"... Her targets range from pharmaceutical companies, which uphold a heartless version of market rationality, to internet companies with monopoly power such as Google and Facebook. Her most compelling example, however, is the workings of the financial sector, and its Friedman-style obsession with "shareholder value maximization," which has infected the corporate sector as a whole. ..."
"... Reading Mazzucato's book, it is hard not to wonder just how "neoliberal" ideas and values, which uphold the rationality of the market and exclude notions of the common good, came to shape the conduct of individuals and institutions. ..."
"... In these narratives, neoliberalism appears indistinguishable from laissez-faire. In " Globalists : The End of Empire and the Birth of Neoliberalism," Quinn Slobodian briskly overturns this commonplace view. Neoliberals, he argues, are people who believe that "the market does not and cannot take care of itself," and indeed neoliberalism is a form of regulation -- one that insulates the markets from vagaries of mass democracy and economic nationalism. ..."
Ideas once dismissed as the ravings of the loony left are breaking into the mainstream of economic and intellectual debate. We live
in an age of political earthquakes: That much, at least, seemed clear from newspaper headlines nearly every day of 2018. But intellectual
tectonic plates were also shifting throughout the year, with ideas once dismissed as the ravings of the loony left breaking into
the mainstream.
A Western consensus quickly formed after the collapse of communist regimes in 1989. It was widely believed by newspaper editorialists
as well as politicians and businessmen that there was no alternative to free markets, which alone could create prosperity.
The government's traditional attempts to regulate corporations and banks and redistribute wealth through taxes were deemed a problem.
As the economist Milton Friedman
put it , "The
world runs on individuals pursuing their separate interests."
Neither individuals nor companies needed to worry much about inequality or social justice. In Friedman's influential view, "There
is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits."
Political fiascos in the West, following its largest financial crisis -- events accompanied by the emergence of China, a Communist-run
nation-state, as a major economic power, as well as an unfolding environmental calamity -- have utterly devastated these post-1989
assumptions about free markets and the role of governments.
Confessions to this effect come routinely from disenchanted believers. Take, for instance, Olivier Blanchard, former chief economist
of the International Monetary Fund, who recently posed the once-blasphemous question: "What comes after capitalism?"
Blanchard was commenting on the recent demonstrations in France against President Emmanuel Macron. He
rightly described a global impasse: "Given
the political constraints on redistribution and the constraints from capital mobility, we may just not be able to alleviate inequality
and insecurity enough to prevent populism and revolutions."
Nor, for that matter, can we work towards a greener economy. In any case, Blanchard's admission confirms that we inhabit, intellectually
and culturally, a radical new reality -- one in which "neoliberalism," a word previously confined to academic seminars, has entered
rap lyrics , and stalwarts of the establishment
sound like activists of Occupy Wall Street.
Thus, Martin Wolf, respected columnist for the Financial Times, recently
concluded , if "reluctantly," that
"capitalism is substantially broken." This year, many books with titles such as "The Myth of Capitalism: Monopolies and the Death
of Competition" and "Winners Take All: The Elite Charade of Changing the World" blamed an unjust economic system and its beneficiaries
for the rise of demagogues.
It is becoming clear that the perennial conflict between democracy, which promises equality, and capitalism, which generates inequality,
has been aggravated by a systemic neglect of some fundamental issues.
In " The Value of
Everything : Making and Taking in the Global Economy," Mariana Mazzucato bracingly focuses our attention on them. Mazzucato
has previously written about the innovative role of governments in the modern economy. In her new book, she asks us to distinguish
between people who create value and those who merely extract it, often destroying it in the process.
Her targets range from pharmaceutical companies, which uphold a heartless version of market rationality, to internet companies
with monopoly power such as Google and Facebook. Her most compelling example, however, is the workings of the financial sector, and
its Friedman-style obsession with "shareholder value maximization," which has infected the corporate sector as a whole.
Reading Mazzucato's book, it is hard not to wonder just how "neoliberal" ideas and values, which uphold the rationality of the
market and exclude notions of the common good, came to shape the conduct of individuals and institutions.
In the conventional account of neoliberalism, Friedman looms large, along with his disciple Ronald Reagan, and Britain's Margaret
Thatcher. Much has been written about how the IMF's structural adjustment programs in Asia and Africa, and "shock-therapy" for post-Communist
states, entrenched orthodoxies about deregulation and privatization.
In these narratives, neoliberalism appears indistinguishable from laissez-faire. In "
Globalists : The
End of Empire and the Birth of Neoliberalism," Quinn Slobodian briskly overturns this commonplace view. Neoliberals, he argues, are
people who believe that "the market does not and cannot take care of itself," and indeed neoliberalism is a form of regulation --
one that insulates the markets from vagaries of mass democracy and economic nationalism.
Beginning with the breakup of the Hapsburg Empire, Slobodian's lucidly written intellectual history traces the ideas of a group
of Western thinkers who sought to create, against a backdrop of anarchy, globally applicable economic rules.
Their attempt, it turns out, succeeded all too well in our own time. We stand in the ruins of their project, confronting political,
economic and environmental crises of unprecedented scale and size.
It is imperative to chart our way out of them, steering clear of the diversions offered by political demagogues. One can only
hope that the new year will bring more intellectual heresies of the kind Mazzucato's and Slobodian's books embody. We need them urgently
to figure out what comes after neoliberalism.
"... The political strategy behind these contradictions is simple: it is difficult to criticise government spending on health and education, or popular regulations like consumer protection and limits on executive pay. So why not just criticise all government spending and all ..."
After the mining boom and decades of economic growth, how can Australia be broke?
Gina Rinehart was becoming the world's richest woman those on the minimum wage were falling further and
further behind
Australia just experienced one of the biggest mining booms in
world history. But even at the peak of that boom, there was no talk of the wonderful opportunity we finally had to invest in world-class
mental health or domestic violence crisis services.
Nor was there much talk from either major party about how the wealth of the
mining boom gave us a once-in-a-generation opportunity to invest in remote Indigenous communities. Nope, the peak of the mining boom
was not the time to help those who had missed out in decades past, but the Howard government thought it was a great time to introduce
permanent tax cuts for high-income earners. These, of course, are the tax cuts that caused the budget deficits we have today.
Millions of tonnes of explosives were used during the mining boom to build more than 100 new mines, but it wasn't just prime farmland
that was blasted away in the boom, it was access to the middle class. At the same time that Gina Rinehart was becoming the world's
richest woman on the back of rising iron ore prices, those on the minimum wage were falling further and further behind their fellow
Australians.
Like Joe Hockey, Rinehart saw the problem of inequality as having more to do with the character of the poor than
with the rules of the game: "If you're jealous of those with more money, don't just sit there and complain. Do something
to make more money yourself – spend less time drinking or smoking and socialising, and more time working."
Privatisation is deeply unpopular with voters. Here's how to end it | John Quiggin
Australia isn't poor; it is rich beyond the imagining of anyone living in the 1970s or 80s. But so much of that
new wealth has been vacuumed up by a few, and so little of that new wealth has been paid in tax, that the public has
been convinced that ours is a country struggling to pay its bills.
Convincing Australians that our nation is poor and that our governments "can't afford" to provide the level of services they provided
in the past has not just helped to lower our expectations of our public services and infrastructure, it has helped to lower our expectations
of democracy itself. A public school in Sydney has had to ban kids from running in the playground because it was so overcrowded.
Trains have become so crowded at peak hours that many people, especially the frail and the disabled, are reluctant to use them. And
those who have lost their jobs now wait for hours on the phone when they reach out to Centrelink for help.
Although people with low expectations are easier to con, fomenting cynicism about democracy comes at a long-term cost. Indeed,
as the current crop of politicians is beginning to discover, people with low expectations feel they have nothing to lose.
As more and more people live with the poverty and job insecurity that flow directly from neoliberal welfare and industrial relations
policies, the scare campaigns run so successfully by the likes of the Business Council of Australia have lost their sting. Scary
stories about the economy become like car alarms: once they attracted attention, but now they simply annoy those forced to listen.
'If governments can't make a difference and all politicians are corrupt, why not vote for outsiders?
After decades of hearing conservative politicians say that government is the problem, a growing number of conservative
voters no longer care which major party forms government. If governments can't make a difference and all politicians
are corrupt, why not vote for outsiders like Jacqui Lambie or Clive Palmer? There is perhaps no clearer evidence of
the short-termism of the Liberal and National parties today than their willingness to fan the flames of anti-politician
rhetoric without considering that it is their own voters who are most likely to heed the message.
Back when he was leading the campaign against Australia becoming a republic, Tony Abbott famously argued that you couldn't trust
politicians to choose our head of state. And more recently, in campaigning against marriage equality, Minister Matt Canavan was featured
in a television advertisement laughing at the thought that we could trust politicians.
Neoliberalism: the idea that swallowed the world
Convincing Australians that the country was broke also helped convince us that we have no choice but to sell the
family silver. But of course we have a choice. Just as there is no right answer as to whether it's better to rent
a home or buy one, there is no right answer to whether it's better for governments to own the electricity supply,
the postal service or the water supply, or none of these things.
Different governments in different countries make different decisions at different points in time. While much of neoliberalism's
rhetorical power comes from the assertion that "there is no alternative," the simple fact is that the world is full of alternatives.
Indeed, even the so-called free marketeers in Australia can see alternatives.
Consider stadiums, for example. The NSW Liberal government has a long track record of being pro-privatisation. It has sold off
billions of dollars' worth of electricity, water and health infrastructure. But when it comes to football stadiums, it has no ideological
problem with public ownership, nor any fiscal inhibition about spending billions of taxpayers' dollars.
In 2016 the NSW Liberal government spent $220m buying back ANZ Stadium, built in the 1990s with taxpayer funds at a cost of $690m
and subsequently sold to Stadium Australia Group. Having bought back the stadium, the NSW government plans to spend hundreds of millions
of dollars refurbishing it. That same money could build a lot of school science labs, domestic violence crisis centres or skate parks
for the bored kids the shopping malls don't want scratching up their marble stairs. For the past 30 years, Australians have been
told that we can't afford high-quality public services, that public ownership of assets is inefficient, and that the pursuit of free
markets through deregulation would create wealth and prosperity for all. But none of this is true.
While the policy agenda
of neoliberalism has never been broadly applied in Australia, for 30 years the language
of neoliberalism has been applied to everything from environmental protection to care of the disabled. The result of the partial
application of policy and the broad application of language is not just a yawning gap between those with the greatest wealth and
those with the greatest need, but a country that is now riven by demographic, geographic and racial divides.
Cutting the budget deficit is very important – except when it isn't
Australian politics
isn't about ideology, it's about interests. The clearest proof of that claim is that neoliberal ideas such
as deregulation were never aimed at powerful interest groups like the pharmacists or the gambling industry. And savage spending cuts
were never aimed at subsidies for the fossil-fuel industry or private health insurers.
Tony Abbott, who claimed to have a philosophical problem with carbon taxing, once proposed a 20% increase in the tobacco excise
Just as conservative Christian theology provides an excuse for sexism and homophobia, neoliberal language allows
powerful groups to package their personal preferences as national interests – systematically cutting spending on their
enemies and giving money to their friends. Here are some examples:
John Howard said he was obsessed with deregulating the labour market, but introduced 762 pages of labour-market regulation,
which he entitled WorkChoices. He didn't deregulate the labour market; he re-regulated it in his preferred form. He knew that
government decisions matter. Similarly, the Abbott government declared it was waging a war on red tape, yet the Turnbull government
is determined to pass new laws restricting unions and NGOs.
If there is one thing that neoliberals really seem to believe, it is that reducing the budget deficit is very, very important.
Except when it isn't. The political and business leaders who said we needed to slash welfare spending because we had a "budget
emergency" are currently advocating a $65bn tax cut for business – even though the deficit is bigger now than it was at the
time of the alleged emergency.
The Productivity Commission and state treasuries spent years advocating the deregulation and privatisation of the electricity
industry – and succeeded in creating a "free market" system governed by 5,000 pages of electricity market rules. Electricity
is too dangerous and too important to be deregulated, and those pushing for deregulation always knew that. They didn't want
a free market; they simply wanted a market, one in which the government played a smaller role and the private sector made large
profits selling an essential service for much higher prices than the government ever charged.
The NSW government requires NGOs and disability service providers to compete with each other but, when it sold Port Botany
and the Port of Newcastle, it structured the sales to ensure that Newcastle could not compete with Port Botany for the landing
of the millions of containers that arrive by ship each year. While "competition policy" is applied to the vulnerable, those
buying billion-dollar assets are protected from those same forces of competition.
To be clear, there has been no obsession among the political elite with the neoliberal goals of reducing government spending,
regulation or tax collection in Australia over the past three decades. None. They didn't mean a word of it. While there may have
been economists, commentators and even business leaders who sincerely believed in those goals, it is clear from their actions, as
distinct from their words, that John Howard, Tony Abbott and even the former head of the Business Council of Australia Tony Shepherd,
the man tasked with running Abbott's National Commission of Audit, had no principled objection to spending large amounts of public
money on things they liked spending large amounts of public money on. Indeed, in his speakers' agency profile, Tony Shepherd brags
about his ability to get public money for private ventures:
It is no mean feat to convince governments to support private sector proposals, but as former prime minister, the honourable
Paul Keating, said, "Tony managed to get more money out of my government than any other person I can recall."
Hundreds of new pages of regulation now govern the conduct of charities. Billions of taxpayers' dollars have been spent by "small
government" politicians on everything from television ads for innovation to subsidies for marriage counselling. And Tony Abbott,
who claimed to have a philosophical problem with carbon taxing, once proposed a 20% increase in the tobacco excise.
The political strategy behind these contradictions is simple: it is difficult to criticise government spending on health and education,
or popular regulations like consumer protection and limits on executive pay. So why not just criticise all government spending and
all
red tape in general? Once you have convinced the public that all government spending is inefficient, you can set about
cutting spending on your enemies and retaining it for your friends. And once you convince people that all regulation is bad, you
can set about removing consumer protections while retaining the laws that protect the TV industry, the gambling industry, the pharmaceutical
industry and all your other friends.
Cover of Dead Right by Richard Denniss, Quarterly Essay.
When powerful groups want subsidies, we are told they will create jobs. When powerless groups want better funding
for domestic violence shelters or after-school reading groups, they are told of the need to reduce the budget deficit.
When powerful groups demand new regulations, we are told it will provide business with certainty, but when powerless
groups demand new regulations, they are told it will create sovereign risk.
Ideology has a bad name these days, but it simply means a "system of ideas and ideals." By that definition, it is possible to
think of neoliberalism as an ideology focused on the idea that market forces are superior to government decision-making. But while
large segments of Australian politics and business have draped themselves, and their policy preferences, in the cloak of neoliberal
ideas and ideals, in reality to call them "ideologues" is to flatter them. They lack the consistency and strength of principle to
warrant the title.
Tue 16 Oct 2018
13.00 EDT
Last modified on Tue 16 Oct 2018
19.11 EDT
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Australian economic growth has been a 'standout' says Bernie Fraser, but too many have missed the benefits.
Photograph: Tracey Nearmy/EPA
Neoliberalism has caused "misery and social polarisation" yet remains in vogue with the Coalition government,
according to the economist Bernie Fraser.
The former Treasury secretary and Reserve Bank governor has made the
comments in a presentation circulated to participants of the Australia Institute's revenue summit to be held in
Canberra on Wednesday.
Michael Keating, a former secretary to the Department of the Prime Minister and Cabinet, will also use the summit
to raise doubts about the Morrison government's budget forecasts.
Australia's housing boom is not heading for a soft landing. How did we get
here? | Greg Jericho
Read more
In the background notes for Fraser's speech, seen by Guardian Australia, he says that Australia's 27 consecutive
years of economic growth is a "standout", "Winx-like" performance.
But the record deserves only "qualified applause" because "too many Australians remain unemployed, under-employed,
underskilled, underpaid and lack job security".
Fraser warns that society has become "less fair, less compassionate and more divided" and "more devoid of trust in
almost every field of human activity" in the past 20 years.
"As a disinterested player in climate change negotiations and a miserable foreign aid donor, we have slipped well
down the list of good global citizens."
Political ideologies appear to have contributed to inequality and disadvantage in Australia in that time, he
argues.
Fraser in large part blames "neoliberalism" and its influence on policymaking for the "disconnect between
Australia's impressive economic growth story and its failure on so many markers to show progress towards a better,
fairer society".
"Favouring the market system ahead of the state system, and individual interests ahead of community interests, can
lead to profoundly unfair social outcomes.
More than three million Australians living in poverty, Acoss report reveals
Read more
"Those unable to afford access to decent standards of housing, healthcare, and other essential services have to
settle for inferior arrangements, or go without."
Fraser says charitable organisations see the effects of "real poverty" that result in "misery, anxiety and loss of
self-esteem of mothers unable to put food on the table for their kids, of old and young homeless people, and the
victims of domestic violence and drug overdoses".
Fraser summarises the key thrusts of neoliberalism as "the pursuit of the lowest possible rates of income and most
other taxes and the maximum restraint on government interventions and spending programs".
Evidence in Australia and overseas shows the influence of neoliberalism on fiscal policy "and the misery and
social polarisation that has come with it", he says.
The global financial crisis "should have" marked a tipping point, when the "idealised view of financial markets
being self-regulating" was shattered. While Australia "avoided the worst traumas of the GFC" with prompt fiscal and
monetary policy responses, in Europe "taxes were increased and spending programs slashed", resulting in a further
five or six years of severe recession.
Fraser says that all political ideologies – taken to extremes – can be divisive and cause damage, including an
ideology "based on a state system".
But the former Reserve Bank governor focuses on neoliberalism because it "remains in vogue". The Morrison
government "continues to reaffirm its over-riding commitment to lower taxation, and to assert that this is the best
way to increase investment, jobs and economic growth" -
despite the lack of evidence to support the theory
.
Although Fraser recognises that politics never can or should be taken out of policymaking, he suggests the best
course is to "hammer away" at flaws of particular approaches.
In a separate presentation Keating – who headed PM&C from 1991 to 1996 – warns the government's promise to cap
expenditure while simultaneously cutting taxes and returning the budget to surplus is based on overly optimistic
assumptions of growth in GDP, wages and productivity.
Why are stock markets falling and how far will they go?
Read more
According to Keating, the government must stop assuming there have been no structural changes in the relationship
between unemployment and the rate of wage increases.
He notes that predictions of a tightening labour market leading to higher wages are predicated on assumptions of
growth averaging 3% or as much as 3.5%.
He will also say a sustained return to past rates of economic growth will be impossible unless we can ensure a
reasonably equitable distribution of income, involving a faster rate of wage increases, especially for the low-paid.
Michael Greenwood , Geoff Naylor and David Murray on the failures of economic policy
While agreeing with the thrust of Paul Mason's article (
A new politics of emotion is needed to beat the far right , Journal, 26 November), it is
surely necessary to employ economics if we are to defeat neoliberalism. We have lived under
this regime, with increasing severity, for 25 years or so. The result has been the stagnation
of real incomes for the large majority, with the benefits of GDP growth accruing to those at
the top of income and wealth distributions. This has suppressed growth, as those with less
money tend to spend it and those with more hide it and avoid tax. Lower UK growth is clearly
shown in comparative data.
So if neoliberalism is a school of economics, it is a failure if the aim of economic policy
is to encourage growth and the reinvestment of the benefits. Of course, neoliberalism is not
economics, it is political dogma, supported by its beneficiaries. We need economics
undergraduates to demand to be taught real economics and not the propaganda of power that is
neoliberalism.
Michael Greenwood Manchester
• In his search for a political narrative of economic hope to counteract the rise of
rightwing populism, Paul Mason overlooks the sense of belonging that exists in faith
communities. Here, a selfless collaboration for the inclusive good of one another has never
required disruption of the free-market economy. It is just that this ethos has not been
introduced at the national economic and political levels.
Geoff Naylor Winchester, Hampshire
• All suffered the same 2007-08 financial crash, but the "UK has weakest wage growth of
wealthy nations" ( Report
, 27 November). Anything to do with Tory-led government economic policy?
David Murray Wallington, Surrey
For 40 years, the ideology popularly known as "neoliberalism" has dominated political decision-making in the English-speaking
west.
People hate
it . Neoliberalism's sale of state assets, offshored jobs, stripped services, poorly-invested infrastructure and armies of the
forcibly unemployed have delivered, not promised "efficiency" and "flexibility" to communities, but discomfort and misery. The wealth
of a few has now swelled to a level of conspicuousness that must politely be considered
vulgar
yet the philosophy's entrenched itself so deeply in how governments make decisions and allocate resources that one of its megaphones
once declared its triumph "the end of history".
... ... ...
Paul Keating's rejection
It was a year ago that a third sign first appeared, when the dark horse of Australian prime ministers, Paul Keating, made public
an on-balance rejection of neoliberal economics. Although Liberal PM Malcolm Fraser instigated Australia's first neoliberal policies,
it was Keating's architecture of privatisation and deregulation as a Labor treasurer and prime minister that's most well remembered.
Now, "we have a comatose world economy held together by debt and central bank money," Keating has said, "Liberal economics has run
into a dead end and has had no answer to the contemporary malaise." What does the disavowal mean? In terms of his Labor heir Bill Shorten's growing appetite for redistributive taxation and close relationship to the union movement, it means "if Bill Shorten becomes
PM, the rule of engagement between labour and capital will be rewritten," according to The Australian this week. Can't wait!
Tony
Abbott becomes a fan of nationalising assets
Or maybe's Sukkar's right about the socialists termiting his beloved Liberal party. How else to explain the earthquake-like paradigm
shift represented by the sixth sign? Since when do neoliberal conservatives argue for the renationalisation of infrastructure, as
is the push of Tony Abbott's gang to nationalise the coal-fired Liddell power station? It may be a cynical stunt to take an unscientific
stand against climate action, but seizing the means of production remains seizing the means of production, um, comrade. "You know,
nationalising assets is what the Liberal party was founded to stop governments doing," said Turnbull, even as he hid in the dens
and in the rocks of the mountains to weather – strange coincidence –
yet another Newspoll
loss.
"new introduction to a re-released Marx and Engels' Communist Manifesto.
Collective, democratic political action is our only chance for freedom and enjoyment."
Might be true. But frightening that people should naively still think that democracy is to be found in the 'Dictatorship of
the Proletariat' [ ie those who know what's good for you even if you don't like it ] of the Communist Manifesto after the revelations
of what that leads to in the Gulag Archipelago , Mao's China , Pol Pot , Kim John - un .
How quickly the world forgets. - you
might just as well advocate Mein Kampf it's the same thing in the end !
That's what you claim and it might be so but I'm not interested in keeping a score on the matter. The point you failed to get
is that the people you mentioned where totalitarian thugs. They used the banner of communism to achieve their ends. They would
have used what ever ideology that was in fashion to achieve the same results.
Does present day neo-liberalism actually qualify as a political movement?
Vested interests and the dollar seem to have all the power. Lies and deception are so common the truth is seen as the enemy.
The voting public are merely fools for manipulation. Nah, neo-liberalism is not government, it is something far nastier, and clearly
not what the public vote for, presuming a vote actually counts for anything anymore.
Craig Murray is right that "As the Establishment feels its grip slipping, as people wake up to the appalling economic exploitation by the few that underlies
the very foundations of modern western society, expect the methods used by the security services to become even dirtier."
Collapse of neoliberal ideology and rise of tentions in neoliberal sociarties resulted in unprecedented increase of covert and false
flag operations by British intelligence services, especially against Russia, which had been chosen as a convenient scapegoat.
With Steele dossier and Skripal affair as two most well known.
New Lady Macbeth (Theresa May) Russophobia is so extreme that her cabinet derailed the election of a Russian to head
Interpol.
Looks like neoliberalism cannot be defeated by and faction of the existing elite. Only when shepp oil end mant people will
have a chance. The US , GB and EU are part of the wider hegemonic neoliberal system. In fact rejection of neoliberal
globalization probably will lead to "national neoliberals" regime which would be a flavor of neo-fascism, no more no less.
Notable quotes:
"... The British state can maintain its spies' cover stories for centuries. ..."
"... I learnt how highly improbable left wing firebrand Simon Bracey-Lane just happened to be on holiday in the United States with available cash to fund himself, when he stumbled into the Bernie Sanders campaign. ..."
"... It is, to say the least, very interesting indeed that just a year later the left wing, "Corbyn and Sanders supporting" Bracey-Lane is hosting a very right wing event, "Cold War Then and Now", for the shadowy neo-con Institute for Statecraft, at which an entirely unbalanced panel of British military, NATO and Ukrainian nationalists extolled the virtues of re-arming against Russia. ..."
"... the MOD-sponsored Institute for Statecraft has been given millions of pounds of taxpayers' money by the FCO to spread covert disinformation and propaganda, particularly against Russia and the anti-war movement. Activities include twitter and facebook trolling and secretly paying journalists in "clusters of influence" around Europe. Anonymous helpfully leaked the Institute's internal documents. Some of the Integrity Initiative's thus exposed alleged covert agents, like David Aaronovitch, have denied any involvement despite their appearance in the documents, and others like Dan Kaszeta the US "novichok expert", have cheerfully admitted it. ..."
"... By sleuthing the company records of this "Scottish charity", and a couple of phone calls, I discovered that the actual location of the Institute for Statecraft is the basement of 2 Temple Place, London. This is not just any basement – it is the basement of the former London mansion of William Waldorf Astor, an astonishing building . It is, in short, possibly the most expensive basement in London. ..."
"... Which is interesting because the accounts of the Institute for Statecraft claim it has no permanent staff and show nothing for rent, utilities or office expenses. In fact, I understand the rent is paid by the Ministry of Defence. ..."
"... I have a great deal more to tell you about Mr Edney and his organisation next week, and the extraordinary covert disinformation war the British government wages online, attacking British citizens using British taxpayers' money. Please note in the interim I am not even a smidgeon suicidal, and going to be very, very careful crossing the road and am not intending any walks in the hills. ..."
"... I am not alleging Mr Bracey-Lane is an intelligence service operative who previously infiltrated the Labour Party and the Sanders campaign. He may just be a young man of unusually heterodox and vacillating political opinions. He may be an undercover reporter for the Canary infiltrating the Institute for Statecraft. All these things are possible, and I have no firm information. ..."
"... one of the activities the Integrity Initiative sponsors happens to be the use of online trolls to ridicule the idea that the British security services ever carry out any kind of infiltration, false flag or agent provocateur operations, despite the fact that we even have repeated court judgements against undercover infiltration officers getting female activists pregnant. The Integrity Initiative offers us a glimpse into the very dirty world of surveillance and official disinformation. If we actually had a free media, it would be the biggest story of the day ..."
"... As the Establishment feels its grip slipping, as people wake up to the appalling economic exploitation by the few that underlies the very foundations of modern western society, expect the methods used by the security services to become even dirtier. ..."
"... You can bank on continued ramping up of Russophobia to supply "the enemy". ..."
The British state can maintain its spies' cover stories for centuries. Look up Eldred Pottinger, who for 180 years appears
in scores of British history books – right up to and including William Dalrymple's Return of the King – as a British officer who
chanced to be passing Herat on holiday when it came under siege from a partly Russian-officered Persian army, and helped to organise
the defences. In researching
Sikunder Burnes, I discovered and published from the British Library incontrovertible and detailed documentary evidence that
Pottinger's entire journey was under the direct instructions of, and reporting to, British spymaster Alexander Burnes. The first
historian to publish the untrue "holiday" cover story, Sir John Kaye, knew both Burnes and Pottinger and undoubtedly knew he was
publishing lying propaganda. Every other British historian of the First Afghan War (except me and latterly
Farrukh Husain) has just followed Kaye's official propaganda.
Some things don't change. I was irresistibly reminded of Eldred Pottinger just passing Herat on holiday, when I learnt how
highly improbable left wing firebrand Simon Bracey-Lane
just happened to be on holiday in the
United States with available cash to fund himself, when he stumbled into the Bernie Sanders campaign.
Recent university graduate Simon Bracey-Lane took it even further. Originally from Wimbledon in London, he was inspired to
rejoin the Labour party in September when Corbyn was elected leader. But by that point, he was already in the US on holiday. So
he joined the Sanders campaign, and never left.
"I had two weeks left and some money left, so I thought, Fuck it, I'll make some calls for Bernie Sanders," he explains. "I just
sort of knew Des Moines was the place, so I just turned up at their HQ, started making phone calls, and then became a fully fledged
field organiser."
It is, to say the least, very interesting indeed that just a year later the left wing, "Corbyn and Sanders supporting" Bracey-Lane
is hosting a very right wing event, "Cold War Then and Now", for the shadowy neo-con Institute for Statecraft, at which an entirely
unbalanced panel of British
military, NATO and Ukrainian nationalists extolled the virtues of re-arming against Russia.
Nor would it seem likely that Bracey-Lane would be involved with the Integrity Initiative. Even the mainstream media has been
forced to give a few paragraphs to the outrageous Integrity Initiative, under which the MOD-sponsored Institute for Statecraft
has been given millions of pounds of taxpayers' money by the FCO to spread covert disinformation and propaganda, particularly against
Russia and the anti-war movement. Activities include twitter and facebook trolling and secretly paying journalists in "clusters of
influence" around Europe. Anonymous helpfully leaked the Institute's internal documents. Some of the Integrity Initiative's thus
exposed alleged covert agents, like David Aaronovitch, have denied any involvement despite their appearance in the documents, and
others like Dan Kaszeta the US "novichok expert", have cheerfully admitted it.
The mainstream media have
tracked down
the HQ of the "Institute for Statecraft" to a derelict mill near Auchtermuchty. It is owned by one of the company directors, Daniel
Lafayeedney, formerly of D Squadron 23rd SAS Regiment and later of Military Intelligence (and incidentally born the rather more prosaic
Daniel Edney).
By sleuthing the company records of this "Scottish charity", and a couple of phone calls, I discovered that the actual location
of the Institute for Statecraft is the basement of 2 Temple Place, London. This is not just any basement – it is the basement of
the former London mansion of William Waldorf Astor, an astonishing building.
It is, in short, possibly the most expensive basement in London.
Which is interesting because the accounts of the Institute for Statecraft claim it has no permanent staff and show nothing
for rent, utilities or office expenses. In fact, I understand the rent is paid by the Ministry of Defence.
Having been told where the Institute for Statecraft skulk, I tipped off journalist Kit Klarenberg of Sputnik Radio to go and physically
check it out. Kit did so and was
aggressively
ejected by that well-known Corbyn and Sanders supporter, Simon Bracey-Lane. It does seem somewhat strange that our left wing
hero is deeply embedded in an organisation that
launches troll attacks on Jeremy Corbyn.
I have a great deal more to tell you about Mr Edney and his organisation next week, and the extraordinary covert disinformation
war the British government wages online, attacking British citizens using British taxpayers' money. Please note in the interim I
am not even a smidgeon suicidal, and going to be very, very careful crossing the road and am not intending any walks in the hills.
I am not alleging Mr Bracey-Lane is an intelligence service operative who previously infiltrated the Labour Party and the
Sanders campaign. He may just be a young man of unusually heterodox and vacillating political opinions. He may be an undercover reporter
for the Canary infiltrating the Institute for Statecraft. All these things are possible, and I have no firm information.
But one of the activities the Integrity Initiative sponsors happens to be the use of online trolls to ridicule the idea that the
British security services ever carry out any kind of infiltration, false flag or agent provocateur operations, despite the fact that
we even have repeated court judgements against undercover infiltration officers getting female activists pregnant. The Integrity
Initiative offers us a glimpse into the very dirty world of surveillance and official disinformation. If we actually had a free media,
it would be the biggest story of the day.
As the Establishment feels its grip slipping, as people wake up to the appalling economic exploitation by the few that underlies
the very foundations of modern western society, expect the methods used by the security services to become even dirtier.
You can
bank on continued ramping up of Russophobia to supply "the enemy".
As both Scottish Independence and Jeremy Corbyn are viewed as
real threats by the British Establishment, you can anticipate every possible kind of dirty trick in the next couple of years, with
increasing frequency and audacity
Looks like a lot of bubbles bursting. Not likely to bounce back, so not much financing
available to float pure Permian players. Doesn't look good for any increase in production.
Oil prices will probably stay low with Dow for awhile. Until inventories get closer to zero.
Madness.
Interesting article from Goehring investment bank. They estimate that KSA remaining reserves
are around 50 billion bbls, instead of the 260 b claimed. They also (surprise) think that was
the reason the Aramco IPO was pulled. I also thought the Aramco IPO would never happen
because they would not be able to buy an acceptable reserve report.
Interesting, they are probably right.
I knew Aramco would pull out of the IPO. They are one of the most secretive companies. How
you going to float on the NYSE or London SE with no transparency, which is required by
law.
50 billion sounds about right in my worthless opinion. Interestingly enough that would be
more or less close to the Permian basin reserves.
I think peak oil will arrive without many people noticing until after it has occurred.
A few more thoughts about the referenced Goering report.
First, the basis or their report: "We have good data going up to 2008, however after that
point data becomes difficult to find."
Does anyone else have good data on Ghawar production through 2008. Actual Saudi production
data is hard to come by, and I would like to see a table of Ghawar production through 2008 if
it is out there.
Based on their 2008 data they have included a Hubbert Linearization which is the basis for
their claim.
Second, if their production data and linearization are correct, they have not been
adjusted for improved results from better technology. I believe the multi lateral super wells
Saleri described in his 2005 SPE paper have allowed KSA to recover several percent of
additional original oil in place, as well as to maintain high production rates longer.
Third is that it appears many of those super wells were drilled beginning in mid 2000's.
It would make sense that the change in Saudi attitudes regarding production restraint between
2014 and now could be due to those multilateral wells watering out.
Coffee. I hope if you have been investing in the Appalachian gas players that you have been
short.
The only investment class in oil and gas that may be worse over the past ten years would
be the service sector, particularly the drillers.
Interesting that, despite all the activity, the US onshore drillers are becoming penny
stocks. I have pointed out Nabors. The rest are all tanking bad it appears.
You made a big deal out of a very long lateral operated by Eclipse Resources. Eclipse
equity closed at 76 cents a share.
I am not so sure that ultra cheap oil and gas is such a great thing for the US, given we
are now the world's largest producer of both.
I never have, nor will I ever in the future, take any financial stake in these or any
other companies.
As I have stated numerous times over the years, my primary interest is in operations who
is doing what, how it is being done, who is doing it better – or claims to be.
My initial interest in this site way back when was to learn why some people seemed to
think this so called Shale Revolution was No Big Deal a retirement party, in the words of
Berman.
It was quickly apparent to me that a great deal of unawareness vis a vis industry
developments permeated this site's participants.
This, alongside several predisposing factors to NOT want the shale production to explode
upwards provided fertile grounds for the soon 12 to 16 million barrels per day US oil
production, along with 100+ Bcfd gas production to be a spectaculsrly unforseen reality.
What I prefer or not prefer is secondary to what I believe to be occurring, shallow.
If anyone cares to spend 3 minutes reading the April, 2017 USGS press release accompanying
the Haynesville/Bossier assessment, they will read the following from Walter Guidroz, Program
Coordinator of the USGS Energy Resources Program
"As the USGS revisits many of the oil and gas basins of the US, we continually find that
technological revolutions of the past few years have truly been a game changer in the amount
of resources that are now technically recoverable".
Addendum Eclipse is being shut down/folded into another entity.
The lead engineer behind their ultra long laterals is now working with the new outfit from
which this technology will continue to spread.
No offense meant coffee. I know some who post here like to tangle with you. I am not
interested in that, just straightforward discussion.
Shale has surprised the heck out of me, and has made me several times strongly consider
liquidating my entire investment in oil and gas, absent maybe keeping just a couple of KSA
like cheap (to quote PXD CEO) LOE wells to fool around with. Had I known in 2012-13 that this
was coming, would have sold all but those few "piddle around with wells." It has been
absolutely no fun when these price crashes occur, and is especially no fun knowing that this
shale miracle is less profitable than an operation producing less than one bopd per well from
very, very old and tired wells.
You have to admit that the way the shale is being developed is destroying the oil and gas
industries that are developing it.
Particularly hard hit are the service companies, many which are already bankrupt.
Even XOM, which I have owned for many, many years (prior to the merger, I owned both Exxon
and Mobil) has hit the skids, having fallen through the $70 per share barrier.
Range Resources is at $10.26, a level not seen since 2004. It traded as high as $90 before
the 2014 crash.
EQT was over $100. Today $18.55
Whiting was nearly $400 (accounting for a reverse split) and now is $21.98
CHK closed at $1.84. All time high was $64.
Nabors Industries, the largest onshore US driller closed at $2.09. Traded at split
adjusted $10 in 1978.
Halcon Resources Corp. was over $3,000 split adjusted at one time, went Ch 11 BK, now at
$1.65, looking not so good re: BK again.
We shall soon see who can access what in the way of capital to keep going assuming oil
prices stay below $50 WTI for a considerable time.
I guess I am always concerned about whether businesses make money. Seems to me that would
be of some importance to you, but it isn't, and I suppose there is no harm in that.
I have yet to work anywhere where making money was not the primary motivation.
If the money wasn't important, the shale executives would not make so much of it, I
suppose.
I have always had a hard time understanding why they kept drilling wells in Appalachia
when the gas was selling for 50 cents per mcf. Not important to you, but maybe to others.
Anyway, if we didn't have different views, places like this wouldn't be very
interesting.
Many threads to tug on at the close of this tumultuous work-week before the supreme holiday
of white privilege rolls through, all silver bells and hovering angels.
