposition to educational and economic inequalities and marginalization is typically pitted against the ethnic 'Other' – real, imagined or 'constructed' – typically seen as 'foreign', even if domestic, as the 'alien within'.
Markovits argues that meritocracy undermines not only itself, but also democratic and egalitarian ideals. He insists that meritocracy also hurts the new 'meritocratic' and 'technocratic' elite, hoping to recruit them to the anti-meritocracy cause, perhaps reflecting his appreciation of the need to build broad inclusive coalitions to bring about social transformation.
"Progressives inflame middle-class resentment, and trigger elite resistance while demagogues and charlatans monopolize and exploit meritocracy's discontents. Meritocratic inequality therefore induces not only deep discontent but also widespread pessimism, verging on despair."
Reducing Inequality Possible
In the US and elsewhere, tax policy, other incentives and even Covid-19 will encourage replacing mid-skilled workers with automation and highly skilled professionals, e.g., facilitated by the growing use of artificial intelligence applications.
One alternative is to reform labour market as well as tax policies and regulations to promote more skilled, 'middle-class' employment. Those introducing new technologies would then be motivated to enable more productive, higher income, middle-class employment.
A more open, inclusive and broader educational system would also provide the workforce needed for such technologies. Thus, the transitions from school to work, which have tended to increase inequality, can be transformed to reduce inequality.
Rather than de-skill workers to be paid less in order to become more profitable, 'up-skilling' workers to be more productive can also be profitable. For example, an Indian cardio-thoracic hospital has trained nurses for many routine medical procedures, allowing specialist doctors to focus on tasks really requiring their expertise.
At relatively lower cost, using workers who are not fully trained doctors, but are paid and treated better, can cost-effectively deliver important healthcare services at lower cost at scale. Such innovations would strengthen the middle class, rather than undermine and erode it.
Sound of the Suburbs , June 18, 2020 at 5:02 am
New Labour talked about a meritocracy. A classless society where anyone could get to the top through their own hard work, drive and ambition. In a meritocracy those at the top do get their on their own merit and deserve their rewards.
In a meritocracy those at the bottom are there through their own lack of effort and others shouldn't feel responsible for them
But what happened? We adopted meritocratic ideas, but never created a meritocracy.
What does a meritocracy look like?
1) In a meritocracy everyone succeeds on their own merit. This is obvious, but to succeed on your own merit, we need to do away the traditional mechanisms that socially stratify society due to wealth flowing down the generations. Anything that comes from your parents has nothing to do with your own effort.
2) There is no un-earned wealth or power, e.g inheritance, trust funds, hereditary titles. In a meritocracy we need equal opportunity for all. We can't have the current two tier education system with its fast track of private schools for people with wealthy parents.
3) There is a uniform schools system for everyone with no private schools.
New Labour's meritocratic vision won a landslide victory in 1997, they just never followed through to actually create that meritocratic society where everyone has equal opportunity. All we got were the meritocratic ideas.
Those at the top got there on a playing field tilted in their favour, but they swan around thinking they got to the top in a meritocracy.
The poor suffer the legacy of New Labour's meritocratic ideas with people thinking we live in a meritocracy and the poor are poor through their own lack of effort.
This is the worst of both worlds, meritocratic ideas without a meritocracy.
Sound of the Suburbs , June 18, 2020 at 5:09 am
In a proper meritocracy you wouldn't be able to use your money to ensure your children succeeded. (Even someone like Boris can become Prime Minister, if you can afford the 30k a year fees for Eton. Look at Trump, inherited wealth personified.)
When you can't guarantee your own children's success, you are going to be a lot more concerned with the well being of those lower down the scale as that is where your own children might end up.
eg , June 18, 2020 at 5:32 am
Welcome to cosmetic meritocracy to go along with your cosmetic democracy. And in America, you can have as much of either you can afford to buy
Adam Eran , June 18, 2020 at 1:14 pm
+1000! Exactly. My favorite example (from NC?) is schools. By de-funding education (55% reduction in funding for higher education since 1972), public policy has made even public universities dependent on tuition (gosh! I wonder why it's been rising) or student loans (double gosh!) for an ever-growing portion of their budgets. Professors can't flunk the incompetent with impunity, then, since it might impair the financial viability of the institution that employs them.
A sensible society understands enhancing its human capital has merit in and of itself, so directs resources to it beyond what tuition students can pay.
Meanwhile, no study validates merit pay for teachers, charter schools, and testing as ways to improve educational outcomes. What does correlate with those outcomes? Answer: childhood poverty rates.
GM , June 18, 2020 at 5:36 am
This is a lot of BS when examined outside the unquestionable assumptions of the US situation.
In the US you have locally funded and geographically segregated schools, which in a rational world should be an absolute scandal that is a topic of constant discussion until the situation gets fixed. Instead people are taking it for granted as they only way things could be.
Well, if you are only allowed to go to the school in your neighborhood, which in turn is funded by whatever the tax base is the immediate vicinity, then of course a system based on educational achievement will very quickly cement existing inequalities into inherited class differences.
A problem with a very simple solution -- fund public schools at the federal level and fund them equally, and also ban all private schools.
That is what the USSR did back in the days, and it did in fact achieve very high level of social equality and mobility. It works. All that is needed is to properly identify the problem and work toward addressing it.
Going after the idea that those who are best educated should be the ones doing the decision making in society is not going to solve the problem and will in fact hurt society in the long run.
Then there is the problem of wealth inequality, which is in fact a separate one from that of status. There is no reason why social status has to be so tightly correlated with wealth. It has not been at many times and in many places throughout history.
And we are once again fighting the wrong battle if we go after "meritocracy" instead of the more concrete mechanismS that create wealth inequality.
Again, in the USSR there was no wealth inequality because the system redistributed very effectively and prevented accumulation of excess wealth by individuals. And before someone screams "but that was communism", we only have to go back to the situation in the 1950s in the US when you had a 90% top income tax rate and the various loopholes that exist now for hiding wealth derived from the wonders of financialization did not exist.
vlade , June 18, 2020 at 6:02 am
"That is what the USSR did back in the days, and it did in fact achieve very high level of social equality and mobility. It works. "
Except that there still were better and worse schools (for various reasons), and party members were better able to place their kids. Not to mention, that being a party member meant a better post-school placement of your kids int he first place, and goign to the uni w/o party membership in family as pretty hard.
And re the wealth distribution – hahahahah. Again, if you were a high-placed party official (which was not based on meritocracy, but on massive political infighting), you did not have to worry about "official" wealth. Because a lot of "state" assets were yours to use as you wished (depending on where in the hierarchy you were).
So you had your 90% of non-communist party members (in mid 80s, party membership was about 10% of populatin), then your 10% of party members, of which you had your 1% and 0.01% respectively.
Franklin , June 18, 2020 at 1:27 pm
How does affirmative action affect meritocracy?
For every kid from the ghetto placed in a technical school, after lowering admission requirements, one fewer high testing child is placed.
U.C. Berkeley is no longer requiring SATs because they are "racist".
The affect of this is to elevate the status of the very privileged even higher and to create strife and infighting among the middle class and lower middle class.
flora , June 18, 2020 at 3:42 pm
I think several high cost colleges like U.C.Berkeley are replacing the SAT and ACT tests with the important Bank Balance test. (joke!)
flora , June 18, 2020 at 3:53 pm
more seriously: some rich people learned how to game the SAT and ACT test results. There was a huge scandal about this last year.
Left in Wisconsin , June 18, 2020 at 4:10 pm
It's not at all clear that affirmative action is at odds with merit, though it is clearly at odds with the credentialing (grade point averages, and all the resume padding) that one sees on the resumes of the PMG progeny. My neck of the academic woods is full of PMC grinders who don't really have much to offer and could use way more people with real life experience.
Which gets to the real problem with meritocracy: it is only concerned with ranking/allocation of of jobs, not the overall structure of the job market. If good jobs were less rare, there would be less infighting about who got to fill them, more social mixing, and we would all have an easier time dispatching the "meritocrats" who don't contribute.
Alex , June 18, 2020 at 7:08 am
The education system in the USSR was definitely meritocratic. There were 'special' schools with advanced curriculum (I studied in one) and you needed to pass exams to get into one. Likewise the admission to universities was also based on examinations and the alumni of these elite schools and universities were overrepresented in the Soviet and then Russian elite
GM , June 18, 2020 at 7:24 am
Yes, and it was based entirely on examinations. None of the "we ask for SAT but mostly decide based on subjective crtiria" BS that results in 75% of the undergraduate slots at the likes of Harvard going to children of alumni and the wealthy (which is mostly the same thing) BS, but a clear cutoff based on exam scores alone. I myself have passed through that exact same system too, so I know very well its virtues (and deficiencies too).
Perhaps even more importantly, kindergartens and primary schools provided as equal educational opportunities as possible. There were no private schools so when the time to pass those exams came, everyone was on as equal footing as possible, they had gone through the same classes together. Unfortunately, there was an exception -- the offspring of high party officials could bypass these barriers, which was deeply unfair and caused quite a bit of resentment, but other than that it was a true meritocracy.
Yes, it was still not a system in which where you were born played no role. The children of university professors will on average be academically far ahead of the children of agricultural workers, just by virtue of the environment they grew up in. There is no way around that other than taking kids away from their parents and raising them communally.
But it is important that everyone has the opportunity to rise through the ranks and that starts from the bottom of the educational pyramid.
We are stubbornly avoiding having that discussion though, instead we talk about how we should be giving preferential treatment to women and minorities when they are in their 20s and applying for jobs and positions. It is almost as if the latter serves the purposes of preventing us from talking about the former
vlade , June 18, 2020 at 8:25 am
That's not true. Party members had access to special schools for their own kids. Often these schools weren't "officially" special, but very often in a district there was a school that got more funding, first pick of teachers etc. and party members had preferential acceptance to those. As I say, it often might not have been an official party line (although I believe there were some schoold reserved for party member kids), but was a common local party office practice.
I say this as someone who went through the system and actually had the advantage (which I did not understand until I was much older) as a grandson of an important party functionary and anti-nazi hero. It even managed to beat the fact that my uncle (from the other side of the family) emigrated to the US, which was often a fatal hit to anyone's college/uni dreams in the rest of the family.
Kouros , June 18, 2020 at 3:34 pm
School maybe, but then admission to University was absolutely done on merit. at least where I grew up, in Romania, the admissions were based on multiple written exams, were completely anonymized, and there were two independent markers. If the grading of the two markers diverged by more than one point, another one was brought to check.
I know children of really big party wigs that couldn't get into university under these circumstances
vlade , June 18, 2020 at 8:09 am
Or you needed to be a kid of a high-enough placed party hack, although in most cases, they didn't bother to put their kids there, as they could get them a job they wanted w/o the school. I _know_ (because I have seen it first hand numerous times) that who the parents were and who they knew played an important role.
That all said, the school system was way less about credentials than the US one. And also, because hard-science schools were not seen as a way to a (guaranteed large) career advancement, the people who went there were most people who really wanted to do it, not taking it as a soft option.
The career advancement path were the various "economic" schools, as that with a right set of connections would more or less guarantee a very cushy top job.
Kurtismayfield , June 18, 2020 at 9:41 am
This country doesn't value home grown STEM graduates.. if it did it wouldn't be undercutting them with H1-B's. So you would have to start there and show kids that getting into STEM is seen as equally valuable as getting an MBA.
Ian Ollmann , June 18, 2020 at 9:19 pm
Why should we value home grown workers if it is a meritocracy?
Jesper , June 18, 2020 at 5:42 am
IP-laws are the source of some/much of current inequality, those IP-laws are most definitely a political choice and they most definitely are not automatically benefitting the meritocratic. Sometimes they do, often they don't.
But as always this is seen as the 'cure':
Rather than de-skill workers to be paid less in order to become more profitable, 'up-skilling' workers to be more productive can also be profitable.
More training, more education .. The de-skilling is done to jobs which might, but does not have to, lead to de-skilling of workers. The stage is set to reduce the work-load and share the work, the de-skilled work is designed to make workers easily replaceable so the 'skill-shortage' stopping a reduction of the hours worked is not as valid of an excuse as it was 40 years ago.
The author does acknowledge the role that governments and legislation has but for some reason reducing the hours worked by an individual and sharing the work is not seen as a valid option. But then again this kind of futurists believe that in the future then there will not be enough resources to house and feed the retired. Another view might be that in the future there will be enough resources to house and feed the retired but those resources might, due to political choices , be spent on luxury for the few leaving homelessness and starvation for the rest.
The Rev Kev , June 18, 2020 at 10:57 am
McDonalds was a pioneer at the movement for de-skilling workers. When they first opened up you actually had people at the back peeling bag after bag of potatoes. Eventually they were able to replace the potatoes with bags of frozen fries which took no skill at all to use. They actually spent a huge amount of effort at de-skilling work there so that workers could be easily replaced and had no skills that they could bargain higher wages for.
stefan , June 18, 2020 at 6:38 am
I would argue that a real education is one that liberates the student to become a free citizen, to become someone who can think for herself or himself. This is what used to be called a liberal arts education. Vocational training may certainly be important, but ought not be confused with education. Vocational training is perhaps best left to the institutions that actually will employ the individual. An education in liberal arts prepares the student to learn how to learn. But we are not the employees of society. We are citizens.
juliania , June 18, 2020 at 1:08 pm
Indeed, stefan, that is entirely the point, and ought to be the goal. Society is only as good as the quality of education given to all its members, not just the elite. This country has forgotten how important education is to the stability of the state, education from the first steps in public schools, so that when time comes to go on with that education at more sophisticated levels, all minds (all minds!) whatever the parents' station in life, have the ability to go where their talents take them. We know how to do this; it's not rocket science!!
I say we know how to do this. But it is clear – this country is not doing it. And it is not doing it on purpose.
That is something to be out on the streets protesting against. One of the many, many things.
Ian Ollmann , June 18, 2020 at 9:13 pm
Maybe, but if you could tell in advance which kids are going to need it, it would be a lot cheaper and waste less of people's time to do advanced degrees for only the best and brightest. For most people, hitting the workforce at the tender young age of 31, for example, has a certain reproductive cost, not to mention lost income. It isn't for everyone.
Also, in my experience, education just gets your foot in the door. Once you get there, it is quite likely you are the worst guy on the factory floor (for some definition of factory) -- the greenhorn -- and whether or not you do well will eventually boil down to quality of work or maybe management potential. In this regard, some will shine and other will not, and at the end of the day, in a meritocracy those are the ones that will do well. In this environment, at least in most fields, the advance degree is quickly forgotten in the absence of law enforcing strict hierarchy (e.g. medicine).
This is as it should be.
Adam Eran , June 18, 2020 at 1:17 pm
In Rome, "liberal arts" were the courses forbidden to slaves.
anon50 , June 18, 2020 at 7:11 am
Ancient Israel had a meritocracy in that those (including women, e.g. Deborah) who had exceptional ability were looked to as Judges.
Yet, every Hebrew family owned a roughly-equal-in-value plot of land they could not permanently lose regardless of their merit (Leviticus 25).
So, per the Bible, meritocracy definitely has its limits and does NOT legitimize, for example, inequality in land ownership.
Adam Eran , June 18, 2020 at 1:18 pm
I'll add that orthodox Christianity does not endorse "salvation by works" (i.e. meritocracy). The orthodox position is "salvation by grace [i.e. gift]" A wise man once told me "Christianity is just Judaism for gentiles"
Amfortas the hippie , June 18, 2020 at 7:29 am
I discovered the idea/Ideal of a Liberal Education around fifth grade. That's what I wanted, due to the influence of Jefferson, Emerson, Whitman and Nietzsche(yes, i was rather strange as a child).