It took hours of rumination and prayer to arrive at a coherent notion about the strange
doings in Gen. Mike Flynn's sentencing hearing, but here goes: Judge Emmet Sullivan sent Gen
Flynn to the doghouse for three months to reconsider his guilty plea. The judge may believe
that Gen. Flynn needs to contest the charge in open court, where all the Special Prosecutor's
janky evidence will be subject to discovery and review. Mr. Mueller tried to toss a wrecking
bar into the proceedings the day before by pressing charges against two of Gen. Flynn's
colleagues in the Turkish lobbying gambit, which was meant to terrify Gen. Flynn as a hint that
separate charges would be dumped on him if he doesn't play ball. A lot can happen in three
months, including the arrival of a new Attorney General, and we'll leave it there for the
moment.
The stopgap spending bill before congress -- to avert a government shut-down -- is based on
the comical idea that the money is actually there to spend. Everyone with half a brain knows
that it's not money but " money ," a hypothetical abstraction composed of hopes and wishes. The
USA is worse than broke. It's down to liquidating its rehypothecated hypotheticals. After all,
financialization added up to money with its value removed . The global credit markets seem to
be sensing this as the tide of borrowings retreats , exposing all the wretched, slimy creatures
wheezing in the exposed mudflats who have no idea how to service their old loans or generate
credible new ones. But, no matter. We'll continue pretending until the US$ flies up its own
cloacal aperture and vanishes.
Contingent on that exercise is "money" for Mr. Trump's promised-and-requested border wall.
The wall is really a symbol for the nation's unwillingness to set a firm policy on immigration.
Half of the political spectrum refuses to even make a basic distinction between people who came
here legally and those who snuck in and broke the law. They've super-glued themselves to that
position not on any plausible principle, but because they're desperate to corral Hispanic votes
-- and notice how eager they are to get non-citizens on the voting rolls. Their mouthpiece, The
New York Times , even ran an op-ed today,
None of Us Deserve Citizenship , (is that even grammatical?) arguing that we should let
everybody and anybody into the country because of our longstanding wickedness.
The simple resolve to firmly and politely send interlopers back across the border would go a
long way to providing border security, but we've allowed this process to be litigated into
incoherence so that it is increasingly impossible to enforce the existing rules. Mr. Trump's
wall is an acknowledgement of that failure to agree on lawful action to defend the border. It
evokes the works of past empires, like the wall built across Britain by the Roman emperor
Hadrian to keep out the warlike, filthy, blue-faced Scots, or the Great Wall of China built to
block marauding Mongols. Of course, these societies didn't have closed circuit TV, drones,
laser sensors, four-wheel-drive landcruisers, and night-vision goggles. I'm not persuaded that
the US really requires Mr. Trump's wall, but it does require a functioning consensus that
national borders mean something, and the president's argument is a lever to produce that
consensus.
In the meantime, the condition of the US economy, which Mr. Trump has boasted is roaring on
his account, wobbles badly. It has been based for two decades on a three-card-monte trade
set-up in which China sends us amazingly cheap products and we send them IOUs (dollars, i.e.
Federal Reserve promissory notes). It was not an arrangement bound to last. And it entailed a
lot of mischief around the theft of complex intellectual property. The damage there appears to
be already done. China may have enough computer mojo now to make all kinds of trouble in the
world. Of course, China will have enough political and economic trouble when its Molto-Ponzi
banking system flies apart, so I would not assume that they are capable of attaining the kind
of world domination that scenario-gamers in the US Intel-and-Military offices dream up.
To me, these disturbances and machinations suggest the unravelling of the arrangements we've
called "globalism." That's what we face most acutely in 2019, along with the fragile conditions
in banking, markets, and currencies that can put the schnitz on supply lines as everybody and
his uncle around the world fear that they will never get paid. It all makes for a suspenseful
holiday. Bake as many cookies as you can while the fixings are still there and stuff a few in
your ammunition box for the fretful days ahed.
Wall Street, Banks, and Angry Citizens
The Inequality Gap on a Planet Growing More Extreme
Nomi Prins
December 13, 2018
2,400 Words
16 Comments
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As we head into 2019, leaving the chaos
of this year behind, a major question remains unanswered when it comes to the state of Main Street, not just
here but across the planet. If the global economy really is booming, as many politicians claim, why are
leaders and their parties around the world continuing to get booted out of office in such a sweeping
fashion?
One obvious answer: the post-Great
Recession economic "recovery" was largely reserved for the few who could participate in the rising financial
markets of those years, not the majority who continued to work longer hours, sometimes at multiple jobs, to
stay afloat. In other words, the good times have left out so many people, like those struggling to keep even
a
few hundred dollars
in their bank accounts to cover an emergency or the
80%
of American workers who live paycheck to paycheck.
In today's global economy, financial
security is increasingly the property of the 1%. No surprise, then, that, as a sense of economic instability
continued to grow over the past decade, angst turned to anger, a transition that -- from the U.S. to the
Philippines, Hungary to Brazil, Poland to Mexico -- has provoked a plethora of voter upheavals. In the
process, a 1930s-style brew of rising nationalism and blaming the "other" -- whether that other was an
immigrant, a religious group, a country, or the rest of the world -- emerged.
This phenomenon offered a series of
Trumpian figures, including of course The Donald himself, an opening to ride a wave of "populism" to the
heights of the political system. That the backgrounds and records of none of them -- whether you're talking
about Donald Trump, Viktor Orbán, Rodrigo Duterte, or Jair Bolsonaro (among others) -- reflected the daily
concerns of the "common people," as the
classic definition
of populism might have it, hardly mattered. Even a billionaire could, it turned out,
exploit economic insecurity effectively and use it to rise to ultimate power.
Ironically, as that American master at
evoking the fears of apprentices everywhere showed, to assume the highest office in the land was only to
begin a process of creating yet more fear and insecurity. Trump's trade wars, for instance, have typically
infused the world with increased
anxiety
and distrust toward the U.S., even as they thwarted the ability of domestic
business
leaders and ordinary
people
to plan for the future. Meanwhile, just under the surface of the reputed good times, the
damage
to that future only intensified. In other words, the groundwork has already been laid for what
could be a frightening transformation, both domestically and globally.
That Old Financial Crisis
To understand how we got here, let's take
a step back. Only a decade ago, the world experienced a genuine global financial crisis, a meltdown of the
first order. Economic growth ended; shrinking economies threatened to collapse; countless jobs were cut;
homes were foreclosed upon and lives wrecked. For regular people, access to credit suddenly disappeared. No
wonder fears rose. No wonder for so many a brighter tomorrow ceased to exist.
The details of just why the Great
Recession happened have since been glossed over by time and partisan spin. This September, when the 10th
anniversary of the collapse of the global financial services firm Lehman Brothers came around, major
business news channels considered whether the world might be at risk of another such crisis. However,
coverage of such fears, like so many other topics, was quickly tossed aside in favor of paying yet more
attention to Donald Trump's latest tweets, complaints, insults, and lies. Why? Because such a crisis was so
2008 in a year in which, it was
claimed,
we were enjoying a first class economic high and edging toward the
longest
bull-market in Wall Street history. When it came to "boom versus gloom," boom won hands down.
None of that changed one thing, though: most people still feel
left behind
both in the U.S. and
globally
. Thanks to the massive accumulation of wealth by a 1% skilled at gaming the system, the roots
of a crisis that didn't end with the end of the Great Recession have spread
across the planet
, while the dividing line between the "have-nots" and the "have-a-lots" only sharpened
and widened.
Though the media hasn't been paying
much attention to the resulting inequality, the statistics (when you see them) on that ever-widening wealth
gap are mind-boggling. According to Inequality.org, for instance, those with at least $30 million in wealth
globally had the fastest growth rate of any group between 2016 and 2017. The size of that club rose by 25.5%
during those years, to 174,800 members. Or if you really want to grasp what's been happening, consider that,
between 2009 and 2017, the number of billionaires whose combined wealth was greater than that of the world's
poorest 50% fell from
380
to just
eight
. And by the way, despite claims by the president that every other country is screwing America, the
U.S. leads the pack when it comes to the growth of inequality. As Inequality.org
notes
, it has "much greater shares of national wealth and income going to the richest 1% than any other
country."
That, in part, is due to an institution
many in the U.S. normally pay little attention to: the U.S. central bank, the Federal Reserve. It helped
spark that increase in wealth disparity domestically and globally by adopting a post-crisis monetary policy
in which electronically fabricated money (via a program called quantitative easing, or QE) was offered to
banks and corporations at significantly cheaper rates than to ordinary Americans.
Pumped into financial markets, that
money sent stock prices soaring, which naturally ballooned the wealth of the small percentage of the
population that actually owned stocks.
According to
economist Stephen Roach, considering the Fed's Survey of Consumer Finances, "It is hardly a
stretch to conclude that QE exacerbated America's already severe income disparities."
Wall Street, Central Banks, and
Everyday People
What has since taken place around the
world seems right out of the 1930s. At that time, as the world was emerging from the Great Depression, a
sense of broad economic security was slow to return. Instead, fascism and other forms of nationalism only
gained steam as people turned on the usual cast of politicians, on other countries, and on each other. (If
that sounds faintly Trumpian to you, it should.)
In our post-2008 era, people have
witnessed
trillions
of dollars flowing into bank bailouts and other financial subsidies, not just from governments
but from the world's major central banks. Theoretically, private banks, as a result, would have more money
and pay less interest to get it. They would then lend that money to Main Street. Businesses, big and small,
would tap into those funds and, in turn, produce real economic growth through expansion, hiring sprees, and
wage increases. People would then have more dollars in their pockets and, feeling more financially secure,
would spend that money driving the economy to new heights -- and all, of course, would then be well.
That fairy tale was pitched around the
globe. In fact, cheap money also pushed debt to epic levels, while the share prices of banks rose, as did
those of all sorts of other firms, to record-shattering heights.
Even in the U.S., however, where a
magnificent recovery was supposed to have been in place for years, actual economic growth simply didn't
materialize at the levels promised. At
2% per year
, the average growth of the American gross domestic product over the past decade, for
instance, has been half the average of 4% before the 2008 crisis. Similar numbers were repeated throughout
the developed world and most emerging markets. In the meantime, total global debt hit
$247 trillion
in the first quarter of 2018. As the
Institute of International Finance
found, countries were, on average, borrowing about three dollars for
every dollar of goods or services created.
Global Consequences
What the Fed (along with central banks
from Europe to Japan) ignited, in fact, was a disproportionate rise in the stock and bond markets with the
money they created. That capital sought higher and faster returns than could be achieved in crucial
infrastructure or social strengthening projects like building roads, high-speed railways, hospitals, or
schools.
What followed was anything but fair. As
former Federal Reserve Chair Janet Yellen
noted
four years ago, "It is no secret that the past few decades of widening inequality can be summed up
as significant income and wealth gains for those at the very top and stagnant living standards for the
majority." And, of course, continuing to pour money into the highest levels of the private banking system
was anything but a formula for walking that back.
Instead, as more citizens fell behind, a
sense of disenfranchisement and bitterness with existing governments only grew. In the U.S., that meant
Donald Trump. In the United Kingdom, similar discontent was reflected in the June 2016 Brexit vote to leave
the European Union (EU), which those who felt economically squeezed to death clearly meant as a
slap at
both the establishment domestically and EU leaders abroad.
Since then, multiple governments in the
European Union, too, have shifted toward the populist right. In Germany, recent elections swung both
right
and
left
just six years after, in July 2012, European Central Bank (ECB) head Mario Draghi
exuded optimism
over the ability of such banks to protect the financial system, the Euro, and generally
hold things together.
Like the Fed in the U.S., the ECB went
on to manufacture money, adding another
$3 trillion
to its books that would be deployed to buy bonds from favored countries and companies. That
artificial stimulus, too, only increased inequality within and between countries in Europe. Meanwhile,
Brexit negotiations remain ruinously divisive,
threatening
to rip Great Britain apart.
Nor was such a story the captive of the
North Atlantic. In Brazil, where left-wing president Dilma Rouseff was ousted from power in 2016, her
successor Michel Temer oversaw plummeting economic growth and escalating unemployment. That, in turn, led to
the election of that country's own Donald Trump, nationalistic far-right candidate Jair Bolsonaro who won a
striking
55.2%
of the vote against a backdrop of popular discontent. In true Trumpian style, he is disposed
against both the very idea of climate change and multilateral trade agreements.
In Mexico, dissatisfied voters similarly
rejected the political known, but by swinging left for the
first time
in 70 years. New president Andrés Manuel López Obrador, popularly known by his initials AMLO,
promised to put the needs of ordinary Mexicans first. However, he has the U.S. -- and the whims of Donald
Trump and his "great wall" -- to contend with, which could hamper those efforts.
As AMLO took office on
December 1st
, the G20 summit of world leaders was unfolding in Argentina. There, amid a glittering
backdrop of power and influence, the trade war between the U.S. and the world's rising superpower, China,
came even more clearly into focus. While its president, Xi Jinping, having fully consolidated power amid a
wave of Chinese nationalism, could become his country's
longest serving
leader, he faces an international landscape that would have amazed and befuddled Mao
Zedong.
Though Trump declared his meeting with
Xi a success because the two sides agreed on a
90-day tariff truce
, his prompt
appointment
of an anti-Chinese hardliner, Robert Lighthizer, to head negotiations, a tweet in which he
referred to himself in superhero fashion as a "
Tariff
Man
," and news that the U.S. had requested that Canada arrest and extradite an executive of a key
Chinese tech company, caused the Dow to take its
fourth largest plunge
in history and then
fluctuate wildly
as economic fears of a future "Great Something" rose. More uncertainty and distrust
were the true product of that meeting.
In fact, we are now in a world whose
key leaders, especially the president of the United States, remain willfully oblivious to its long-term
problems, putting policies like deregulation, fake nationalist solutions, and profits for the already
grotesquely wealthy ahead of the future lives of the mass of citizens. Consider the
yellow-vest protests
that have broken out in France, where protestors identifying with left and right
political parties are calling for the resignation of neoliberal French President Emmanuel Macron. Many of
them, from financially starved provincial towns, are angry that their purchasing power has dropped so low
they can barely
make ends meet
.
Ultimately, what transcends geography
and geopolitics is an underlying level of economic discontent sparked by twenty-first-century economics and
a resulting Grand Canyon-sized global inequality gap that is still
widening
. Whether the protests go left or right, what continues to lie at the heart of the matter is the
way failed policies and stop-gap measures put in place around the world are no longer working, not when it
comes to the non-1% anyway. People from
Washington
to
Paris
,
London
to
Beijing
, increasingly grasp that their economic circumstances are not getting better and are not likely
to in any presently imaginable future, given those now in power.
A Dangerous Recipe
The financial crisis of 2008 initially
fostered a policy of bailing out banks with cheap money that went not into Main Street economies but into
markets enriching the few. As a result, large numbers of people increasingly felt that they were being left
behind and so turned against their leaders and sometimes each other as well.
This situation was then exploited by a
set of self-appointed politicians of the people, including a billionaire TV personality who capitalized on
an increasingly widespread fear of a future at risk. Their promises of economic prosperity were wrapped in
populist platitudes, normally (but not always) of a right-wing sort. Lost in this shift away from previously
dominant political parties and the systems that went with them was a true form of populism, which would
genuinely put the needs of the majority of people over the elite few, build real things including
infrastructure, foster organic wealth distribution, and stabilize economies above financial markets.
In the meantime, what we have is, of
course, a recipe for an increasingly unstable and vicious world.
However, coverage of such fears, like so many other topics, was quickly tossed aside in favor of
paying yet more attention to Donald Trump's latest tweets, complaints, insults, and lies.
Tossed aside by whom? The corporate media of course. Fake news. Their ONLY agenda is the ongoing
demonetization of Donald Trump.
Minus the obligatory Trump bashing this is a good piece. The beating heart of Neo Feudalism (against
which we populists/nationalists/deplorables rebel) is debt money aka the FED. So what would you have us
actually do about the banking cartel? Vote BETO? Check our privilege?
I suggest stepping back further than the GFC, to the halcyon days of Thatcher and Reagan and TINA.
That's
when we stopped investing in ourselves, which is why R&D has a 50% lower share of GDP today than then.
Encouraged by the success of this non-investment, we then stopped keeping up the infrastructure we had
built–including the great corporate labs that created our recent prosperity–and now the maintenance bill is
coming due.
Needless to say, the Chinese did the opposite and the current "China!" noise is designed to distract us
from the dreadful destiny our faux democracy created for us.
But a country deserves the government it gets and we've always liked Elmer Gantry's style of
self-confident bullshit.
I miss Mike Whitney. Where did he go? He hasn't posted anything here at Unz since June. He was just as good
as Nomi on the finance/economic topics, but we didn't have to endure the constant anti-Trump
virtue-signalling. It's a bit like being served castor oil along with your beef bourguignon: it spoils the
whole effect.
Another thing I don't like about Nomi is how she fails to make the connection between
hyper-financialization and falling median incomes in the West on the one hand, and open borders and 'free'
trade on the other. Neoliberalism could succinctly be defined as the free movement of goods, capital and
people across borders. Hence, there is nothing left-wing about hating borders–not if you by 'left-wing' you
mean
pro-workingclass
.
Remember, the Tea Party was a grassroots anti-banker movement. The media successfully convinced the rest of
America that they were all racist fascist deplorables.
Post-housing collapse, maybe, the Fed should have provided loans to Main Street merchants, unleashing more
small-business energy, especially since so few Americans are starting businesses these days. But those
loans, too, always need to be allocated to people with a reasonable chance to pay them back. The Fed gave
the dough to the banks and the zombies, but in different ways, the small-business climate in the USA is
almost as bad as the zombie-business climate.
Back in 2008, any small-business stimulus would have been
complicated by the need for small fish to compete with the Goliath of big-box chains and on-every-corner
franchise mills spawned by big corporations, which, in neither case, generate many quality, rent-covering
jobs beyond a few management positions. In many cases, the owners of franchise businesses do not make
much -- they can't pay much. And the recent attempt to stimulate small businesses via the LLC tax cut might be
diluted by the undermining of small retail by volume sellers, like Amazon & Walmart -- behemoths that sell
everything under the sun at cut rates, now speedily delivering to customers' doors.
Infrastructure spending would create long-term value and some quality, if temporary, jobs mostly for
underemployed males, one of the groups unable to just work part-time or temp jobs at low wage levels, making
up the difference between living expenses and inadequate pay with spousal income, child support checks or
multiple monthly welfare streams from .gov and a refundable child tax credit up to $6,431. Rather than
working multiple jobs, that is what many single-breadwinner parents do. They stay below the income limits
for the .gov handouts, strategically, thereby keeping wages and job quality low for many women who lack
access to unearned income streams unrelated to their employment.
College-educated Americans (and others) also face the problem of the many dual-earner parents, keeping
two of the few decent-paying jobs with benefits under one roof. These are often not two rocket-scientist
jobs, but jobs that many educated people could perform. They maintain those jobs despite tons of time off to
accommodate their personal lives, letting $10-per-hour daycare workers, NannyCam-surveilled babysitters and
never-retiring grandparents do the work of raising their kids. The middle-class job pool would expand
dramatically if they were just more interested in raising the kids they produce, but they put house size and
multiple vacations first, with the liberals among them insincerely bemoaning the fact that 30 million
Americans lack health insurance, while they are double-covered in their above-firing, family-friendly jobs.
Still, if infrastructure spending is used to build The Wall, everyone will at least be safer, welfare
expenditures will go down and fewer welfare-assisted noncitizens will chase jobs, driving wages down for
underemployed US citizens. Bridges require repair -- something that affects the safety of everyone in the
country. The electrical grid and nuclear plants need to be fortified. Something needs to be done about
cybersecurity, a type of invisible infrastructure that is more and more important.
We need US citizens to get these jobs, including the record number of working-aged US citizens out of the
laborforce. Infrastructure spending should not be used to employ the citizens of other countries, like the
1.5 to 1.7 new legal immigrants admitted into the country each year, many of whom qualify for welfare and
tax credits for US-born kids and boatloads of illegal immigrants.
The Western propaganda continues unabated. In the latest episode of #FakeNews France3 TV got caught
broadcasting a fake Yellow Vests image–photoshoped by its disinformation division–to their viewers, and then
blatantly lied about afterwards:
I fear for the Jews, both universalist Tikkun Olas like Nomi and the Zio-nationalists,
when the (((Great Ponzi))) collapses.
Haxo has to be hasbara of some sort trying to discredit Prins' article. That aside, I hope for major
correction before we see a complete collapse of the U.S. and global economy which will result in complete
social collapse. For no other reason than I live in a major East Coast city and am not prepared to forage
for food.
That's when we stopped investing in ourselves, which is why R&D has a 50% lower share of GDP today
than then.
Encouraged by the success of this non-investment, we then stopped keeping up the infrastructure we had
built–including the great corporate labs that created our recent prosperity–and now the maintenance bill
is coming due.
Is this the result of Ivy League schools pumping out more degrees in finance rather than science and
engineering, or the cause?
Including Hungary and Viktor Orban in your piece demonstrates a lack of research and a definite lack of
perspective. I discount the rest of what you babble on about as a result. Try doing some on-the-spot
research. You might learn what really is going on. Start with the hundreds of YouTube tourist blogs. Then
visit. Stop blindly regurgitating the narrow, usually distorted crap you find in the press. You may have a
point but it appears to be a house of cards. To me at least. An expat enjoying my freedoms in Hungary.l
Yeah, and what 'tomdispatch regular' Prins does is increase the sense of rage and helplessness by pointing
out the degenerative process without offering any avenue to lance the boil and treat the infection. This
only contributes to the resultant social problems she describes. Not necessarily smart.
Better had she
pointed to some means of holding those responsible accountable, example given:
I'm old, mid seventies, studied economics in the sixties.
Among the many stupid things I did or thought in my life is that economics is what is expressed by
'economics is common sense made difficult'.
Maybe I had also the completely wrong idea about common sense, looking back, and looking around me now, it
hardly seems to exist.
The figures about CO2 ppm can be explained in one sentence, yet mankind seems to be embarking on the most
expensive experiment ever, the outcome of which will, my conviction, be that the only effect is back to
barbarism, civilisation depends on cheap energy.
About financial crises, around 1880 there was a crash in
Germany, Wild West around emission of shares was ended.
In 1929 USA financial regulations were way behind German, the great crash.
The USA, with GB, is the only country in the world where the central bank is not state owned.
Therefore derivatives were not regulated, the fairy tales about absolute minimum value were believed, as
were before 1880 in Germany emission fairy tales.
We have one more problem central bank, ECB, in theory owned by the euro countries, in practice Draghi can do
what he wants, as long as he stays within his statutes.
Anyone with some insight in the world economy sees that w're heading towards a gigantic crash, who is
unable to see this can read Varoufakis.
Now how did we get into this mess ?
In my opinion quite simple: globalisation, that made the political power of the nation states disappear, EU
of course also is globalisation.
Central bankers of the world monthly meet at BIS Basle, financially, economically, in my opinion, there the
world is ruled.
What these central bankers think, I've no idea.
But that Dutch central bank director Klaas Knot does not care for Dutch interests, is more than clear.
There is one important and interesting thing about economies, economy defined as the finances of a
country, the euro zone, the USA, politicians, and bankers, even central bankers, do not control economies.
A few aspects can be controlled, but not all of them at the same time.
So inconsistent decisions lead to unwanted, and/or unforeseen consequences.
The euro is a political experiment, the object was to force euro countries to become more or less
economically the same.
It failed, southern euro countries differ economically as much now from northern as when the euro was
introduced.
The only way out for France economically now I can see is the old devaluation recipe.
Alas, 'thanks' to the euro this is no longer possible.
So that, what is erronuously called elite, has maneuvred itself into a lose lose situation, do nothing, and
France will have a second 1791, or remove the euro flag from the sinking EU ship.
In both cases, as far as I can see, end of EU.
@tac
Quite simple, more and more French are running into financial difficulties.
Most of them of course do not understand why, but they're not interested in why, as the immigrants 'we want
a better life'.
Since over ten years now, I'm retired, we live many months yearly in France.
Great country, compared to the Netherlands, more and more resembling LA.
We do not pay French income taxes, just property tax.
But the steady increase over the years of the cost of living in France we noticed quite well.
For the last two or three years it is clear to us that even our French neighbours are less affluent, our
neighbouring houses all are second homes, owned by upper middle class, of course.
Complaints about the cost of the gardener, no parties with traiteurs any more.
A traiteur is someone who prepares expensive dishes for parties etc.
French complain, even in casual conversations, a restaurant owner 'Macron is right, nobody wants to work in
France any more', someone else 'France is ill, we pay to much for social security'.
Nomi doesn't even mention the impact a million and a half legal immigrants coming in each year has had on
our supposed recovery. How can we trust what she says when she leaves out such pertinent information? In
fact we could argue the only way we were able to recover after the Great Depression is because immigration
had been cut.
Mike was possibly the
only
journalist who gave Trump a modicum of good advice when he mentioned
bumping retirees pay instead of pretending corporate tax cuts will ever "trickle down" to the workers still
on the job. Bullseye! I could use a raise.
Mike said $150 more per month would go directly for stuff retirees need, especially the ones right on the
edge. Young plumbers, roofers, electricians and so on would have tons of work to do.
Cut corporate tax, on the other hand. and the buggers only send more work to China, sluice money to
anti-worker NGOs, or sit on it all like Bill Gates.
I'd go one step further: Put a cork in the billions for Israel program and pay off all American student
loans. Further still: Tax corporations that outsource work to pay every young worker $2500 monthly till
America learns how to pay "middle class wages" again. Bezos at Amazon can get a special bill for the
millions of worker-years he's stiffed and pay them US Marshall rates, backdated to their start date with
interest.
I know, I know. Fascist economics is
so
boring. But we're near the centennial of the days when
Benito Mussolini was the most respected and successful politician in Europe if not the world.
So in 2018 chickens hatched in 2008 come home to roost.
The financial meltdown of 2008 is no longer fresh in our minds. In the wake of the 2008
crisis, to save itself from bankruptcy, the US paid leading banks in excess of $16 trillion - the
biggest bailout ever! This itself had a huge impact on the overall debt burden.
Was 2017 a bond bubble that was deflated in 2018 or it was "everything bubble" and stocks are
the next in line. The lowest S&P500 went during22008 crisis was 670 I think.
Notable quotes:
"... financial crisis poses a fundamental challenge to globalization and to the finance capitalism of the Anglo-American neoliberal model of the free market. ..."
Reinhart and Rogoff (2008) suggest that 'the present U.S. financial crisis is severe by any
metric.' Many have pointed to the systemic nature of the crisis. Gokay (2009) suggests an
analysis in terms of' the explosive growth of the financial system during the last three
decades relative to manufacturing and the economy as a whole' with the huge growth of finance
capitalism and 'the proliferation of speculative and destabilizing financial institutional
arrangements and instruments of wealth accumulation.' This has meant 'the rise of new centers
and the loss of relative weight of the U.S. as a global hegemonic power' with increasing
resource depletion and ecological crisis. He goes on to argue:
The current financial crisis (and economic downturn) has not come out of blue. It is the
outcome of deep-seated contradictions within the structure of global economic system. It is
not a 'failure' of the system, but it is central to the mode of functioning of the system
itself. It is not the result of some 'mistakes' or 'deviations,' but rather it is inherent to
the logic of the system. ( http://www.globalresearch.ca/index.php?contexr=va&and=123
)
... ... ...
The question is the nature of the systemic crisis: does it mean the end of U.S. style
capitalism? Does it mean the end of neoliberalism? Does it mean the end of capitalism
itself?
Undoubtedly, the financial and economic crisis of 2008 is a major geopolitical setback for
the United States and Europe.
Altman (2009) argues hat governments in the U.S. and Europe will turn inward to focus on
domestic recovery especially as their citizens begin to make demands, such as the 'tea-party' )
phenomenon in the U.S.
The international fiscal deficits will discourage the U.S. and Western nations from
embarking on any international initiatives in foreign policy and Western capital markets will
take several years to recover as the banks insulate themselves by becoming risk-averse.
Perhaps, most importantly 'the economic credibility of the West has been undermined by the
crisis' (p. 10)...
... ... ...
Whatever the economic advantages of progress toward the 'knowledge economy,' the 'creative
economy' and, even the 'green economy the fact is that the cur- rent financial crisis poses
a fundamental challenge to globalization and to the finance capitalism of the Anglo-American
neoliberal model of the free market. As Harold James (2009: 168) reminds us
'The response to the Asian crisis of 1997-98 was the reinforcement of the American model
of financial capitalism, the so-called Washington consensus'
and he goes on to argue
'The response to the contagion caused by the U.S. subprime crisis of 2007-8 will be the
elaboration of the Chinese model.' ...
The key problem of the USA is that neoliberalism ideology is now discredited (since 2008) and
neoliberalism as the social system clearly entered the stage of decline. Trump and Brexit
were the first Robin (as in "One robin doesn't make a spring" )
The key problem that probably will prolong the period of neoliberalism past its Shelf LIfe
Expiration Date is that the alternative to it is still unclear. and probably will not emerge
until the end of the age of "cheap oil" which might mean another 40-50 years. But the rise of
far-right nationalism is a clear indication of people in various countries started reject
neoliberal globalization (including the USA, GB and most of Europe.) Trump's "national
neoliberalism" and Brexit are just another side of the same coin.
Economic rape of Russia and post Soviet republic in 1991-2000 as well as the communication
revolution postponed the crisis of neoliberalism for a decade or so. Otherwise, it might well
start around 2000 instead of 2008. Now G7 countries that adopted neoliberalism entered the
phase of "secular stagnation" (as Summers called it) and probably will not be able to escape
for it without some war-style mobilization or military coup d'état and introduction of
command economics.
IMHO military remains one of the few realistic hopes to play the role of countervailing
force for the financial oligarchy -- which owns that state under neoliberalism, So when we
talk about the Depp State that created anti-Trump witch hunt it is not just intelligence
agencies (although they assume active political role now and strive to be the kingmakers).
This Wall street, military-industrial complex and intelligence agencies.
It will be interesting if establishment neoliberals will try to take revenge in 2020, as
they clearly do not have any viable candidate right now (Biden is a sad joke). But they
definitely can put Trump on the ropes in 2019 and sign of their intention to do so already
emerged.
BTW the key problem of Trump survival is that Trump abandoned (or was forced to abandon)
most of his key election promises to the electorate (with the only exception of tariffs for
China, I think).
In this sense Trump behaved much like Obama did with his "Change and hope" bait and switch
trick, and Nobel Peace Price. Nobel Peace Prize for the butcher of Libya and Syria, the
godfather of ISIS, is rich.
During election campaign, his message was straightforwardly anti-globalization. He
believes that the interests of the working class have been sacrificed in favor of the big
corporations that have been encouraged to invest around the world and thereby deprive
American workers of their jobs. Further, he argues that large-scale immigration has
weakened the bargaining power of American workers and served to lower their wages.
He proposes that US corporations should be required to invest their cash reserves in the
US. He believes that the North American Free Trade Agreement (NAFTA) has had the effect of
exporting American jobs to Mexico. On similar grounds, he is opposed to the TPP and the
TTIP. And he also accuses China of stealing American jobs, threatening to impose a 45%
tariff on Chinese imports.
To globalization, Trump counterposes economic nationalism: "Put America first". His
appeal, above all, is to the white working class who, until Trump's (and Bernie Sander's)
arrival on the political scene, had been ignored and largely unrepresented since the 1980s.
Given that their wages have been falling for most of the last 40 years, it is extraordinary
how their interests have been neglected by the political class. Increasingly, they have
voted Republican, but the Republicans have long been captured by the super-rich and Wall
Street, whose interests, as hyper-globalisers, have run directly counter to those of the
white working class. With the arrival of Trump they finally found a representative: they
won Trump the Republican nomination.
Trump believes that America's pursuit of great power status has squandered the nation's
resources
The economic nationalist argument has also been vigorously pursued by Bernie Sanders , who
ran Hillary Clinton extremely close for the Democratic nomination and would probably have
won but for more than 700 so-called super-delegates, who were effectively chosen by the
Democratic machine and overwhelmingly supported Clinton. As in the case of the Republicans,
the Democrats have long supported a neoliberal, pro-globalization strategy, notwithstanding
the concerns of its trade union base. Both the Republicans and the Democrats now find
themselves deeply polarized between the pro- and anti-globalizers, an entirely new
development not witnessed since the shift towards neoliberalism under Reagan almost 40
years ago.
Another plank of Trump's nationalist appeal – "Make America great again" –
is his position on foreign policy. He believes that America's pursuit of great power status
has squandered the nation's resources. He argues that the country's alliance system is
unfair, with America bearing most of the cost and its allies contributing far too little.
He points to Japan and South Korea, and NATO's European members as prime examples. He seeks
to rebalance these relationships and, failing that, to exit from them.
As a country in decline, he argues that America can no longer afford to carry this kind
of financial burden. Rather than putting the world to rights, he believes the money should
be invested at home, pointing to the dilapidated state of America's infrastructure. Trump's
position represents a major critique of America as the world's hegemon. His arguments mark
a radical break with the neoliberal, hyper-globalization ideology that has reigned since
the early 1980s and with the foreign policy orthodoxy of most of the postwar period. These
arguments must be taken seriously. They should not be lightly dismissed just because of
their authorship.
Roughly two-thirds of Americans agree that "we should not think so much in international
terms but concentrate more on our own national problems". And, above all else, what will
continue to drive opposition to the hyper-globalizers is inequality.
It is very interesting and educational to read this pre-election article two years later and see where the author is
right and where he is wrong. The death of neoliberalism was greatly exaggerated. It simply mutated in the USA into "national
neoliberalism" under Trump. As no clear alternative exists it remain the dominant ideology and universities still
brainwash students with neoclassical economics. And in way catchy slogan "Make America great again" under Trump
means "Make American working and lower middle class great again"
It is also clear that Trump betrayed or was forced to betray most of his election promises. Standrd of living of common
americans did not improve under his watch. most of hi benefits of his tax cuts went to large corporations and financial
oligarch. He continued the policy of financial deregulation, which is tantamount of playing with open fire trying to
warm up the house
What we see under Trump is tremendous growth of political role of intelligence agencies which now are real kingmakers and can
sink any candidate which does not support their agenda. And USA intelligence agencies operated in 2016 in close cooperation
with the UK intelligence agencies to the extent that it is not clear who has the lead in creating Steele dossier. They are
definitely out of control of executive branch and play their own game. We also see a rise of CIA democrats as a desperate
attempt to preserve the power of Clinton wing of the Democratic Party ('soft neoliberals" turned under Hillary into into warmongers
and neocons) . Hillary and Bill themselves clearly belong to CIA democrats too, not only to Wall Street democrats, despite the fact
that they sold Democratic Party to Wall Street in the past. New Labor in UK did the same.
But if it is more or less clear now what happened in the USa in 2016-2018, it is completely unclear what will happen next.
I think in no way neoliberalism will start to be dismantled. there is no social forces powerful enough to start this job, We
probably need another financial crisi of the scale of 2008 for this work to be reluctantly started by ruling
elite. And we better not to have this repetition of 2008 as it will be really devastating for common people.
Notable quotes:
"... the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye turned to corporate evasion. ..."
"... It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present. ..."
"... In the period 1948-1972, every section of the American population experienced very similar and sizable increases in their standard of living; between 1972-2013, the bottom 10% experienced falling real income while the top 10% did far better than everyone else. In the US, the median real income for full-time male workers is now lower than it was four decades ago: the income of the bottom 90% of the population has stagnated for over 30 years . ..."
"... On average, between 65-70% of households in 25 high-income economies experienced stagnant or falling real incomes between 2005 and 2014. ..."
"... As Thomas Piketty has shown, in the absence of countervailing pressures, capitalism naturally gravitates towards increasing inequality. In the period between 1945 and the late 70s, Cold War competition was arguably the biggest such constraint. Since the collapse of the Soviet Union, there have been none. As the popular backlash grows increasingly irresistible, however, such a winner-takes-all regime becomes politically unsustainable. ..."
"... Foreign Affairs ..."
"... "'Populism' is the label that political elites attach to policies supported by ordinary citizens that they don't like." Populism is a movement against the status quo. It represents the beginnings of something new, though it is generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both. ..."
"... According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population. ..."
"... The re-emergence of the working class as a political voice in Britain, most notably in the Brexit vote, can best be described as an inchoate expression of resentment and protest, with only a very weak sense of belonging to the labour movement. ..."
"... Economists such as Larry Summers believe that the prospect for the future is most likely one of secular stagnation . ..."
"... those who have lost out in the neoliberal era are no longer prepared to acquiesce in their fate – they are increasingly in open revolt. We are witnessing the end of the neoliberal era. It is not dead, but it is in its early death throes, just as the social-democratic era was during the 1970s. ..."
In the early 1980s the author was one of the first to herald the emerging dominance of neoliberalism in the west. Here he argues
that this doctrine is now faltering. But what happens next?
The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The
crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks
were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour
was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary
policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade,
with no end in sight.
After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism
manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic
disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left
had all bought into its philosophy, New Labour a classic
in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic.
But that hegemony cannot and will not survive the test of the real world.
The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and
business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters
of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the
political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It
marked the beginnings of a wider political crisis.
But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial
crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the
late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services
and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby
creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned
as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye
turned to corporate evasion.
It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic
period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism,
when the growth rate was double that of the neoliberal period from 1980 to the present.
But by far the most disastrous feature of the neoliberal period has been the huge growth in inequality. Until very recently, this
had been virtually ignored. With extraordinary speed, however, it has emerged as one of, if not the most important political issue
on both sides of the Atlantic, most dramatically in the US. It is, bar none, the issue that is driving the political discontent that
is now engulfing the west. Given the statistical evidence, it is puzzling, shocking even, that it has been disregarded for so long;
the explanation can only lie in the sheer extent of the hegemony of neoliberalism and its values.
But now reality has upset the doctrinal apple cart. In the period 1948-1972, every section of the American population experienced
very similar and sizable increases in their standard of living; between 1972-2013, the bottom 10% experienced falling real income
while the top 10% did far better than everyone else. In the US, the median real income for full-time male workers is now lower than
it was four decades ago: the income of the bottom 90% of the population has
stagnated for over 30 years .
A not so dissimilar picture is true of the UK. And the problem has grown more serious since the financial crisis. On average,
between 65-70% of households in 25 high-income economies experienced stagnant or falling real
incomes between 2005 and 2014.
Large sections of the population in both the US and the UK are now in revolt against their lot
The reasons are not difficult to explain. The hyper-globalisation era has been systematically stacked in favour of capital against
labour: international trading agreements, drawn up in great secrecy, with business on the inside and the unions and citizens excluded,
the Trans-Pacific Partnership (TPP) and the
Transatlantic
Trade and Investment Partnership (TTIP) being but the latest examples; the politico-legal attack on the unions;
the encouragement of large-scale immigration in both the US and Europe that helped to undermine
the bargaining power of the domestic workforce; and the failure to retrain displaced workers in any meaningful way.
As Thomas Piketty has shown, in the absence of
countervailing pressures, capitalism naturally gravitates towards increasing inequality. In the period between 1945 and the late
70s, Cold War competition was arguably the biggest such constraint. Since the collapse of the Soviet Union, there have been none.
As the popular backlash grows increasingly irresistible, however, such a winner-takes-all regime becomes politically unsustainable.
Large sections of the population in both the US and the UK are now in revolt against their lot, as graphically illustrated by
the support for Trump and Sanders in the US and the Brexit vote in the UK. This popular revolt is often described, in a somewhat
denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes in a recent excellent
essay
in Foreign Affairs : "'Populism' is the label that political elites attach to policies supported by ordinary citizens
that they don't like." Populism is a movement against the status quo. It represents the beginnings of something new, though it is
generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both.
Brexit is a classic example of such populism. It has overturned a fundamental cornerstone of UK policy since the early 1970s.
Though ostensibly about Europe, it was in fact about much more: a cri de coeur from those who feel they have lost out and been left
behind, whose living standards have stagnated or worse since the 1980s, who feel dislocated by large-scale immigration over which
they have no control and who face an increasingly insecure and casualised labour market. Their revolt has paralysed the governing
elite, already claimed one prime minister, and left the latest one fumbling around in the dark looking for divine inspiration.
The wave of populism marks the return of class as a central agency in politics, both in the UK and the US. This is particularly
remarkable in the US. For many decades, the idea of the "working class" was marginal to American political discourse. Most Americans
described themselves as middle class, a reflection of the aspirational pulse at the heart of American society. According to a Gallup
poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population.
Brexit, too, was primarily a working-class revolt. Hitherto, on both sides of the Atlantic, the agency of class has been in retreat
in the face of the emergence of a new range of identities and issues from gender and race to sexual orientation and the environment.
The return of class, because of its sheer reach, has the potential, like no other issue, to redefine the political landscape.
The working class belongs to no one: its orientation, far from predetermined, is a function of politics
The re-emergence of class should not be confused with the labor movement. They are not synonymous: this is obvious in the US
and increasingly the case in the UK. Indeed, over the last half-century, there has been a growing separation between the two in Britain.
The re-emergence of the working class as a political voice in Britain, most notably in the Brexit vote, can best be described as
an inchoate expression of resentment and protest, with only a very weak sense of belonging to the labour movement.
Indeed, Ukip has been as important – in the form of immigration and Europe – in shaping its current attitudes as the Labour party.
In the United States, both Trump and Sanders have given expression to the working-class revolt, the latter almost as much as the
former. The working class belongs to no one: its orientation, far from predetermined, as the left liked to think, is a function of
politics.
The neoliberal era is being undermined from two directions. First, if its record of economic growth has never been particularly
strong, it is now dismal. Europe is barely larger than it was on the eve of the financial crisis in 2007; the United States has done
better but even its growth has been anaemic. Economists such as Larry Summers believe that the prospect for the future is most likely
one of secular stagnation .
Worse, because the recovery has been so weak and fragile, there is a widespread belief that another financial crisis may well
beckon. In other words, the neoliberal era has delivered the west back into the kind of crisis-ridden world that we last experienced
in the 1930s. With this background, it is hardly surprising that a majority in the west now believe their children will be worse
off than they were. Second, those who have lost out in the neoliberal era are no longer prepared to acquiesce in their fate – they
are increasingly in open revolt. We are witnessing the end of the neoliberal era. It is not dead, but it is in its early death throes,
just as the social-democratic era was during the 1970s.
A sure sign of the declining influence of neoliberalism is the rising chorus of intellectual voices raised against it. From the
mid-70s through the 80s, the economic debate was increasingly dominated by monetarists and free marketeers. But since the western
financial crisis, the centre of gravity of the intellectual debate has shifted profoundly. This is most obvious in the United States,
with economists such as Joseph Stiglitz, Paul Krugman, Dani Rodrik and Jeffrey Sachs becoming increasingly influential. Thomas Piketty's
Capital in the Twenty-First Century has been a massive seller. His work and that of
Tony Atkinson
and Angus Deaton have pushed the question of the inequality to the top of the political agenda. In the UK,
Ha-Joon Chang , for long isolated within the economics
profession, has gained a following far greater than those who think economics is a branch of mathematics.
Meanwhile, some of those who were previously strong advocates of a neoliberal approach, such as Larry Summers and the Financial
Times 's Martin Wolf, have become extremely critical. The wind is in the sails of the critics of neoliberalism; the neoliberals
and monetarists are in retreat. In the UK, the media and political worlds are well behind the curve. Few recognize that we are at
the end of an era. Old attitudes and assumptions still predominate, whether on the BBC's Today programme, in the rightwing
press or the parliamentary Labor party.
Following Ed Miliband's resignation as Labour leader, virtually no one foresaw the triumph of
Jeremy Corbyn in the subsequent leadership election.
The assumption had been more of the same, a Blairite or a halfway house like Miliband, certainly not anyone like Corbyn. But the
zeitgeist had changed. The membership, especially the young who had joined the party on an unprecedented scale, wanted a complete
break with New Labour. One of the reasons why the left has failed to emerge as the leader of the new mood of working-class disillusionment
is that most social democratic parties became, in varying degrees, disciples of neoliberalism and uber-globalisation. The most extreme
forms of this phenomenon were New Labour and the Democrats, who in the late 90s and 00s became its advance guard, personified by
Tony Blair and Bill Clinton, triangulation and the third way.
But as David Marquand observed in a review for the New Statesman , what is the point of a social democratic party if
it doesn't represent the less fortunate, the underprivileged and the losers? New Labour deserted those who needed them, who historically
they were supposed to represent. Is it surprising that large sections have now deserted the party who deserted them? Blair, in his
reincarnation as a money-obsessed consultant to a shady bunch of presidents and dictators, is a fitting testament to the demise of
New Labour.
The rival contenders – Burnham, Cooper and Kendall – represented continuity. They were swept away by Corbyn, who won nearly 60%
of the votes. New Labour was over, as dead as Monty Python's parrot. Few grasped the meaning of what had happened. A Guardian
leader welcomed the surge in membership and then, lo and behold, urged support for Yvette Cooper, the very antithesis of the
reason for the enthusiasm. The PLP refused to accept the result and ever since has tried with might and main to remove Corbyn.
Just as the Labour party took far too long to come to terms with the rise of Thatcherism and the birth of a new era at the end
of the 70s, now it could not grasp that the Thatcherite paradigm, which they eventually came to embrace in the form of New Labour,
had finally run its course. Labour, like everyone else, is obliged to think anew. The membership in their antipathy to New Labour
turned to someone who had never accepted the latter, who was the polar opposite in almost every respect of Blair, and embodying an
authenticity and decency which Blair patently did not.
Labour may be in intensive care, but the condition of the Conservatives is not a great deal better
Corbyn is not a product of the new times, he is a throwback to the late 70s and early 80s. That is both his strength and also
his weakness. He is uncontaminated by the New Labour legacy because he has never accepted it. But nor, it would seem, does he understand
the nature of the new era. The danger is that he is possessed of feet of clay in what is a highly fluid and unpredictable political
environment, devoid of any certainties of almost any kind, in which Labour finds itself dangerously divided and weakened.
Labour may be in intensive care, but the condition of the Conservatives is not a great deal better. David Cameron was guilty of
a huge and irresponsible miscalculation over Brexit. He was forced to resign in the most ignominious of circumstances. The party
is hopelessly divided. It has no idea in which direction to move after Brexit. The Brexiters painted an optimistic picture of turning
away from the declining European market and embracing the expanding markets of the world, albeit barely mentioning by name which
countries it had in mind. It looks as if the new prime minister may have an anachronistic hostility towards China and a willingness
to undo the good work of George Osborne. If the government turns its back on China, by far the fastest growing market in the world,
where are they going to turn?
Brexit has left the country fragmented and deeply divided, with the very real prospect that Scotland might choose independence.
Meanwhile, the Conservatives seem to have little understanding that the neoliberal era is in its death throes.
Dramatic as events have been in the UK, they cannot compare with those in the United States. Almost from nowhere,
Donald Trump rose to capture the Republican nomination
and confound virtually all the pundits and not least his own party. His message was straightforwardly anti-globalisation. He believes
that the interests of the working class have been sacrificed in favour of the big corporations that have been encouraged to invest
around the world and thereby deprive American workers of their jobs. Further, he argues that large-scale immigration has weakened
the bargaining power of American workers and served to lower their wages.
He proposes that US corporations should be required to invest their cash reserves in the US. He believes that the North American
Free Trade Agreement (Nafta) has had the effect of exporting American jobs to Mexico. On similar grounds, he is opposed to the TPP
and the TTIP. And he also accuses China of stealing American jobs, threatening to impose a 45% tariff on Chinese imports.
To globalisation Trump counterposes economic nationalism: "Put America first". His appeal, above all, is to the white working
class who, until Trump's (and Bernie Sander's) arrival on the political scene, had been ignored and largely unrepresented since the
1980s. Given that their wages have been falling for most of the last 40 years, it is extraordinary how their interests have been
neglected by the political class. Increasingly, they have voted Republican, but the Republicans have long been captured by the super-rich
and Wall Street, whose interests, as hyper-globalisers, have run directly counter to those of the white working class. With the arrival
of Trump they finally found a representative: they won Trump the Republican nomination.
Trump believes that America's pursuit of great power status has squandered the nation's resources
The economic nationalist argument has also been vigorously pursued by
Bernie Sanders , who ran Hillary Clinton extremely
close for the Democratic nomination and would probably have won but for more than 700 so-called super-delegates, who were effectively
chosen by the Democratic machine and overwhelmingly supported Clinton. As in the case of the Republicans, the Democrats have long
supported a neoliberal, pro-globalisation strategy, notwithstanding the concerns of its trade union base. Both the Republicans and
the Democrats now find themselves deeply polarised between the pro- and anti-globalisers, an entirely new development not witnessed
since the shift towards neoliberalism under Reagan almost 40 years ago.
Another plank of Trump's nationalist appeal – "Make America great again" – is his position on foreign policy. He believes that
America's pursuit of great power status has squandered the nation's resources. He argues that the country's alliance system is unfair,
with America bearing most of the cost and its allies contributing far too little. He points to Japan and South Korea, and NATO's
European members as prime examples. He seeks to rebalance these relationships and, failing that, to exit from them.
As a country in decline, he argues that America can no longer afford to carry this kind of financial burden. Rather than putting
the world to rights, he believes the money should be invested at home, pointing to the dilapidated state of America's infrastructure.
Trump's position
represents a major critique of America as the world's hegemon. His arguments mark a radical break with the neoliberal, hyper-globalisation
ideology that has reigned since the early 1980s and with the foreign policy orthodoxy of most of the postwar period. These arguments
must be taken seriously. They should not be lightly dismissed just because of their authorship. But Trump is no man of the left.
He is a populist of the right. He has launched a racist and xenophobic attack on Muslims and on Mexicans. Trump's appeal is to a
white working class that feels it has been cheated by the big corporations, undermined by Hispanic immigration, and often resentful
towards African-Americans who for long too many have viewed as their inferior.
A Trump America would mark a descent into authoritarianism characterised by abuse, scapegoating, discrimination, racism, arbitrariness
and violence; America would become a deeply polarised and divided society. His threat to impose
45%
tariffs on China , if implemented, would certainly provoke retaliation by the Chinese and herald the beginnings of a new era
of protectionism.
Trump may well lose the presidential election just as Sanders failed in his bid for the Democrat nomination. But this does not
mean that the forces opposed to hyper-globalisation – unrestricted immigration, TPP and TTIP, the free movement of capital and much
else – will have lost the argument and are set to decline. In little more than 12 months, Trump and Sanders have transformed the
nature and terms of the argument. Far from being on the wane, the arguments of the critics of hyper-globalisation are steadily gaining
ground. Roughly two-thirds of Americans agree that "we should not think so much in international terms but concentrate more on our
own national problems". And, above all else, what will continue to drive opposition to the hyper-globalisers is inequality.
End of cheap oil is the next milestone in the development of neoliberalism. It remain to be seen if it can survive the end of
cheap oil.
Notable quotes:
"... According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population. ..."
"... American politicians, Obama in particular, constantly talk about "the middle class" when they want to refer to the bulk of the working population, as if almost everybody were doctors, lawyers, teachers and managers. ..."
"... This situation in the USA remind me of Australia where we have a choice between two right wing parties ..."
"... austerity for the working class while the rich go untouched even to pay a fair share of taxation. It's world wide the servants of the 1% who own 50% of the world's economy. ..."
"... There is no country in the world that doesn't have a mixture of both. The mix is probably a bit strained in north Korea but those countries where private capital is supreme all have intolerable conditions for workers. The Nordic countries probably have the most enlightened approach and best living standards for the majority. Remember well the old adage: With communism man exploits man. With capitalism it's the other way round. ..."
"... one can only hope neoliberalism is dead and/or dying.... ..."
"... Trump does not truly represent the labor or economically frustrated class. He is saying things that they'd like to hear. He is a rich and pompous man who belongs to the class which benefited tremendously from neoliberalistic policies. People are so fed up with inequality, their emotions can be directed in any direction and manipulated. Anger needs a target - Mexicans, Blacks, women, Muslims, immigrants and the list expands. Trump is misleading them by speaking in their voices while enjoying the comfort of luxury that he built by exploiting those very people. ..."
Quote: According to a Gallup poll, in 2000 only 33% of Americans called themselves working
class; by 2015 the figure was 48%, almost half the population.
How strange. American politicians, Obama in particular, constantly talk about "the middle
class" when they want to refer to the bulk of the working population, as if almost everybody
were doctors, lawyers, teachers and managers. It's good therefore to know that the American
people know better than their politicians how to classify themselves.
This situation in the USA remind me of Australia where we have a choice between two right
wing parties. The LNP is extreme/ultra right wing and our Labor Party is right wing
controlled. At least in Britain you have a choice, from afar it seems that your Conservative
Party is equal to our LNP but your Labour Party seems to be a little more Left wing than our
Labor Party which is a good thing for Britain.
willpodmore your next target must be your tory government, they are doing to you what our
tory government in Australia is doing to us and if Trump gets elected the USA tory government
will do to them, austerity for the working class while the rich go untouched even to pay a
fair share of taxation. It's world wide the servants of the 1% who own 50% of the world's
economy. If you don't believe me type the 1% own 50% of Earth's economy into Dr Goggle and
see what come up.
The one thing all Left leaning people do agree on is 'fairness' and equity for all, in
economic terms it means that huge corporations pay a fair share of tax, as working people do.
Sadly Tory govts ignore the profits of corporations and fail to force them to pay a fair
share of tax. The basic problem that the neo-cons suffer from is insatiable greed where
enough is never enough, selfishness is also a trait along with lack of empathy or compassion
for their fellow mankind.
"neoliberalism" is simply unregulated capitalism as practiced by Tory governments around the
world. Labour governments usually regulate and force these huge corporations to pay a fair
share of taxation from their huge incomes. The corporations are owned by the 1% who own 50%
of the world economy and continuing to grow on a daily basis.
Yes, nothing has changed in my lifetime except the 1% now own 50% of Earth's economy. Working
people have always struggled while the rich build their mansions, both Bernie Sanders and
Jeremy Corbyn have the right idea of a fair distribution of wealth. This means these huge
corporations paying their fair share of their income in taxes to the host country so "all"
the people receive some benefit, apart from the 1%.
blaster1, the joke of the century, globalisation -- which will only increase to the benefit of
everyone eventually. You obviously have little knowledge apart from what the Tories feed you.
1% of the global population own 50% of Earth's economy and through their corporations who the
tories allow to avoid paying tax will build on that 50% how long will it eventually take the
other 99% to receive any benefit? 200,000 years?
Exploitation is high on the priority list of any Tory government, wealth should be
distributed much more fairly than it currently is. The tories only serve the rich, they have
no time or empathy for the poor. Empathy and compassion are vacant in the tory philosophy of
the world. These two components make up a psychopathic personality.
pantomimetorie yes, and England could also be if you had a government who were not merely
servants of the rich. A government interested in the fair distribution of wealth. Not a tory
government, obviously!
There's no such thing as neoliberalism, it's just capitalism and capitalism actually works,
unlike socialism.
Yes it works alright, it works for the 1% of the global population who own 50% of the global
economy, sadly it leaves in its wake an underclass of people living below the poverty line
struggling to survive. It works for the rich, but there is no mechanism in the system that
the conservative will use to force the rich to pay their fair share of taxation to the
country included in that are the multibillion pound multinational corporations who pay little
to naught in taxes also which leaves a huge swathe of the population on Struggle Street and
the sooner that democratic socialism is instituted the better off the other 99% will be.
Keep up! There is no country in the world that doesn't have a mixture of both. The mix is
probably a bit strained in north Korea but those countries where private capital is supreme
all have intolerable conditions for workers. The Nordic countries probably have the most
enlightened approach and best living standards for the majority. Remember well the old
adage:
With communism man exploits man.
With capitalism it's the other way round.
Think they call it lobbying. Companies pay professional lobby firms staffed with ex MPs or
whatever to ' meet' ministers. The PR companies make 'donations' to party funds and push for
government contracts, changes in legislation, favorable to their industry tax breaks. You
can do it of course. Write to your mp to get your local roads, parks, libraries, improved.
Don't hold your breath.
That has to be the joke of the year if not the century!!!!!!!!!!!!
The most dynamic period of postwar western growth was that between the end of the war and
the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was
double that of the neoliberal period from 1980 to the present.
It would be interesting to see those growth figures with inflation taken into account or
to average them out across the whole world and not just the West. I suspect that if the
massive growth in India, China and the rest of Asia was taken into account the growth figures
wouldn't be so bad.
Excuse me? You're the one claiming rural inhabitants "have no idea" what city life entails.
That may have been the case centuries ago, but not now. Offshoring is small potatoes in the shift of global production. It may have been big news
a decade ago. We aren't a decade ago.
"Poverty = no kids" is your myth. Human history proves otherwise. Nobody's "decimating western/westernized population for profit". Is what you're about
really more white people, fewer brown people? Just say it, this is the Guardian, we've heard
it all before.
So run your country then. But intelligently, not on the basis of twisted myth-making and
dodgy race myths that we had enough of in 1945.
The left, at least as far as I know, have not been able to build up a solid set of
ideas on which to build a political agenda nor have they sought to gain traction for their
ideas in sites of knowledge production. The neoliberals were organised and waiting when
their turn came. For me, the left have fragmented and have turned to cultural critiques and
identity politics, forgoing any kind of realistic transformative agenda.
Apologies for not answering earlier.
i) Traction in sites of knowledge production is happening certainly. Again I can point to the
article for support - Stiglitz, Ha-Joon Chang, Piketty etc did not arise to such prominence
due to an organised left-wing agenda but because events in the real world demanded an
explanation for why neoliberalism wasn't delivering its universal benison as promised, and
indeed was showing empirical signs that it might be poisonous to economic activity in certain
fundamental ways.
ii) In my view it is quite possible to support identity politics (social liberalism if you
like) and a more left wing view of economics. At present the more enthusiastic placard wavers
are seeing identity politics as more likely to produce a beneficial change, but many are
recognising that the former hegemony of neoliberalism is breaking, and the best way to really
enhance the welfare of vulnerable groups is to promote universal economic justice in some
form.
iii) You appear to want to replace one hegemonic system of thought with another. But these
are the wrong tactics for me, since we have things to do in the real world.
By all means explain some of the properties your new left hegemonic theory should have, I'd
be very interested to hear them.
But in the end the practical steps are obvious and consist of applying left wing principles
to the modern economy. An example would be privatising the natural monopoly of the
railways.
If that sounds retro, it isn't, because we've never had to deal with an economy in this
condition before. We must proceed step by step in my view. The hegemony of neoliberalism was
damaging and lasted 40 years and counting. We must be pragmatic to be successful, given what
we know about the modern economy, and proceed by finding successful strategies rather than an
abstruse new theory that ignores the messy present in favour of some pure, simple conception
of the world backed up by the PR department. As I said above, one of the critical faults of
neoliberalism is its insistence that it is the answer to everyone's prayers. That certainty
is also the seed of its destruction, because to avoid doubts it eventually has to answer
those unrealistic prayers.
Trump does not truly represent the labor or economically frustrated class. He is saying
things that they'd like to hear. He is a rich and pompous man who belongs to the class which
benefited tremendously from neoliberalistic policies. People are so fed up with inequality,
their emotions can be directed in any direction and manipulated. Anger needs a target -
Mexicans, Blacks, women, Muslims, immigrants and the list expands. Trump is misleading them
by speaking in their voices while enjoying the comfort of luxury that he built by exploiting
those very people.
Billions of Chinese and Indian have never seen a toilet in their life, so yes, they really
don't know what life in a city is. And that doesn't make them "dumb". In their domain,
farming, you don't look like a brain storm either.
Offshoring isn't a "tiny element". We are no longer self sustaining and if China slammed the
door (as they did for a brief instant on Japan), there'd be serious heartburn in the US
before transitioning.
The official western tautology is fail/fail for the public. Not enough jobs to consider
having kids? Too bad. Not enough money to raise your kids? Too bad. Due to natural events?
No, due to political gaming.
Decimating western/westernized population for profit. It's not complicated. It is you who
claim immigration is needed to leave it as it is. "Ending our ability to pay pensions by
ending immigration isn't improvement either. "
The west has no business meddling with the rest of the planet if it can't run their own
countries.
People aren't so dumb as you imagine. They really didn't know about life in the city? Every
village had its emigrant. I've no such disdain for those who made that move.
Offshoring's now a tiny element in western deindustrialisation. Your costs are too high,
you can't compete: don't blame those worse off than yourself, put your own house in order and
educate your workforce to do better than flip burgers.
"Birth control brings down reproduction rates" is a meaningless tautology. People have
been practising birth control for centuries, mainly by delaying marriage. The PRB peddles
malthusian nonsense that the past half-century has clearly discredited. I thought you were
for population growth anyway: "economies so economically unstable that population declines"?
Make your mind up.
The ridiculous boom did crash, in 2008. Maybe you missed it. I want to know how we go
forward. But people need to pay attention to what's going on outside our head too.
I correct misrepresentations of the truth such as yours.
And the problem with communism is that it suspends peoples right in favour of central
control.
Communism and socialism is a post -capitalist society, means exactly the same thing to
me as they did to Marx also.
The common ownership and democratic control by us all, of all the means and instruments
for creating and distributing wealth. 'Common' and 'social' mean the same.
Nothing to do with state ownership or corporate or private ownership.
Nothing to do with central control either . It is a post-capitalist system
which utilises the technological advances of capitalism to produce for use to satisfy human
needs, using self feeding loopback informational tools for stock measurements and control
with direct inputs at local regional and global levels to allow calculation in kind, as
opposed to the economic calculation of capitalism, only necessary to satisfy profit
taking.
The reality is that we can all choose to be rich or poor. We are free to do as we wish
(within the law).
Nonsense. If you are born poor you will most likely die poor. Poverty is both absolute
and relative.
All wealth comes from the exploited abour of the working class which creates a surplus value
above its rationed access (wages). A commonly owned society, would not have rich or poor, we
would all have free access to the commonly produced wealth, with no elite classes creaming it
off and storing it.
Other than that, mind your own damn business, if you can't deal with the arguments.
One of the biggest downsides of the rise of Corbyn and Sanders, interesting though it is, is
the oxygen it seems to be giving to several old Marxist hacks who have made a good living for
decades banging on about their discredited and blood soaked ideology, ie Jacques et al.
Recently joined by that newly hatched Marxist harpie on the block, the hipster bearded and
thoroughly poisonous Richard Seymour.
The fact is there is not and never was any such thing as "neoliberalism". What they are
really referring to is globalisation- which will only increase to the benefit of everyone
eventually. The world is shrinking ever faster and that is no bad thing. Progress, evolution,
the future, call it what you want. To try and make out that it is halting or in reverse is
plainly nonsense.
???
What I remember of Reagan,
- spent like a drunken sailor, "defense" spending, til it broke US economy
- unbounded "adjustable rate" and "balloon" mortgages, first bank bailout, bill kicked down
the road to Bush Sr., $125 billion, when it blew up
- "trickle down", wealth transfer, via having taxed public pick up the tab for not just his
defense binge spending, but also corporate welfare programs (patent office, Import/Export
bank, infrastructure, etc.)
- first soup kitchens, adults panhandling/will work for food signs that I'd ever seen
- illegal immigrant amnesty, millions
- "War On Drugs" and right after that black neighborhoods flooded with crack
Reagan and Thatcher kicking off their "gut the public of wealth" agenda.
Their story is "you're a failure". Because a) you don't work hard enough/long enough, b) hold
your household together (if you were at work all waking hours), c) don't know how to raise
decent, independent kids (whilst being at work every waking hour), d) aren't motivated to
improve your lot in life if you need to work every waking hour and e) probably need to take
stress management classes if this gets on your nerves because you personally are driving up
"our" health care costs with your irresponsible neglect of your health.
Or, as the economists tout in the papers, "Productivity is up!" Or as the oligarchical put
it, "we need immigrant work force", who'll do it for cheaper and not complain or
burden us with their need for an actual life outside of work.
Clinton is, was, and still is. despite her recent fake reversal, a staunch supporter of TPP
and other trade agreements that will further impoverish the working class. She is the
furthest thing from a populist. Case closed.
During the last decades of Soviet power, the importance of Communist ideology' was
frequently
overrated abroad. Only after the downfall of the regime did it become clear that
Marxism-Leninism
was no longer taken seriously; lip service was still paid to it, but it became the subject of
ridicule
among those at the very' top.
Is there a danger that a similar misapprehension may prevail now that political views once
found only' at the periphery' of the political system have moved to its center?
... ... ....
... In the 1980s, a strange situation had arisen: The KGB spent much of its time harassing
and persecuting the dissidents, but they believed as little in communism and the Soviet system
as their victims. They did what they did because they had been given orders from above. What is
known about their real convictions? Deep down many of them were probably cynics, willing
apparently' to serve any' system as long as it preserved their privileged positions. What of
the current situation? How important is ideology', and what is the specific weight of power and
money'?
... ... ...
In its cultural history, Russia went through a golden and a silver age, but now there are
few prospects even for a bronze age. One feels reminded of Pushkin's reaction having finished
listening to Nikolai Gogol reading to him Dead Souls: "God, what a sad country, our
Russia."
As with the USSR if promised of better life are not fulfulled, ideology is bankruppt and
nationalism is on the rise.
Notable quotes:
"... The Party of Davos is yet unwilling to make the fundamental changes that would reduce the huge advantages they have accumulated over the past 40 years. We should therefore expect an intensification of this conflict with the natural ups and downs but a general trend towards increasing angst and frustration manifesting in unpredictable ways ..."
The main fault of the EU is that the biggest party at the table always in the end, when
things get serious, gets its way. The 80 million or so people of Germany de facto rule the 500
million of the Union, or you know, the three handfuls that rule Germany. No important decision
can or will ever be taken that Berlin does not agree with. Angela Merkel has been the CEO of
Europe Inc. since November 22 2005, gathering more power as time went by . That was never going
to work unless she made everyone richer. Ask the Greeks about that one.
Merkel was the leader of both Germany and of Europe, and when things got precarious, she
chose to let German interests prevail above Italian or Greek ones. That's the fundamental flaw
and failure of the Union in a nutshell. All other things, the Greek crisis, Salvini, Macron,
Brexit, are mere consequences of that flaw. In absence of a forever economic boom, there is
nothing left to fall back on. SF
-----------
A persuasive article, the Europeans here can now explain to us all how much better and more
virtuous Europe is than the United States.
What was it that Macron was saying about a European army? The CRS and the Gendarmerie Mobile
will get this under control but Macron may well be neutered by the unrest.
FWIW, the disparate power exercised by the great and the small states under present EU
conditions is exactly what the US Framers successfully avoided by the Great Compromises in the
US Constitution. pl
The main breaking point of the EU is the Euro. The rules agreed in the Maastricht Treaty
are not suitable for the participating countries but are written by the northern european
countries such as Germany and my country The Netherlands.
The rules each Euro-country are:
* maximum of 60% debt to GDP
* maximum deficit of 3% of GDP
* maximum inflation of 1.5%
These rules made national politicians toothless. A lot of monetary policy they could use
were taken away from them and delegated to the non-democratic, non-chosen technocratic
institute of the European Central Bank.
They are not allowed to print money battle a recession which would increase inflation.
This strategy makes a country cheap. So when there is a lot of inflation in Italy, Greece,
Portugal or Greece a lot of people from northern Europe go there on holiday.
In your discussion of the Eurozone you do not mention the Target 2 balances. This is almost a
non subject in Germany and not referred to that often elsewhere. I believe they amount to an
unacknowledged form of fiscal transfer.
Even if I'm correct, I don't think it's enough.
All unified countries, from the US to Iceland, recognise the duty of the richer areas to
transfer funds to poorer areas if needed. So, in the UK, HMG sends large sums of money over
to Northern Ireland as subsidy.
The other side of the coin to this is that the central government may supervise the
expenditure of that subsidy. That entails overall control over the entire expenditure of the
recipient area.
This system of fiscal transfer is seldom adequate and seldom well supervised.
It is, however, essential in any country.
As the EU becomes more unified this question of fiscal transfer becomes more important.
There are two obstacles.
1. The richer countries are reluctant to pay the subsidy. Since the EU is not yet a
unified state there are no means of coercing the richer countries into paying the subsidy. To
be part of a superstate, and to benefit from being part of it, is one thing. To face a
reduced standard of living in order to subsidise other parts of it is quite another.
2. Even if the richer parts of the EU are willing to pay, there are no effective means of
supervising the spending of the subsidy.
This is I think the greatest problem the EU faces and it faces it because it is in
transition from a collection of countries to a unified state under unified control. As a
collection of countries there is no onus on any one country to subsidise another. As a
unified state the process would happen automatically. But the in-between stage the EU's
currently at allows for neither one nor the other.
This is why we hear so often the calls for "ever greater unity" for the EU. That is no
mere expression of an ideological or millenarian dream. It is a precondition that must be met
if the EU is to hold together. Given the other stresses to which the EU is subjected I do not
believe it will arrive quickly enough or at all at the degree of unification that will allow
that precondition to be satisfied.
"The Union appears fatally wounded, and that's even before the next financial crisis has
materialized. Speaking of which, the Fed has been hiking rates and can lower them again a
little if it wants, but much of Europe 'works' on negative rates already. That next crisis
could be a doozy."
Sir
IMO, the Southfront article has a lot of merits. The problem that much of Europe faces is
similar to what we face here. Extreme wealth inequality caused by the concentration of
political and economic power in the hands of a few. The divide between the working class and
the urban upper class. The "Deplorables" are expressing their frustration at the ballot box
now by voting for Brexit, Trump, Bolsonaro, AMLO, Salvini & Five Star and what would have
been considered fringe parties not too long ago. The social contract has fallen apart.
The Party of Davos is yet unwilling to make the fundamental changes that would reduce
the huge advantages they have accumulated over the past 40 years. We should therefore expect
an intensification of this conflict with the natural ups and downs but a general trend
towards increasing angst and frustration manifesting in unpredictable ways
Russian articles are about as close to the truth as we are going to get on the internet
since it serves their interests to weaken the sanctions placed on them by the West. Facts do
not serve western Media Moguls. The last thing they want published is that the news is
manipulated to make them richer and more powerful. The closest I ever got to the White House
was standing on the lawn when Jimmy Carter welcomed Pierre Trudeau. Still, there is a video
of Huma Abedin hugging Lindsey Graham with the Generals looking on at John McCain's
funeral.
The fundamental problem of the EU is that the Euro is an unfinished project. Unfinished
because it lacks the internal transfer payments required to make it fully functional. Every
single currency essentially subsidizes to some degree it's poorer regions at the expense or
the richer. This is true or the US, all European countries prior to the euro etc The reason
for this is that under normal circumstances a poorer region (or under the current EURO
scenario, a poorer country) would be able to benefit from a weaker currency, in its
relationship with a better off country enjoying a stronger currency. By agreeing to a common
currency it gives up this essential compensating mechanism, but (normally) only in exchange
for meaningful fiscal transfers as compensation.
Today euro zone fiscal transfer amount to a fraction of comparative rates in the us or
other countries. Practically, it's non existent.
And the main reason for the current situation is Merkel/Germany. It takes all the benefits
(a lower weaker currency then it would otherwise have and unfettered access for is products
across Europe) without any costs. Of course, in the long run it's undermining the golden
goose, but it's difficult to focus even Germans on the long term...
The topic can be expanded at length but I've tried to keep it simple. Nothing is more
important than this.
The article is over the top. Brussels has very limited economic power and less political
power. The EU budget is only around 1% of Gross National Income. What is the Federal Budget
in the USA in comparison? Just your defence spending is around 3% of GDP. Fx. Hungary
receives around 4 billion Euros in 2017 from the EU and paid ca 800 million Euros to the EU.
How vital is 3.2 billion Euros for Hungary in a existential question? It's ca 2.7 % of GDP.
As for the commission it is only able to administrate existing rules.
New rules required the Council of Europe (the governments) and the EU parliament to pass
them.
The Council's voting rules require a majority to pass and sometimes unanimity. Which is
why the is no agreement on the distribution of refugees/immigrants. Member countries can
refuse to take part. Germany has limited
" .. if the more national-minded parties of the EU get a majority in the EU parliament
..."
They are a most disparate group of parties and it's unlikely in any case that they'd end
up having the say in the European Parliament. If they got near to it, we would see the same
mechanism operating as can operate in the parliaments of the constituent countries - the
status quo parties would join together to keep them from power.
But that's speculation. Here we are on firmer ground -
"The article is over the top. Brussels has very limited economic power and less
political power. The EU budget is only around 1% of Gross National Income."
There are two points relevant here.
1. "Brussels" or "the EU" are very imprecise terms. It is safer to talk in terms of the
Berlin/Paris/Brussels axis, with the two first components having the ultimate say and the
third being mainly the means through which that say is expressed.
2. The size and expenditure of Brussels itself is remarkably small. Compare it to the
massive size and expenditure of the governing apparatus in Washington and it's almost
invisible. But through regulation and law it has at its disposal increasing control over the
much larger establishments and budgets of the constituent nation states.
It is important not to exaggerate the reach of EU regulation. Many regulations we think of
as "EU regulations" are made elsewhere at international level and the EU only transmits these
regulations to its member states. For this and other reasons the Berlin/Paris/Brussels axis,
or whatever term one may wish to use, cannot be directly compared with the central power in
the US. But the EU does have very much more power than is indicated in the sentence quoted
above.
Good day Colonel. We can only hope so. The EU was conceived as an idea that would prevent
another European Conflict. Its initial organisation the European Coal and Steel
Community was designed to bring the sinews of war under centralised control. This was a
practical measure which was quite separate from the founder's beliefs about the origins of
the war; this was that it was the people who by their nationalism and subordination to
demagoguery that had enabled that power to be harnessed by the forces of Fascism. They thus
determined to create a political system in parallel that would neutralise the people as a
factor in political decisions within what would eventually become the EU. This involved
rendering their choices at the ballot box ineffective puppets who can initiate no legislation
and by virtue of their large constituencies are so distant from the people that no real
representation can take place. I doubt that there is one person in twenty in the UK who could
tell you the name of their MEP. What this means in effect is that there is no demos, no
people in the original Greek political sense and since there is no demos there can be no
democracy. The European Commission, which is the executive arm of the EU is voted for by the
Parliament, there is no input from the people which is why you see strange anomalies like
Prime Minister May negotiating with Michael Barnier or President Donald Trump talking to
Jean-Claude Juncker, two men who wield enormous power and yet have never received a single
vote from a citizen of the EU.
The truly frightening thing about this state of affairs is not the present EU even with
its lack of accountability, malice and incompetence but the opportunities it offers for
future tyranny and oppression. Human beings being what they are, no system that leaves the
people out of its decision making process will endure long as a force for good in the
world.
A currency is both an instrument and a product of a nation's monetary, fiscal and budgetary
policies.
Multiple nations with separate, and often contrary policies, cannot realistically share a
currency.
on one hand the dream of the internationalist eurocrats is the United States of Europe,
that is a USA on steroids from the aspect of govt powers. They are after it with 'all
possible despatch' as the old british navy slang goes. For them nation states are a thing of
the past and they see a rainbow society stretching from Gibraltar to Tallinn, and from Faroer
islands to Rhodes, with all possible colours, and other liberal nightmares of 'families', as
well as as a refuge open to everybody, who is not christian/and or conservative. Political
and economical control is absolute in their hands, and a police state is chasing 'family
values', but not petty crime. Drugs are legalized and stuff.