But as the Schooling continued, I was continually frustrated by the all but hidden fact that this was not what American Education was for,lol.
This frustration extended all the way into the college experience I got accepted(with a GED, no less) to Oberlin, Brown, etc but was told we didn't have the money so a state school it was which turned out to be a High School with ashtrays..and an indelible focus on "Getting a Job".
Registrar actually laughed when I said i wanted to major in Philosophy ""what good is that?"
35 or so years later, and I got my Liberal Education, on my own .and it's had zero(if not a negative) effect on my work-life.
we've raised up a generation or 3 of technicians and micromanagers and ladder-climbers who don't have the smash to Think, except in very narrow terms. A favorite trope-like example: "Biology"= "specialisation", not just in Beetles or even a specific Family of Beetles but on a specific Species of Beetle with little regard for the world that Beetle is embedded in.(I knew a guy like this. knew all about June Bugs)
While i understand the utility of specialisation, this laser focus has negated the ability for so many to "Think Outside the Box" or to obtain a broader perspective of our complex world.
State College, for me, was all about "Networking" and learning how to kiss ass and say "Yes Sir" .not about becoming a Citizen let alone a Better Human
I hated it,lol.
It took a long time to be able to articulate it and that articulation is still wanting.
But the critique of "actually existing Meritocracy" is a good place to begin.
It's not really "Meritocratic", at all.
Just another justification for privilege and inequality and the status quo(world without end).
Paul Kleinman , June 18, 2020 at 4:07 pm
I don't think specialization = narrow mindedness. A long time ago at the university I made the progression from philosophy to anthropology to genetics/cell biology and of course my graduate thesis answered a very specific question (about the extracellular effects on collagen synthesis.) It is a fact that that rapidly growing knowledge requires people to specialize in deeply understanding parts of that knowlege. But I have never stopped reading philosophy (existential), Dostoevsky's novels, along with political reading. Specialization is not the reason for people's horizons to be so narrow. It's the societal shift toward disregarding anything that cannot be immediately monetized. It's also the disregard for teaching all students the tools for critical thinking.
Amfortas the hippie , June 18, 2020 at 7:38 pm
I stated that specialisation is necessary it just feels like(30 years on, mind you) that there was a narrowness that was encouraged. The opposite of a "Liberal Education", where one expands and learns to Think.
I'm also biased, because i went to two community colleges, and a state school that was famous for Criminal Justice, and for being neighbors to a bunch of prisons,lol.
I'm certainly glad, for instance, that there are people who specialise in Grasshoppers, cancer meds and soil biota.
But we long ago stopped encouraging big picture broadness .and i think that lack is rather acute, at the moment.
My Da Vincian Renaissance tendencies were quite actively discouraged, over my entire primary and secondary school experience to the point that i hated school from 3rd grade on(a remarkable achievement, in retrospect). I had, therefore, high hopes for college which were similarly dashed, due to the sort of ineffable culture of the place.
again, i admit that all this may be merely a function of place and time .as well as of my own anomalousness and expectations.
I might feel differently if i had been allowed to go to some of the real colleges i managed to get accepted to(but, Amor Fati, and all,lol would i be me without all that BS?)
jake , June 18, 2020 at 8:09 am
Forget sham meritocracy. What's the value of *actual* meritocracy, when the underlying activity -- say, investment banking -- is worthless or injurious?
Are prisons repositories of merit, because they hold the most active and determined of criminals?
CH , June 18, 2020 at 8:11 am
Running through an endless gauntlet of test-taking in order to have something approaching a stable, non-precarious life does not sound like a very pleasant society either, even if it is sufficiently "meritocratic." Neither does constantly chasing credentials. You get all these wasteful arms races. This was the type of society that the Hunger Games depicted: a never-ending, unremitting competition, with the stakes being just the ability to ensure one's basic survival. It sounds awful, even for the "winners".
MT_Bill , June 18, 2020 at 9:17 am
Life on this planet is a never-ending, unremitting competition, with the stakes being just the ability to ensure one's genes survival.
This is true across a spectrum of geographic and temporal scales. The plants in the yard? And endless evolutionary game of attracting pollinators at the expense of others while simultaneously engaging in chemical warfare with their neighbors.
The trap is the thought that we should be able to do better. I think the Romans probably showed the limit of what was possible, everything else has just been a remake with different stage props.
We've spent 2000 years or so basically knocking around the limits of what humanity is capable of achieving in terms of societal structure. Lots of technological advances made and to be discovered, but the parallel attempts on the societal side seem to end up being inherently unstable.
m sam , June 18, 2020 at 1:02 pm
I can't see how the plants in your backyard are a good model for any society. We do not need to savagely compete by starving our neighbors, for instance, to get food or shelter. Any scarcity of the basic necessities of life are pretty much induced.
Competition is instead over quality of life, social status, and most importantly, who gets to decide. It is here where so-called meritocracy is supposed to be an "objective" measure (but really, that there can be an objective measure of merit is where the idea fails, and proves itself to be a Utopian value that really only the successful "meritocrats" can embrace).
I think the real trap is in thinking we can't do any better (and your thought that we haven't progressed farther than the Romans is telling). And in in the age of falling life expectancy, incomes (for the bottom 90%), and social mobility, I would go so far as to say such an idea forecloses on the reality that shared progress has actually happened.
Off The Street , June 18, 2020 at 10:50 am
Crab-in-a-bucket scenario: other crabs prevent that venturesome one from escaping.
Meritocracy, current version scenario: escaped arthropods act as guards to let in only their own preferred candidates.
The latter has been in use at any number of companies, where the wrong kind of applicant just isn't acknowledged. No need to write down any rules, as those unspoken ones will do just fine. That can lead to a type of in-breeding with associated dysfunctions, and relies heavily upon the upstream provider filtering mechanisms, such as they are. Game those mechanisms in various ways and see the results populate, or pollute, the downstream pools.
rob , June 18, 2020 at 8:31 am
in the US our "meritocracy" is akin to the old saying;
"those who win in a rigged game too long ,get stupid"
We are stuck as a society because so many of the positions of authority are filled by people , who may be "smart" in some sense . but are really just stupid.
Whatever the dynamic that enables a certain type of mindset and worldview, to rise within the power structures , as they are is utterly insane and a serious flaw in the system.
the evidence of this is look who will be "running the free world" . today, and after the next election all choices point to zero.
Look at our form of capitalism . we allow banks to create our money out of nothing . then they can fund wall street speculation and corporate behemoths who dictate the playing field(through control of the political class) all business must play on. and so the lives and fortunes of the people and the planet and all of its life forms must endure.
the question of how stupid are we .. pretty damn stupid.
km , June 18, 2020 at 10:46 am
We can discuss the advantages and disadvantages of capitalism all day long – but we don't have capitalism – we have crony capitalism.
We can discuss whether or not meritocracy is a good thing – but our "meritocracy" is in fact massively rigged.
That said, a society has got to have some way to select leaders. If it doesn't select based on some kind of merit, what's the alternative? Accident of birth? Random lottery? Footraces?
CuriosityConcern , June 18, 2020 at 8:11 pm
Actually, I think random lottery of a group of citizens would be much better than a president. Make the group big enough that a citizen has a good chance of assuming office at least once in their average lifespan. Renumeration should be median of income. A democratic executive body.
This would probably make the US more agreement capable.
Polar Socialist , June 18, 2020 at 8:56 am
Having worked in academia for 25+ years (and counting), I really can't agree with equating the capability and/or competence with level of education. Just doesn't happen.
We have a rule of thumb: the more PhDs are involved in a project the more confused and messier it'll be for us to sort out and make to work. If professors are involved, even we can't sort it out.
Of course there are exceptions: some people can retain their common sense and competence regardless of higher education. They just don't tend to climb very high in the academic meritocracy.
Arizona Slim , June 18, 2020 at 3:38 pm
My father, who had a PhD, was fond of saying that a PhD was no substitute for common sense.
shinola , June 18, 2020 at 10:00 am
With the emphasis on "elite" education, I think the article is describing credentialism which is not exactly the same as actual meritocracy.
Meritocratic hierarchies have their own built-in problems – those of us of a certain age may recall "The Peter Principle."
Carolinian , June 18, 2020 at 2:11 pm
Yes but for purposes of this discussion they are the same thing since TPTP have decided that in our complicated society with so many millions of citizens credentials are a the way to separate "the wheat from the chaff." There was a time when you had a lot more self made men (and they were men) but our ossified economic system now makes that less likely. A country where individualism was once the hallmark has been turned–elite division–into a homogenized, fearful "safe space."
For the rest of us there is at least the internet where individualism can still thrive. They are trying to stamp that out.
Tom , June 18, 2020 at 10:17 am
You should have a look at the role of the meritocracy in Singapore. its amazing!
Bufeng , June 18, 2020 at 1:26 pm
We have similar problems with meritocracy as the rest of the world. "Ownership" of public housing is 80+% of citizen households, but the figure in our top school is nearer 50% (the other 50% live in private housing – they are not homeless!): https://www.straitstimes.com/singapore/education/can-a-taxi-driver-or-hawkers-son-still-make-it-to-raffles-institution
There are many legacy "socialist era" policies (free basic education, subsidised basic healthcare, high ownership of public housing, well-functioning utilities and public transport and public services that in spite of being ostensibly privatized are actually owned by a state-owned enterprise – Temasek Holdings) that still keep things from becoming too nasty. But we've been heading the same direction as you all.
Red , June 18, 2020 at 9:35 pm
That's because despite being semi authoritarian Singapore couldn't resist marketisation. Doesn't make any sense to include market value of land in the price of public houses if the government owns that land and you essentially rent it from them. Or the recent electricity market privatisation. Just gets to show you that democratic or authoritarian, governments are out of ideas.
David , June 18, 2020 at 10:17 am
OK, but then the alternative is . not very obvious.
I think in fact that the problems people have with meritocracy are more to do with the "cracy" than the "merit" part of the term. After all, there are only three possible ways of choosing people to fill positions and run organisations. The first is patronage, favouritism, family and wealth, which has been the rule for most of human history, and was the only way to make career in Europe until relatively recently. You might accidentally get a person of ability appointed to an important job, but you obviously couldn't guarantee it. The second is selection by lot, which worked OK in Athens for certain jobs, but is hard to generalise. The only other option is competitive selection by merit, depending on the qualities needed for the job, and for promotion. All modern states have ultimately gone for the third option.
When people say that they don't approve of meritocracy, then, they don't usually mean that they want a return to the days when government positions were in the personal gift of Ministers. They mean one of two things. First, that selection by merit doesn't always work well or fairly, because the selection criteria can in practice favour candidates from wealthier or more educated backgrounds, second that meritocracies can themselves become hereditary, selecting people like themselves, just as patronage systems used to do. It's also true that success in one field can generate a sense of individual and collective arrogance and a belief that you are qualified to do anything. All of these are very valid criticisms (and all can be addressed to some extent) but none of them is an argument against the principle of merit-based selection. It's also important to remember that "merit" here really means just "most suited"; It's not a value judgement or the equivalent of the keys to a selective club.
Left in Wisconsin , June 18, 2020 at 4:49 pm
Yes, this is the key problem. But I would suggest two other possibilities that also exist: A) wide acceptance to entry-level positions, lots of training/assessment and promotions from within, and promotion by seniority (above a threshold of competence) – a scheme which has ups and downs and is probably not a good fit anymore for a world in which long term employment with one employer is not the norm; and B) democratic control with promotion determined from below (by those to be managed) rather than above. All the evidence suggests that good management is a function of getting the best out of your subordinates (true leadership), not all the fact BS around star performers.
The big problem with merit is that many jobs have no suitable pre-employment or even current employment merit indicators (think of K-12 teaching, where test scores are used to judge reading and math teachers but there are no comparable measures for teachers of any other discipline), and the ones that are used can be gamed, and so merit becomes conflated with credentials or test scores, which have limited real-world applicability. Another example: in the old days, you could become a lawyer through "apprenticeship," which allowed lots of talented people to become lawyers without the gatekeeping of law schools. It is impossible to argue that the profession is now better with than it was in those days.
Left in Wisconsin , June 18, 2020 at 4:57 pm
"fake," not "fact"
anon in so cal , June 18, 2020 at 10:27 am
Anyone familiar with the notorious Kingsley Davis and Wilbur Moore stratification theory? The theory attempted to legitimize economic and political stratification (i.e. inequality) in modern societies by using quasi-Parsonian notions of meritocracy. There are standard rebuttals to the Davis-Moore theory and this article sounds as though it has attempted to regurgitate some of those rebuttals.
anon50 , June 18, 2020 at 12:58 pm
Also, however much merit one has, that should not allow her/him to steal from the lessor-so via the use of what is, due to government privilege, the PUBLIC'S credit but for private gain.
In other words, those with merit should not have to steal from the poor, should they? Kinda of diminishes their triumph, doesn't it? Knowing their success is built on oppression?
Dave in Austin , June 18, 2020 at 2:18 pm
NFL wide receivers; NBA centers; MIT physics PHDs; University of Texas Petroleum Engineering grads.
"Meritocracy legitimizes, deepens inequality"
"Meritocracy" based on gatekeeping (lawyers, civil service rules that say "must have a a BA"; 7 years to become a physical therapist) these are, in my opinion , bad. I want to measure outputs not inputs. And that means those hardworking, always dependable high school girls who always turn in perfect homework (an input unconnected to knowledge) may have a high class rank but I'll take the kid with the bad attitude, bad clothing and lousy social skills who gets in the 98% percentile in the SAT Math exam (an output) every time (unless I'm hiring people to be TV weathermen and weather girls- I like cute too).
What would happen in the NFL if we demanded a masters degree in wide receiver studies from a state accredited university? Fewer blacks; fewer drug bust and girl friends beaten up and fewer amazing catches.
Ian Ollmann , June 18, 2020 at 8:59 pm
Some of this rings with class warfare hogwash. I am very far from a conservative, but even I must resort to that old saw in this case. Anyone who has worked in the same field or company for 20 years will eventually come to realize that in time at the workplace the academic degree is like so much kindling used to start a bonfire, and what really matters in the long run is the contribution you make in your chosen field over that time. This can hardly be lost on a bunch of academics nurturing their own career over decades so I must only conclude that such an edgy interpretation is intended to make waves. Degrees don't matter for sh__ once leadership figures out you don't know what you are doing. The best shine no matter how much muck you throw on them.
Where education matters is getting your foot in the door in the first place. If you can't manage that, then you may be a really great auto mechanic, rising to the top of your field, but failing to really make the same splash as you might have from being a mechanical engineer or chemist. Nonetheless, in almost any industry there is a need for smart competent people to help make sure the endeavor doesn't go off the rails and those will do well. Maybe they can afford to send their kids, who may be smart too probably, on to a better school.
It isn't about justifying inequality. It is about getting the best people in the right places to produce he best outcomes. Consult your Napoleon. When good outcomes are needed, and we aren't just writing papers, good people are essential.
Henry , June 18, 2020 at 10:18 pm
It depends what those meritocrats are doing. MBA s are a good example. Plus nothing original and creative comes out of a culture that prioritises corporate career building over other aspects of human beings. That's why you see the children of these meritocrats are so shallow and boring.