That dream is falling apart. Thank God.
On the other hand everything a semi-official russian source says must be taken with a huge
spoon of salt, since those 'pesky rooshans' are always up to something. A united and strong
EU not to mention a strong european army is not in their interest, since they fear a
Barbarossa 2.0. But what they want less is the version of Mr. Trump's NATO, an enlarged and
obeying military AND political arm of the US.
Yes the current EU is weak and will be weaker when in April 2019 more eu-sceptical parties
will join the EU parliament, I would even go as far as they will the majority. The neoliberal
top down, forced 'gleichschaltung' has failed and the Yellow Vests are only one aspect. A
thorough reform is needed, and as always I promote the way the austro-hungarian empire
worked, and worked reliably. That is a common foreign and defence politics, financed commonly
BUT this budget was to be suported by BOTH parliaments. The rest is voluntary. Standards,
education, police and intelligence services obligatorily share data etc. but NOTHING ELSE is
mandatory.
As of anti US sentiments. The late G. Bush with his visit in 1989 has left a deep and very
positive mark on hungarian public opinion. Some 30 years later the new ambassador appointed
by the running Pres himself says, that although Mr. Trump and Mr. Orban see the world very,
very similarly, a gesture from the hungarian govt is needed to facilitate a personnal
meeting. It could be a defence cooperation, a step to increase energy independence, or
helping to resolve the ukrainian situation.
Let me translate.
Buy US weapons for billions of dollars, buy US LNG for 50-70% higher price, or let 150 000
hungarians be forcefully assimilated into ukrainians becuase that is in-line with US
interests.
If you would like Sir, I would be more than honoured to write you a piece on the growing
disillusionment about the „West" in the Visegrad 4 countries, and the impossibility of
US geopolitical plans with this region.
"The 80 million or so people of Germany de facto rule the 500 million of the Union, or you
know, the three handfuls that rule Germany. No important decision can or will ever be taken
that Berlin does not agree with. "
Stupid lie, in the past I was used to better quality Rusian propaganda. :-)
"A persuasive article, the Europeans here can now explain to us all how much better and
more virtuous Europe is than the United States."
Sir;
It may be a stretch, but I can see the present state of the European Union as analogous to
America under the Articles of Confederation. That experiment wasn't working out as expected,
so, America went back to the drawing board and developed the Constitution. This set in train
events that, arguably, culminated in the War Between the States. Out of that crucible came a
strong central government, with some allowances for differences between states and regions,
but a general and enforceable national system. Where is the District of Columbia for Europe?
Berlin? Hardly. German civil law does not run in France, or Spain. Brussels? Conrad was right
in describing it in the opening of his book "The Heart of Darkness" as full of whited
sepulchers. Until some true Capitol is established for Europe, apart from and distinct from
the state capitols, and given effective power, Europe will just limp along.
The real value of the European Union lies in its function as a brake on inter-european
disputes. Preventing round three of the Great War might be it's biggest achievement.
As for Merkel being CFO of Germany, well, a nation is not just it's financial and economic
systems. If she concentrated her energies only on the financial aspects of her country, then
she deserves to go. Not enough of the 'vision' thing.
"The real value of the European Union lies in its function as a brake on inter-european
disputes."
I've seen that statement so often that I might eventually have to agree with it out of
weariness. But I don't think it'll do.
The reason we've had seventy years of peace, more or less, is that the European powers,
possibly excepting Germany, are no longer Great Powers.
In such disputes as have seriously escalated the EU has not been a brake. It has if
anything been a promoter of conflict, though its contribution to conflict so far has
necessarily been less than the contribution of its constituent nation states.
The reaction of the western media to these protests in France is quite different compared to
how they reported (aka propagandized) the Arab Spring and the Color Revolutions in Eastern
Europe. There they created the mythology of the liberty loving people vs the authoritarian
state. And the hysteria to gin up support for regime change.
In this instance on the protests in France, on most days there is no reporting. And when
there is any analysis these protesters are deemed as anarchists and troublemakers. I can't
wait for the subversive Russian hand to show up in the NY Times and WaPo. I for one would be
very interested to learn more about the Yellow Vests and the sentiments among the broad
public they are mining. It seems their demands are the demands of the disenfranchised. Those
who have paid the price for the enormous wealth of the Davos globalist elites. It also seems
that 70% of the French public support the protests.
The poll ratings of Macron the favorite of the globalist elites has plummeted that makes
Trump a very popular leader relatively. Will the "regime changers" in the west demand that
Macron go as they would if these protests were taking place in Russia for example?
IMO, the biggest problem in Europe is that an unelected bureaucracy in Brussels has
essentially stripped EU countries of their sovereignty and make classic bureaucratic
decisions that make ordinary lives more challenging, like the well known example of the pages
of directive about the shape and color of bananas that can be sold in the EU, which is an
example of a bureaucracy that is so big that they have to invent knew ways to remain
relevant.
We've seen many countries in Europe starting to take independent stances and pushing back
against the Brussels bureaucracy. Hungary, Czech Republic, Italy are examples of countries in
some conflict with Brussels. Even in Germany what would have been considered fringe political
parties are gaining substantial ground in national, state and local elections. All signs that
the average person is getting more frustrated.
this article from SF is provocative, not so persuasive. The mantra that some German Kamarilla
is ruling the EU, that German "deep state" if you will, exists in order to conquer the
European continent by peaceful, economic, financial means is IMO total BS. Germany is not
sovereign country, that is no. 1; secondly - the important decisions like the Greece bailouts
were made by France (Sarkozy) and others by "pulling Merkel over the table", by ramming these
decisions through the Bundestag without proper deliberations. Thirdly, the ECB boss and the
Board are totally out of German hands. Merkel saw to it that Mario Draghi became the boss,
and not Weidmann. The issue of Greece´s debts and the role of Goldman Sachs in getting
Greece into the Euro zone is well known, and I will not spend any more time digesting it
again here. Facts are that Greece´s billions of Euro´s received from printing
presses, ended up in the pockets of oligarchs, who purchased real estate in Geneva, Lausanne,
Paris, Berlin, Munich, London, New York. The famous 2000 names on Lagarde´ list never
materialized in public.
Now, the state of infrastructure in Germany is bad, people´s savings disappeared,
poverty in old age is a big issue for average German worker. Tell me, how did Germany profit?
There is no disparate power of Germany in the EU. France does not know "wo ihr der Schwanz
steht" - and talking about european military force is of course excluding the control over
the French nuclear arsenal.
I am not linking to sources but I can provide these if so desired, the SF article did not
provide any for their claims.
Fanto - I am so glad that you distinguish between "Germany" - still one of the finest
countries in Europe - and the German ruling apparatus.
The elites tend to drag us along with them when it comes to conflict. So because the
Western power structures are at present opposed to, say, Russia, we must all line up
dutifully and uncritically behind the anti-Russian line. And many of us do just that.
I've seen this mechanism at work in my own country. Our government, Brussels, and the
Irish government are involved in a complex dispute. This is now spilling over into antagonism
on our part against "the Irish" and antagonism on their part against "the Brits" - not
unexpected in the latter case because the Irish do have a fair few reasons for hostility to
"the Brits" in any case. What a mess!
The same mechanism operated internally in the Ukraine. A generalised sense of resentment
against a corrupt and greedy elite was diverted to the quite different channel of conflict
between pro-Russian and anti-Russian sectors of the population.
They got the conflict, all right, but the corrupt and greedy elite is still there.
I believe this will happen to us in Europe if we don't look out. The crony corporatist
club we term "the EU", and the crony corporatist governments of its constituent nations, are
the common burden of the many peoples of Europe. If we allow them to become our leaders in a
fight against each other they will remain our common burden.
The Greek bailout was simply EU self preservation and not in their interests. The IMF was
more lenient that Germany in those bailouts.. Seriously. =)
Germany did not mind the wealth transfer from the southern states, nor the lower euro due
to their economic inefficiencies (see Pres. Trumps comments), Goldman or no Goldman. If the
Chinese do it they are currency manipulators but when Germany does it...
And Germany not spending on infrastructure restrained consumption, imposing their short
sighted austerity on the rest of Europe. This exacerbated the crazy trade surpluses that
Europe had with the rest of the world, basically starving the European consumers and screwing
the USA further.
hah. I would hope no one is suggesting that Merkel's 'refugees for cheap labour' imposed on
Europe was due to American pressure. It is basically an extension of the German predatory
economic polices.
The financial sovereignty of the Eurozone countries, Germany included, is constrained by the
terms of the Maastricht Treaty, by which they are restricted from running budget deficits in
excess of 3%. The north/south divide that has been unfolding since it went into effect early
in this century was uncannily predicted by the late Wynne Godley in the London Review of
Books a few months the treaty's ratification. Godley was a senior analyst in the British
Finance Ministry and his analyses were said by some to be the primary influence in the
government's decision not to forsake the pound for the common currency.
As for Germany having minimal influence on Eurozone financial policy, try telling that to
Yanis Varoufakis, who was the Finance Minister of Greece during the 2015 negotiations that
led to the draconian austerity program under which the country's economy has all but
collapsed and its infrastructure looted at bargain basement prices. There was little question
in his mind that it was Wolfgang Schäuble, the German Finance Minister at the time,
running the show.
exSpec4Chuck, I see that you are full on board of emotional German bashing tour; I can
recommend the book by H.W.Sinn, "Der Euro", Hanser Verlag, 2015. quote (p.27) "....Italiens
große Tageszeitung iL Giornale sieht in Deutschland das Bestreben am Werk, das Vierte
Reich zu errichten... Das linke englische Wochenmagazin New Statesman nannte Angela Merkel
gar das ´gefährlichste deutsche Staatsoberhaupt seit Hitler´ " (if you are
not proficient in German, you can try Google translate).
and what Varoufakis claims are concerned - he was refuted by the research of H.W. Sinn, who
calculated that only 1/3 of money which was going to Greece - benefited the French, German,
American banks, and not 90% as Varoufakis claims. The 2/3rds of it benefited Greeks, who were
buying foreign assets because they did not trust their own economy.
BTW, the introduction of the Euro was a political decision to weaken to Deutsche Mark,
against the Franc, it was promoted by Mitterrand as "better than Versaille", meaning better
than the reparations after WW1. -also called "Versaille without war". So, tell me -who is
right, give me some other points of view, please.
Related to the question ( rethorical? ) you pose, it was really very timely that these
protests in France started just a week after Macron supported the creation of an European
Army....They were organized by social networks ( not workers assemblies, as it is the usual
way amongst French working class movements... )... like the last so succesful electoral
campaign of Bolsonaro.... There is a significant extrem right component and claims for only
low taxes..... In fact it seems that people from the "Yellow Vests" who are willing to
negotiate are receiving death threats from the far-righters, who, at the same time, claim for
the rise to power of a general whom Macron dismissed in the past, once taking over....Then...
it is the presence of strange strong fitted masked people wearing sunglasses and dressed in
military fatigues with backpacks....wearing strange white brazelets.... amongst the first
line in the front of the riots...Believe me, I have seen many working class movements through
these years in Europe and this one resembles more the "Ukrainian Maidan" than any other
else...by its extrem violence, even attacking representative signs of French nation as
Marianne statue, Arc du Triumphe , or even burning of French flags...and calls
to storm L´ Elysée ...
Macron, like it or not, is the legitimate president of France elected in democratic
elections....There is an excellent opportunity to fight him in the next European elections,
since the real fish ( we all seem to agree in that ) is cut in Brussels.... Why it is that
this people can not wait till May..., or is it that the real organizers of these riots do not
expect any good result in those elections, be it because they are fringe organizations with
scarce support amongst the French people, or because they can not concur as subjects to these
elections because they are... well, foreigners...?
There are a lot of people who live far worst that the French today, including people in
the US ( only you would wish to have the still remaining French welfare state...to which the
globalist want to take a dent in...) and then, would you be happy seeing this happening in
the US?
Anyway, am I detecting some schadenfreude here by this South Front people?
Who they are, btw?
I use to read them when at first The Saker was publishing their "analyses"...It seemed to me
they were military people then....
Nobody in the US disputes Macron's legitimacy. His fantastical effort to prevent global
warming by raising the already sky high taxes on consumer energy products are a French
problem and worthy of an Enarch. The US has far fewer bases in Europe that it used to have,
especially in Germany. The remaining ones are there because of a mistaken policy of
containing Russia post USSR.
You Europeans and your governments are fully complicit in that
policy although as Trump observes you are unwilling to fund your own defense adequately under
NATO agreements. As I have said, I personally, think NATO should be dissolved and that
whatever security arrangements should exist between the US and European countries should be
on a bi-lateral basis, but it appears that your governments do not want NATO dissolved.
Pompeo is pretty simplistic guy from the "Coalition for the peace from the position of strength". A neocon hell bent on US hegemony.
And it not true that Mike Pompeo is doing his best to demolish the global neoliberal world order. It just point to US vassals its real
place in the neoliberal pecking order.
Notable quotes:
"... "Multilateralism has too often become viewed as an end unto itself," said Pompeo. "The more treaties we sign, the safer we supposedly are. The more bureaucrats we have, the better the job gets done." Maybe I ran in strange circles during my eight years in the State Department, but few of my colleagues were in thrall to such simplistic thinking. ..."
"... For its part, the Trump administration hasn't been shy about trespassing on other countries' sovereignty. Trump has threatened to invade Venezuela and to punish South Africa for its land-reform policies. By the end of 2017, he had also sanctioned nearly 1,000 individuals and entities. Apparently, there are limits to how much other countries can "exert their sovereignty" within their own borders if doing so goes against the interests of the U.S. ..."
"... The liberal international order actually provides a legal basis for such interventions -- if, that is, you're willing to uphold it and play by its rules. The UN Security Council has passed hundreds of Chapter VII resolutions authorizing action to "restore international peace and security." Many investigations and prosecutions by the ICC, to which all NATO members except Turkey and the U.S. belong, have advanced many U.S. policy interests. Multilateral bodies also provide a forum for resolving lesser disputes. Trump's animus toward the World Trade Organization, for instance, ignores the better than average (and better than China) U.S. winning streak in trade cases. ..."
"... Do multilateral institutions need review, reform and renewal? Well, what institution doesn't? And as the largest funder from 2014 to 2016 for 24 out of 53 leading UN and non-UN multilateral institutions (compared with nine each for Japan and the U.K.), the U.S. has a strong interest in making sure they work effectively and advance the interests of member states. ..."
If a diplomat truly is, as the old saying goes, "an honest man sent abroad to lie for his country," then Secretary of State Mike
Pompeo has earned his pay. His speech in
Brussels on "Restoring the Role of the Nation-State in the Liberal International Order" deserves a State Department Distinguished
Honor Award for Intellectual Dishonesty.
"Multilateralism has too often become viewed as an end unto itself," said Pompeo. "The more treaties we sign, the safer we supposedly
are. The more bureaucrats we have, the better the job gets done." Maybe I ran in strange circles during my eight years in the State
Department, but few of my colleagues were in thrall to such simplistic thinking.
Pompeo then hurled rhetorical grenades at a row of multilateral bunkers: United Nations peacekeeping missions don't work; the
Organization of American States hasn't brought freedom to Cuba; the African Union doesn't advance the mutual interest of its members;
the World Bank and International Monetary Fund just make things worse; the European Union puts the interests of its bureaucrats before
those of its countries and citizens. Admittedly, each of those institutions is imperfect. But none lives down to the caricatures
Pompeo made of them.
Finally, in his own Mount Suribachi moment
, Pompeo brazenly planted the flag of American leadership on an international liberal order that this administration has worked
harder to blow up than to build. Wisely, he beat a retreat after his speech, taking no questions.
So, let's look at his points one by one. In attacking multilateralism, Pompeo claimed that the Trump administration's mission
is "to reassert our sovereignty and we want our friends to help us and exert their sovereignty as well." Trump himself played up
this same theme at the United Nations General Assembly in September.
But it's not clear that multilateral agreements and institutions have actually done much to abuse U.S. sovereignty. The UN
charter , for instance, clearly excludes intervention in
any state's domestic affairs. The U.S. veto on the Security Council gives it an unassailable backstop. America has unrivaled
voting power in the International Monetary
Fund and the World Bank. Many of the supposed threats to U.S. sovereignty that the Trump administration has cited have been either
illusory -- such as a hortatory compact on migration the U.S. pulled out of last year -- or could be easily
countered
, such as a possible investigation by the International Criminal Court into U.S. actions in Afghanistan.
For its part, the Trump administration hasn't been shy about trespassing on other countries' sovereignty. Trump has threatened
to invade Venezuela and to punish South Africa for its land-reform policies. By the end of 2017, he had also sanctioned
nearly 1,000 individuals and entities. Apparently,
there are limits to how much other countries can "exert their sovereignty" within their own borders if doing so goes against the
interests of the U.S.
The liberal international order actually provides a legal basis for such interventions -- if, that is, you're willing to uphold
it and play by its rules. The UN Security Council has passed hundreds of Chapter VII resolutions authorizing action to "restore international
peace and security." Many investigations and prosecutions by the ICC, to which all NATO members except Turkey and the U.S. belong,
have advanced many U.S. policy interests. Multilateral bodies also provide a forum for resolving lesser disputes. Trump's animus
toward the World Trade Organization, for instance, ignores the
better than average (and better than China) U.S. winning streak in trade cases.
Even in those situations where international rules may constrain future U.S. behavior, they reflect trade-offs that negotiators
have weighed and accepted. As Secretary of State Dean Rusk said to Congress in 1965 about the thousands of treaties and agreements
that the U.S. had inked in the previous two decades, "We are constantly enlarging our own freedom by being able to predict what others
are going to do."
At their best, multilateral institutions allow their member states to leverage national power. Twice in the last decade, the U.S.
Government Accountability Office has compared the cost of UN peacekeeping missions to U.S. boots on the ground and found them to
be a much more cost-effective
alternative . Fittingly, two days after Pompeo blasted his hosts at the EU for shortchanging the interests of its members' citizens,
news broke of a massive, multi-nation EU-coordinated
raid on the 'Ndrangheta crime syndicate in
Italy -- the kind of bust that no country can mount on its own.
Do multilateral institutions need review, reform and renewal? Well, what institution doesn't? And as the
largest funder
from 2014 to 2016 for 24 out of 53 leading UN and non-UN multilateral institutions (compared with nine each for Japan and the
U.K.), the U.S. has a strong interest in making sure they work effectively and advance the interests of member states.
But the way to do that isn't to browbeat them, or to take your ball and go home when things don't go your way. For all the weaknesses
of the UN Human Rights Council, the U.S. withdrawal (Iceland
took its place) won't make it better, and makes it even less likely that offenders will be held to account. Moreover, China and Russia
are busy building their own multilateral bodies or suborning existing ones like
Interpol .
Pompeo claimed that the U.S. wants to create international organizations "that deliver on their stated missions, and that create
value for the liberal order and for the world." But the administration's drastic budget cuts to the State Department and international
organizations (which a more multilaterally-minded Congress
has blunted) and its preference for bilateral over multilateral deals suggest it would rather they withered on the vine. Equally
toxic has been Trump's disdain for the work of experts and seasoned public servants -- witness his recent repudiation of a searing
U.S. government
report on climate change's economic impact.
One of my wonkiest jobs as a Foreign Service Officer at the U.S. Embassy in Tokyo was to cover Japan's conduct in commodities
groups such as the International Tropical Timber Organization, the International Coffee Organization and the now-defunct International
Natural Rubber Organization. I never became an expert, though I did come to understand why Japan has such good coffee. I did, however,
develop a healthy respect for the wonks, nerds and gnomes who inhabit the multilateral garden, tending to their countries' national
interests while advancing the greater common good. They need and deserve your support, Mr. Secretary, not your contempt.
"... The unquenchable quest for high income on the part of the upper classes must be halted. ..."
"... They maintain it is a mistake to isolate it merely in the context of the financial innovation and deregulation occurring from the late 1990s. Instead, capitalism has particular historical tendencies and specific class relations. ..."
"... However, because politics and social class alliances can change, so can the profitability. The current crisis was not caused by falling rates of profits, but by financial innovation, credit overextension, and the particular social class alliances facilitating these activities. ..."
Neoliberalism is a new stage of capitalism that emerged in the wake of the
structural crisis of the 1970s. It expresses the strategy of the capitalist classes
in alliance with upper management, specifically financial managers, in-
tending to strengthen their hegemony and to expand it globally. As of 2004,
when our book Capital Resurgent: Roots of the Neoliberal Revolution was
published by Harvard University Press, this strategy appeared successful,
based on its own objectives, the income and wealth of a privileged minority,
and the dominance of a country. The contemporary crisis is an outcome
of the contradictions inherent in that strategy. The crisis revealed the
strategy's unsustainable character, leading to what can be denoted as the
"crisis of neoliberalism." Neoliberal trends ultimately unsettled the foundations
of the economy of the "secure base" of the upper classes -- the capability of the United States
to grow, maintain the leadership of its financial institutions worldwide, and ensure the dominance of its currency
-- a class and imperial strategy that resulted in a stalemate.
A New Social Order-A Multipolar World
The crisis of neoliberalism is the fourth structural crisis in capitalism since
the late nineteenth century. Each of these earthquakes introduced the establishment
of a new social order and deeply altered international relations. The
contemporary crisis marks the beginning of a similar process of transition.
Not only is financial regulation involved, but a new corporate governance,
the rebuilding of the financial sector, and new policies are now required. The
basic tenets and practices of neoliberal globalization will be questioned, and
production has to be "re-territorialized" in the United States to a significant
extent. Accordingly, countries such as China, India, or Brazil will become
gradually less dependent on their relationship to the United States. It will be,
in particular, quite difficult to correct for the macro trajectory of declining
trends of accumulation and cumulative disequilibria of the U.S. economy
once the present Great Contraction is stopped.
In any event, the new world order will be more multipolar than at present. Further, if such changes are not realized successfully in
the United States, the decline of U.S. international hegemony could be sharp. None of the urgently required tasks in the coming
decades to slow down the comparative decline of the U.S. economy can be realized under the same class leadership and unchecked
globalizing trends. The unquenchable quest for high income on the part of the upper classes must be halted. Much will
depend on the pressure exerted by the popular classes and the peoples of the world, but the "national factor," that is, the national
commitment in favor of the preservation of U.S. preeminence worldwide, could play a crucial role. The necessary adjustment can be realized in the context of a new
social arrangement to the Right or to the Left, although, as of the last months
of 2009, the chances of a Left alternative appear slim.
It is important to understand that the contemporary crisis is only the
initial step in a longer process of rectification. How long this process will
last depends on the severity of the crisis, and national and international
political strife. The capability of the U.S. upper classes to perform the much
needed adjustment and the willingness of China to соllaborate will be
crucial factors. A crisis of the dollar could precipitate a sequence of events
that would alter the basic features of the process.
Two very distinct categories of phenomena are involved in the analysis of the contemporary crisis: the historical dynamics of
capitalism, on the one hand, and financial and macro mechanisms, on the other hand. The interpretation of the crisis lies at the
intersection of these two sets of processes, and the difficulty is to do justice to both and account for their reciprocal
relationships.
Neoliberalism should be understood as a new phase in the evolution of capitalism. As such, it can be described
intrinsically-its basic mechanisms and contradictions. The reference to a m ost recent phase raises, however, the issue of
previous phases. The comparison with earlier periods reveals the traits proper to the new period. The analysis of the social,
political, and economic trends that led to the establishment of neoliberalism is also telling of the nature and fate of this
social order. Symmetrically, the notion of a crisis of neoliberalism implies a possible transition to a new phase, and the
nature of the society that will prevail in the wake of the contemporary crisis is a major component of the investigation here.
... ... ...
A central thesis in Capital Resurgent: Roots of the Neoliberal Revolution
is that the overall dynamics of capitalism under neoliberalism,
both nationally and internationally, were determined by new class
objectives that worked to the benefit of the highest income brackets,
capitalist owners, and the upper fractions of management. The greater
concentration of income in favor of a privileged minority was a crucial
achievement of the new social order. Income statement data make this
apparent. In this respect, a social order is also a power configuration,
and implicit in this latter notion is "class" power. National accounting
frameworks add to this observation that a large and increasing fraction
of U.S. capital income comes from outside of the United States. Not only
class relations are involved, but also imperial hierarchies, a permanent
feature of capitalism.
The new configuration of income distribution was the outcome of
various converging trends. Strong pressure was placed on the mass of
salaried workers, which helped restore profit rates from their low levels
of the 1970s or, at least, to put an end to their downward trend. The opening
of trade and capital frontiers paved the way to large investments in
the regions of the world where prevailing social conditions allowed for
high returns, thus generating income flows in favor of the U.S. upper
classes (and broader groups that benefit to some extent by capital income).
Free trade increased the pressure on workers, the effect of the
competition emanating from countries where labor costs are low. Large
capital income flows also derived from the growing indebtedness of households
and the government. Extreme degrees of sophistication and expansion
of financial mechanisms were reached after 2000, allowing for
tremendous incomes in the financial sector and in rich households. The
crisis, finally, revealed that a significant fraction of these flows of income
were based on dubious profits, due to a n increasing overvaluation of
securities.
Besides the comparative interests of social classes, the leading position
of the United States, economically, politically, and militarily, must also
be considered. The political conditions underlying the dominance of the
United States in the decades preceding the crisis are well known. Two
major factors are the fall of the Soviet Union and the weakness of Europe
as a political entity. Neoliberalism corrected for the earlier decline of
the leadership of the United States in the 1970s, at least vis-a-vis Europe
and Japan. The U.S. economy is still the largest in the world in terms of
gross domestic product (GDP), with a leadership in fields as important
as research and innovation, both in production and financial mecha-
nisms. As a consequence, the dollar is acknowledged as the international
currency.
The international neoliberal order -- known as neoliberal globalization --
was imposed throughout the world, from the main capitalist countries of
the center to the less developed countries of the periphery, often at the cost
of severe crises as in Asia and Latin America during the 1990s and after
2000. As in any stage of imperialism, the major instruments of these international
power relations, beyond straightforward economic violence, are
corruption, subversion, and war. The main political tool is always the establishment
of a local imperial-friendly government. The collaboration of the
elites of the dominated country is crucial, as well as, in contemporary capitalism,
the action of international institutions such as the North Atlantic
Treaty Organization (NATO), the International Monetary Fund (IMF), the
World Bank (WB), and the World Trade Organization (WTO). Economically, the purpose
of this domination is the extraction of a "surplus" through
the imposition of low prices of natural resources and investment abroad, be
it portfolio or foreign direct investment. That countries of the periphery
want to sell their natural resources and are eager to receive foreign invest-
ment does not change the nature of the relations of domination, just as
when, within a given country, workers want to sell their labor power, the
ultimate source of profit.
The same notion, hegemony, is used here to refer to both class hierarchi-
cal relationships, as in neoliberalism, and imperialism internationally. No
distinction is made between hegemony and domination as in approaches of
Gramscian inspiration. The notion emphasizes a common aspect within
class and international mechanisms. In each instance, a class or country
leads a process of domination in which various agents are involved. In
neoliberalism, the upper fractions of capitalist classes, supported by finan-
cial institutions, act as leaders within the broader group of upper classes in
the exercise of their common domination. Similarly, the United States acts
as leader within the broader group of imperialist countries.
... ... ..
..the upper classes, to the Right. A shift would occur within the compara-
tive interests of these classes.
b. It is hard to imagine that such a far-reaching transformation would
be accomplished without significant support from the popular classes. A
degree of concession to the popular classes might be necessary. Consequently,
a political orientation to the Center Right could be expected.
3. Diversification in the rest of the world. Such a new strategy of strengthening
of the U.S. domestic economy would have important consequences for countries
of the periphery profoundly engaged in the neoliberal international
division of labor. But, in the long run, such trends open opportunities
toward the establishment of national development models as was the case
after the Great Depression (as in import-substitution industrialization in
Latin America), the much needed alternative to neoliberal globalization.
Independent of the path followed by the United States, the situation will
differ significantly around the globe. An increased diversity will be observed
in the establishment of new social orders more or less to the Right
or to the Left. Europe is not committed to international hegemony as is the
United States, and the European Union is politically unable to pursue such
an ambitious strategy. Europe might-paradoxically, given its history -- become the traditional
neoliberal stronghold in the coming decades.
It is still unclear whether social democratic trends in a few countries of Latin America
will open new avenues to social progress. The crucial factor
will be the impact of the contemporary crisis on China. Either, having suecessfully
superseded the consequences of the crisis, China will experience
strengthened neoliberal trends as if nothing had happened, or the experience
of the crisis, in China itself or in the rest of the world, will work in
favor of a "third way" along the contemporary pattern of the mixed economy
that prevails in China.
Even if new social arrangements are successfully established in the
United States, it is hard to imagine that U.S. hegemony will be preserved.
There will be no clear substitute to an impaired U.S. dominance, and a
multipolar configuration, around regional leaders, will gradually prevail
in the coming decades. A bipolar world, Atlantic and Asian, is a possible
outcome. Abstracting from rising international confrontation if conflicting
interests cannot be superseded, the optimistic scenario is that new international
hierarchies will be expressed within international institutions
to which the task of global governance would be slowly transferred.
This
new environment would be favorable to the international diversification of
social orders around the globe. This would mean a sharp break with the
logic of neoliberal globalization, with a potential for developing countries
depending, as in the case of the popular classes concerning domestic social
orders, on what these countries would be able to impose.
This book can be highly recommended as a book on the Great Financial
Crisis of 2008, and a book of politics, political economy, class analysis,
sociology, and history. Very impressive accomplishment.
The strength of this book on the Great Financial Crisis of 2008 is that
Dumenil and Levy place the crisis in a larger historical perspective.
They maintain it is a mistake to isolate it merely in the context of
the financial innovation and deregulation occurring from the late 1990s.
Instead, capitalism has particular historical tendencies and specific class
relations.
This is a very impressive volume published by Harvard University Press.
It offers a play by play of the Great Financial Recession of 2008, beginning
from 2000 in chapters 12 - 17, the political response and the continued
stagnation in domestic economies and instability within the international
economic order in chapters 18 - 20, along with very interesting historical
policy observations and recommendations for this current crisis in chapters
21 - 25. Nonetheless the real power of this book occurs in its historical
analysis of capitalist development since 1970s described in great detail
in chapters 1 - 11.
According to Dumenil and Levy the historical
tendencies of capitalism are radically mediated by politics and social class
configurations (i.e. alliances). They argue capitalistic
development, since 1880s, has gone through four primary stages and corresponding
crises. They emphasize these developments are not historically necessary,
but contingent on politics and social class configurations. Moreover, their
analysis is particular to the capitalistic development in the United States
and Western Europe, they are able to generalize or internationalize their
analysis because of the U.S. global hegemony (although they certainly accept
there are modes of resisting this hegemony (e.g. Iran, Venezuela, Cuba,
China, etc.).
Dumenil and Levy have demonstrated in previous work the tendency of the
rate of profit to fall in capitalistic economies. However, because politics
and social class alliances can change, so can the profitability. The current
crisis was not caused by falling rates of profits, but by financial innovation,
credit overextension, and the particular social class alliances facilitating
these activities. There is no single cause of the crisis, but broader
social political mechanisms at work and in the process of transformation.
The basic story goes like this: following the Great Depression of 1930
a strong social political alliance emerged between
the management class and "popular classes" (this popular
class includes blue and white collar workers, including quasi-management,
clerical, and professional, which cannot be reduced to the traditional "working-class").
In the 1970s there was a severe profitability crisis, the legislative and
institutional response to this crisis caused a fracture between management
and popular classes, and a re-alliance between
management and capitalist classes (which includes ownership and financial
classes).
Once the alliance between capitalist classes and management had been
forged in late 1970s and 1980s, profitability returned and financial incentives
and financial innovation reconfigured personal incentives and corporate
motivations. Most important according to Dumenil and Levy is that these
historical transformations manifested a "divorce" between ownership/finance
and the domestic economy and its actual production process. The political
system did nothing to reconcile this disconnect, indeed expedited the divorce
via deregulation and financial innovation, what the economic literature
calls "financialization" (although, to repeat in several countries the response
was radically different and in specific opposition to U.S. hegemony and
the neo-liberalism which the U.S. Treasury, IMF, World Bank, and WTO exported
to the rest of the world).
Nationalisation of essential services is required to put this country back on an even keel.
It was a stupid idea by governments (of all persuasions) to sell off monopoly essential
service assets. The neoliberal experiment has failed.
Beware: Just build a HUGE worker owned, democratically run (by workers) sector to compete
against privately owned concerns. If workers are (democratically) involved in running and
managing their own workplaces that will give plenty of competition for private concerns.
Workers will be involved in the 'politics' and economics of their local area as part of work.
They'll have more control over the technologies they want to use, how much profit they want
to make or not, wages, investment, working conditions and all aspects of their concern.
Workers would 'participate' more and be more involved in thinking about larger concerns. This
would make a nation/region more democratic on the 'ground'. Not just reliant on
'representative' democracy/voting. You'd still need over-arching government(s) but people
would have more direct control over their livelihoods and work conditions. Such a BIG sector
would give (I'm talking about Health, Education, manufacturing etc - not 'bread shop',
basket-weaving coops/social enterprises) private enterprise some REAL competition on prices
and services. It would deliver democracy to masses of people, some control over wealth
generation/economy and on a large enough scale CHANGE society in terms of social justice and
politics.
You don't need to go to State control or Private control of 'the economy'. Just the right
kinds of structures.
Neoliberalism is like a cancer on a health democracy. If we'd treated it in its early
magnifications (when the Librerals and far right old version of Labor), first started selling
off public assets (that are then charged back to citizens to use at increasing price rates
etc), we would have been fine.
But now the cancer is deep in democracy's lymph glads ( in many of our public services)
and so needs radical prolonged treatment and some surgery to assure the country's thriving
democracy survives.
First surgically remove the source: cease (vote out always) all right wing conservative
nutters from ever gaining power, or media mogul influence of government. Most but not all
hide in the Coalition.
Then, begin the reconstruction surgery to re-assert public assets and services. This is a
temporary but life saving cost.
Then, monitor and manage, (educate) the citizens about this scourge on democracy.
The death of neoliberalism means we can finally have a national debate about the size
and role of government, and the shape of the economy and society we want to build.
Neoliberalism is far from dead Richard - neoliberalism is deeply entrenched in mainstream
thinking its corporate enriching magic works insidiously - mostly subliminally under cover of
'sensible' free market self clearing 'orthodox' economics.
You and many others from 'progressive' TAI almost daily, unwittingly play a role in
reinforcing and entrenching neoliberal ideology in the community by framing macroeconomic
analysis/commentary in neoliberal terms.
Your oft repeated call for 'budget balance' over the business cycle is such an example. Only
fiscal deficits can build a prosperous productive nation in the absence of consistent
external surpluses - no government can ever build and expand a nation without permanently
injecting more funds into the non government sector than (through taxation etc) it
withdraws.
Both our major parties of government espouse neoliberal economic orthodoxy as if there is
no alternative - and no one calls them out - not even the quasi progressive TAI.
DSGE based 'orthodox' economics provides the lifeblood to neoliberalism - the myth of tax
collections funding expenditure provides plausible cover to constrain spending on
citizen/social services - but when it comes to war/corporate subsidy spending, such
constraints are immediately abandoned.
Hetereodox MMT exposes the lie of such DSGE myths - but faithful Ptolemaic 'progressives'
refuse to investigate or debate such Copernican macroeconomic sacrilege.
The recent TAI 'outlook' economic conference (proudly sponsored by 'The Australian'!! )
was a classic progressive 'fail'; loaded with orthodox 'experts' like Bowen and Keating
spouting austerity inducing neoliberal orthodoxy - not one heterodox economist was invited to
present the unwelcome, uncomfortable truth of sovereign nation macroeconomic reality.
Prof Bill Mitchell is Australia's most widely & internationally respected REAL
progressive heterodox academic - yet the TAI ignores him.
Neoliberalism won't die until it extracts the last breath of available wealth from
Australia's citizenry. It will die a savage death with the onset of the impending depression
'to end all depressions' when the collapsing housing bubble leaves citizens with a 'decades
long' bubble of unpayable private debt.
Only then will people realise they have been elaborately 'conned' - too late.
P.S. For all TRUE progressives:
Some brilliant short videos here
and here by Parody Project.
That's really the point, much as you might expect government like the Howard and Abbott ones
to have stuck to their claimed neo-liberal principles, neither substantially altered the
compulsory nature of the scheme, despite the fact that it ran more or less completely
contrary to Chicago School principles. Howard might have been fond of shouting "socialism" or
"nanny state" when he felt the need to criticise something, but deeds speak stronger than
words, and for all his p!ssing and moaning he was never going to do anything that stopped all
those truckloads of money finding their way to his friends in the banking industry.
Yes historically high mass immigration in Australia has been used as a trojan horse by the
adherents of neo-liberalism - to break down the pay and conditions of Australian workers and
their rights and entitlements.
By importing "ready made" skilled workers, neither the Government or the private sector have
had to go to the trouble of training their workforce nor bear any of the costs of educating
and training them.
As to the lower skilled imported workers, in the main, this is a crude device to cut out the
locals so that accepted or legislated pay and conditions can be lowered. Most of those
imported workers don't know their rights and are ripe for exploitation.
The shonks, rip off and quick buck merchants love neo-liberalism for the what it has done to
the Australian labour market.
And the Labor party has been complicit in all this - when it should have been protecting
Australians and Australian workers present and future from the ravaging impacts of
neo-liberalism.
For something that's supposedly dead, it still looks like neoliberalism is in charge to me.