Jun 12, 2020 | www.zerohedge.com
Recall, it was just days ago that we pointed out Cornell professor and friend of Zero Hedge Dave Collum was publicly shamed by Cornell for daring to express the "wrong" opinion about current events on social media. Now, there's a second Cornell professor coming under fire for his critique of the Black Lives Matter movement.
Cornell Law School professor William A. Jacobson has challenged any student or faculty member to a public debate about the Black Lives Matter movement after he says liberals on campus have launched a "coordinated effort" to have him fired from his job. At least 15 emails from alumni have been sent to the dean, demanding that action be taken, according to Fox News .
"There is an effort underway to get me fired at Cornell Law School, where I've worked since November 2007, or if not fired, at least denounced publicly by the school," Jacobson wrote on Thursday . "I condemn in the strongest terms any insinuation that I am racist."
Jacobson founded the website Legal Insurrection and says he's had an "awkward relationship" with the university for years as a result. The recent outrage comes as a result of two posts he recently made on his site:
"Those posts accurately detail the history of how the Black Lives Matters Movement started, and the agenda of the founders which is playing out in the cultural purge and rioting taking place now," Jacobson said.Jacobson (Source: Jacobson's Blog, Legal Insurrection )
He recently wrote on his blog: "Living as a conservative on a liberal campus is like being the mouse waiting for the cat to pounce. For over 12 years, the Cornell cat did not pounce. Though there were frequent and aggressive attempts by outsiders to get me fired, including threats and harassment, it always came from off campus."
"Not until now, to the best of my knowledge, has there been an effort from inside the Cornell community to get me fired," he says.
"The effort appears coordinated, as some of the emails were in a template form. All of the emails as of Monday were from graduates within the past 10 years," he continued. Jacobson's "clinical faculty colleagues, apparently in consultation with the Black Law Students Association" drafted and published a letter denouncing 'commentators, some of them attached to Ivy League Institutions, who are leading a smear campaign against Black Lives Matter.'"
Cornell responded , backhandedly defending the Professor's right to his own opinion:
"...the Law School's commitment to academic freedom does not constitute endorsement or approval of individual faculty speech. But to take disciplinary action against him for the views he has expressed would fatally pit our values against one another in ways that would corrode our ability to operate as an academic institution."
"This is not just about me. It's about the intellectual freedom and vibrancy of Cornell and other higher education institutions, and the society at large. Open inquiry and debate are core features of a vibrant intellectual community," he stated.
"I challenge a representative of those student groups and a faculty member of their choosing to a public debate at the law school regarding the Black Lives Matter Movement, so that I can present my argument and confront the false allegations in real-time rather than having to respond to baseless community email blasts."
"I condemn in the strongest terms any insinuation that I am racist, and I greatly resent any attempt to leverage meritless accusations in hopes of causing me reputational harm. While such efforts might succeed in scaring others in a similar position, I will not be intimidated," Jacobson concluded.
Jun 16, 2020 | www.moonofalabama.org
A User , Jun 16 2020 3:36 utc | 87I'm always amused, nah that is a little harsh - dumbfounded is more reasonable, when Americans express dismay that 'their' constitution is not being adhered to by the elites.
The minutiae of American political history hasn't greatly concerned me after a superficial study at high school, when I realized that the political structure is corrupt and was designed to facilitate corruption.
The seeming caring & sharing soundbites pushed out by the 'framers' scum such as Thomas Jefferson was purely for show, an attempt to gather the cannon fodder to one side. This was simple as the colonial media had been harping on about 'taxation without representation' for decades.
It wasn't just taxes, in fact for the American based elites that was likely the least of it. The objective of the elites was to wrest control of resources eg land and/or timber plus so-called royal warrants that controlled who was allowed to produce, sell export products to who, grab allocation out of the control of the mobs of greedy royal favorites, then into the hands of the new American elites.
A well placed courtier would put a bagman into the regional center of a particular colony (each colony becoming a 'state' post revolution), so that if someone wanted to, I dunno, say export huge quantities of cotton, the courtier would charge that 'colonial' for getting the initial warrant, then take a hefty % of the return on the product - all collected by the on-site bagman then divvied up.
The bagmen & courtiers grew fat at the expense of the colonists and generally the bagman, who also spied on the locals for obvious reasons, would go back to England once he had made his stash.
The system was ponderous inaccurate & very expensive. Something had to be done, but selling revolutionary change to the masses on the basis of the need to enrich the already wealthy was not likely to be a winner. Consequently the high faulting blather.
The American elites wanted and, after the revolution got, the power to control economic development for themselves.Hence the birth of lobbyists simultaneous with the birth of the American nation state.
IMO the constitution was about as meaningful to the leaders of the revolution as campaign promises are to contemporary politicians.That is, something to be used as self protection without ever implementing.
Jun 16, 2020 | www.youtube.com
Dave C , 4 days agoRobert Schupp , 4 days ago
"That's why they call it the American Dream, because you have to be asleep to believe it." -George Carlin
You can't just move to American cities to pursue opportunity; even the high wages paid in New York are rendered unhelpful because the cost of housing is so high.
Dingo Jones , 3 days agoDirtysparkles , 4 days ago
@JOHN GAGLIANO Cost of living is ridiculous too.Jean-Pierre S , 4 days ago
Our country has become the American NightmareJohn Sanders , 3 days ago
Martin Luther King, Jr. was vilified and ultimately murdered when he was helping organize a Poor People's Campaign. Racial justice means economic justice.Adriano de Jesus , 4 days ago
Old saying: A Recession is when your neighbor loses their Job. A Depression is when you lose your Job.Ammon Weser , 4 days ago
A lot of mega wealthy people are cheats. They get insider info, they don't pay people and do all they can to provide the least amount of value possible while tricking suckers into buying their crap. Don't even get me started on trust fund brats who come out of the womb thinking they are Warren buffet level genius in business.crazyman8472 , 4 days ago
There's a documentary about Wal-Mart that has the best title ever: The High Cost of Low CostDavid Tidwell , 4 days ago
Night Owl: "What the hell happened to us? What happened to the American Dream?"
Comedian: "What happened to the American Dream? It came true! You're looking at it."
-- WatchmenD dicin , 4 days ago
Nailed it. As a millennial, I'm sick of being told to just "deal with it" when the cards have always been stacked against me. Am I surviving? Yes. Am I thriving? No.farber2 , 4 days ago
When the reserve status of the American dollar goes away, then it will become apparent how poor the US really is. You cannot maintain a country without retention of the ability to manufacture the articles you use on a daily basis. The military budget and all the jobs it brings will have to shrink catastrophically.Michael D , 4 days ago (edited)
American trance. The billionaires hypnotized people with this lie.B Sim , 3 days ago
...and sometimes you CAN'T afford to move. You can't find a decent job. You certainly can't build a meaningful savings. You can't find an apartment. And if you have kids? That makes it even harder. I've been trying to move for years, but the conditions have to be perfect to do it responsibly. The American Dream died for me once I realized that no matter the choices I made, my four years of college, my years of saving and working hard....I do NOT have upward mobility. For me, the American Dream is dead. I've been finding a new dream. The human dream.Sound Author , 3 days ago
This is a very truncated view. You need to expand your thinking. WHY has the system been so overtly corrupted? It's globalism that has pushed all this economic pressure on the millennials and the middle class. It was the elites, working with corrupt politicians, that rigged the game so the law benefited them.
This is all reversible. History shows that capitalism can be properly regulated in a way that benefits all. The answer to the problem is to bring back those rules, not implement socialism.
- - Ended the free trade deals
- - Imposed Protective tarriffs to defend American jobs and workers
- - Lowered corporate taxes to incentivize business to locate within us borders.
- - Limited immigration to reduce the supply of low skilled labor within US borders.
The result? before COVID hit the average American worker saw the first inflation adjusted wage increase in over 30 years!
This is why the fake news and hollywood continue to propagandize the masses into hating Trump.
Trump is implementing economic policies good for the people and bad for the elitesJulia Galaudet , 4 days ago
The dream was never alive in the first place. It was always bullshit.Scott Clark , 4 days ago
Maybe it's time for a maximum wage.Siri Erieott , 4 days ago
Private equity strips the country for years! It's the AMERICAN DREAM!!!andrew kubiak , 4 days ago
A dream for 1%, a nightmare for 99%.
Globalism killed the American dream. We can buy cheap goods made somewhere else if we have a job here that pays us enough money.
Jun 12, 2020 | www.youtube.com
Krystal Ball exposes the delusion of the American dream.
About Rising: Rising is a weekday morning show with bipartisan hosts that breaks the mold of morning TV by taking viewers inside the halls of Washington power like never before. The show leans into the day's political cycle with cutting edge analysis from DC insiders who can predict what is going to happen.
It also sets the day's political agenda by breaking exclusive news with a team of scoop-driven reporters and demanding answers during interviews with the country's most important political newsmakers.
Owen Cousino , 4 days agopoppaDehorn , 4 days ago
Debt-free is the new American dream
Got my degree just as the great recession hit. Couldn't find real work for 3 years, not using my degree... But it was work. now after 8 years, im laid off. I did everything "right". do good in school, go to college, get a job...
I've never been fired in my life. its always, "Your contract is up" "Sorry we cant afford to keep you", "You can make more money collecting! but we'll give a recommendation if you find anything."
Now I'm back where i started... only now I have new house and a family to support... no pressure.
Jun 16, 2020 | www.moonofalabama.org
Richard Steven Hack , Jun 16 2020 1:11 utc | 73Posted by: karlof1 | Jun 15 2020 17:36 utc | 24
This happened prior to Crooke writing his current article
Just read that piece. I was fascinated to see him referencing an article by "Walrus" over at SST (which was a particularly BS article in my view.) However, he referenced the concept of Walrus' article about a "billionaire network" controlling everything by corrupting people over 40.
My reaction to that is: Isn't that how it was always done throughout history? The rich control the less-rich who control the less-rich - using his matryoshka example.
His main thesis is that younger ideologist are setting up a more serious divide in US society than the old "Liberal vs Conservative" or "North vs South" division, and that this is putting pressure on the "billionaires network."
I'm not sure how to regard that concept yet. On the one hand, I know that the old "young vs old" dynamic is always at work - and generally irrelevant since it is the old that controls the money and the military power. OTOH, there is a new phenomenon in the last decades, starting with the availability of networks, and then growing with the availability of affordable personal computers, and now exploding with the presence of the Internet. That phenomenon is hacking. And it is the youth that control that technology.
I referenced the "cyberpunk" sci-fi genre a few threads back. If one is familiar with the hacker community and the infosec profession, ne if struck by the massive disparity between the capabilities of the attackers and that of the defenders of networks. No matter what the defenders do, there is no stopping an adversary which has motivation, resources and time. The defender has to always be right, the attacker only has to be right once.
This translates to the current situation socially - but only to a limited degree. Hackers are a particular breed intellectually and emotionally. Their attitudes and abilities do not translate to the rest of people their age. Their political and social attitudes *may*, to some degree, depending on the hacker.
But most hackers have a decidedly anti-authoritarian, if not libertarian, or dare I say anarchist, attitude. They can join with others, but that tends to be at arm's length. So I don't see the majority of them empowering a "youth collectivism" or whatever one wants to call the general social and political attitude of the young today.
I *do* see them being willing to take on political and social power. That was the entire reference point of the cyberpunk genre: technically proficient iconoclasts marginalized as criminals taking on (and frequently losing) TPTB depicted as corporations and the state.
I see the rise of hacking as a direct threat to the "billionaires network" (if such a thing actually exists as a coordinated entity.) The only question is whether the hackers have a coherent view of their potential. I suspect they don't, much like the "Woke" (see below). But they could - and if they did, they'd be very dangerous since there is no real way to stop them, and their numbers are growing worldwide as more Third World societies develop middle classes that can afford to own computers while still not providing an adequate economy for their people (places like India, Malaysia and Indonesia.)
"One aspect he apparently overlooks is the very poor understanding of history and contemporary events exhibited on all sides--the "woke" are asleep as they know nothing of Anti-Federalism or of the Class-based rationale related to the genesis of Police, although they seem to be aware of the social control goals of that Genesis in both North and South as we examined last week."
Agreed. That's my problem with the "Woke" - they're even more ignorant than their parents were, even if they're more socially conscious. They believe things that aren't correct just as much as their parents did - they just believe different incorrect things.
"The Class War is also sidelined despite the reality of it being the most important factor in the equation--The .1% being the genuine looters..."
"IMO, there's no discernable ideological direction aside from some basic demands related to policing and the racism connected to it because those in the streets lack the tools to articulate a complete vision--something that's very difficult to do when you don't know where you've actually been and the happenings over the past 75 years that have shaped the current landscape"
Indeed. One has to burrow rather deeply into first principles to formulate a coherent philosophy - and I don't see anyone doing that. I had nine years in a Federal prison to re-orient myself and I benefited from having a previous forty years of exposure to concepts outside the mainstream "left vs right" dichotomy. I doubt many of these people on the streets have a clue as to what should be done either on their personal level or a social level.
Jun 16, 2020 | jacobinmag.com
Trump just changed the rules to let Wall Street's most predatory industry get its hands on hundreds of billions of dollars of ordinary workers' retirement savings. Now his friends in private equity are celebrating.
If politics is the art of the sleight of hand, then Donald Trump is one of the deftest magicians of all time -- a master of creating mesmerizing spectacles, while his minions quietly rob everything in sight. This David Copperfield routine has become so mundane we are practically numb to it, but the trick Trump just pulled off for his billionaire pals was something particularly special -- it could end up being one of the single biggest financial heists in history.
As news cycles were consumed by Trump deliberately inflaming social unrest and threatening a domestic military invasion , the president's political appointees were approving a regulatory change that could transfer hundreds of billions of dollars of Americans' retirement savings to private equity firms. Those are the Gordon Gekko–run outlets that have become famous for fleecing investors , laying off workers , gutting local economies , strip-mining media outlets and creating public health and environmental disasters -- all while minting Wall Street billionaires.
The Trump administration's new directive came just a few months after private equity billionaire Stephen Schwarzman -- who had been pushing for the change -- poured $3 million into a super PAC backing Trump's reelection bid."A Windfall of $435 Billion"
To the casual onlooker, the information letter from the Employee Benefits Security Administration reads like every other impenetrable passage of stereo instructions that fills the Federal Register -- but this was no routine piece of paperwork. The guidance to Switzerland-based investment firm Partners Group effectively changed the enforcement of federal law protecting workers' retirement savings.
While long-standing worker-protection regulations have prevented 401(k) plans from investing in high-risk private equity firms, the letter now permits corporations to funnel that money to those firms, which charge notoriously giant fees.
Trump's administration argued that workers should feel fortunate and thankful that the administration will now let employers turn their savings over to private equity barons.
"This information letter will help Americans saving for retirement gain access to alternative investments that often provide strong returns," labor secretary Eugene Scalia said in a statement announcing the new policy. "The letter helps level the playing field for ordinary investors and is another step by the department to ensure that ordinary people investing for retirement have the opportunities they need for a secure retirement."
Scalia previously represented Wall Street banks and investment firms at the law firm Gibson Dunn, including Goldman Sachs, which has been working to raise more money for its private equity funds .
In practice, private equity firms will now be allowed to access -- and skim fees off of -- the $9 trillion in 100 million workers' 401(k) plans and IRAs.