The relentless commodification of every aspect of life continues apace. Money is still the
measure of everything and takes precedence over the environment, ethics, community,
creativity, discovery, and virtually everything else you care to name. When water thiefs, big
bankers, corrupt politicians, environmental despoilers, and those that start pointless wars
are IN GAOL, then I'll start to believe things are changing.
Neoliberalism is not simply an economic agenda. From the beginning it was conceived as and
then constructed to be much more than that - it was in fact as much a pedagogical cum
psychological operation to change minds across generations with regard to free-market
capitalism and thus to orient all thinking to that, than it was a matter of simple monetary
or trade policy. Of course, this had to be done with a good deal of repression and oppression
backing it up, here and there - Chile e.g. Thus electing neoliberalism is an effect of this
pedagogy over time - we are all schooled in its 'normality - and not a reflection of either
some natural desire for it or an educated choice.
I agree that we should be discussing fiscal policy but I suspect that Richard Denniss is
using a false frame for this topic. He probably adheres to the claim made by the
macroeconomic equivalent of pre-Copernican physics that a government that issues its own
currency, enforces taxes in that currency, and allows the currency to float in foreign
exchange markets can run out of its currency.
The fiscal policy of the federal government should be to employ all available labour in
socially useful and environmental sustainable productive activity, maintain price stability,
minimize inequality of income and wealth, and fund public services and infrastructure to the
maximum extent permitted by the resources that are available for sale in the government's
currency.
If you think that the government's fiscal policy should be to reduce a fiscal deficit or
deliver a fiscal surplus, you are a dill.
It makes no sense to target a particular fiscal balance because the outcome is driven
largely by the aggregated spending and saving decisions of the domestic non-government sector
and the external sector. The federal government does not control those variables.
The federal government needs to target economically, socially, and environmentally
desirable goals and allow the fiscal balance to reach whatever level is needed at any given
time to achieve those goals.
'Democracy' needs to be structural as well as a moral idea. Workers have been disempowered
and impoverished and disenfranchished by neoliberalism. An answer to structurally improve the
wealth AND democratic power of the workers is to build a HUGE co operative sector in each
economy: worker owned workplaces/businesses/concerns AND democratically run. THAT will
improve the situation for workers/punters: democracy where they live and work. Democracy
rooted not in fine ideas only about rights but bedded down in economic livelihoods. People
will take an interest in their local 'politics' and also understand more of the politics of
the nation. You don't have to get rid of 'capitalism' just give it a 'good run' for it's
money - some real COMPETITION. Cooperatively run Hospitals, owned by doctors and nurses and
other stakeholders - not for profit - that'll soon see the 'private' for profit' health
providers/rorters wind their prices and necks in. Socially owned, worker-owned,
government/taxpayer supported enterprise, work places, democratically run will boot up the
level of 'democracy' in our societies. We can still have voter style over-arching national
government of course. If you don't root democracy where people actually can participate and
which gives them a lot of control over their workplaces/livelihood, then it can all be
hijacked by the greedy and cunning (see neoliberalism). OH, a large cooperative sector in the
economy democratically run by workers won't deliver 'heaven on earth' - it'll still be run by
people!
It is also a tool of the neoliberals along with the whole neoliberal trend in macroeconomic
policy. The essential thing underlying this, is to try to reduce the power of government and
social forces that might exercise some power within the political economy -- workers and
others -- and put the power primarily in the hands of those dominating in the markets. That's
often the financial system, the banks, but also other elites. The idea of neoliberal
economists and policymakers being that you don't want the government getting too involved in
macroeconomic policy. You don't want them promoting too much employment because that might
lead to a raise in wages and, in turn, to a reduction in the profit share of the national
income.
Austerity fits into the mix very well Keeping wages low, or debt pressure high, means
workers will be less likely to complain or make demands. As workers struggle to provide their
families with all the temptations that a capitalist society offers, they become far less
likely to risk their employment, and less able to improve their situation.
At bottom, conservatives believe in a social hierarchy of "haves" and "have nots". They
have taken this corrosive social vision and dressed it up with a "respectable" sounding
ideology which all boils down to the cheap labour they depend on to make their fortunes.
It shows a great sense of inferiority and knowing our "proper"place, that the populace
apparently accepted the colloquial term for neo-liberalism or economic rationalism, as being
"trickle down economics" and that all that the populace deserved and was going to get was a
trickle of the alleged wealth and benefits created.
Why were most people so compliant and accepting of something that as a concept, from the
outset, was clearly signalling it would economically completely discriminate against the 99%
and was intended to provide such a meager share of the wealth and economic benefits
generated?
A quick look around the world provides clear evidence that there really are a lot of
alternatives.
That's the crux: many (western, developed) countries before us have
proven over and over again that the best type of democratic government is one in which
consensus is the basis for long-term decisions to the benefit of all. Is it tedious? Yes.
Frustrating at times? You bet. Slow? Indeed, quite often so. But the point is,
consensus-based decision making works and eventually is in everyone's interest (left,
right and centre), resulting in better long-term outcomes. With the added benefit that new
"majority" Governments won't throw out the children with the bathwater all the time.
I'd add one aspect to the article though, and that is to combine a form of proportional
representation with longer terms of Government. You won't get much meaningful done in
3 years, whatever form of representation you choose. 4 years, 5 years... whatever strikes the
best balance between governments getting some runs on the board and voters feeling empowered
to change government coalitions in the ballot box when they stuff up.
But what economic system worked in the interests of majority of population. There was only
one such system -- USA in 1935-1970th and it was the result of WWII and record profits of the US
corporation after the war, when both Europe and Japan were devastated.
In no way the USSR was social system that worked for the majority of population. It worked
for the Nomenklatura -- a pretty narrow caste, similar to current top 1% under
neoliberalism.
Neoliberalism clearly works for the interests of the minority and against the interests of
the majority. Households are now worse off than they were 6 years ago and large businesses
are enjoying record profits. It feels as if the australian economy is being run for the
benefit of a small percentage of wealthy shareholders.
While a purported devotion to the principles and precepts of neo-liberalism has been claimed
by decades of right-wing politicians, businesses and bankers, drilling down deeper often reveals
that what is really happening in favoring the economic interests of the few at the expense of the
many, and very often involving compulsorily actions like switch to 401K accounts. Which was stoke
of genius for neoliberals to fleeces common people. acquired
Speaking as no fan of neo-liberalism, but there is a risk that the term gets overused. Things
that the right have embraced with open arms, like compulsory retirement savings (which have
enriched the private sector, especially banks and their shareholders), would have caused
sharp intakes of breath from the steely-eyed theorists who came up with the concept. While a
purported devotion to the principles and precepts of neo-liberalism has been claimed by
decades of right-wing politicians, businesses and bankers, drilling down deeper often reveals
that what is really happening in favouring the economic interests of the few at the expense
of the many, and very often involving compulsorily acquired public resources being
re-directed to business, with barely even the thinnest veneer of genuine theoretical
observance to the neo-liberal model. Both neo-liberalism itself, and bogus claims of its
practical use and benefits, need to be dead and buried.
I really would love the rich and powerful who basically prey on the average
person/worker/mums and dads, to be held accountable and penalised properly in relation to
their deeds. These bastards destroy families in their grab for greed, and almost every time
they are excused by their cohorts, and even go on to bigger and better opportunities to keep
feeding their voracious greedy appetites. Basically they steal, so why isn't their proceeds
of crime taken back by government; and why do they not do any jail time?
Natural monopolies like water and power, roads and public transport should be in public
hands. All call centres dealing with government issues should be done by public servants, not
outsourced to foreign corporations.
I'd start with a bank. Give people a non-greed infested alternative.
Under neo-liberalism we have gone from 1 person, 1 vote to $1, one vote. The con job that
is 'small government and little or no regulations' is bad for society and the environment.
Greed over need.
Dr. T. J. Coles is director of the Plymouth Institute for Peace Research and the author of
several books, including Voices for Peace (with Noam Chomsky and others) and the forthcoming
Fire and Fury: How the US Isolates North Korea, Encircles China and Risks Nuclear War in Asia
(both Clairview Books).
The current economic model being used by capitalist countries across the world is failing
most of the people in these countries while enriching tiny elites. Unfortunately, politicians
in these countries are often in the pockets of the elite or are themselves members of the
elite.
We need a new economic narrative which better reconciles the needs of the population with
the directives of the market.
Why not? Profits to the nation, not greedy corporates and their shareholders.
I think you will find there were no profits made that could be put "to the nation." When
the wall came down, the USSR and the entire eastern bloc were completely bankrupt.
As was Mao's China prior to the emergence of Deng and his "to get rich is glorious"
mantra, that set China on its current path. Of course his generally market-oriented approach
has since been bastardised to one of One Party State-capitalism dominated by cronyism,
corruption, and a perverted justice system.
Yes it has generated vast wealth, but it is an empire built on sand. As any analysis of
its shadow banking system will show.
And while the legions of newly minted millionaires of party benevolence celebrate, the
hundreds of millions stuck in poverty are left to fend for themselves.
Neoliberalism is a secular religion, so it doe need to be rational, to remains influential or even dominant, much like
Bolshevism or Trotskyism (actually neoliberalism should be viewed as a perverted mutation of Trotskyism -- Trotskyism for irch) .
It took 70 years for Bolshevism to became discredited and collapse (under the attack from neoliberalism).
In the absence of alternatives neoliberalism might continues to exist in zombie state for a very long time.
Notable quotes:
"... Poverty rate in the USA has been increasing since about the year 2000. ..."
"... Why do you think that all around the world voters are going hard against Neoliberalism and why do you think that Neoliberals are desperately trying to save their bankrupt philosophy by hiding behind Nationalism and Racism? ..."
"... While I would very much like to agree with the notion that neo-liberalism is dead, there's rather too much evidence that its pernicious influence lingers ghost-like and ghastly, having suffused far too many politicians of an ultra-conservative ilk ..."
"... The true believers in the neo-liberal faith, as it was never other than a creed espoused by Thatcher and Pinochet among others, are like those in the catholic church who continued to advocate an earth centric universe long after science proved them wrong. ..."
"... It will be a long wait until these myopic adherents to the gospel of Hayek, Friedman and Buchanan, are consigned to the waste bin of history where they belong. Until then, it will remain a struggle to right the many wrongs of this mis-guided and shallow populism. ..."
"... The neocons have had their day, though it'll no doubt take one hell of an effort to drag them out of their crony-capitalist, snouts-in-the-trough ways. The profit motive in the provision of essential services should be confined to covering costs, maintenance and associated investment. ..."
The death of neoliberalism means we can finally have a national debate about the size and
role of government, and the shape of the economy and society we want to build.
Unfortunately, I see lots of deaths but none of them is neoliberalism. I can see death of
a decent safety net in Australia. Death of biodiversity. Death of ecosystems. Death of
intelligent debate. Death of science.
Poverty rate in the USA has been increasing since about the year 2000. The international
poverty trend has been decreasing over time only because the definition of poverty is to earn
less than $1.25 per day..... So, if you earn $10/day you are well above the poverty line:
Good luck living on that income in any OECD country!
Standards of living are decreasing in Australia... ever heard of the housing crisis? The
household debt crisis?.... Paying for hospital and medicines, education, electricity and
other services.... should I go on?.... ACOSS found that "there are just over 3 million people
(13.2%) living below the poverty line of 50% of median income – including 739,000
children (17.3%)".
"The evil neo-liberalism" has delivered poverty, massive inequality, dissatisfaction,
unemployment/sub-employment and casualization, collapse of public services, high costs of
living.... and deterioration of the environment...
Why do you think that all around the world
voters are going hard against Neoliberalism and why do you think that Neoliberals are
desperately trying to save their bankrupt philosophy by hiding behind Nationalism and
Racism?
While I would very much like to agree with the notion that neo-liberalism is dead, there's
rather too much evidence that its pernicious influence lingers ghost-like and ghastly, having
suffused far too many politicians of an ultra-conservative ilk.
The true believers in the neo-liberal faith, as it was never other than a creed espoused
by Thatcher and Pinochet among others, are like those in the catholic church who continued to
advocate an earth centric universe long after science proved them wrong.
It will be a long wait until these myopic adherents to the gospel of Hayek, Friedman and
Buchanan, are consigned to the waste bin of history where they belong. Until then, it will
remain a struggle to right the many wrongs of this mis-guided and shallow populism.
Abso-bloody-lutely! The neocons have had their day, though it'll no doubt take one hell of an
effort to drag them out of their crony-capitalist, snouts-in-the-trough ways. The profit
motive in the provision of essential services should be confined to covering costs,
maintenance and associated investment. It's so painfully obvious that the market has not met
the needs of the average citizen without absurd cost. Bring on the revolution!
What made anyone think neo-liberalism was going to work? Why was this even tried or got past
a focus group?
Only the Murdoch press ever dreamed this could have any merit and a few totally selfish and
controlling wealthy people. 2008 and the GFC should have killed this idea instead it gained
traction as the perpetrators not only were not prosecuted but were subsidised to create more
havoc. Find the culprits and jail them ... it is not too late.
"... What about "competition", the God of Neoliberals?.... Competition can have some positive role in society only in an environment of Regulation. That's why the future is neither Neoliberal nor Socialist, but a Mixed Economy Social Democracy. ..."
"... Bring back a Commonwealth Bank! In fact bring back State run Electricity, Gas and Water utilities... ..."
"... The Coalition these days proudly subsidise their friends and regulate their enemies in order to reshape Australia in their preferred form. ..."
All essential infrastructure should be Nationalised. Water electricity supply and generation,
ports and railways, educational facilities, one major bank, one country wide telco and mail
delivery. Remove the for profit aspect, and they become assets. In at least a few of these
they also provide training opportunities across a wide spectrum of careers
Nationalise the banks and the Mining Industry .
Take back control of outrageous wages in both these sectors and return profits to the
taxpayer .
Nationalise the State Governments in other words get rid of them and appoint federal
controlled administrators same with local councils, sack the lot of them and appoint
administrators.
Just like the AFP is "nationalised", or education is also to a big extent "nationalised",
alongside a big chunk of the health system.... so we can nationalise other things, such as
the modes of production and distribution of energy, major mineral resources, etc.
What about "competition", the God of Neoliberals?.... Competition can have some positive
role in society only in an environment of Regulation. That's why the future is neither
Neoliberal nor Socialist, but a Mixed Economy Social Democracy.
Which party is for a Mixed Economy Social Democracy?.... Labor and to some extent the
Greens. A bunch of independents are also happy with the concept.... Together they are
currently a majority, only waiting for a Federal election.
"... I don't like using the term "neo-liberalism" that much because there is nothing "new" or "liberal" about it, the term itself just helps hide the fact that it's a political project more about power than profit and the end result is more like modern feudalism - an authoritarian system where the lords (bankers, energy companies and their large and inefficient attendant bureaucracies), keep us peasants in thrall through life long debt-slavery simply to buy a house or exploit us as a captured market in the case of the energy sector. ..."
"... Since the word "privatisation" is clearly no longer popular, the latest buzzword from this project is "outsourcing". ..."
"... As far as I can see "neo-liberalism", or what I prefer to call managerial and financialised feudalism is not dead, it's still out and about looking around for the next rent-seeking opportunity. ..."
"... In the political arena, is enabling porkies facilitate each other in every lunatic pronouncement about "Budget repair" and "on track for a surplus". And its spotty, textbook-spouting clones ("all debt is debt! Shriek, gasp, hyperventilate!") fall off the conveyor belts of tertiary education Australia-wide, then turn up on The Drum as IPA 'Research Fellows' to spout their evidence-free assertions. ..."
"... And don't forget the handmaiden of neoliberalism is their macroeconomic mythology about government "debt and borrowing" which will condemn our grandchildren to poverty - inter-generational theft! It also allows them to continue dismantling government social programs by giving tax-cuts to reduce "revenue" and then claiming there is no money to fund those programs. ..."
"... "Competition" as the cornerstone of neoliberal economics was always a lie. Corporations do their best to get rid of competitors by unfair pricing tactics or by takeovers. And even where some competitors hang in there by some means (banks, petrol companies) the competition that occurs is not for price but for profit. ..."
"... We find a shift away from democratic processes and the rise of the "all new adulation of the so-called tough leader" factor, aka Nazism/Fascism. From Trump to Turkey, Netanyahu to Putin, Brazil to China, the rise of the "right" in Europe, the South Americas, where the leader is "our great and "good" Teacher", knows best, and thus infantalises the knowledge and awareness of the rest of the population. Who needs scientists, when the "leader" knows everything? ..."
"... There are indeed alternatives to neoliberalism, most of which have been shown to lead back to neoliberalism. Appeals for fiscal and monetary relief/stimulus can only ever paper over the worst aspects of it's relentless 'progress', between wars, it seems. ..."
"... Neoliberalism seems vastly, catastrophically misunderstood. Widely perceived as the latest abomination to spring from the eternal battle 'twixt Labour and Capital, it's actual origins are somewhat more recent. Neoliberalism really, really is not just "Capitalism gone wrong". It goes much deeper, to a fundamental flaw buried( more accurately 'planted') deep in the heart of economics. ..."
"... In 1879 an obscure journalist from then-remote San Francisco, Henry George, took the world by storm with his extraordinary bestseller Progress and Poverty . Still the only published work to outsell the Bible in a single year, it did so for over twenty years, yet few social justice advocates have heard of it. ..."
"... George gravely threatened privileged global power-elites , so they erased him from academic history. A mind compared, in his time with Plato, Copernicus and Adam Smith wiped from living memory, by the modern aristocracy. ..."
"... In the process of doing so, they emasculated the discipline of economics, stripped dignity from labour, and set in motion a world-destroying doctrine. Neo-Classical Economics(aka neoliberalism) was born , to the detriment of the working-citizen and the living world on which s/he depends. ..."
I don't like using the term "neo-liberalism" that much because there is nothing "new" or
"liberal" about it, the term itself just helps hide the fact that it's a political project
more about power than profit and the end result is more like modern feudalism - an
authoritarian system where the lords (bankers, energy companies and their large and
inefficient attendant bureaucracies), keep us peasants in thrall through life long
debt-slavery simply to buy a house or exploit us as a captured market in the case of the
energy sector.
Since the word "privatisation" is clearly no longer popular, the latest buzzword from this
project is "outsourcing". If you've had a look at The Canberra Times over the last couple of
weeks there have been quite a few articles about outsourcing parts of Medicare and Centrelink, using labour hire companies and so on – is this part of a current LNP plan
to "sell off" parts of the government before Labour takes the reins in May?
As far as I can see "neo-liberalism", or what I prefer to call managerial and
financialised feudalism is not dead, it's still out and about looking around for the next
rent-seeking opportunity.
Neoliberalism "dead"?
I think not.
It is riveted on the country like a straitjacket.
Which is exactly what it was always intended to be, a system gamed and rigged to ensure the
wage-earning scum obtain progressively less and less of the country's productive wealth,
however much they contributed to it.
The wage theft and exploitation Neoliberalism fosters has become the new norm.
Neoliberal idealogues thickly infest Federal and State Treasuries.
In the political arena, is enabling porkies facilitate each other in every lunatic
pronouncement about "Budget repair" and "on track for a surplus".
And its spotty, textbook-spouting clones ("all debt is debt! Shriek, gasp, hyperventilate!")
fall off the conveyor belts of tertiary education Australia-wide, then turn up on The Drum as
IPA 'Research Fellows' to spout their evidence-free assertions.
The IPA itself has moles in govt at every level--even in your local Council.
Certainly in ours.
Neoliberalism is "dead"?
Correction.
Neoliberalism is alive, thriving---and quick to ensure its glaring deficiencies and
inequities are solely attributable to its opponents. Now THERE'S a surprise.....
Agree! And don't forget the handmaiden of neoliberalism is their macroeconomic mythology
about government "debt and borrowing" which will condemn our grandchildren to poverty -
inter-generational theft! It also allows them to continue dismantling government social programs by giving tax-cuts
to reduce "revenue" and then claiming there is no money to fund those programs.
Neoliberalism will not be dead until the underpinning of neoliberalism is abandoned by ALP
and Greens. That underpinning is their mindless attachment to "budget repair" and "return to
surplus". The federal government's "budget" is nothing like a currency user's budget.
Currency users collect in order to spend whereas every dollar spent by the federal government
is a new dollar and every dollar taxed by the federal government is an ex-dollar. A currency
cannot sensibly have "debt" in the currency that it issues and no amount of surplus or
deficit now will enhance or impair its capacity to spend in future. A currency issuer does
not need an electronic piggybank, or a Future Fund, or a Drought Relief Fund. It can't max
out an imaginary credit card. It's "borrowing" is just an exchange of its termless no-coupon
liabilities (currency) for term-limited coupon-bearing liabilities (bonds). The federal
budget balance is no rational indicator of any need for austerity or for stimulus. The
rational indicators are unemployment (too small a "deficit"/too large a surplus) and
inflation (too large a "deficit"/too small a "surplus"). Federal taxation is where dollars go
to die. It doesn't "fund" a currency issuer's spending - it is there to stop the dollars it
issues from piling up and causing inflation and to make room for spending by democratically
elected federal parliament. The name of the game is to balance the economy, not the entirely
notional and fundamentally irrelevant "budget".
"Competition" as the cornerstone of neoliberal economics was always a lie. Corporations do
their best to get rid of competitors by unfair pricing tactics or by takeovers. And even
where some competitors hang in there by some means (banks, petrol companies) the competition
that occurs is not for price but for profit.
And changing the electoral system? Yes indeed. After years of observation it seems to me
that the problem with our politics is not individual politicians (although there are notable
exceptions) but political parties. Rigid control of policies and voting on party instruction
(even by the Greens) makes the proceedings of parliament a complete waste of time. If every
policy had to run the gauntlet of 150 people all voting by their conscience we would have
better policy. The executive functions could be carried out by a cabinet also elected from
those members. But not going to happen - too many vested interests in the parties and their
corporate sponsors.
With the election of Bolsonaro in Brazil (even though nearly 30% of electors refused to vote)
it may be a little presumptuous to dissect the dead corpse of neoliberalism, as Richard
Denniss' hopes that we can.
What is absolutely gob-smacking is that Brazilians voted for him; a man that Glenn Greenwald
describes as "far more dangerous than Trump" , that Bolsonaro envisages military
dictatorships as "being a far more superior form of government" advocating a civil war
in order to dispose of the left.
Furthermore, the election of this far-right neoliberal extremist also threatens the Amazon
forest and its indigenous people; with a global impact that will render combatting climate
change even more difficult.
Locally, recent Liberal Party battles over leadership have included the neolib factor, as the
lunatic right in that party - who I suspect would all love to be a Bolsonaro themselves -
aggressively activate their grumblings and dissension.
Oh, Richard how I wish you were right; but in the Victorian election campaign - currently
underway - I have seen Socialist candidates behaving in a manner that doesn't garner hope in
a different way of doing politics.
The fact that 'our' democracy is based on an adversarial, partisan system leaves me with
little hope.
Alain Badiou wrote that "ours is not a world of democracy but a world of imperial
conservatism using democratic phraseology" ; and until that imposition is discarded 'our'
democracy will remain whatever we are told it is, and neolibs will continue to shove their
bullshit down our throats as much as they can.
We find a shift away from democratic processes and the rise of the "all new
adulation of the so-called tough leader" factor, aka Nazism/Fascism. From Trump to
Turkey, Netanyahu to Putin, Brazil to China, the rise of the "right" in Europe, the South
Americas, where the leader is "our great and "good" Teacher", knows best, and thus
infantalises the knowledge and awareness of the rest of the population. Who needs scientists,
when the "leader" knows everything?
Have the people of the world abrogated their democratic responsibility?
Or is it the gerrymandering chicanery of US Republican backers/politicians( so long as you
control the voting machines ) that have sent the ugly message to the world, Power is yours
for the making and taking by any means that ignores the public's rights in the decision
making process. Has the "neo-liberal" world delivered a corrupted system of democracy that
has deliberately alienated the world's population from actively participating fully in the
full awareness that their vote counts and will be counted?
Do we need to take back the controls of democracy to ensure that it is the will of the
people and not a manipulation by vested interest groups/individuals? You're darn
tootin'!!!
A thoughtful piece. Thanks. There are indeed alternatives to neoliberalism, most of which
have been shown to lead back to neoliberalism. Appeals for fiscal and monetary
relief/stimulus can only ever paper over the worst aspects of it's relentless 'progress',
between wars, it seems.
Neoliberalism seems vastly, catastrophically misunderstood. Widely perceived as the
latest abomination to spring from the eternal battle 'twixt Labour and Capital, it's actual
origins are somewhat more recent. Neoliberalism really, really is not just "Capitalism gone
wrong". It goes much deeper, to a fundamental flaw buried( more accurately 'planted')
deep in the heart of economics.
Instead of trying to understand Neo-Classical Economics it is perhaps more instructive to
understand what it was built, layer by layer, to obscure. First the Land system, then the
Wealth system, and finally the Money system (hived off into a compartment - 'macroeconomics').
Importantly, three entirely different categories of "thing" .
In 1879 an obscure journalist from then-remote San Francisco, Henry George, took the world
by storm with his extraordinary bestseller Progress and Poverty . Still the only
published work to outsell the Bible in a single year, it did so for over twenty years, yet
few social justice advocates have heard of it.
George set out to discover why the worst poverty always seemed to accompany the most
progress. By chasing down the production process to its ends, and tracing where the proceeds
were going, he succeeded spectacularly. From Progress and Poverty , Chapter 17 - "The Problem Explained"
:
Three things unite in production: land, labor, and capital. Three parties divide the
output: landowner, laborer, and capitalist. If the laborer and capitalist get no more as
production increases, it is a necessary inference that the landowner takes the gain.
George
gravely threatened privileged global power-elites , so they erased him from academic
history. A mind compared, in his time with Plato, Copernicus and Adam Smith wiped from living
memory, by the modern aristocracy.
In the process of doing so, they emasculated the discipline of economics, stripped dignity
from labour, and set in motion a world-destroying doctrine. Neo-Classical
Economics(aka neoliberalism) was born , to the detriment of the working-citizen and the
living world on which s/he depends.
Einstein was a fan of George, and used his methods of thought-experiment and powerful
inductive reasoning to discover Relativity, twenty years later. Henry Georges brilliant
insights into Land (aka nature), Wealth (what you want, need), and Money
(sharing mechanism) are as relevant as ever, and until they are rediscovered, we are likely
to re-run the 1900's over and over, with fewer and fewer resources.
No-deal Brexit: Disruption at Dover 'could
last six months' BBC. I have trouble understanding why six months. The UK's customs IT
system won't be ready and there's no reason to think it will be ready even then. I could
see things getting less bad due to adaptations but "less bad" is not normal
The
Great Brexit Breakdown Wall Street Journal. Some parts I quibble with, but generally
good and includes useful historical detail.
"... Another reason for the instability of the Western system is that two of the main areas of sovereignty are not included in the state structure: control of credit/banking and corporations. These two elements are therefore free of political controls and responsibility. They have largely monopolized power in Western Civilization and in American society. They are ruthlessly going forward to eliminate land, labour, entrepreneur-management skills and everything else the economists once told us were the chief elements of production. ..."
Summary of Prof. Carroll Quigley's
Last Public Lecture Given Months Before He Died:
"The 3rd. Oscar Iden Lecture 1978"
By Christopher M. Quigley B.Sc., M.M.I.I., M.A.
"This shift from customary conformity to decision making by some other power, in its
final stages, results in the dualism of almost totalitarian imperialism and an
amorphous mass culture of atomised individuals.
The fundamental, all pervasive cause of World instability today is the destruction of
communities by the commercialization of all human relationships and the resulting
neurosis and psychosis.
Another reason for the instability of the Western system is that two of the main areas
of sovereignty are not included in the state structure: control of credit/banking and
corporations. These two elements are therefore free of political controls and
responsibility.
They have largely monopolized power in Western Civilization and in American society.
They are ruthlessly going forward to eliminate land, labour, entrepreneur-management
skills and everything else the economists once told us were the chief elements of
production.
The only element of production they are concerned with is the one they control:
capital. Thus capital intensification has destroyed food, manufacturing, farming and
communities. All these processes create frustrations on every level of modern human
experience and result in the instability and disorder we see around everyday."
Carroll Quigley
In 1978 Professor Carroll Quigley, a few months before he died, gave three lectures at
Georgetown University, Washington. The lecture series was sponsored by a grant from the
Oscar Iden endowment.
The genius of Carroll Quigley shone through his three presentations because, as always, he
forced his audience to think. His essays covered the thousand years of the growth of the
State in the Western tradition from 976 – 1976. His approach went against the grain of
most academics who only taught history in short sound bites.
Quigley believed that you could not understand anything unless you saw the whole, and the
essence of his philosophy was that history is logical, i.e. things happen for a reason.
For him the core of all that occurs throughout the ages is the underlying force of
fundamental human values.
Leaders, rulers and executives who miss this point are prone to make erroneous decisions
because their actions will be based on flawed analysis and understanding. The professor
saw that American society and Western Civilization were in serious trouble in the late
70's. In hindsight his final essay
The State of Individuals
was particularly
prophetic and events during the subsequent 32 years have exonerated his controversial
conclusions.
In summary this essay stated the following:
Society is an organization of persons and artifacts to satisfy human needs.
Currently our desires are remote from our true needs. Societies are built on needs and
they are ultimately destroyed through desires.
Power between the state and the society rests on the ability of the state to satisfy human
needs. The state is a good state if it is sovereign and responsible.
There are seven level of culture or aspects of society: military, political, economic,
social, emotional, religious and intellectual.
Military
: men cannot live outside of groups. They can satisfy their needs only by
co-operating within community. The group needs to be defended.
Political:
If men operate within groups you must have a method to settle disputes.
Economic:
The group must have organizational patterns for satisfying material
needs.
Social:
Man and women are social beings. They have a need for other people. They
have a need to love and be loved.
Emotional:
Men and women must have emotional experiences. Moment to moment with
other people and moment to moment with nature.
Religious:
Human beings have a need for a feeling of certitude in their minds about
things they cannot control and do not fully understand.
Intellectual:
Men and women have a need to comprehend and discuss.
Power is the ability in society to meet these eight fore-mentioned human needs.
Community is group of people with close inter-personal relationships. Without community no
infant will be sufficiently socialized. Most of our internal controls which make society
function have historically been learnt in community. Prior to 976 most controls in society
were internal. In the West after 976 due to specialization and commercial expansion
controls began to be externalized.
Sovereignty has eight aspects: defence, judicial, administrative, taxation, legislation,
executive, monetary and incorporating power.
Expansion in society brings growing commercialization with the result that all values, in
time, become monetized. As expansion continues it slows with the result that society
becomes politicized and eventually militarized. This shift from customary conformity to
decision making by some other power in its final stages results in the dualism of almost
totalitarian imperialism and an amorphous mass culture of atomised individuals.
The main theme in our society today is [ruthless] competition, and no truly stable society
can possibly be built on such a premise. In the long term society must be based on
association and co-operation.
From 1855 Western Civilization has shown signs of becoming increasingly unstable due to:
technology and the displacement of labour: increased use of propaganda to brainwash people
into thinking society was good and true; an increased emphasis on material desires; the
increased emphasis on individualism over conformity; growing focus on quantity rather than
quality; increased demand for vicarious satisfactions.
As a result more and more people began to comprehend that the state was not a society with
community values. This realisation brought increasing instability.
Another element of the trend towards instability in Western Civilization was the growth in
weapon
systems that if actually used would ensure total destruction of the planet. This in effect
meant that they were effectively redundant.
In addition the expansion of the last 150 years has in essence been based on fossil fuels.
The energy which gave us the industrial revolution, coal – oil – natural gas – represented
the combined savings of four weeks of sunlight that managed to be accumulated on earth out
of the previous three billion years of sunshine.
This resource instead of being saved has been lost. Gone forever never to return. The
fundamental all pervasive cause of World instability today is the destruction of
communities by the commercialization of all human relationships and the resulting neurosis
and psychosis.
Medical science and all the population explosions have continued to produce more and more
people while the food supply and the supply of jobs are becoming increasingly precarious,
not only in the United States, but everywhere, because the whole purpose of using fossil
fuels in the corporate structure is the elimination of jobs.
Another reason for the instability of the Western system is that two of the main areas of
sovereignty are not included in the state structure: control of credit/banking and
corporations. These two elements are therefore free of political controls and
responsibility. They have largely monopolized power in Western Civilization and in
American society. They are ruthlessly going forward to eliminate land, labour,
entrepreneur-management skills and everything else the economists once told us were the
chief elements of production.
The only element of production they are concerned with is the one they control: capital.
Thus capital intensification has destroyed food, manufacturing, farming and communities.
All these processes create frustrations on every level of modern human experience and
result in the instability and disorder we see around everyday.
Today in America there is a developing constitutional crisis. The three branches of
government set up in 1789 do not contain the eight aspects of sovereignty. As a result
each has tried to go outside the sphere in which it should be restrained. The constitution
completely ignores, for example, the administrative power.
As a result the courts, in particular the Supreme court, is making decisions it should not
be making. In addition the President, who by the constitution should be easily impeached,
has become all powerful to such an extent that the office is now as basically Imperial.
However, to me the most obvious flaw in our constitutional set-up is the fact that the
federal government does not have control over money and credit and does not have control
over corporations. It is therefore not really sovereign and is not really responsible.
The final result is that the American people will unfortunately prefer communities. They
will cop or opt out of the system. Today everything is a bureaucratic structure, and
brainwashed people who are not personalities are trained to fit into it and say it is a
great life but I think otherwise.
Do not be pessimistic. Life goes on; life is fun. And if a civilization crashed it
deserves to. When Rome fell the Christian answer was. "Create your own communities."
Source: The Oscar Iden Lecture Series Georgetown University Library: Prof. Carroll
Quigley
"... The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt. And, of course, its loans famously come with strings attached: adopt a free-market economy, or strengthen the one you have, kissing goodbye to the Big State. ..."
"... Yet, the irony is painful. Neoliberal ideology insists that states are too big and cumbersome, too centralized and faceless, to be efficient and responsive ..."
"... The problem is that the ruthless sentimentalists of neoliberalism like to tell themselves – and anyone else who will listen – that removing the dead hand of state control frees the individual citizen to be entrepreneurial and productive. Instead, it places the financially powerful beyond any state, in an international elite that makes its own rules, and holds governments to ransom. That's what the financial crisis was all about ..."
"... Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they avoid their taxes, because they can, because they are more powerful than governments. ..."
"... The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who came up with that theory , did not agree that economic activity alone was enough to keep humans decent and civilised. ..."
The crash was a write-off, not a repair job. The response should be a wholesale reevaluation of the way in which wealth
is created and distributed around the globe
he IMF's limited admission of guilt over the Greek bailout is a start, but they still can't see the global financial system's
fundamental flaws, writes Deborah Orr.
The International Monetary Fund has admitted that some of the decisions it made in the wake of the 2007-2008 financial crisis
were wrong, and that the €130bn first bailout of Greece was "bungled". Well, yes. If it hadn't been a mistake, then it would have
been the only bailout and everyone in Greece would have lived happily ever after.
Actually, the IMF hasn't quite admitted that it messed things up. It has said instead that it went along with its partners in
"the Troika" – the European Commission and the European Central Bank – when it shouldn't have. The EC and the ECB, says the IMF,
put the interests of the Eurozone before the interests of Greece. The EC and the ECB, in turn, clutch their pearls and splutter with
horror that they could be accused of something so petty as self-preservation.
The IMF also admits that it "underestimated" the effect austerity would have on Greece. Obviously, the rest of the Troika takes
no issue with that. Even those who substitute "kick up the arse to all the lazy scroungers" whenever they encounter the word "austerity",
have cottoned on to the fact that the word can only be intoned with facial features locked into a suitably tragic mask.
Yet, mealy-mouthed and hotly contested as this minor mea culpa is, it's still a sign that financial institutions may slowly be
coming round to the idea that they are the problem. They know the crash was a debt-bubble that burst. What they don't seem to acknowledge
is that the merry days of reckless lending are never going to return; even if they do, the same thing will happen again, but more
quickly and more savagely. The thing is this: the crash was a write-off, not a repair job. The response from the start should have
been a wholesale reevaluation of the way in which wealth is created and distributed around the globe, a "structural adjustment",
as the philosopher
John Gray has said all along.
The IMF exists to lend money to governments, so it's comic that it wags its finger at governments that run up debt. And, of
course, its loans famously come with strings attached: adopt a free-market economy, or strengthen the one you have, kissing goodbye
to the Big State.
Yet, the irony is painful. Neoliberal ideology insists that states are too big and cumbersome, too centralized and faceless,
to be efficient and responsive. I agree.
The problem is that the ruthless sentimentalists of neoliberalism like to tell themselves – and anyone else who will listen
– that removing the dead hand of state control frees the individual citizen to be entrepreneurial and productive. Instead, it places
the financially powerful beyond any state, in an international elite that makes its own rules, and holds governments to ransom. That's
what the financial crisis was all about. The ransom was paid, and as a result, governments have been obliged to limit their
activities yet further – some setting about the task with greater relish than others. Now the task, supposedly, is to get the free
market up and running again.
But the basic problem is this: it costs a lot of money to cultivate a market – a group of consumers – and the more sophisticated
the market is, the more expensive it is to cultivate them. A developed market needs to be populated with educated, healthy, cultured,
law-abiding and financially secure people – people who expect to be well paid themselves, having been brought up believing in material
aspiration, as consumers need to be.
So why, exactly, given the huge amount of investment needed to create such a market, should access to it then be "free"? The neoliberal
idea is that the cultivation itself should be conducted privately as well. They see "austerity" as a way of forcing that agenda.