"If just 5 percent of the money in these retirement funds were available to private equity, it would be a windfall of $435 billion -- real money even to private equity millionaires and billionaires," wrote Eileen Appelbaum of the Center for Economic and Policy Research (CEPR)."A Huge Opportunity for the Firm"
From the beginning, Trump's White House has been operating as a de facto subsidiary of the private equity industry : his reelection campaign is being bankrolled by private equity donors; his commerce secretary is a private equity kingpin ; his SEC chairman was a Wall Street lawyer at a firm that represents private equity clients ; his first National Economic Council was the president of a private equity giant ; and his top outside adviser is Schwarzman, the CEO of the world's largest private equity firm , Blackstone.
The Labor Department letter is the result of all that private equity influence -- and at a particularly opportune time. The industry -- including Partners Group -- has recently been fretting about a decline in fees during the COVID-19 pandemic. The letter offers the potential for a bailout for the industry, paid for by millions of workers' retirement savings.
That said, this is not some temporary relief during a fleeting crisis -- this is the culmination of a long-term campaign by Schwarzman. Six days after Trump was inaugurated, the Blackstone chief said that he had been dreaming of a president who would change the law to let his firm make bank off workers' 401(k) savings.
"In life you have to have a dream," Schwarzman told analysts in January 2017 , days after Trump's inauguration. "One of the dreams is our desire and the market's need to have more access at retail to alternative asset products . . . A lot of people are not allowed to put those into retirement vehicles and other types. And one of the interesting issues when you have a new government is whether they want to continue that type of prohibition or not. Because what it's doing is denying people sort of a better retirement, and if there's a change in that area that becomes a huge opportunity for the firm."
In the ensuing years, Schwarzman and other private equity moguls continued to deliver cash to Trump's national Republican Party while the industry pushed for the changes in law that would allow them to raid 401(k) savings."This Wealth Transfer Might Be One of The Largest in the History of Modern Finance"
Like Shelley Levene's smarmy real-estate sales pitch in Glengarry Glen Ross , Schwarzman's argument is that private equity offers ordinary Americans terrific untapped investment upside. In his telling, workers have been unfairly deprived of these opportunities under the old laws -- and not surprisingly, both the Trump Labor Department and some of the business press have credulously echoed that line.
"Everyday investors may soon be able to get a piece of private equity action," effused the lede of the New York Times ' report on the Labor Department letter, as if this is a sweet get-rich-quick opportunity for the average working man.
But only days after the change, a landmark study was released, telling the real story of private equity.
The report by University of Oxford professor Ludovic Phalippou shows that in the last fifteen years, private equity firms generally have not provided better returns to investors than low-fee stock index funds. In the process, a handful of private equity firms and their executives have raked in roughly $230 billion in fees from investors like public pension funds and university endowments.
"This wealth transfer might be one of the largest in the history of modern finance: from a few hundred million pension scheme members to a few thousand people working in private equity," Phalippou concludes.
Politicians have enabled this redistribution.
In Washington, federal lawmakers have preserved a tax loophole that allows private equity moguls to classify their winnings as capital gains rather than income, thereby paying far lower tax rates than ordinary workers.
Meanwhile, in states and cities, local officials have continued to direct more and more of government workers' pension savings to politically connected private equity firms. Those officials have been hoping that private equity investments would produce outsize returns that might forestall tax hikes necessary to raise revenue and fund the pension benefits promised to public-sector workers. But overall, those returns were not significantly better than the stock market, and they came with giant fees.
In its letter, the Trump administration actually acknowledged some of these pitfalls of private equity investments, noting that they involve "more complex, and typically, higher fees." But that wasn't enough to stop the Labor Department from shoving millions of unwitting workers and retirees into private equity's maw just a few years after Blackstone and other major private equity firms were sanctioned by regulators for fleecing investors.The Quest for Dumb Money
The private equity industry is hardly short on cash -- the industry was sitting on roughly $1.5 trillion of undeployed capital at the end of 2019. The reason the Labor Department letter is so important to the industry is because 401(k)s and IRAs represent a particular kind of capital that private equity firms love -- so-called "dumb money."
Unlike a share of publicly traded stock whose price is the same for all investors, a private equity investment's fees can vary widely from investor to investor. Private equity firms are therefore always eager to find investors willing to accept the highest possible fees. "Dumb money" refers to such investors -- entities like pension funds, 401(k) plans, and university endowments that are pools of other people's money directed by officials with no personal skin in the investment decisions.
Wall Street sees these funds as "dumb" -- and particularly lucrative -- because the officials negotiating on retirees' or universities' behalf may not drive as hard a bargain on fees and terms as, say, an individual billionaire or an insurance company trying to protect its cash reserves.
This wiggle room with dumb money can be enormously lucrative for private equity firms: a recent study by Stanford and Harvard researchers found that had public pensions all received the same private equity fee rates, they "would have earned nearly $45 billion more on their investments."
In other words: that is $45 billion of earnings that could have gone to retirees, but instead went to private equity firms and other wealthy investors because pension fund managers didn't secure better fees and terms.
That part about "other unobserved investors" is key -- private equity firms explicitly say in their SEC filings that they can and will offer different investors different fees and terms on the exact same investments. It is a situation that has caused some retirees to wonder whether their dumb money is being used to pad the profits of smarter, politically connected investors who negotiate better terms in the same private equity investments.
Now that Trump's Labor Department has opened the floodgates, a lot more money could end up flowing into these opaque deals, enriching private equity executives and their friends -- while leaving workers' meager retirement savings even further depleted.
David Sirota is editor-at-large at Jacobin . He edits the Too Much Information newsletter and previously served as a senior adviser and speechwriter on Bernie Sanders's 2020 presidential campaign. You can subscribe to David Sirota's newsletter "Too Much Information" here . Andrew Perez contributed research to this story.
Jun 16, 2020 | www.unz.com
Malla , says: Show Comment June 13, 2020 at 4:24 pm GMT@karelMalla , says: Show Comment June 13, 2020 at 5:06 pm GMT
asymmetry of the relationship between India, or its various provinces, to be more accurate, and the GB.
Agreed but the Europeans wanted a way to the Indies (East Indies – a territorial description in those days which included South Asia and South East Asia all the way to Indonesia.) Indeed it was Indonesia which was the first prize (spices) which the Dutch got. India was the second best price, some spices yes but most importantly garments. And they Western Europeans (Portuguese, Spanish, French, Dutch, British, Danish [very small players]) wanted a way to the Indies to beat the monopoly of this trade by the Muslims and Venice. And when Constantinople fell to the Turks, this desire to find an alternative route increased further. I did not ask the Turks to conquer Constantinople. The whole colonial Empire chapter of mankind started thanks to the actions of the Turks.
a bit of eastern civilization to the savage people of these dismal islands.
Savage people? Abu Taleb Khan's book on British Society gives the opposite picture.
The eastern devil had also a little chance to gang up with the worst segments of the British ruling class to suck even more blood from its indigenous slaves. Had he made it, then Nawab Siraj Ud Daulah would have been awarded by haveing a nice statue of him erected in every major town of GB.
The East India Company itself stamped out all such corrupt practices with time. That is why Robert Clive was sent for a second time.
The British came to India to trade. But rivalry with other European powers especially the French led to the conquest of India. The earliest conquest of Indian regions of India by the English was primarily because of rivalry with France. It was originally France which started interfering in Indian affairs forcing the British to do the same in response out of fear of losing trade rights in India. Before that the English policy was to not interfere in local affairs much but just concentrate on trade. India for a while (especially) South India was going more French than British. However French ambitions depended on one person Joseph François Dupleix, a Napoleonic type figure of whom Empire builders are made of. However the French East India Company Directors lambasted Dupleix to not waste energy on conquests and empire buildings but concentrate on trade.
Must add that many Indian powers like Hyder Ali of Mysore were friends of Dupleix, unlike the French East India Company directors, the local powers were not complaining about his actions.
And how can we forget the Maratha Empire. It were the Maratha raids which would give the best help to the conquest and expansion of the British Empire in India. Marathas raided and decimated Bengal. They looted it out by their heavy taxation of Chouth (1/4th taxation i.e. 25% of the conquered/raided ) as well as killed many. So heavy were the impact of these Maratha raids, that the fierce Rajput Kings themselves voluntarily signed an alliance with the British East Indian Company for protection. Travancore Kingdom in South India signed a similar treaty with the English to save them from Tipu Sultan's invasions. Also must add that Nawab Shiraj Ud Daulah, the Nawab of Bengal crushed the Borgees, Maratha raiders who would raid and kill and rape and loot Bengal. One must add that a Peshwa (Prime Minister of the Royal Maratha Bhosle Family but defacto rulers) of the Marathas tried to stop all this raiding but before he could take any action in Bengal he had to return to Pune (the capital of the Peshwas and Maratha power center).
And what about Nader Shah the brave Sultan of Iran. Nadir Shah looted out of India multiple times of what the British East India Company earned in India till the mutiny. During the course of one day (March 22) 20,000 to 30,000 Indians were brutally killed by Iranian troops and as many as 10,000 women and children were taken as slaves, forcing Indian Mughal Emperor Mohammad Shah to beg Nader Shah for mercy.
In response, Iranian Emperor Nader Shah agreed to withdraw, but Indian Emperor Mohammad Shah paid the consequence in handing over the keys of his royal treasury, and losing even the fabled Peacock Throne to the Iranian emperor. The Peacock Throne, thereafter, served as a symbol of Iranian imperial might. It is estimated that Nader took away with him treasures worth as much as seven hundred million rupees. Among a trove of other fabulous jewels, Nader also looted the Koh-i-Noor (meaning "Mountain of Light" in Persian) and Darya-ye Noor (meaning "Sea of Light") diamonds. The Iranian troops left Delhi at the beginning of May 1739, but before they left, he ceded back to Muhammad Shah all territories to the east of the Indus which he had overrun. The booty they had collected was loaded on 700 elephants, 4,000 camels, and 12,000 horses.
I let us not even start about Ahmed Shah Abdali, the Lord of the Afghans who had his own lootings in India. The British East India Company got peanuts compared to the above two Empires. LOL.
You think Iranian Emperor Nadir Shah, would feel guilty about slavery? LOL. Imagine a bunch of pussyboy leftist SJWs & anti fa thugs going to manly Nadir Shah's court and calling him evul because he enslaved people. Nadir Shah would roar with laughter so hard, the SJWs/anti-fas would collectively pee in their pants. He would probably keep the male SJWs & anti fas as nautch boys and females would be forced into his harem or distributed to his courtiers.@AnonMalla , says: Show Comment June 13, 2020 at 10:13 pm GMT
British empire wasn't run by Indian merchants.
It was run by White British 'gentlemen.'
British Empire had its own Jew lobby just like how Jews control America today.
But the people whos topped that evil trade were all British Protestant missionaries. No Indian Baniya or Parsi or Bengali cared about the Chinese dying. Do you really think the typical Indian baniya trader would give a rats ass about the deaths of chinkis (East Asians) or Goras (Whites) or Kalus (Blacks)? They would not Giva a f ** k. The Jews definitely did not care about Chinese dying. It were evul Whitey Anglos who led a campaign to stop this trade.
The opium trade faced intense enmity from the later British Prime Minister William Ewart Gladstone. As a member of Parliament, Gladstone called it "most infamous and atrocious" referring to the opium trade between China and British India in particular . Gladstone was fiercely against both of the Opium Wars and ardently opposed to the British trade in opium to China. He lambasted it as "Palmerston's Opium War" and said that he felt "in dread of the judgments of God upon England for our national iniquity towards China" in May 1840. Gladstone criticized it as "a war more unjust in its origin, a war more calculated in its progress to cover this country with permanent disgrace,".
In the 1890s, the effects of opium use were still largely undocumented by science. Protestant missionaries in China compiled data to demonstrate the harm of the drug, which they had observed. They were outraged that the British Royal Commission on Opium visited India but not China. They created the Anti-Opium League in China among their colleagues in every mission station, for which the American missionary Hampden Coit DuBose served as the first president. This organization was instrumental in gathering data from Western-trained medical doctors in China, most of whom were missionaries. They published their data and conclusions in 1899 as Opinions of Over 100 Physicians on the Use of Opium in China. The survey included doctors in private practices, particularly in Shanghai and Hong Kong, as well as Chinese who had been trained in medical schools in Western countries.
In England, the home director of the China Inland Mission, Benjamin Broomhall, was an active opponent of the opium trade; he wrote two books to promote banning opium smoking: Truth about Opium Smoking and The Chinese Opium Smoker. In 1888 Broomhall formed and became secretary of the "Christian Union for the Severance of the British Empire with the Opium Traffic" and editor of its periodical, National Righteousness. He lobbied the British Parliament to stop the opium trade. He and James Laidlaw Maxwell appealed to the London Missionary Conference of 1888 and the Edinburgh Missionary Conference of 1910 to condemn the trade. As he lay dying, the government signed an agreement to end the opium trade within two years.@AnonMalla , says: Show Comment June 13, 2020 at 10:15 pm GMT
A lot of those Jewish and Indian traders brought valuable goods to Britain,
The valuable goods were brought to Britain by the East India Company itself.
Indians made a lot of money, it's because they were better traders than British.
China's Opium War Was 'Completely Indian Enterprise', not British: Indian Author Amitav Ghosh
At this juncture he found that the first opium war in China was an Indian undertaking. " The first opium war (was) planned in India, it was financed by Indian money, it was fought with Indian soldiers. But it has all completely vanished from our historical memory ," Ghosh, whose third book of Ibis series 'Flood of Fire' is all about migration in the 1830s, told IANS.
" The putting together of the expeditionary force took place in India. The British naval ships for the expedition were accompanied by 50 supply ships, all provided for by Parsi merchants in Bombay (now Mumbai). From top to bottom, it was a completely Indian enterprise; all the wherewithal for it came from India," he added.
What role did India Inc play in the opium trade war?
They [Indian companies] played a pioneering part. In large parts, the opium war was financed by Indian money – by old Bombay money. Many of t he big Indian families made their money in opium. This is equally true about America.
Many American companies and families have made their money in opium -President Franklin Roo sevelt's family, t he C a l v i n Coolidge family, Forbes family from where you get the current secretary of state, John Kerry, even institutions like Yale and Brown. Singapore and Hong Kong wouldn't exist today without opium.Essentially opium was the most important commodity of the 19th century.
Are companies hesitant to acknowledge their past connections to opium?
Very hesitant . Jardine Matheson was one of the most important opium trading companies in the 19th century. Their closest partner was Sir Jamsetji Jeejeebhoy, who built half of Bombay. To this day, Jardine Matheson does not like this connection mentioned. In fact, they've been known to threaten journalists. Similarly, people who've been trying to work with papers of various Indian companies find it very difficult to access documents. Let me just say it tactfully that several companies don't like this to be spoken of in public.
Would it have been difficult for companies to hide their past if there was social media at that time?
The opium war was a very modern war. It was sold to the British government by merchants. They collected money and sent William Jardine to London to bribe politicians into starting this war. It's a collusion between the State and the private sector, which benefited not only from the policies of the opium trade, but also from the whole war being sub-contracted to them, in terms of provisions, supply ships etc. It was the template of the Iraq war. First, you pick up something, drum it up by publishing some articles about it, the people will get worked up, then you start the war. You keep hidden what is actually happening.@Malla
But the people whos topped that evil trade were all British Protestant missionaries.
Sorry dangerous typo.
But the people who stopped that evil trade were all British (& American) Protestant missionaries.