But how can the privatization of societal welfare possibly happen when unemployment is already high, working people are turning to
food banks to survive and the debt industry, far from being sorry that it brought the global economy to its knees, is snapping up
bargains in the form of busted high-street businesses to establish shops with nothing to sell but high-interest debt? Why, you have
to ask yourself, is this vast implausibility, this sheer un-sustainability, not blindingly obvious to all?
Markets cannot be free. Markets have to be nurtured. They have to be invested in. Markets have to be grown. Google, Amazon
and Apple haven't taught anyone in this country to read. But even though an illiterate market wouldn't be so great for them, they
avoid their taxes, because they can, because they are more powerful than governments.
And further, those who invest in these companies, and insist that taxes should be low to encourage private profit and shareholder
value, then lend governments the money they need to create these populations of sophisticated producers and consumers, berating them
for their profligacy as they do so. It's all utterly, completely, crazy.
The other day a health minister,
Anna Soubry
, suggested that female GPs who worked part-time so that they could bring up families were putting the NHS under strain. The
compartmentalised thinking is quite breathtaking. What on earth does she imagine? That it would be better for the economy if they
all left school at 16? On the contrary, the more people who are earning good money while working part-time – thus having the leisure
to consume – the better. No doubt these female GPs are sustaining both the pharmaceutical industry and the arts and media, both sectors
that Britain does well in.
As for their prioritising of family life over career – that's just another of the myriad ways in which Conservative neoliberalism
is entirely without logic. Its prophets and its disciples will happily – ecstatically – tell you that there's nothing more important
than family, unless you're a family doctor spending some of your time caring for your own. You couldn't make these characters up.
It is certainly true that women with children find it more easy to find part-time employment in the public sector. But that's a prima
facie example of how unresponsive the private sector is to human and societal need, not – as it is so often presented – evidence
that the public sector is congenitally disabled.
Much of the healthy economic growth – as opposed to the smoke and mirrors of many aspects of financial services – that Britain
enjoyed during the second half of the 20th century was due to women swelling the educated workforce. Soubry and her ilk, above all
else, forget that people have multiple roles, as consumers, as producers, as citizens and as family members. All of those things
have to be nurtured and invested in to make a market.
The neoliberalism that the IMF still preaches pays no account to any of this. It insists that the provision of work alone
is enough of an invisible hand to sustain a market. Yet even Adam Smith, the economist who
came up with that theory , did not agree
that economic activity alone was enough to keep humans decent and civilised.
Governments are left with the bill when neoliberals demand access to markets that they refuse to invest in making. Their refusal
allows them to rail against the Big State while producing the conditions that make it necessary. And even as the results of their
folly become ever more plain to see, they are grudging in their admittance of the slightest blame, bickering with their allies instead
of waking up, smelling the coffee and realising that far too much of it is sold through Starbucks.
"... power in our societies resides in structure, ideology and narratives – supporting what we might loosely term our current "neoliberal order" – rather than in individuals. Significantly, our political and media classes, who are of course deeply embedded in this neoliberal structure, are key promoters of the very opposite idea: that individuals or like-minded groups of people hold power; that they should, at least in theory, be held accountable for the use and misuse of that power; and that meaningful change involves replacing these individuals rather than fundamentally altering the power-structure they operate within. ..."
"... The [neoliberal] focus on individuals happens for a reason. It is designed to ensure that the structure and ideological foundations of our societies remain invisible to us, the public. The neoliberal order goes unquestioned – presumed, against the evidence of history, to be permanent, fixed, unchallengeable. ..."
"... These minor narratives conceal the fact that such individuals are groomed before they ever gain access to power. Business leaders, senior politicians and agenda-setting journalists reach their positions after proving themselves over and over again – not consciously but through their unthinking compliance to the power-structure of our societies. ..."
"... They rise to the top because they are the most talented examples of those who are blind or submissive to power, those who can think most cleverly without thinking critically. Those who reliably deploy their skills where they are directed to do so. ..."
"... Were the neoliberal order laid bare – were the emperor to allow himself to be stripped of his clothes – no one apart from a small psychopathic elite would vote for neoliberalism's maintenance. ..."
"... elections become an illusory contest between more transparent and more opaque iterations of neoliberal power ..."
"... Despite its best efforts, neoliberalism is increasingly discredited in the eyes of large sections of the electorate in the US and UK. Its attempts at concealment have grown jaded, its strategy exhausted. It has reached the end-game, and that is why politics now looks so unstable. "Insurgency" candidates in different guises are prospering. ..."
"... Neoliberal power is distinctive because it seeks absolute power, and can achieve that end only through global domination. Globalisation, the world as a plaything for a tiny elite to asset-strip, is both its means and its end. Insurgents are therefore those who seek to reverse the trend towards globalisation – or at least claim to. There are insurgents on both the left and right. ..."
"... A Trump figure can usefully serve power too, because he dons the clothes of an insurgent while doing little to actually change the structure. ..."
"... Nonetheless, Trump is a potential problem for the neoliberal order for two reasons. First, unlike an Obama or a Clinton, he too clearly illuminates what is really at stake for power – wealth maximisation at any cost – and thereby risks unmasking the deception. And second, he is a retrograde step for the globalising power-structure. ..."
"... The neoliberal order prefers a Trump to a Bernie Sanders because the nativist insurgents are so much easier to tame. A Trump can be allowed to strut on his Twitter stage while the global power-structure constrains and undermines any promised moves that might threaten it. Trump the candidate was indifferent to Israel and wanted the US out of Syria. Trump the president has become Israel's biggest cheerleader and has launched US missiles at Syria. ..."
"... Neoliberalism is now so entrenched, so rapacious that even a moderate socialist like Corbyn is seen as a major threat. And unlike a Blair, Obama or Trump, Corbyn is much harder to tame because he has a grassroots movement behind him and to which he is ultimately accountable ..."
"... In the US, the neoliberal wing of the Democratic party prevented the left-insurgent candidate, Bernie Sanders, from contesting the presidency by rigging the system to keep him off the ballot paper ..."
"... How anti-semitism is being weaponised, not to protect Jews but to protect the neoliberal order, was made starkly clear this week when Corbyn criticised the financial elite that brought the west to the brink of economic ruin a decade ago, and will soon do so again unless stringent new regulations are introduced. Useful idiots like Stephen Pollard, editor of the rightwing Jewish Chronicle, saw a chance to revive the anti-semitism canard once again, accusing Corbyn of secretly meaning "Jews" when he actually spoke of bankers. It is a logic intended to make the neoliberal elite untouchable, cloaking them in a security blanket relying on the anti-semitism taboo. ..."
"... The weaponising of anti-semitism by the neoliberal order to protect its power risks turning Jews into collateral damage. It makes them another small or bigger drama in the increasingly desperate attempt to create a narrative that deflects attention from the real power-structure. ..."
"... And second, the effort to stitch together a narrative of Corbyn's anti-semitism out of non-existent cloth is likely to encourage more and more people to take a step back from the screen so that those unintelligible pixels can more easily be discerned as a smoking gun. The very preposterousness of the allegations, and the fact that they are taken so seriously by a political and media class selected for their submissiveness to the neoliberal order, accelerates the process by which these opinion-formers discredit themselves. Their authority wanes by the day, and as a result their usefulness to the power-structure rapidly diminishes. ..."
"... No one pays me to write these blog posts. If you appreciated it, or any of the others, please consider hitting the donate button in the right-hand margin (computer) or below (phone). ..."
In
my last
blog post I argued that power in our societies resides in structure, ideology and
narratives – supporting what we might loosely term our current "neoliberal order" –
rather than in individuals. Significantly, our political and media classes, who are of course
deeply embedded in this neoliberal structure, are key promoters of the very opposite idea: that
individuals or like-minded groups of people hold power; that they should, at least in theory,
be held accountable for the use and misuse of that power; and that meaningful change involves
replacing these individuals rather than fundamentally altering the power-structure they operate
within.
In other words, our political and media debates reduce to who should be held to
account for problems in the economy, the health and education systems, or the conduct of a war.
What is never discussed is whether flawed policies are really the fleeting responsibility of
individuals and political parties or symptoms of the current neoliberal malaise –
manifestations of an ideology that necessarily has goals, such as the pursuit of maximised
profit and endless economic growth, that are indifferent to other considerations, such as the
damage being done to life on our planet.
The [neoliberal] focus on individuals happens for a reason. It is designed to ensure
that the structure and ideological foundations of our societies remain invisible to us, the
public. The neoliberal order goes unquestioned – presumed, against the evidence of
history, to be permanent, fixed, unchallengeable.
So deep is this misdirection that even efforts to talk about real power become treacherous.
My words above might suggest that power is rather like a person, that it has intention and
will, that maybe it likes to deceive or play tricks. But none of that is true either.
Big
and little power
My difficulty conveying precisely what I mean, my need to resort to metaphor, reveals the
limitations of language and the necessarily narrow ideological horizons it imposes on anyone
who uses it. Intelligible language is not designed adequately to describe structure or power.
It prefers to particularise, to humanise, to specify, to individualise in ways that make
thinking in bigger, more critical ways near-impossible.
Language is on the side of those, like politicians and corporate journalists, who conceal
structure, who deal in narratives of the small-power of individuals rather than of the
big-power of structure and ideology. In what passes for news, the media offer a large stage for
powerful individuals to fight elections, pass legislation, take over businesses, start wars,
and a small stage for these same individuals to get their come-uppance, caught committing
crimes, lying, having affairs, getting drunk, and more generally embarrassing themselves.
These minor narratives conceal the fact that such individuals are groomed before they
ever gain access to power. Business leaders, senior politicians and agenda-setting journalists
reach their positions after proving themselves over and over again – not consciously but
through their unthinking compliance to the power-structure of our societies. They are
selected through their performances in exams at school and university, through training
programmes and indentures. They rise to the top because they are the most talented examples
of those who are blind or submissive to power, those who can think most cleverly without
thinking critically. Those who reliably deploy their skills where they are directed to do
so.
Their large and small dramas constitute what we call public life, whether politics, world
affairs or entertainment. To suggest that there are deeper processes at work, that the largest
of these dramas is not really large enough for us to gain insight into how power operates, is
to instantly be dismissed as paranoid, a fantasist, and – most damningly of all – a
conspiracy theorist.
These terms also serve the deception. They are intended to stop all thought about real
power. They are scare words used to prevent us, in a metaphor used in my previous post, from
stepping back from the screen. They are there to force us to stand so close we see only the
pixels, not the bigger picture.
Media makeover
The story of Britain's Labour party is a case in point, and was illustrated even before
Jeremy Corbyn became leader. Back in the 1990s Tony Blair reinvented the party as New Labour,
jettisoning ideas of socialism and class war, and inventing instead a "Third Way".
The idea that gained him access to power – personified in the media narrative of the
time as his meeting
with Rupert Murdoch on the mogul's Hayman Island – was that New Labour would
triangulate, find a middle way between the 1 per cent and the 99 per cent. The fact that the
meeting took place with Murdoch rather than anyone else signaled something significant: that
the power-structure needed a media makeover. It needed to be dressed in new garb.
In reality, Blair made Labour useful to power by re-styling the turbo-charged neoliberalism
Margaret Thatcher's Conservative party of the rich had unleashed. He made it look compatible
with social democracy. Blair put a gentler, kinder mask on neoliberalism's aggressive pursuit
of planet-destroying power – much as Barack Obama would do in the United States a decade
later, after the horrors of the Iraq invasion. Neither Blair nor Obama changed the substance of
our economic and political systems, but they did make them look deceptively attractive by
tinkering with social policy.
Were the neoliberal order laid bare – were the emperor to allow himself to be
stripped of his clothes – no one apart from a small psychopathic elite would vote for
neoliberalism's maintenance. So power is forced to repeatedly reinvent itself. It is like
the shape-shifting Mystique of the X-Men films, constantly altering its appearance to lull us
into a false sense of security. Power's goal is to keep looking like it has become something
new, something innovative. Because the power-structure does not want change, it has to find
front-men and women who can personify a transformation that is, in truth, entirely hollow.
Power can perform this stunt, as Blair did, by repackaging the same product –
neoliberalism – in prettier ideological wrapping. Or it can, as has happened in the US of
late, try a baser approach by adding a dash of identity politics. A black presidential
candidate (Obama) can offer hope, and a woman candidate (Hillary Clinton) can cast herself as
mother-saviour.
With this model in place, elections become an illusory contest between more transparent
and more opaque iterations of neoliberal power . In failing the 99 per cent, Obama so
woefully voided this strategy that large sections of voters turned their back on his intended
successor, the new makeover candidate Hillary Clinton. They saw through the role-playing. They
preferred, even if only reluctantly, the honest vulgarity of naked power represented by Trump
over the pretensions of Clinton's fakely compassionate politics.
Unstable politics
Despite its best efforts, neoliberalism is increasingly discredited in the eyes of large
sections of the electorate in the US and UK. Its attempts at concealment have grown jaded, its
strategy exhausted. It has reached the end-game, and that is why politics now looks so
unstable. "Insurgency" candidates in different guises are prospering.
Neoliberal power is distinctive because it seeks absolute power, and can achieve that
end only through global domination. Globalisation, the world as a plaything for a tiny elite to
asset-strip, is both its means and its end. Insurgents are therefore those who seek to reverse
the trend towards globalisation – or at least claim to. There are insurgents on both the
left and right.
If neoliberalism has to choose, it typically prefers an insurgent on the right to the left.
A Trump figure can usefully serve power too, because he dons the clothes of an insurgent
while doing little to actually change the structure.
Nonetheless, Trump is a potential problem for the neoliberal order for two reasons.
First, unlike an Obama or a Clinton, he too clearly illuminates what is really at stake for
power – wealth maximisation at any cost – and thereby risks unmasking the
deception. And second, he is a retrograde step for the globalising power-structure.
Neoliberalism has dragged capitalism out its nineteenth-century dependency on nation-states
into a twenty-first ideology that demands a global reach. Trump and other nativist leaders seek
a return to a supposed golden era of state-based capitalism, one that prefers to send our
children up chimneys if it prevents children from far-off lands arriving on our shores to do
the same.
The neoliberal order prefers a Trump to a Bernie Sanders because the nativist insurgents
are so much easier to tame. A Trump can be allowed to strut on his Twitter stage while the
global power-structure constrains and undermines any promised moves that might threaten it.
Trump the candidate was indifferent to Israel and wanted the US out of Syria. Trump the
president has become Israel's biggest cheerleader and has launched US missiles at
Syria.
Faustian pacts
The current power-structure is much more frightened of a left insurgency of the kind
represented by Corbyn in the UK. He and his supporters are trying to reverse the accommodations
with power made by Blair. And that is why he finds himself relentlessly assaulted from every
direction – from his political opponents; from his supposed political allies, including
most of his own parliamentary party; and most especially from the state-corporate media,
including its bogus left-liberal elements like the Guardian and the BBC.
The past three years of attacks on Corbyn are how power manifests itself, shows its hand,
when it is losing. It is a strategy of last resort. A Blair or an Obama arrive in power having
already made so many compromises behind the scenes that their original policies are largely
toothless. They have made Faustian pacts as a condition for being granted access to power. This
is variously described as pragmatism, moderation, realism. More accurately, it should be
characterised as betrayal.
It does not stop when they reach high office. Obama made a series of early errors, thinking
he would have room to maneuver in the Middle East. He made a speech in Cairo about a "New
Beginning" for the region. A short time later he would help to snuff out the Egyptian Arab
Spring that erupted close by, in Tahrir Square. Egypt's military, long subsidized by
Washington, were allowed to take back power.
Obama won the 2009 Nobel peace prize, before he had time to do anything, for his
international diplomacy. And yet he stepped up the war on terror, oversaw the rapid expansion
of a policy of extrajudicial assassinations by drone, and presided over the extension of the
Iraq regime-change operation to Libya and Syria.
And he threatened penalties for Israel over its illegal settlements policy – a
five-decade war crime that has gone completely unpunished by the international community. But
in practice his inaction allowed Israel to entrench its settlements to the point where
annexation of parts of the West Bank is now imminent.
Tame or destroy
Neoliberalism is now so entrenched, so rapacious that even a moderate socialist like
Corbyn is seen as a major threat. And unlike a Blair, Obama or Trump, Corbyn is much harder to
tame because he has a grassroots movement behind him and to which he is ultimately
accountable .
In the US, the neoliberal wing of the Democratic party prevented the left-insurgent
candidate, Bernie Sanders, from contesting the presidency by rigging the system to keep him off
the ballot paper . In the UK, Corbyn got past those structural defences by accident. He
scraped into the leadership race as the token "loony-left" candidate, indulged by the Labour
party bureaucracy as a way to demonstrate that the election was inclusive and fair. He was
never expected to win.
Once he was installed as leader, the power-structure had two choices: to tame him like
Blair, or destroy him before he stood a chance of reaching high office. For those with short
memories, it is worth recalling how those alternatives were weighed in Corbyn's first
months.
On the one hand, he was derided across the media for being shabbily dressed, for being
unpatriotic, for threatening national security, for being sexist. This was the campaign to tame
him. On the other, the Murdoch-owned Times newspaper, the house journal of the neoliberal
elite, gave a platform to an anonymous army general to warn that the British military would
never allow Corbyn to reach office. There would be an army-led
coup before he ever got near 10 Downing Street.
In a sign of how ineffectual these power-structures now are, none of this made much
difference to Corbyn's fortunes with the public. A truly insurgent candidate cannot be damaged
by attacks from the power-elite. That's why he is where he is, after all.
So those wedded to the power-structure among his own MPs tried to wage a second leadership
contest to unseat him. As a wave of new members signed up to bolster his ranks of supporters,
and thereby turned the party into the largest in Europe, Labour party bureaucrats stripped as
many as possible of their right to vote in the hope Corbyn could be made to lose. They failed
again. He won with an even bigger majority.
Redefining words
It was in this context that the neoliberal order has had to play its most high-stakes card
of all. It has accused Corbyn, a lifelong anti-racism activist, of being an anti-semite for
supporting the Palestinian cause, for preferring Palestinian rights over brutal Israeli
occupation. To make this charge plausible, words have had to be redefined: "anti-semitism" no
longer means simply a hatred of Jews, but includes criticism of Israel; "Zionist" no longer
refers to a political movement that prioritises the rights of Jews over the native Palestinian
population, but supposedly stands as sinister code for all Jews. Corbyn's own party has been
forced under relentless pressure to adopt these malicious reformulations of meaning.
How anti-semitism is being weaponised, not to protect Jews but to protect the neoliberal
order, was made starkly clear this week when Corbyn criticised the financial elite that brought
the west to the brink of economic ruin a decade ago, and will soon do so again unless stringent
new regulations are introduced. Useful idiots like Stephen Pollard, editor of the rightwing
Jewish Chronicle, saw a chance to revive the anti-semitism canard once again, accusing Corbyn of
secretly meaning "Jews" when he actually spoke of bankers. It is a logic intended to make the
neoliberal elite untouchable, cloaking them in a security blanket relying on the anti-semitism
taboo.
Almost the entire Westminister political class and the entire corporate media class,
including the most prominent journalists in the left-liberal media, have reached the same
preposterous conclusion about Corbyn. Whatever the evidence in front of their and our eyes, he
is now roundly declared an
anti-semite . Up is now down, and day is night.
High-stakes strategy
This strategy is high stakes and dangerous for two reasons.
First, it risks creating the very problem it claims to be defending against. By crying wolf
continuously about Corbyn's supposed anti-semitism without any tangible evidence for it, and by
making an unfounded charge of anti-semitism the yardstick for judging Corbyn's competence for
office rather than any of his stated policies, the real anti-semite's argument begins to sound
more plausible.
In what could become self-fulfilling prophecy, the anti-semitic right's long-standing ideas
about Jewish cabals controlling the media and pulling levers behind the scenes could start to
resonate with an increasingly disillusioned and frustrated public. The weaponising of
anti-semitism by the neoliberal order to protect its power risks turning Jews into collateral
damage. It makes them another small or bigger drama in the increasingly desperate attempt to
create a narrative that deflects attention from the real power-structure.
And second, the effort to stitch together a narrative of Corbyn's anti-semitism out of
non-existent cloth is likely to encourage more and more people to take a step back from the
screen so that those unintelligible pixels can more easily be discerned as a smoking gun. The
very preposterousness of the allegations, and the fact that they are taken so seriously by a
political and media class selected for their submissiveness to the neoliberal order,
accelerates the process by which these opinion-formers discredit themselves. Their authority
wanes by the day, and as a result their usefulness to the power-structure rapidly
diminishes.
This is where we are now: in the final stages of a busted system that is clinging on to
credibility by its fingernails. Sooner or later, its grip will be lost and it will plunge into
the abyss. We will wonder how we ever fell for any of its deceptions.
In the meantime, we must get on with the urgent task of liberating our minds, of undoing the
toxic mental and emotional training we were subjected to, of critiquing and deriding those
whose job is to enforce the corrupt orthodoxy, and of replotting a course towards a future that
saves the human species from impending extinction.
No one pays me to write these blog posts. If you appreciated it, or any of the others,
please consider hitting the donate button in the right-hand margin (computer) or below
(phone).capitalism , corporations , Jeremy Corbyn
Famous song of Vladimir Vysotsky about Soviet system. Sound now as if it was written about the current crisis of neoliberalism
I found several translation of it at Vysotsky Translations Of
course, original is better, but it is assessable only for Russian-speaking readers
Notable quotes:
"... Yes, something wrong along the road But at the end nightmare Neither church nor even pub Non of them is right way Nor my friends, oh nor my friends All are wrong, friends, I can say ..."
"... At the end of that long road Nothing but the gallows. ..."
"... Nothing's holy anymore, Neither drink nor prayer. ..."
Dreaming I see yellow lights
Hoarsely scream while dreaming
Give me time, oh give me time
Morning will be easy
But the morning was also hard
My party have been over
So I am smoking on empty gut
Or drinking in hangover
I saw the pub-a lot of fun
And many sexy women
This place is heaven for drunkard
But for me it's prison
In holy church was dusk and stunk
Priest burned incensed honey
No, even church was wrong, I think
Nothing there was holy
I saw wild field along the stream
That God forgot forever
Blue bells were only in clear field
And road that led somewhere
Dark ancient forest by this road
With evil witches orgies
And at the end of that scary road
Were guillotine and axes
So loosing breath I climbed on hill
To save myself from horror
I saw red alder on the top of hill
But at the foot-black cherry
If even ivy twined hills slope
I might be happy see it
Or, if there was only something else
But nothing pleased my spirit
So, I am dreaming on empty gut
Or drinking in hangover
Yes, something wrong along the road
But at the end nightmare
Neither church nor even pub
Non of them is right way
Nor my friends, oh nor my friends
All are wrong, friends, I can say
Hey one, another one,
And many, many, many, many ones
Another one and other ones
All are wrong, I can say.
In my dream burn yellow lights,
And I spill my sorrow:
"Do not go - please, stay the night!
Wait! Fresh for the morrow!"
But the morning seems all wrong,
No joy - more's the pity -
Ugh - the hair of the dog,
Of the dog that bit you!
In the bars, red, bloodshot eyes,
All that sparkling poison -
Clowns' and beggars' paradise
And my gilded prison.
In the church, stench, Evensong,
Even gold looks shabby...
No, the church, it feels all wrong,
Not the way it should be!
In a hurry, I climb up,
Why? I do not know.
There's an alder-tree on top,
A cherry-tree below.
Wish there was plush on the slope -
It would look less scrubby.
There is not a bloody hope,
Nothing's as it should be.
I keep searching high and low:
Oh my God, where are you?
By the roadside, bluebells grow,
And the road climbs higher.
All along the road, a wood
Full of witches, fellows.
At the end of that long road
Nothing but the gallows.
Horses dancing all along,
Smoothly dance the horses.
On the road it seems all wrong,
At the end, much worser.
Nothing's holy anymore,
Neither drink nor prayer.
It's all wrong, boys, by the Lord,
No, boys, it's not fair...
Into my dream creep yellow lights,
And I shout myself hoarse in my sleep:
"Wait a bit, wait a bit -
It'll get better in the morning."
But in the morning nothing is right,
It's no fun anymore:
You either smoke on empty stomach,
Or drink from a hangover.
In the drinking-house there is a familiar sight
Of a green shot, white napkins, -
It's a heaven for beggars and buffoons,
I feel like a caged bird in it.
The church dissolves in stench and darkness ,
The deacons are smoking the incense...
No, nothing is right in here, either,
Nothing is the way it's supposed to be!
I hurry off onto the hill,
So nothing would come before me, -
There grows an alder on the hill
And under the hill - a cherry tree.
If only the ivy twined the slope, -
It would bring me a slight consolation,
If there only was something else...
But no, nothing is the way it should be!
I go off onto the field, along the river.
Tons of light, no God.
Corn-flowers in the clear field
And a road leading far away.
Along the road - a deep forest
With evil witches.
And at the end of that road -
A guillotine and axes.
Somewhere horses are dancing to the beat,
Half-heartedly and smoothly..
Nothing is right along the road,
And it's no better at the end of it.
And not the church or the drinking-house -
Nothing is holy!
No, folks, nothing is right!
Nothing is right, folks...
The evidence of social decay in America is becoming more visible. As other countries
continue to show increases in life expectancy, the US continues its deterioration.
Life expectancy in the US fell to 78.6 years in 2017, a o.1 year fall from 2016 and a 0.3
year decline from the peak.
Overdose deaths reached a new high in 2017, topping 70,000, while the suicide rate
increased by 3.7%, the CDC's National Center for Health Statistics reports.
Dr. Robert Redfield, CDC director, called the trend tragic and troubling. "Life expectancy
gives us a snapshot of the Nation's overall health and these sobering statistics are a wakeup
call that we are losing too many Americans, too early and too often, to conditions that are
preventable," he wrote in a statement.
While this assessment is technically correct, it is too superficial in seeing the rising
rate of what Angus Deaton and Ann Case called "deaths of despair" as a health problem, rather
than symptoms of much deeper societal ills. Americans take antidepressants at a higher rate
than any country in the world. The average job tenure is a mere 4.4 years. In my youth, if you
changed jobs in less than seven or eight years, you were seen as an opportunist or probably
poor performer. The near impossibility of getting a new job if you are over 40 and the fact
that outside hot fields, young people can also find it hard to get work commensurate with their
education and experience, means that those who do have jobs can be and are exploited by their
employers. Amazon is the most visible symbol of that, working warehouse workers at a deadly
pace, and regularly reducing even white collar males regularly to tears.
On top of that, nuclear families, weakened communities, plus the neoliberal expectation that
individuals be willing to move to find work means that many Americans have shallow personal
networks, and that means less support if one suffers career or financial setbacks.
But the big driver, which the mainstream press is unwilling to acknowledge, is that highly
unequal societies are unhealthy societies. We published this section from a Financial Times
comment by Michael Prowse in 2007, and it can't be
repeated often enough :
Those who would deny a link between health and inequality must first grapple with the
following paradox. There is a strong relationship between income and health within countries.
In any nation you will find that people on high incomes tend to live longer and have fewer
chronic illnesses than people on low incomes.
Yet, if you look for differences between countries, the relationship between income and
health largely disintegrates. Rich Americans, for instance, are healthier on average than
poor Americans, as measured by life expectancy. But, although the US is a much richer country
than, say, Greece, Americans on average have a lower life expectancy than Greeks. More
income, it seems, gives you a health advantage with respect to your fellow citizens, but not
with respect to people living in other countries .
Once a floor standard of living is attained, people tend to be healthier when three
conditions hold: they are valued and respected by others; they feel 'in control' in their
work and home lives; and they enjoy a dense network of social contacts. Economically unequal
societies tend to do poorly in all three respects: they tend to be characterised by big
status differences, by big differences in people's sense of control and by low levels of
civic participation .
Unequal societies, in other words, will remain unhealthy societies – and also
unhappy societies – no matter how wealthy they become. Their advocates – those
who see no reason whatever to curb ever-widening income differentials – have a lot of
explaining to do.
The stats first. They tell a clear story: Americans now live shorter lives than men and
women in most of the rest of the developed world. And that gap is growing.
Back in 1990, shouts
a new study published last week in the prestigious Journal of the American Medical
Association, the United States ranked just 20th on life expectancy among the world's 34
industrial nations. The United States now ranks 27th -- despite spending much more on health
care than any other nation.
Americans, notes an editorial the
journal ran to accompany the study, are losing ground globally "by every" health measure.
Why such poor performance? Media reports on last week's new
State of U.S. Health study hit all the usual suspects: poor diet, poor access to
affordable health care, poor personal health habits, and just plain poverty.
In the Wall Street Journal, for instance, a chief wellness officer in Ohio opined
that if Americans exercised more and ate and smoked less, the United States would surely
start moving up in the global health rankings.
But many epidemiologists -- scientists who study health outcomes -- have their doubts.
They point out that the United States ranked as one of the world's healthiest nations in the
1950s, a time when Americans smoked heavily, ate a diet that would horrify any 21st-century
nutritionist, and hardly ever exercised.
Poor Americans, then as now, had chronic problems accessing health care. But poverty,
epidemiologists note, can't explain why fully insured middle-income Americans today have
significantly worse health outcomes than middle-income people in other rich nations.
The University of Washington's Dr. Stephen Bezruchka
has been tracking these outcomes since the 1990s. The new research published in the
Journal of the American Medical Association, Bezruchka told Too Much last week, should worry
Americans at all income levels.
"Even if we are rich, college-educated, white-skinned, and practice all the right health
behaviors," he notes, "similar people in other rich nations will live longer."
A dozen years ago, Bezruchka
published in Newsweek the first mass-media commentary, at least in the United States, to
challenge the conventional take on poor U.S. global health rankings.
To really understand America's poor health standing globally, epidemiologists like
Bezruchka posit, we need to look at "the social determinants of health," those social and
economic realities that define our daily lives.
None of these determinants matter more, these researchers contend, than the level of a
society's economic inequality, the divide between the affluent and everyone else. Over 170
studies worldwide have so far linked income inequality to health outcomes. The more
unequal a society, the studies show, the more unhealthy most everyone in it -- and not the
poor alone.
Just how does inequality translate into unhealthy outcomes? Growing numbers of researchers
place the blame on stress. The more inequality in a society, the more stress on a daily
level. Chronic stress, over time, wears down our immune systems and leaves us more vulnerable
to disease.
Data the Centers for Disease Control and Prevention released on Thursday show life
expectancy fell by one-tenth of a year, to 78.6 years, pushed down by the sharpest annual
increase in suicides in nearly a decade and a continued rise in deaths from powerful opioid
drugs like fentanyl. Influenza, pneumonia and diabetes also factored into last year's
increase.
Economists and public-health experts consider life expectancy to be an important measure
of a nation's prosperity. The 2017 data paint a dark picture of health and well-being in the
U.S., reflecting the effects of addiction and despair, particularly among young and
middle-aged adults, as well as diseases plaguing an aging population and people with lower
access to health care
Life expectancy is 84.1 years in Japan and 83.7 years in Switzerland, first and second in
the most-recent ranking by the Organization for Economic Cooperation and Development. The
U.S. ranks 29th..
White men and women fared the worst, along with black men, all of whom experienced
increases in death rates. Death rates rose in particular for adults ages 25 to 44, and
suicide rates are highest among people in the nation's most rural areas. On the other hand,
deaths declined for black and Hispanic women, and remained the same for Hispanic men .
Earlier this century, the steady and robust decline in heart-disease deaths more than
offset the rising number from drugs and suicide, Dr. Anderson said. Now, "those declines
aren't there anymore," he said, and the drug and suicide deaths account for many years of
life lost because they occur mostly in young to middle-aged adults.
While progress against deaths from heart disease has stalled, cancer deaths -- the
nation's No. 2 killer -- are continuing a steady decline that began in the 1990s, Dr.
Anderson said. "That's kind of our saving grace," he said. "Without those declines, we'd see
a much bigger drop in life expectancy."
Suicides rose 3.7% in 2017, accelerating an increase in rates since 1999, the CDC said.
The gap in deaths by suicide widened starkly between cities and the most rural areas between
1999 and 2017, the data show. The rate is now far higher in rural areas. "There's a much
wider spread," Dr. Hedegaard said.
"This is extremely discouraging," Christine Moutier, chief medical officer of the American
Foundation for Suicide Prevention, said of the suicide-rate increase. Studies show that
traumas such as economic difficulties or natural disasters, along with access to lethal means
including guns and opioid drugs, and lack of access to care can affect suicide rates, she
said. More accurate recording of deaths may also have added to the numbers, she said.
Japan leads the pack in life expectancy and pretty much every other measure of social well
being. Yet when its financial bubbles were bigger than the ones in the US pre our crisis, and
it's on its way to having a lost three decades of growth. On top of that, Japan has one of the
worst demographic crunches in the world, in terms of the aging of its population. So how it is
that Japan is coping well with decline, while the US is getting sicker in many ways (mental
health, obesity, falling expectancy)?
It's easy to hand-wave by saying "Japanese culture," but I see the causes as more specific.
The Japanese have always given high employment top priority in their economic planning.
Entrepreneurs are revered for creating jobs, not for getting rich. Similarly, Japan was long
criticized by international economist types for having an inefficient retail sector (lots of
small local shops), when they missed the point: that was one way of increasing employment, plus
Japanese like having tight local communities.
After their crisis, Japanese companies went to considerable lengths to preserve jobs, such
as by having senior people taking pay cuts and longer term, lowering the already not that large
gap between entry and top level compensation. The adoption of second-class workers (long-term
temps called "freeters") was seen as less than ideal, since these workers would never become
true members of the company community, but it was better than further reducing employment.
Contrast that to our crisis response. We reported in 2013 that
the top 1% got 121% of the income gains after the crisis. The very top echelon did better
at the expense of everyone else. Longer term, lower-income earners have fallen behind. From a
2017 MarketWatch story, quoting a World Economic Forum report: "America has experienced 'a
complete collapse of the bottom 50 percent income share in the U.S. between 1978 to 2015.'"
There is a lot of other data that supports the same point: inequality continues to widen in
America. The areas that are taking the worst hits are states like West Virginia and Ohio that
have been hit hard by deindustrialization. But the elites are removed in their glamorous cities
and manage not to notice the conditions when they transit through the rest of America. They
should consider themselves lucky that America's downtrodden are taking out their misery more on
themselves than on their betters.
God, this is so depressing to read. The worse aspect of it is that it never had to be this
way but that these deaths were simply 'collateral damage' to the social and economic changes
in America since the 1970s – changes by choice. This seems to be a slow motion move to
replicate what Russia went through back in the 1990s which led to the unnecessary, premature
deaths of millions of its people. Dmitry Orlov has a lot to say about the subject of collapse
and there is a long page in which Orlov talks about how Russia got through these bad times
while comparing it with America as he lives there now. For those interested, it is at-
What gets me most is how these deaths are basically anonymous and are not really
remembered. When AIDS was ravishing the gay community decades ago, one way they got people to
appreciate the numbers of deaths was the AIDS Memorial Quilt which ended up weighing over 50
tons. It is a shame that there can not be an equivalent project for all these deaths of
despair.
There were pictures in the Wall Street Journal article I didn't pull over due to copyright
issues, but it did show people commemorating these deaths Captions:
People in Largo, Fla., hold candles at a vigil on Oct. 17 to remember the thousands who
succumbed to opioid abuse in their community.
More than 1,000 backpacks containing belongings of suicide victims and letters with
information about them are scattered across a lawn during a demonstration at the University
of Tennessee at Chattanooga on March 22.
But to your point, these seem isolated and are not getting press coverage at anywhere near
the level of the AIDS crisis.
It focuses too much on peak oil. As if the social collapse of the United States (and the
Soviet Union) was some kind of natural consequence of resources dryinf out instead of a
premeditated looting.
Orlov's posts on how Russians survived the collapse is a small masterpiece. I read it a
couple of years back and it affected me greatly. I just reread it, thanks, Rev Kev, and it
seems even more relevant now.
Small gems: Money becomes useless: items or services that can be swapped are paramount.
Bottles of alcohol, fresh homegrown veggies (and pot), I re-fashion your old suit and you fix
my broken window.
Social networks keep you alive. Know and be on good terms with your neighbors. Communal
gardens keep you fed.
War-hardened men (and the women who love them), who thrive on violence abound. They will
either be hired as security or rove about as free-lancers. A community is better able either
to hire them, or defend against them.
Our ancestors lived and thrived without: central heating, electric lights, hot and cold
running water, flush toilets, garbage collection, the Internet. We can too; it just takes
forethought and planning. Densely packed cities without these amenities are hell.
Cultivate an attitude of disdain for the 'normal' things that society values, especially
if you are a middle-aged male; career, large house and SUV, foreign vacations, a regular
salary. Enjoy contemplating nature. When the former disappear, you have the latter to fall
back upon. And consider a second career as a recycler of abandoned buildings, or a distiller
of potatoes. (Think of all the Medieval structures built from crumbling Roman edifices.)
Russians, in many ways, had more resilience built in to their system: housing was
State-owned, so there was less homelessness. Private automobiles were relatively rare, but
public transportation was wide-spread and remained in good-running order. Minimal universal
health care existed.
Cease from trying, futilely, to change the System. Ain't gonna happen. Instead, prepare to
survive, if only just, the coming dismantling.
> Once a floor standard of living is attained, people tend to be healthier when three
conditions hold: they are valued and respected by others; they feel 'in control' in their
work and home lives; and they enjoy a dense network of social contacts.
"Sapolsky: We belong to multiple hierarchies, and you may have the worst job in your
corporation and no autonomy and control and predictability, but you're the captain of the
company softball team that year and you'd better bet you are going to have all sorts of
psychological means to decide it's just a job, nine to five, that's not what the world is
about. What the world's about is softball. I'm the head of my team, people look up to me, and
you come out of that deciding you are on top of the hierarchy that matters to you."
iirc, there was a perspective of some economists that infinite groaf could be carried by
the creative, emergent, and infinite wants of homo sapiens. But that creates compounding
deprivations, never enough time, money, resources. With the 2:1 ratio of loss aversion, what
is compounded are bad affects.
That 'dense network of social contacts' means smaller groups with symmetric interactions. The multiple
dominance heirarchies is the healthy version of creative emergence, but supplying needs, not
creating wants.
I think that one of the most valuable tools used by government in the Great Depression was
the CCC, WPA, and TVA set of programs that provided jobs to people while they created
valuable infrastructure and art. How many of those people could go back to the dams or state
parks and tell their spouses and kids that "I helped build that." During a time of despair,
it was a way of making people believe they had value.
Today, it would be viewed as a waste of money that could be better spent on the military
or another tax cut for the wealthy.
I'd mentioned some wrongheaded policies of Sequoia NP of 90 years ago yesterday, and they
seem ridiculous in retrospect, and we no longer treat natural places as ad hoc zoos, where
everybody gets to see the dancing bears @ a given hour.
Our methodology as far as our rapport with fire was just as stupid, but we've really done
nothing to repair our relationship with trees and the forests they hang out in.
There's an abundance of physical labor needed to clear out the duff, the deadfalls and
assorted debris from huge swaths of guaranteed employment until the job is done, which could
take awhile.
There's really few graft possibilities though, we're talking chainsaws, Pulaskis, never
ending burn pile action and lots of sweat equity. If KBR wanted to be in charge of
backcountry camps housing crews, that'd be ok, they'd be doing something useful for a
change.
Yes, why do you think video games appeal so much to young males? Because of the pixels?
What these gamers are really after is the ability to excel in a niche hierarchy. It doesn't
(usually) appeal to females as much as more traditional kinds of success but it serves a
psychological need.
A traitorous ruling class that has sold out its workers in favor of foreign workers.
And it's very lucrative – the Walton's fortune was made by being an agent of
communist Chinese manufacturers. In direct competition with US manufacturers. Does this not
seem like treason to you?
The word 'communist' in relation to the Chinese government and party is void of content.
'Communist' in the current Chinese context is legacy branding, nothing more. Its use in this
comment is inflammatory, as is the too-loose bandying of 'treason'. The Waltons are loyal to
their class (however fierce their disputes may be with rival oligarch factions), and since
the state exists to serve the interests of their class, how can they be traitors to the
state?
"Communist" is what they call themselves. They're totalitarians. Which is what most people
think "communist" means – because all countries that called themselves communist used
authoritarian rule. Methinks you might be a marxist idealist. Offended by the misuse of your
ideal State word by totalitarians.
Similarly, I used "treason" in the sense of acting against the interests of the citizens,
not in the sense of a crime against the state. You clearly believe the state to be
representative of only the ruling class. And I don't disagree wrt the USA and its imperial
machine. Which would make the State treasonous, according to the sense of the word I
used.
One could always say communism is an end point developed through a process preceded by
socialism and before that capitalism which replaces feudalism. The idea being Chinese
Communists, the rich Chinese have bug out spots for a reason, believe Mao and the Soviets
moved too quickly skipping a Marxist historical epoch.
The Communist Party officially is always a vanguard for the future society not the
Communist society. Phrases such as "under communism" aren't Soviet features as much as they
are propaganda from the West.
When the Reds were the only game in town, the greedy class joined the CCP, but since 1991,
they skipped signing up, leaving believers in control. What the party congress believes is
probably important.
As far as branding goes, all Communists are branded because the are all vanguard parties,
not parties of blocs or even current populations. Star Trek is the only communist society.
The Soviet thinkers definitely wrote about what an Ideal society would look like, the nature
of work, and self and societal improvement.
Overthrowing a long established government shouldn't be done for light and transient
reasons, and Xi has seemed to be concerned with the demands of the party congress. The party
at large doesn't have a single voice to rally behind which makes it difficult to overthrow a
government.
the word is "communist". The gov't isn't anything of the sort these days. Isn't the
chinese gov't of today "fascist". just like the national socialists of the german stripe?
They are the state that may be lord over controller of private institutions, and ruler of
other state institutions, all intermixed into what is "the chinese economy". They allow the
private wealth creation in a controlled sense. that is state function serving private wealth.
and if you are a party loyal, private wealth may come to you some day too.
It is just another part of the world trend "everyone is turning into full fledged
fascists"
No wonder people in the states are dying earlier.. to get back on topic
Last night, my wife and I took our boys to meet Santa at my older son's school. Elementary
school in Mississippi. The town is an outer suburb of Memphis. A mile east of the town you
are in rural Mississippi. I noticed 2 or 3 parents with visible drug addiction issues. These
folks were still people. Want their kids to see Santa and have a better life. The country
doesn't care.
I'll guess that you're near Byhalia. Happy memories of visiting family there from late
forties through sixties. Wonder what its like now – how the economic changes have
affected it.
Byhalia is a little further down highway 78. Kids from Byhalia drive up to Olive Branch to
go to a McDonald's and other fast food. Things may be changing because they just completed an
outer interstate loop that passes close by Byhalia. Byhalia was just in news a couple months
ago because a kid died during a football game. People were up in arms about no doctor at game
and a 30 to 40 minute drive to closest hospital. There aren't any doctors offices in Byhalia.
Then toxicology report came back. Kid had cocaine in his system. Holly Springs and Byhalia
area are big drug smuggling area. Close to Memphis and it's distribution network, but across
state line in poor rural Mississippi. NBA players linked to this area and smuggling
networks.
I'm always amazed @ the suicide by gun numbers, as it strikes me as a not so fool proof
way of checking out, exacerbated by perhaps dying slowly in a painful way?
Oh, and bloody, very much so.
Fentanyl seems an easier way out, you just drift into the ether and leave a presentable
corpse for everybody you knew, who all wonder if they could have done something to stop it
from happening, posthaste.
It's cheap and fairly efficient, and the drug way out can be tricky. Silent film legend,
Lupe Valez, is the famed example of suicide by drugs gone wrong. She still died but not on
her own terms because the sleeping pills she took didn't react well with her last meal.
How many people have tried to check out and had it not work is something to consider.
The level of denial people are capable of can be daunting.
1). My dentist who I think is Republican told me when I brought up Medicare for all said
"I don't think we can afford Medicare for all." This was not an immediate response to my
raising the topic, but something he told me after several visits and having thought about
what I had said and around the time Sanders got media coverage introducing a Medicare for all
bill (I was getting a crown and required many visits). Talking to your dentist can be a one
sided conversation for obvious reasons, but I thought "don't you mean we can't afford NOT to
have Medicare for all?"
2). A co-worker of mine who is African American. When I said U.S. life expectancy is
falling, this is a sign of extreme policy failure and should affect how we rate the ACA (read
that here, of course!) replied "You're assuming health has an impact on life expectancy." I
was stunned and didn't know what to say for a second and finally said "yes, absolutely."
These are the types that are more than happy to hand the place over to the next Bolsonaro
if only to protect the status gap between themselves and those beneath them.
They also "hand the place over" when the Bolsonaro types tell everyone they have the
solution and the opposition party is tainted by austerity and corruption.
"You're assuming health has an impact on life expectancy"
I have absolutely no idea how I would respond to this either. Was this comment by this
person some kind of built in knee-jerk response to criticism of the ACA/Obama?
actually you are assuming health coverage, even if it was real coverage for what one
needed, has that much of an impact on life expectancy and from what I've read it probably
doesn't compared to things like poverty *regardless* of health coverage. Because the greatest
link to say heart attacks is with poverty (not diet etc.)
At this point though it doesn't even make sense to talk about the ACA circa now and say
it's Obama's ACA, it wasn't that great to begin with. But Trump has made it worse.
My dentist who I think is Republican told me when I brought up Medicare for all said
"I don't think we can afford Medicare for all."
When I brought up Medicare for All to my dentist, after listening to him describe some of
his ER work where he claims to routinely see people who have intentionally damaged their
teeth in order to obtain painkillers (which he is not allowed to proscribe to them
regardless), he said he would never want to have the kind of inferior health care they have
"in Europe." He seemed genuinely surprised when I reported that my wife had done most of a
pregnancy in Italy in the mid-90s and got pre-natal care that was better than anything she
ever got in this country.
My dentist is definitely a Repub. And he socializes with other medical professionals,
which I presume gives him a very distorted image of the health care system. I often hear him
railing against the idiotic dictates of insurance companies and he seems genuinely proud
that, unlike the inscrutable and BS pricing of hospitals, dentists have to have
straightforward pricing because many people do pay 100% out of pocket (so he says).
This is a part of the 10% that is going to be very hard to reach. But I tell him
socialists need dental care too and so he will always have work even after we take over.
Suicide can be a rational and sensible choice.
Bluntly, if the quality of your life is shitty and not going to improve why stick around?
That the reason so many people's lives are bad enough that they decide death is preferable to
life is societal doesn't change their circumstances.
If you are old and sick, barely surviving financially or in poor health and unable to afford
care suicide might look like your best alternative.
The "Hemlock Society" has been around for quite a while, that its membership is growing in
the short term says a great deal about America.
Suicide is never rational. It is arrogance that one could weigh the pros and cons of
suicide like they think the have all the pertinent information. The only truth is that we
have no idea what happens when we die or if there is some kind of experience that continues
in a form that might not be a personal consciousness. Also, why don't you see the decision to
die is made under duress and therefor invalid like signing a contract with a gun pointed at
your head? There were several times in my life that I determined "the quality of [my] life is
shitty and not going to improve [so] why stick around", but yet, I became better off going
through the struggle. As a result I have made others lives better with the understanding I
have gained going through the Shaman's journey.
By considering suicide you are considering trading a known (suffering) for an unknown
(Death). In what way can that be considered rational?
The sad fact is that we spend our whole lives avoiding suffering and never take the time
to understand it. Opioids, all drugs, are a route to avoid suffering, to avoid looking at our
trauma. Materialism is about avoiding our suffering. Suicide is materialistic because it
supposes there is a mind that we can stop.
But even in the Buddhist centers I visit it has turned away from the spiritual and people
go there not to understand their suffering, but rather only to escape it.
American society does not have an economic problem, it has a spiritual problem.
I respect your view that suicide is an arrogant act and that suffering is an unavoidable
part of life. I totally agree with the latter philosophy. You suffer, and you wade through it
and come out on the other side as a better person. Forged in fire, so to speak.
Plus, I am, by nature, an optimist. There is always something to look forward to, every
morning.
But, a few years ago, I suffered a cascade of bodily failures, whose symptoms were at
first ignored, then misdiagnosed, resulting in my taking medications that made me worse off.
At one point, for two months, I had constant nerve pain (comparable to having teeny barbed
wire wrapped around my torso and and being zapped by an electric charge every few seconds.)
Plus back pain. I could not eat, and when I did, I vomited. I lost 20 pounds. I could not
sleep for more than hour at a time, and that hour happened only once a day. I walked only
with the aid of two walking sticks. I was totally constipated for a month (gross, but this
condition just adds to one's misery.) There was no end in sight and my condition just kept
worsening with each round of new medication.
I did not seriously contemplate suicide. But I did give some thought to what I would do if
I had to face life without sleep, without food, without the ability to walk, and death came
up as one of the better solutions. Fortunately, I changed doctors.
I empathize with your struggles, and I have contemplated suicide myself, but contemplating
death is part of the shaman's journey. I do not think that suicide is arrogant, I think it is
a misunderstanding.
IMHO, medical doctors will disrupt this journey. They should be consulted but with the
understanding that they know very little about the balance of the body and what is needed to
heal.
Truth is, we will die. The greater the suffering the easier to find out "who" that is
suffering.
I get in fights with my therapist all the time about this. She is always advocating for ME
to change when I feel if she wants to help us all she should be helping us change the
system.
Well roles like therapist are part of what props up the system and they get paid for
precisely that.
I mean if we are just living our lives we see that things are both individual and
systematic. And some things are strongly systematic (economic problems), and others probably
have a significantly personal component (phobias etc.). And so we have to exist with both
being true, but if we are drowning in economic problems the rest doesn't matter. But
therapists have a specific role to individualize all problems. But if people are just doing
therapy to get stuff off their chest, who can blame them. Enough people are, although it's
not how therapists like to see their role.
The train goes right by Chester, Pa, and you can see decay along the tracks all along
BosWash. Except for Biden, a corrupt tool who hasn't figured out how to cash in, the elites
don't take the train.
Remember the Kingsman movie where the president was going to let all the dopers die? Think
Trump.
Not only is the WH response to the opioid problem merely cosmetic, they (and NIH) refuse
to link it to the economics of human obsolescence. How convenient. As jobs die, the workers
do too – less welfare burden. That is fascist thinking, and it is evident today.
Finally, let us recall that all public health leaders are Trump appointees – i.e.,
incompetent. CDC too refuses to link suicide to the economy. It's bad politics. They can do
this because there are no national standards for reporting deaths as suicides or even drug
overdoses. It is entirely up to the elected coroner. Thus 10s of thousands of suicides are
reported as natural or accidental either intentionally to ease the grief of family members or
because they lack the manpower to investigate suspicious deaths. Note the bump in accidental
deaths. Driving your car into a concrete abutment or over a cliff might be an accident, but
more often than not, the driver was pickled (Irish courage) and the death was
intentional.
So, until we do a better job of measuring the causes of death, the administration can
continue to blame the deaths on moral weakness rather than its cruel economic policies.
Sadly, I believe if suicide attempts were taken into account, the picture would even look
far bleaker, and likely include far more Metro areas. In those Metro areas there are likely
far less gun/rifle owners (reportedly the most successful method), far quicker ambulance
response times, and significant expenditures have been made, and actions taken, to thwart
attempts on transit lines and bridges, along with committing suicidal persons to locked down
psychiatric facilities (which then adds further financial burden, significant employment
issues, and possibly ugly, forced medication side effects); while doing absolutely nothing
whatsoever to address the causes.
What a sickening blotch on the US , with such wealth and power – sovereign in
its own currency – that it's citizens are increasingly attempting and committing
suicide because they can no longer afford to live in any manner that's considered humane.
That, while its Fourth Estate deliberately obscures the deadly problem – which
cannot be cured by forcing Pharma™, Therapy™, and Psychiatric Confinement™
at it, when a predatory crippling of economic stability is the entire cause – and
refuses to hold the Government and Elites accountable.
I would commend to all Beth Macy's riveting book "
Dopesick : Dealers, Doctors, and the Drug Company that Addicted America ."
Equal parts nicely written investigative reporting and painful personal stories. I'd
thought that the "opioid epidemic" meme was hyperbolic. I was wrong.
China does not have its own technological base and is depended on the USA for many technologies. So while China
isdefinitly in assendance, Washington still have capability to stick to "total global dominance" agenda for some time.
Attempt to crush China by Tariffs might provoke the economic crisi in China and possible a "regime change", like Washington
santions to the USSR in the past. And that's probably the calculation.
Notable quotes:
"... President Trump has taken long-simmering US complaints about China to boiling point, castigating Beijing for unfair trade, currency manipulation, and theft of intellectual property rights. China rejects this pejorative American characterization of its economic practices. ..."
"... The problem is that Washington is demanding the impossible. It's like as if the US wants China to turn the clock back to some imagined former era of robust American capitalism. But it is not in China's power to do that. The global economy has shifted structurally away from US dominance. The wheels of production and growth are in China's domain of Eurasia. ..."
"... Combined with its military power, the postwar global order was defined and shaped by Washington. Sometimes misleading called Pax Americana, there was nothing peaceful about the US-led global order. It was more often an order of relative stability purchased by massive acts of violence and repressive regimes under Washington's tutelage. ..."
"... In American mythology, it does not have an empire. The US was supposed to be different from the old European colonial powers, leading the rest of the world through its "exceptional" virtues of freedom, democracy and rule of law . In truth, US global dominance relied on the application of ruthless imperial power. ..."
"... Washington likes to huff and puff about alleged Chinese expansionism "threatening" US allies in Asia-Pacific. But the reality is that Washington is living in the past of former glory. Trading blocs like the Asia-Pacific Economic Cooperation (APEC) realize their bread is buttered by China, no longer America. ..."
"... Washington's rhetoric about "standing up to China" is just that – empty rhetoric. It doesn't mean much to countries led by their interests of economic development and the benefits of Chinese investment. ..."
"... China's strategic economic plans – the One Belt One Road initiative – of integrating regional development under its leadership and finance have already created a world order analogous to what American capital achieved in the postwar decades. ..."
"... American pundits and politicians like Vice President Mike Pence may disparage China's economic policies as creating "debt traps" for other countries . But the reality is that other countries are gravitating to China's dynamic leadership ..."
The G20 summits are nominally about how the world's biggest national economies can cooperate
to boost global growth. This year's gathering – more than ever – shows, however,
that rivalry between the US and China is center stage.
Zeroing in further still, the rivalry is an expression of a washed-up American empire
desperately trying to reclaim its former power. There is much sound, fury and pretense from the
outgoing hegemon – the US – but the ineluctable reality is an empire whose halcyon
days are a bygone era.
Ahead of the summit taking place this weekend in Argentina, the Trump administration has
been issuing furious ultimatums to China to "change its behavior". Washington is threatening an
escalating trade war if Beijing does not conform to American demands over economic
policies.
President Trump has taken long-simmering US complaints about China to boiling point,
castigating Beijing for unfair trade, currency manipulation, and theft of intellectual property
rights. China rejects this pejorative American characterization of its economic practices.
Nevertheless, if Beijing does not comply with US diktats then the Trump administration says
it will slap increasing tariffs on Chinese exports.
The gravity of the situation was highlighted by the comments this week of China's
ambassador to the US, Cui Tiankai, who warned that the "lessons of history" show trade wars can
lead to catastrophic shooting wars. He urged the Trump administration to be reasonable and to
seek a negotiated settlement of disputes.
The problem is that Washington is demanding the impossible. It's like as if the US wants
China to turn the clock back to some imagined former era of robust American capitalism. But it
is not in China's power to do that. The global economy has shifted structurally away from US
dominance. The wheels of production and growth are in China's domain of Eurasia.
For decades, China functioned as a giant market for cheap production of basic consumer
goods. Now under President Xi Jinping, the nation is moving to a new phase of development
involving sophisticated technologies, high-quality manufacture, and investment.
It's an economic evolution that the world has seen before, in Europe, the US and now
Eurasia. In the decades after the Second World War, up to the 1970s, it was US capitalism that
was the undisputed world leader. Combined with its military power, the postwar global order was
defined and shaped by Washington. Sometimes misleading called Pax Americana, there was nothing
peaceful about the US-led global order. It was more often an order of relative stability
purchased by massive acts of violence and repressive regimes under Washington's tutelage.
In American mythology, it does not have an empire. The US was supposed to be different from
the old European colonial powers, leading the rest of the world through its "exceptional"
virtues of freedom, democracy and rule of law . In truth, US global dominance relied on the
application of ruthless imperial power.
The curious thing about capitalism is it always outgrows its national base. Markets
eventually become too small and the search for profits is insatiable. American capital soon
found more lucrative opportunities in the emerging market of China. From the 1980s on, US
corporations bailed out of America and set up shop in China, exploiting cheap labor and
exporting their goods back to increasingly underemployed America consumers. The arrangement was
propped up partly because of seemingly endless consumer debt.
That's not the whole picture of course. China has innovated and developed independently from
American capital. It is debatable whether China is an example of state-led capitalism or
socialism. The Chinese authorities would claim to subscribe to the latter. In any case, China's
economic development has transformed the entire Eurasian hemisphere. Whether you like it or
not, Beijing is the dynamo for the global economy. One indicator is how nations across
Asia-Pacific are deferring to China for their future growth.
Washington likes to huff and puff about alleged Chinese expansionism "threatening" US allies
in Asia-Pacific. But the reality is that Washington is living in the past of former glory.
Trading blocs like the Asia-Pacific Economic Cooperation (APEC) realize their bread is buttered
by China, no longer America.
Washington's rhetoric about "standing up to China" is just that
– empty rhetoric. It doesn't mean much to countries led by their interests of economic
development and the benefits of Chinese investment.
One example is Taiwan. In contrast to Washington's shibboleths about "free Taiwan", more and
more Asian countries are dialing down their bilateral links with Taiwan in deference to China's
position, which views the island as a renegade province. The US position is one of rhetoric,
whereas the relations of other countries are based on material economic exigencies. And
respecting Beijing's sensibilities is for them a prudent option.
A recent
report by the New York Times starkly illustrated the changing contours of the global
economic order. It confirmed what many others have observed, that China is on the way to
surpass the US as the world's top economy. During the 1980s, some 75 per cent of China's
population were living in "extreme poverty", according to the NY Times. Today, less than 1 per
cent of the population is in that dire category. For the US, the trajectory has been in reverse
with greater numbers of its people subject to deprivation.
China's strategic economic plans – the One Belt One Road initiative – of
integrating regional development under its leadership and finance have already created a world
order analogous to what American capital achieved in the postwar decades.
American pundits and politicians like Vice President Mike Pence may disparage China's
economic policies as creating "debt traps" for other countries . But the reality is that other
countries are gravitating to China's dynamic leadership.
Arguably, Beijing's vision for economic development is more enlightened and sustainable than
what was provided by the Americans and Europeans before. The leitmotif for China, along with
Russia, is very much one of multipolar development and mutual partnership. The global economy
is not simply moving from one hegemon – the US – to another imperial taskmaster
– China.
One thing seems inescapable. The days of American empire are over. Its capitalist vigor has
dissipated decades ago. What the upheaval and rancor in relations between Washington and
Beijing is all about is the American ruling class trying to recreate some fantasy of former
vitality. Washington wants China to sacrifice its own development in order to somehow
rejuvenate American society. It's not going to happen.
That's not to say that American society can never be rejuvenated . It could, as it could
also in Europe. But that would entail a restructuring of the economic system involving
democratic regeneration. The "good old days" of capitalism are gone. The American empire, as
with the European empires, is obsolete.
That's the unspoken Number One agenda item at the G20 summit. Bye-bye US empire.
What America needs to do is regenerate through a reinvented social economic order, one that
is driven by democratic development and not the capitalist private profit of an elite few.
If not, the futile alternative is US failing political leaders trying to coerce China, and
others, to pay for their future. That way leads to war.
"... Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad. ..."
"... The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among both supporters and opponents of Trump. ..."
"... everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness... ..."
"... The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF ..."
Trump also floated the idea of removing U.S. troops from the Middle East, citing the lower price of oil as a reason to withdraw.
"Now, are we going to stay in that part of the world? One reason to is Israel ," Trump said. "Oil is becoming less and less
of a reason because we're producing more oil now than we've ever produced. So, you know, all of a sudden it gets to a point
where you don't have to stay there."
It is only Israel, it is no longer the oil, says Trump. But the nuclear armed Israel does not need U.S. troops for its protection.
And if it is no longer the oil, why is the U.S. defending the Saudis?
Trump's Secretary of State Mike Pompeo disagrees with his boss. In a Wall Street journal op-ed today he claims that
The U.S.-Saudi Partnership
Is Vital because it includes much more then oil:
[D]egrading U.S.-Saudi ties would be a grave mistake for the national security of the U.S. and its allies.
The kingdom is a powerful force for stability in the Middle East. Saudi Arabia is working to secure Iraq's fragile democracy
and keep Baghdad tethered to the West's interests, not Tehran's. Riyadh is helping manage the flood of refugees fleeing Syria's
civil war by working with host countries, cooperating closely with Egypt, and establishing stronger ties with Israel. Saudi
Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other terrorist organizations.
Saudi oil production and economic stability are keys to regional prosperity and global energy security.
Where and when please has Saudi Arabia "managed the flood of refugees fleeing Syria's civil war". Was that when it
emptied its jails of violent criminals and sent them to wage jihad against the Syrian people? That indeed 'managed' to push
millions to flee from their homes.
Saudi Arabia might be many things but "a powerful force for stability" it is not. Just ask 18 million Yemenis who, after years
of Saudi bombardment, are near to death for lack of
food .
Pompeo's work for the Saudi dictator continued today with a Senate briefing on Yemen. The Senators will soon vote on a resolution
to end the U.S. support for the war. In his prepared remarks Pompeo wrote:
The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot
worse.
What could be worse than a famine that threatens two third of the population?
If the U.S. and Britain would not support the Saudis and Emirates the war would end within a day or two. The Saudi and UAE
planes are maintained by U.S. and British specialists. The Saudis still
seek 102 more U.S. military personal to
take care of their planes. It would be easy for the U.S. to stop such recruiting of its veterans.
It is the U.S. that
holds up an already
watered down UN Security Council resolution that calls for a ceasefire in Yemen:
The reason for the delay continues to be a White House worry about angering Saudi Arabia, which strongly opposes the resolution,
multiple sources say. CNN reported earlier this month that the Saudi crown prince, Mohammed bin Salman, "threw a fit" when
presented with an early draft of the document, leading to a delay and further discussions among Western allies on the matter.
There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him
no gain and a lot of trouble.
Trump protected MbS from the consequences of murdering Jamal Khashoggi. He hoped to gain leverage with that. But that is not
how MbS sees it. He now knows that Trump will not confront him no matter what he does. If MbS "threws a fit" over a UN Security
Council resolution, the U.S. will drop it. When he launches his next 'adventure', the U.S. will again cover his back. Is this
the way a super power is supposed to handle a client state?
If Trump's instincts really tell him that U.S. troops should be removed from the Middle East and Afghanistan, something I doubt,
he should follow them. Support for the Saudi war on Yemen will not help to achieve that. Pandering to MbS is not MAGA.
Posted by b on November 28, 2018 at 03:12 PM |
Permalink
Comments Pompeo: "Saudi Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other
terrorist organizations."
Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to
the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize
Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad.
The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among
both supporters and opponents of Trump.
There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him
no gain and a lot of trouble.
He did get to fondle the orb - although fuck knows what weirdness was really going on there.
thanks b... pompeo is a very bad liar... in fact - everything he says is about exactly the opposite, but bottom line is he is
a bad liar as he is thoroughly unconvincing..
everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial
industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what
they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness...
oh, but don't forget to vote, LOLOL.... no wonder so many are strung out on drugs, and the pharma industry... opening up to
the msm is opening oneself up to the world george orwell described many years ago...
Take a wafer or two of silicon and just add water. The oil obsession has been eclipsed and within 20 years will be in absolute
disarray. The warmongers will invent new excuses.
A hypothetical: No extraordinary amounts of hydrocarbons exist under Southwest Asian ground; just an essential amount for domestic
consumption; in that case, would Zionistan exist where it's currently located and would either Saudi Arabia, Iraq and/or Iran
have any significance aside from being consumers of Outlaw US Empire goods? Would the Balfour Declaration and the Sykes/Picot
Secret Treaty have been made? If the Orinoco Oil Belt didn't exist, would Venezuela's government be continually targeted for Imperial
control? If there was no Brazilian offshore oil, would the Regime Change effort have been made there? Here the hypotheticals end
and a few basic yet important questions follow.
Previous to the 20th Century, why were Hawaii and Samoa wrested from their native residents and annexed to Empire? In what
way did the lowly family farmers spread across 19th Century United States further the growth of its Empire and contribute to the
above named annexations? What was the unspoken message sent to US elites contained within Frederic Jackson Turner's 1893 Frontier
Thesis ? Why is the dominant language of North America English, not French or Spanish?
None of these are rhetorical. All second paragraph questions I asked of my history students. And all have a bearing on b's
fundamental question.
b says, "And it its no longer the oil, why is the U.S. defending the Saudis?"
The US has a vital interest in protecting the narrative of 9/11. The Saudis supplied the patsies. Mossad and dual-citizen neocons
were the architects of the event. Hence, the US must avoid a nasty divorce from the Saudis. The Saudis are in a perfect blackmailing
position.
Of course, most Americans have no idea that the U.S. Shale Oil Industry is nothing more than a Ponzi Scheme because of the
mainstream media's inability to report FACT from FICTION. However, they don't deserve all of the blame as the shale energy
industry has done an excellent job hiding the financial distress from the public and investors by the use of highly technical
jargon and BS.
S.A. is a thinly disguised US military base, hence the "strategic importance" and the relevance of the new Viceroy's previous
experience as a Four Star General. It's doubtful that any of the skilled personnel in the SA Air Force are other than former US/Nato.
A few princes might fancy themselves to be daring fighter pilots. In case of a Anglo-Zio war with Iran SA would be the most forward
US aircraft carrier. The Empire is sustained by its presumed military might and prizes nothing more than its strategically situated
bases. Saud would like to capture Yemen's oil fields, but the primary purpose of the air war is probably training. That of course
is more despicably cynical than mere conquest and genocide.
Trump is the ultimate deceiver/liar. Great actor reading from a script. The heel in the Fake wrestling otherwise known as US politics.
It almost sounds as if he is calling for an end of anymore significant price drops now that he has got Powell on board to limit
interest rate hikes. After all if you are the worlds biggest producer you dont want prices too low. These markets are all manipulated.
I cant imagine how much insider trading is going on. If you look at the oil prices, they started dropping in October with Iran
sanctions looming (before it was announced irans shipments to its 8 biggest buyers would be exempt) and at the height of the Khashoggi
event where sanctions were threatened and Saudi was making threats of their own. In a real free market prices increase amidst
supply uncertainty.
Regardless of what he says he wants and gets now, he is already planning a reversal. Thats how the big boys win, they know
whats coming and when the con the smaller fish to swim one way they are lined up with a big mouth wide open. Controlled chaos
and confusion. For every winner there must be a loser and the losers assets/money are food for the Gods of Money and War
As for pulling out of the Middle East Bibi must have had a good laugh. My money is on the US to be in Yemen to protect them
from the Saudis (humanitarian) and Iranian backed Houthis while in reality we will be there to secure the enormous oil fields
in the North. Perhaps this was what the Khashoggi trap was all about. The importance of oil is not to supply US markets its to
deny it to enemies and control oil prices in order to feed international finance/IMF
@ Pft who wrote: "The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order
to feed international finance/IMF"
BINGO!!! Those that control finance control most/all of everything else.
Saudi Arabia literally owns close to 8% of the United States economy through various financial instruments. Their public investment
funds and dark pools own large chunks from various strategic firms resting at the apex of western power such as Blackstone. Trump
and Pompeo would be stupid to cut off their nose to spite their face... It's all about the petrodollar, uncle sam will ride and
die with saudi barbaria. If push comes to shove and the saudis decide to untether themselves from the Empire, their sand kingdom
will probably be partitioned.
The oil certainly still plays an important role, the u.s. cannot maintain the current frack oil output for long. For Tronald's
term in office it will suffice, but hardly longer. (The frack gas supplies are much more substantial.)
Personal interests certainly also play a role, and finally one should not make u.s. foreign policy more rational than it is.
Much is also done because of traditions and personal convictions. Often they got it completely wrong and the result was a complete
failure.
Let us watch what Trump does with this or if the resolution makes it to daylight:
Senate advances Yemen resolution in rebuke to Trump
The Senate issued a sharp rebuke Wednesday to President Trump, easily advancing a resolution that would end U.S. military support
for the Saudi-led campaign in Yemen's civil war despite a White House effort to quash the bill.
The administration launched an eleventh-hour lobbying frenzy to try to head off momentum for the resolution, dispatching
Defense Secretary James Mattis and Secretary of State Mike Pompeo to Capitol Hill in the morning and issuing a veto threat
less than an hour before the vote started.
But lawmakers advanced the resolution, 63-37, even as the administration vowed to stand by Saudi Arabia following outcry
over the killing of journalist Jamal Khashoggi.
"There's been a lot of rhetoric that's come from the White House and from the State Department on this issue," said Sen.
Bob Corker (R-Tenn.), chairman of the Foreign Relations Committee. "The rhetoric that I've heard and the broadcasts that we've
made around the world as to who we are have been way out of balance as it relates to American interests and American values."
[/] LINK
TheHill
But Mattis says there is no smoking gun to tie the Clown Thug-Prince to Kashoggi's killing.
TheHill
And Lyias @ 2 is a bingo. Always follow the fiat.
Soon, without any announcements, if they wish to maintain selling oil to China, KSA will follow Qatar. It will be priced in
Yuan...especially given the escalating U.S. trade war with China.
2019 holds interesting times. Order a truckload of popcorn.
Midwest For Truth , Nov 28, 2018 7:29:46 PM |
link
You would have to have your head buried in the sand to not see that the Saudi "Kings" are crypto-Zionistas. Carl Sagan once said,
"One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle.
We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even
to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back." And Mark Twain also
wrote "It's easier to fool people than to convince them that they have been fooled."
Gee, not one taker amongst all these intelligent folk. From last to first: 1588's Protestant Wind allowed Elizabeth and her cronies
to literally keep their heads as Nature helped Drake defeat the Spanish Armada; otherwise, there would be no British Empire root
to the USA, thus no USA and no future Outlaw US Empire, the British Isles becoming a Hapsburg Imperial Property, and a completely
different historical lineage, perhaps sans World Wars and atomic weapons.
Turner's message was with the Frontier closed the "safety valve" of continental expansion defusing political tensions based
on economic inequalities had ceased to be of benefit and future policy would need to deal with that issue thus removing the Fear
Factor from the natives to immigrants, and from wide-open spaces to the inner cities. Whipsawing business cycles driving urban
labor's unrest, populist People's Party politics, and McKinley's 1901 assassination further drove his points home.
Nationwide, family farmers demanded Federal government help to create additional markets for their produce to generate price
inflation so they could remain solvent and keep their homesteads, which translated into the need to conduct international commerce
via the seas which required coaling stations--Hawaii and Samoa, amongst others--and a Blue Water Navy that eventually led to Alfred
T. Mahan's doctrine of Imperial Control of the Oceans still in use today.
As with Gengis Khan's death in 1227 that stopped the Mongol expansion to the English Channel that changed the course of European
history, and what was seen as the Protestant Wind being Divine Intervention, global history has several similar inflection points
turning the tide from one path to another. We don't know yet if the Outlaw US Empire's reliance on Saudi is such, but we can see
it turning from being a great positive to an equally potential great negative for the Empire--humanity as a whole, IMO, will benefit
greatly from an implosion and the relationship becoming a Great Negative helping to strip what remains of the Emperor's Clothing
from his torso so that nations and their citizens can deter the oncoming financialized economic suicide caused by massive debt
and climate chaos.
Vico's circle is about to intersect with Hegel's dialectic and generate a new temporal phase in human history. Although many
will find it hard to tell, the current direction points to a difficult change to a more positive course for humanity as a whole,
but it's also possible that disaster could strike with humanity's total or near extinction being the outcome--good arguments can
be made for either outcome, which ought to unsettle everyone: Yes, the times are that tenuous. But then, I'm merely a lonely historian
aware of a great many things, including the pitfall inherent in trying to predict future events.
"The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot
worse." And I'll bet Pompeo said that with a straight face, too. lmfao
And as for "...keep[ing] Baghdad tethered to the West's interests and not Tehran's," I'm guessing the "secretary" would have
us all agree "yeah, fk Iraqi sovereignty anyway. Besides, it's not like they share a border with Iran, or anything. Oh,
wait..."
p.s. Many thanks for all you have contributed to collective knowledge, b; I will be contacting you about making a contribution
by snail mail (I hate PayPal, too).
"... a powerful force for stability in the Middle East."
"Instability" more like it.
Paid for military coup in Egypt. Funding anti-Syrian terrorists. Ongoing tensions with Iran. Zip-all for the Palestinians.
WTF in Yemen. Wahhabi crazy sh_t (via Mosque building) across Asia. Head and hand chopping Friday specials the norm -- especially
of their South-Asian slave classes. Ok, so females can now drive cars -- woohoo. A family run business venture manipulating the
global oil trade and supporting US-petro-$ hegemony recently out of goat herding and each new generation 'initiated' in some Houston
secret society toe-touching shower and soap ceremonies before placement in the ruling hierarchy back home. But enough; they being
Semites makes it an offence to criticize in some 'free' democratic world domains.
Instead of the "rebuke to Trump" meme circulating around, I found
this statement to be more accurate:
"'Cutting off military aid to Saudi Arabia is the right choice for Yemen, the right choice for our national security, and the
right choice for upholding the Constitution,' Paul Kawika Martin, senior director for policy and political affairs at Peace Action,
declared in a statement. ' Three years ago, the notion of Congress voting to cut off military support for Saudi Arabia would
have been politically laughable .'" [My Emphasis]
In other words, advancing Peace with Obama as POTUS wasn't going to happen, so this vote ought to be seen as an attack on Obama's
legacy as it's his policy that's being reconsidered and hopefully discontinued.
Trump, Israel and the Sawdi's. US no longer needs middle east oil for strategic supply. Trump is doing away with the petro-dollar
as that scam has run its course and maintenance is higher than returns. Saudi and other middle east oil is required for global
energy dominance.
Energy dominance, lebensraum for Israel and destroying the current Iran are all objectives that fit into one neat package.
Those plans look to be coming apart at the moment so it remains to be seen how fanatical Trump is on Israel and MAGA. MAGA
as US was at the collapse of the Soviet Union.
As for pulling out of the Middle East Bibi must have had a good laugh. Remember when he said he wanted out of Syria. My money
is on the US to be in Yemen before too long to protect them from the Saudis (humanitarian) and Iranian backed Houthis, while in
reality it will be to secure the enormous oil fields in the North. Perhaps this was what the Khashoggi trap was all about.
The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international
finance/IMF .
@16 karlof1.. thanks for a broader historical perspective which you are able to bring to moa.. i enjoy reading your comments..
i don't have answers to ALL your questions earlier.. i have answers for some of them... you want to make it easy on us uneducated
folks and give us less questions, like b did in his post here, lol.... cheers james
The US Senate has advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen.
In a blow to President Donald Trump, senators voted 63-37 to take forward a motion on ending US support.
Secretary of State Mike Pompeo and Defence Secretary Jim Mattis had urged Senators not to back the motion, saying it would
worsen the situation in Yemen.
...
The vote in the Senate means further debate on US support for Saudi Arabia is expected next week.
However, correspondents say that even if the Senate ultimately passes the bipartisan resolution it has little chance of
being approved by the outgoing House of Representatives.
That is quite a slap for the Trump administration. It will have little consequences in the short term (or for Yemen) but it sets
a new direction in foreign polices towards the Saudis.
Pompeo is a Deep State Israel-firster with a nasty neocon agenda. It is to Trump's disgrace that he chose Pompeo and the abominable
Bolton. At least Trump admits the ME invasions are really about Israel.
Take a look at some of the - informed - comments below the vid to which you linked. Then think again about an 'all electric
civilisation within a few years'. Yes, and Father Christmas will be providing everything that everyone in the world needs for
a NAmerican/European standard of living within the same time frame. Er - not.
'Renewables' are not going to save hitech industrial 'civilisation' from The Long Descent/Catabolic Collapse (qv). Apart from
any other consideration - and there are some other equally intractable ones - there is no - repeat NO - 'renewable' energy system
which doesn't rely crucially on energy subsidies from the fossil-hydrocarbon fuels, both to build it and to maintain it. They're
not stand-alone, self-bootstrapping technologies. Nor is there any realistic prospect that they ever will be. Fully renewable-power
hitech industrial civilisation is a non-deliverable mirage which is just drawing us ever further into the desert of irreversible
peak-energy/peak-everythig-else.
@16 karlof1. I also find your historical references very interesting. We do indeed seem to be at a very low point in the material
cycle, it will reverse in due course as is its want, hopefully we will live to see a positive change in humanity.
For example we know Tesla didn't succeed in splitting the planet in half, the way techno-psychotics fantasize. As for that
silly link, how typical of techno-wingnuts to respond to prosaic physical facts with fantasies. Anything to prop up faith in the
technocratic-fundamentalist religion. Meanwhile "electrical civilization" has always meant and will always mean fracking and coal,
until the whole fossil-fueled extreme energy nightmare is over.
Given the proven fact that the extreme energy civilization has done nothing but embark upon a campaign to completely destroy
humanity and the Earth (like in your Tesla fantasy), why would a non-psychopath want to prop it up anyway?
It is still the oil, even for the US. The Persian Gulf supplies 20% of world consumption, and Western Europe gets 40% of its oil
from OPEC countries, most of that from the Gulf. Even the US still imports 10% of its total consumption.
Peter AU 1 | Nov 28, 2018 9:44:50 PM | 20
b | Nov 29, 2018 2:33:04 AM | 23
USD as a world reserve currency could be one factor between the important ones. With non US support the saud land could crash
under neighbours pressure, that caos may be not welcomed.
Humble people around where I live have mentioned that time is speeding up its velocity; there seems to be a spiritual (evolutionary)/physical
interface effect or something...
Tolstoy, in the long theory-of-history exposition at the end of War and Peace, challenges 'the great man' of History idea,
spreading in his time, at the dawning of the so-called: European Romantic period of Beethoven, Goerte and Wagner, when
the unique person was glorified in the name of art, truth, whatever (eventually this bubble burst too, in the 20th C. and IMO
because of too much fervent worship in the Cult of the Temple of the Money God. Dostoyevki's great Crime and Punishment is all
about this issue.)
Tolstoy tries to describe a scientifically-determined historical process, dissing the 'great man of History' thesis. He was
thinking of Napoleon Bonaparte of course, the run-away upstart repulican, anathema to the established order. Tolstoy describes
it in the opening scene of the novel: a fascinating parlor-room conversation between a "liberal" woman of good-birth in the elite
circles of society and a military captain at the party.
...only tenuously relevant to karlofi1's great post touching upon the Theory of History as such; thanks.
Now as to the question: żWhy is Trump supporting Saudi Arabia? Let me think about that...
After Democratic party was co-opted by neoliberals there is no way back. And since Obama the trend of Democratic Party is
toward strengthening the wing of CIA-democratic notthe wing of the party friendly to workers. Bought by Wall Street leadership is
uncable of intruting any change that undermine thier current neoliberal platform. that's why they criminally derailed Sanders.
Notable quotes:
"... When you think about the issue of how exactly a clean-energy jobs program would address the elephant in the room of private accumulation and how such a program, under capitalism, would be able to pay living wages to the people put to work under it, it exposes how non threatening these Green New Deals actually are to capitalism. ..."
"... To quote Trotsky, "These people are capable of and ready for anything!" ..."
"... "Any serious measures to stop global warming, let alone assure a job and livable wage to everyone, would require a massive redistribution of wealth and the reallocation of trillions currently spent on US imperialism's neo-colonial wars abroad." ..."
"... "It includes various left-sounding rhetoric, but is entirely directed to and dependent upon the Democratic Party." ..."
"... "And again and again, in the name of "practicality," the most unrealistic and impractical policy is promoted -- supporting a party that represents the class that is oppressing and exploiting you! The result is precisely the disastrous situation working people and youth face today -- falling wages, no job security, growing repression and the mounting threat of world war." - New York Times tries to shame "disillusioned young voters" into supporting the Democrats ..."
"... It is an illusion that technical innovation within the capitalist system will magically fundamentally resolve the material problems produced by capitalism. But the inconvenient facts are entirely ignored by the corporate shills in the DSA and the whole lot of establishment politicians, who prefer to indulge their addiction to wealth and power with delusions of grandeur, technological utopianism, and other figments that serve the needs of their class. ..."
"... First it was Obama with his phoney "hope and change" that lured young voters to the Dumbicrats and now it's Ocacia Cortez promising a "green deal" in order to herd them back into the Democratic party--a total fraud of course--totally obvious! ..."
"... from Greenwald: The Democratic Party's deceitful game https://www.salon.com/2010/... ..."
they literally ripped this out of the 2016 Green Party platform. Jill Stein spoke repeatedly
about the same exact kind of Green New Deal, a full-employment, transition-to-100%-renewables
program that would supposedly solve all the world's problems.
When you think about the issue of how exactly a clean-energy jobs program would address
the elephant in the room of private accumulation and how such a program, under capitalism,
would be able to pay living wages to the people put to work under it, it exposes how non
threatening these Green New Deals actually are to capitalism.
In 2016, when the Greens made
this their central economic policy proposal, the Democrats responded by calling that platform
irresponsible and dangerous ("even if it's a good idea, you can't actually vote for a
non-two-party candidate!"). Why would they suddenly find a green new deal appealing now
except for its true purpose: left cover for the very system destroying the planet.
To quote
Trotsky, "These people are capable of and ready for anything!"
"Any serious measures to stop global warming, let alone assure a job and livable wage to
everyone, would require a massive redistribution of wealth and the reallocation of trillions
currently spent on US imperialism's neo-colonial wars abroad."
Their political position not only lacks seriousness, unserious is their political
position.
"It includes various left-sounding rhetoric, but is entirely directed to and dependent
upon the Democratic Party."
For subjective-idealists, what you want to believe, think and feel is just so much more
convincing than objective reality. Especially when it covers over single-minded class
interests at play.
"And again and again, in the name of "practicality," the most unrealistic and impractical
policy is promoted -- supporting a party that represents the class that is oppressing and
exploiting you! The result is precisely the disastrous situation working people and youth
face today -- falling wages, no job security, growing repression and the mounting threat of
world war." - New York Times tries to shame "disillusioned young voters" into supporting
the Democrats
It is an illusion that technical innovation within the capitalist system will magically
fundamentally resolve the material problems produced by capitalism. But the inconvenient
facts are entirely ignored by the corporate shills in the DSA and the whole lot of
establishment politicians, who prefer to indulge their addiction to wealth and power with
delusions of grandeur, technological utopianism, and other figments that serve the needs of
their class.
First it was Obama with his phoney "hope and change" that lured young voters to the
Dumbicrats and now it's Ocacia Cortez promising a "green deal" in order to herd them back
into the Democratic party--a total fraud of course--totally obvious!
Only an International Socialist program led by Workers can truly lead a "green revolution" by
expropriating the billionaire oil barons of their capital and redirecting that wealth into
the socialist reconstruction of the entire economy.
Alexandria Ocasio-Cortez's "Green New Deal" is a nice laugh. Really, it sure is funny hearing
these lies given any credence at all. This showmanship belongs in a fantasy book, not in real
life. The Democratic Party as a force for good social change Now that's a laugh!
Lies, empty promises, meaningless tautologies and morality plays, qualified and conditional
declarations to be backpedalled pending appropriate political expediencies, devoid any
practical content that is what AOC, card carrying member of DSA, and in fact young energetic
political apparatchik of calcified political body of Dems establishment, duty engulfs. And
working for socialist revolution is no one of them.
What kind of socialist would reject socialist revolution, class struggle and class
emancipation and choose, as a suppose socialist path, accommodation with oligarchic ruling
elite via political, not revolutionary process that would have necessarily overthrown ruling
elite.
What socialist would acquiesce to legalized exploitation of people for profit, legalized
greed and inequality and would negotiate away fundamental principle of egalitarianism and
working people self rule?
Only National Socialist would; and that is exactly what AOC campaign turned out to be all
about.
National Socialism with imperial flavor is her affiliation and what her praises for
Pelosi, wife of a billionaire and dead warmonger McCain proved.
Now she is peddling magical thinking about global change and plunge herself into falacy of
entrepreneurship, Market solution to the very problem that the market solutions were designed
to create and aggravate namely horrific inequality that is robbing people from their own
opportunities to mitigate devastating effects of global change.
The insidiousness of phony socialists expresses itself in the fact that they lie that any
social problem can be fixed by current of future technical means, namely via so called
technological revolution instead by socialist revolution they deem unnecessary or
detrimental.
The technical means for achieving socialism has existed since the late 19th century, with the
telegraph, the coal-powered factory, and modern fertilizer. The improvements since then have
only made socialism even more streamlined and efficient, if such technologies could only be
liberated from capital! The idea that "we need a new technological revolution just to achieve
socialism" reflects the indoctrination in capitalism by many "socialist" theorists because it
is only in capitalism where "technological growth" is essential simply to maintain the
system. It is only in capitalism (especially America, the most advanced capitalist nation,
and thus, the one where capitalism is actually closest towards total crisis) where the dogma
of a technological savior is most entrenched because America cannot offer any other kind of
palliative to the more literate and productive sections of its population. Religion will not
convince most and any attempt at a sociological or economic understanding would inevitably
prove the truth of socialism.
"... The original "New Deal," which included massive public works infrastructure projects, was introduced by Democratic President Franklin Roosevelt in the 1930s amid the Great Depression. Its purpose was to stave off a socialist revolution in America. It was a response to a militant upsurge of strikes and violent class battles, led by socialists who were inspired by the 1917 Russian Revolution ..."
"... Since the 2008 crash, first under Bush and Obama, and now Trump, the ruling elites have pursued a single-minded policy of enriching the wealthy, through free credit, corporate bailouts and tax cuts, while slashing spending on social services. ..."
"... To claim as does Ocasio-Cortez that American capitalism can provide a new "New Deal," of a green or any other variety, is to pfile:///F:/Private_html/Skeptics/Political_skeptic/Neoliberalism/Historyromote an obvious political fiction." ..."
"The original "New Deal," which included massive public works infrastructure projects,
was introduced by Democratic President Franklin Roosevelt in the 1930s amid the Great
Depression. Its purpose was to stave off a socialist revolution in America. It was a response
to a militant upsurge of strikes and violent class battles, led by socialists who were
inspired by the 1917 Russian Revolution that had occurred less than two decades before.
American capitalism could afford to make such concessions because of its economic
dominance. The past forty years have been characterized by the continued decline of American
capitalism on a world stage relative to its major rivals. The ruling class has responded to
this crisis with a social counterrevolution to claw back all gains won by workers. This has
been carried out under both Democratic and Republican administrations and with the assistance
of the trade unions.
Since the 2008 crash, first under Bush and Obama, and now Trump, the ruling elites have
pursued a single-minded policy of enriching the wealthy, through free credit, corporate
bailouts and tax cuts, while slashing spending on social services.
To claim as does Ocasio-Cortez that American capitalism can provide a new "New Deal," of a
green or any other variety, is to pfile:///F:/Private_html/Skeptics/Political_skeptic/Neoliberalism/Historyromote an obvious political fiction."
US allies in Europe and Asia did not expect to be treated like vassal states, at least not
openly. Succumbing to Trump's demands is an admission of being a lapdog.
US allies in Europe and Asia have no choice but to push back against Trump's bullying and
condescending stances. They are elected by their citizens to protect the countries' sovereignty
and interests, after all. Too, these leaders must save face and protect their legacies.
One of the first European leaders having the courage to defy Trump is French President
Emmanuel Macron, calling for the establishment of a European Union army independent of the US
to defend itself against Russia, China and possibly America itself. His proposal is supported
by German Chancellor Angela Merkel.
Asian allies, particularly India, also seem to have pushed back , buying Iranian oil whether
the US likes it or not.
Washington's attempt to revive the Quadrilateral Security Dialogue comprising itself and
soulmates Australia, India and Japan may be losing support. Instead of joining with the US to
contain China, India and Japan are seeking rapprochement with the Asian giant. Even "deputy
sheriff" Australia is apparently having second thoughts, as one of its states is
officially joining China's Belt and and Road Initiative.
In short, these three allies might finally realize that joining the US in containing China
is harmful to their national interests. Fighting that nuclear power on their own soil might not
be a good idea.
No country treats the US 'unfairly'
The fact of the matter is no country treats the US "unfairly" or is "eating its lunch." On
the contrary, it could be argued that it is the other way around.
Having emerged as the world's strongest nation during and after World War II, US foreign
policies have one goal: Shape the world to its image. That process began at the 1944 Bretton
Woods Conference, insisting on using the US dollar as the world reserve currency and writing
the trade rules. In this way, the US has accumulated a very powerful tool, printing as much
money as it wants without repercussions to itself. For example, when a country wants to cash
its US Treasury holdings, all America has to do is print more greenbacks.
To that end, the US is clearly "eating other countries' lunch." Indeed, a major reason the
US can afford to build so many weapons is that other countries are paying for them.
US
trade practices
On trade, the US in 1950 rejected the UK's proposal of forming an International Trade
Organization (ITO) modeled after the International Monetary Fund and World Bank because it
feared the ITO might have harmed American manufacturing. In its place, the US proposed and
succeeded in forming the General Agreement on
Tariffs and Trade (GATT) framework to negotiate tariff rates on goods.
Being the world's most powerful economy and biggest trading nation at that time, the US
dominated the world trading system and wrote its rules. For example, it was the US that
invented and implemented non-tariff trade barriers such as anti-dumping duties and
national-security concerns to block imports. For example, the US imposed tariffs on Canadian,
EU, Mexican and other countries' steel and aluminum from entering its market for security
reasons.
It is laughable for the US to accuse Canada, the EU and Mexico of posing a national-security
threat. They are, in fact, America's most staunch allies.
US foreign direct investment
abroad
US companies bring with them ideas and technology (for which they charge exorbitant prices)
when investing in a foreign market such as China and elsewhere. The capital needed to build
factories is largely funded by the host country or other partners. For example, it is Taiwanese
and Japanese investors that built Foxconn factories in China to assemble American electronic
gadgets such as the iPad.
What's more, US companies charge huge prices for the products they make in China. According
to the Asian Development Bank and other research organizations, Chinese labor, for example,
receives a small percentage of the profits Apple takes in from gadgets it produces in China.
This lopsided profit distribution raises the question: Who is "eating whose
lunch?"
America has itself to blame
The US cannot blame China or any other country for its declining global influence and
dominance – America, particularly under Donald Trump, did that to itself. Chinese
President Xi Jinping, indeed, has advocated cooperation and dialogue as ways to defuse
conflicts and attain a better world.
No country has ever even hinted at attacking the US; it is after all the world's most
powerful nation, armed with enough conventional and nuclear weapons to blow up the world. The
"threats" are exaggerated or invented by US neoconservatives and vested interests to scare
Americans into supporting huge defense spending.
'Fake news' can only go so far
Using "fake news" to pressure countries into submission might work with those unable to
fight back, but could be extremely costly against powers such as China and Russia. For example,
Trump's escalating trade tensions with China are already adversely affecting the US economy, as
seen in falling GDP growth, decreasing stock prices, a huge agricultural inventory, and rising
poverty.
According to United Nations, the impoverished American population is being hit the hardest
under the Trump administration. The US Federal Reserve and others are projecting significant
economic decline in the foreseeable future if the trade war does not end.
One can only imagine what a nuclear war would bring.
Donald Trump is probably no less bullying than his predecessors (perhaps with the exception
of George W Bush), but he is more open about it. Bush's outburst, "You are either with us or
against us," earned America a bad reputation when he demanded that allies join him to invade
Iraq.
Trump has bullied or offended everyone, friends and foes alike. Unless he shifts gear, he
could alienate friends as well as foes, which could erode US geopolitical influence and
economic growth or might even bring the country down. He cannot threaten sovereign nations
without incurring huge costs to America.
That discovery chart shows the problem well, I hadn't seen it before. The big blip in deep
water discoveries in the 2000s from improved technologies and higher prices contributed
greatly to the subsequent glut and price collapse – and now what's left? There hasn't
been much of an uptick in exploration despite the price rally, offshore drillers continue to
go bust, leasing activity still fairly slow – the tranches get bigger as the last, less
attractive bits are released but lease ratio falls, Permian dominates all news stories. Why
would the recent decline curve turn around? And the biggest surprise might be that gas is
just as bad as oil, so the recent boost in supplies from condensate and NGL might also have
run its course.
I tracked FIDs for oil through 2017, I've been a bit less diligent this year so may have
missed some, but for greenfield conventional plus oil sands I have for the remainder of 2018
through 2025: 400, 1770, 1170, 800, 985, 70, 250, 400 kbpd added – about 6 mmbpd total,
nothing after 2025, plus another 1 mmbpd from ramp ups from this year. Only pretty small
projects could get done now before 2022, and there aren't many of those left. Anything else
would need to come from brownfield (in-fill), LTO or new discoveries (including existing
known resources that become reserves once a development decision is made).
High economic growth matched high growth in energy consumption and recessions saw fall in
energy consumption.
Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas
and wood. It is hardly surprising that during high economic growth CO2 emissions increase
also.
Those who not not wish to see this link, obviously think Peak Oil is not a problem. GDP
growth will continue even though oil becomes more scarce.
If oil production falls by just 1% per year, taking into account new vehicle production.
The world would have to produce 90 million electric cars each year in order to prevent oil
prices from destroying other users such as the aviation industry.
This year 1.5 million fully electric cars were made and according to several people here
peak oil is no more then 4 years away.
Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas
and wood. It is hardly surprising that during high economic growth CO2 emissions increase
also
I have a hunch that we are about to see some major changes to that paradigm.
I hope you are correct, but I have done some calculations on what is needed.
According to reports around $1.7 trillion was invested in energy supply in 2017. $790
billion on oil, gas and coal supply. $320 billion was spent on solar and wind.
During 2017 oil consumption increased by 1 million barrels per day. Gas consumption increased
by 3% and even coal consumption went up.
The world needs to spend about $2.5 trillion per year on wind, solar and batteries in
order to meet increased energy demand and reduce fossil fuel burning by about 1% per year.
This obviously depends on GDP growth being about average.
Since recent scientific observations have discovered that Greenland, the Arctic and
Antarctica melting much faster than anyone thought. The shift needs to be a minimum of 2.5%.
Thus a spending of around £4 trillion per year is needed.
I do not see any country spending a minimum of 12 times more on solar and wind in the next
3-5 years. It would take every country doing so.
Agreed Hugo. The world is only making token moves towards installation of the necessary wind
and solar.
This coming decade will see everyone scrambling to get the equipment built and installed.
Looks like centralized planning (China) is going to beat 'the market' on being the primary
supplier. Our 'free' market has tariffs on PV imported. Brilliant.
Does having a 5 (or 10 yr) plan make you communist?
Or just smart.
"The world needs to spend about $2.5 trillion per year on wind, solar and batteries in order
to meet increased energy demand and reduce fossil fuel burning by about 1% per year. This
obviously depends on GDP growth being about average."
1% per year? You have got to be kidding.
The global oil consumption for transport is about 39.5 million barrels of oil per day. Using
PV to drive EV transport would mean an investment of 2.2 trillion dollars in PV to provide
global road transport energy.
So what do we use next year's money for?
.
"The global oil consumption for transport is about 39.5 million barrels of oil per day"
39.5 million is only gasoline in the world. Add diesel and jet fuel and you get to about
75 million barrels a day for transportation or about 75% of oil produced.
Did you get the point? That Hugo overstated the cost of renewables to replace fossil fuels
by a huge amount and understated their effect by another huge amount.
We have a couple of people that consistently do that on this site.
@tac The Torah,
biblical and Quran stories were written in agrarian societies where capitalistic enterprise
hardly existed.
Loans were for not dying of hunger in the period between when the food of the last harvest
had been used completely, and the new harvest was still in the future.
Thus interest was seen as blackmailing people, they needed money to prevent dying of
starvation.
There was enterprise long ago, and trade over long distances, in the early centuries for
example swords from Damascus were famous in Europe, and exported to Europe.
Investment for business was the exception, even the first iron smelting installations were
simple, those who wanted them could build them by themselves.
The idea that invested money could yield money came later, when installations became more
complex, ships bigger, etc.
With investment came risk, there was not much risk in consumptive loans, they normally could
paid out of the coming harvest.
And so the problem began, a church not understanding capitalism, an agrarian society based on
barter changing into a money using capitalistic society.
Commercial people had no problem with interest, even now Muslims do not have problems with
interest.
What they do is simply giving interest other names, such as a fine for repaying late.
It has been agreed that the repayment will be late, so anybody is happy.
@renfro And
there you have it in a nutshell: usary -- the usurper of civilization, the enslaver of
humanity, the seed of ultimate degeneracy. It seems humanity is adverse to learn from
history. It is an interesting side-note that both Christianity and Islam both prohibit the
use of usury (a consideration worthy of mention when one contemplates the ongoing wars in the
ME) and some who here take shots at Farakhann, 'neo-nazis', blue-hair and other deplorables.
Our dilemma today is the same that occurred in Rome. Our country and people will
suffer the same fate if usury continues as it has. From the onset of history, it has
been the moneychangers, who have exploited mankind for pure profit. Usury is an abomination
against God's statutes, which manipulates and destroys people, families, and nations. It is
by the profits made from usury used to attack Christianity. One needs only to ask- who is
in control of usury worldwide? Didn't Rome suffer from these same people? Usury brings
forth an insidious side to all people. The temptation to borrow is powerful, and it always
polarizes lender against borrower where the former becomes the master and the later, the
slave. As a vice, neighbor is pitted against his neighbor, and nation against nation.
[...]
The Roman government was far too corrupt already with its politicians bought by
moneychangers for any fledgling Christian sect to have an affect on its decline. The
moneychanger's demand was perpetually self-serving, which was disparate to the common good
of the populace. Originally, Rome was founded as a republic. The unchecked influence of the
moneychangers caused it to change into a democracy. A republic is derived through the
election of public officials whose attitude toward property is respected in terms of law
for individual rights. A democracy is derived through the election of public officials
whose attitude toward property is communistic and respects the "collective good" of the
population instead of the individual. This is the resultant system that moneychangers bring
to civilization. The subversion of power is a sleight of hand that changes the right of the
individual into what is often called the "collective good" of the people (communistic),
which is always controlled by an alliance of powerful interests.
There is no reference in the article to the moneychangers and their lawyers sowing the
seeds for Roman society to suffocate under its own lethargic weight. Lawyers were indeed a
problem to Rome. The Romans were so concerned by lawyers' opprobrious effect on public
morale that they attempted to curb their influence. In 204 BC, the Roman Senate passed a
law prohibiting lawyers from plying their trade for money. As the Roman republic declined
and became more democratic, it became increasingly difficult to keep lawyers in check and
prevent them from accepting fees under the table. Indeed, they were very useful to the
moneychangers. The lawyers fed upon corruption and accelerated the downward plunge of Roman
civilization. Some wealthy Romans began sending their sons to Greece to finish their
schooling, to learn rhetoric (Julius Caesar was one example) -- a lawyer's cleverness in
oration. This compounded Rome's growing woes.
[...] The moneychangers destroyed Rome from within by first monopolizing usury, monopolizing
the precious mineral trade and then disproportionately magnifying the temporal businesses
of prostitution (including pedophilia and homosexuality), and slavery. Constantine
(306-337 AD) was the first Roman emperor to issue laws, which radically limited the rights
of Jews as citizens of the Roman Empire, a privilege conferred upon them by Caracalla in
212 AD. The laws of Constantius (337-361 AD) recognized the Jewish domination of the slave
trade and acted to greatly curtail it. A law of Theodosius II (408-410 AD), prohibited Jews
from holding any advantageous office of honor in the Roman state. Always the impetus was
buying influence concerning their trade.
[...] Usury has been the opiate that has ruined the ingenuity of many of its civilizations. As
this Jewish craft spread, the people increasingly suffered from the burdens of
indebtedness. So troubling was the effects of usury that Lex Genucia outlawed usury in
342 BC. Nevertheless, ways of evading such legislation were found and by the last period of
the Republic, usury was once again rife. Emperors like Julius Caesar and Justinian tried to
limit the interest rate and control its devastating effects (Birnie, 1958).
Entertainment was a way to temporarily set aside the burdens of indebtedness. It was a
way to festively indulge in all the glory that Rome had to offer. Rome soon became drunk on
hedonism. Collectively, entertainment helped disguise the collapsing of a great power.
Spectator blood sports, brothels, carnivals, festivals, and parties substituted for
everything that was wrong with Rome.
[...] Rome became a multi-cultural state much like our own in the United States. Indeed, it
was truly an international city. Foreigners of every nation resided and worked there. The
Romans soon intermarried and had children with the many foreigners. This included
concubines from the numerous slaves won through war. Rome had an extraordinary large
slave population and was estimated to make up about two-thirds of its population at one
time.
[...] Eventually, the Romans lost their tribal cohesion and identity. The population of Rome
had changed and so did its character. Increasing demands were made of the ruling
patricians. The aristocrats tried to appease the masses, but eventually those demands could
not be sustained. Rome had become bankrupt. The effects of usury polarized the patrician
class against an increasingly dispossessed and burdened class of citizens.
[...]
Rome was bankrupt and was collapsing. The parasitic nature of usury and its effect on
government was too complex for the uneducated plebeians to understand (see Addendum for
an illustration of usury's power). Indeed, it was the moneychangers with the use of
their lawyers that destroyed pagan Rome. The Jewish interests did not control all
usury. However, they were a people well recognized as being extremely loyal to each
other and adept in the black craft of usury. To all others (gentiles) they showed hate and
enmity. Throughout history the weapon of usury is used again and again to destroy
nations.
[...]
Fortunately, the writings of Cicero survived the burning of libraries. In the case against
Faccus, we can see the crafts of the Jews are the same today. The Jews clearly held
great influence in politics as a result of their professions and profited immensely at the
expense of Rome. We can further deduce by the case of Faccus that the Jews were not
concerned with the interests of Rome, but rather for their own interests. The Jewish
gold was being shipped from Rome and its provinces throughout the empire to Jerusalem. Why?
We also know that the Jews had utter contempt and hatred of the Romans. This contempt is
demonstrated by their breaking of Roman law, which Faccus tried to uphold. If we look
closer, we see that gold has a very special meaning to all Jewry unlike any other
people.
[...] There are enough records for us to piece together what actually occurred in Rome that
led to its downfall. Rome fell as a result of corruption and the lack of cohesion of its
own people. But, it was the instrument of usury that brought about this corruption and
allowed its gold and silver to be controlled by Jewish interests.
[...] It was Christianity that put an end to the destructive nature of usury on its people
(see addendum for usury example). Rome's treasury became barren as a result of the
moneychangers. It weakened the Roman Empire immeasurably, and thrust untold millions in
poverty, debt, and in prison. It was Christianity that halted the influence of the Jews and
their destructive trades and practices. And, the Christian faith spread throughout the
former Roman Empire. All of the European people eventually became Christianity's vanguard
and champion. Without the strict adherence to the moral ethos, any civilization will
devolve into the religion of Nimrod.
According to my calculations (admittedly simplistic), the world has past the point of peak
oil and in aggregate cannot produce enough oil to meet present and future demand and that may
very well be why the US is doing its best to destroy or damage as many economies in the world
as it can even if it has to go to war to do it. Once it becomes well established that we are
past peak oil no telling what our financial markets will look like. Would appreciate hearing
from someone who has more expertise than I have. https://www.gpln.com
anon4d2s , November 14, 2018 at 10:23 pm
Why are you trying to change the subject? Please desist.
I'm offering you the, or a, motive of why the deep state is pursuing the agendas we see
unfolding, which is to say, the crimes, the lies, the treason that the likes of Clapper,
Bush, Obama, Clinton and others are pursuing to cover up their reaction to their own fears.
Of course 9/11, the false flag coup and smoking gun that proves my point is still the big
elephant in the room and will eventually bring us down if the truth is never released from
its chains.
I didn't change the subject. I'm offering you an answer as to the motive of why so many
officials are willing to trash the Constitution in order to accomplish their insane agendas.
It's all about money and power and the terrified Deep State fear of facing the blowback from
the lies that have been propagated by the government and media regarding just about
everything. Here's another place you might want to look in addition to my website: https://youtu.be/CDpE-30ilBY It's not just
about oil. But this is where the rubber's going to meet the road. This is about what's going
to hit the fan at any moment and in the absence of the Truth, we are all going to face this
unprepared. 9/11 is still the smoking gun. It not just a few liars and cheats we're talking
about.
I didn't change the subject. The purpose of the search for WMD was to misdirect the
public's attention away from the real purpose of the invasion which was to gain control of
Iraq's oil reserves primarily. Misdirection is primary skill used by those in power and very
effectively.
The cost of producing a large lithium battery is high and it is "perishable product",
which will not last even 10 years. The average life expectancy of a new EV battery at about
five (Tesla) to eight years. Or about 1500 cycles (assuming daily partial recharge, which
prolongs the life of the battery) before reaching 80% of its capacity rating. https://www.quora.com/What-is-the-cycle-lifetime-of-lithium-ion-batteries
Battery performance and lifespan begins to suffer as soon as the temperature climbs above
86 degrees Fahrenheit. A temperature above 86 degrees F affects the battery pack performance
instantly and often permanently. https://phys.org/news/2013-04-life-lithium-ion-batteries-electric.html
It is also became almost inoperative at below freezing point temperatures. For example it
can't be charged.
So they need to be cooled at summer and heated at winter. Storing such a car on the street
is out of question. You need a garage.
And large auto battery typically starts deteriorating after three years of daily use or
800 daily cycles.
Regular gas, and , especially, diesel cars can last 20 years, and larger trucks can last
30 years.
The key question not addressed by the author is how long the period of "plato oil
production" (the last stage of the so called "oil age", which started around 1911) might
last -- 10, 20 or 50 years. And the oil age is just a very short blip in Earth
history.
Let's assume that this means less the $100 per barrel; in the past, it was $70 per
barrel that considered the level that guarantees the recession in the USA, but financial
system machinations now probably reached a new level, so that might not be true any
longer. The trillion dollars question is "How long this period can be extended?"
It is important to understand the US shale oil is not profitable and never will be for
prices under $80 or so. At prices below that level, it actually produces three products,
not two – oil, gas and junk bonds.
I view it as a very sophisticated, very innovative gamble to pressure oil prices down
and get compensation for the losses due to large amount of imported oil (the USA export
mainly lightweight oil which is kind of "subprime oil" often used for dilution of heavy
oil in countries such as Canada and Venezuela, but imports quality oil).
If the hypothesis that Saudis and Russians are close to Seneca Cliff (Saudi prince
recently said that Russian are just 10-15 years from it) and that best days of the US
shale and Gulf of Mexico deep oil is in the past if true, then "Houston we have a
problem".
That means that in 20 years, or so the civilization might experience some kind of
collapse, and the population of the Earth might start rapidly shrinking.
Under neoliberlaism the idea of loyalty between a corporation and an employee makes no more sense than loyalty between a motel and its guests.
Notable quotes:
"... Any expectation of "loyalty", that two-way relationship of employee/company from an earlier time, was wishful thinking ..."
"... With all the automation going on around the world, these business leaders better worry about people not having money to buy their goods and services plus what are they going to do with the surplus of labor ..."
"... This is the nail in the coffin. As an IT manager responsible for selecting and purchasing software, I will never again recommend IBM products ..."
"... The way I saw it, every time I received a paycheck from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything. The way I saw it, every time I received a paycheck from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything. The idea of loyalty between a corporation and an at-will employee makes no more sense than loyalty between a motel and its guests. ..."
"... The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982. The economy seemed trapped in the new nightmare of stagflation," so called because it combined low economic growth and high unemployment ("stagnation") with high rates of inflation. And the prime rate hit 20% by 1980. ..."
I started at IBM 3 days out of college in 1979 and retired in 2017. I was satisfied with my choice and never felt mistreated because
I had no expectation of lifetime employment, especially after the pivotal period in the 1990's when IBM almost went out of business.
The company survived that period by dramatically restructuring both manufacturing costs and sales expense including the firing
of tens of thousands of employees. These actions were well documented in the business news of the time, the obvious alternative
was bankruptcy.
I told the authors that anyone working at IBM after 1993 should have had no expectation of a lifetime career. Downsizing, outsourcing,
movement of work around the globe was already commonplace at all such international companies. Any expectation of "loyalty",
that two-way relationship of employee/company from an earlier time, was wishful thinking .
I was always prepared to be sent packing, without cause, at any time and always had my resume up-to-date. I stayed because
of interesting work, respectful supervisors, and adequate compensation.
The "resource action" that forced my decision to retire was no surprise, the company that hired me had been gone for decades.
With all the automation going on around the world, these business leaders better worry about people not having money to buy
their goods and services plus what are they going to do with the surplus of labor
I had, more or less, the same experience at Cisco. They paid me to quit. Luckily, I was ready for it.
The article mentions IBMs 3 failures. So who was it that was responsible for not anticipating the transitions? It is hard enough
doing what you already know. Perhaps companies should be spending more on figuring out "what's next" and not continually playing
catch-up by dumping the older workers for the new.
I was laid off by IBM after 29 years and 4 months. I had received a division award in previous year, and my last PBC appraisal
was 2+ (high performer.) The company I left was not the company I started with. Top management--starting with Gerstner--has steadily
made IBM a less desirable place to work. They now treat employees as interchangeable assets and nothing more. I cannot/would not
recommend IBM as an employer to any young programmer.
Truly awesome work. I do want to add one thing, however--the entire rhetoric about "too many old white guys" that has become so
common absolutely contributes to the notion that this sort of behavior is not just acceptable but in some twisted way admirable
as well.
Is anyone surprised that so many young people don't think capitalism is a good system any more?
I ran a high technology electronic systems company for years. We ran it "the old way." If you worked hard, and tried, we would
bend over backwards to keep you. If technology or business conditions eliminated your job, we would try to train you for a new
one. Our people were loyal, not like IBMers today. I honestly think that's the best way to be profitable.
People afraid of being unjustly RIFFed will always lack vitality.
I'm glad someone is finally paying attention to age discrimination. IBM apparently is just one of many organizations that discriminate.
I'm in the middle of my own fight with the State University of New York (SUNY) over age discrimination. I was terminated by
a one of the technical colleges in the SUNY System. The EEOC/New York State Division of Human Rights (NYDHR) found that "PROBABLE
CAUSE (NYDHR's emphasis) exists to believe that the Respondent (Alfred State College - SUNY) has engaged in or is engaging in
the unlawful discriminatory practice complained of." Investigators for NYDHR interviewed several witnesses, who testified that
representatives of the college made statements such as "we need new faces", "three old men" attending a meeting, an older faculty
member described as an "albatross", and "we ought to get rid of the old white guys". Witnesses said these statements were made
by the Vice President of Academic Affairs and a dean at the college.
This saga at IBM is simply a microcosm of our overall economy. Older workers get ousted in favor of younger, cheaper workers;
way too many jobs get outsourced; and so many workers today [young and old] can barely land a full-time job. This is the behavior that our system incentivises (and gets away with) in this post Reagan Revolution era where deregulation is
lauded and unions have been undermined & demonized. We need to seriously re-work 'work', and in order to do this we need to purge
Republicans at every level, as they CLEARLY only serve corporate bottom-lines - not workers - by championing tax codes that reward
outsourcing, fight a livable minimum wage, eliminate pensions, bust unions, fight pay equity for women & family leave, stack the
Supreme Court with radical ideologues who blatantly rule for corporations over people all the time, etc. etc. ~35 years of basically
uninterrupted Conservative economic policy & ideology has proven disastrous for workers and our quality of life. As goes your
middle class, so goes your country.
I am a retired IBM manager having had to execute many of these resource reduction programs.. too many.. as a matter of fact. ProPUBLICA....You
nailed it!
IBM has always treated its customer-facing roles like Disney -- as cast members who need to match a part in a play. In the 60s
and 70s, it was the white-shirt, blue-suit white men whom IBM leaders thought looked like mainframe salesmen. Now, rather than
actually build a credible cloud to compete with Amazon and Microsoft, IBM changes the cast to look like cloud salespeople. (I
work for Microsoft. Commenting for myself alone.)
I am a survivor, the rare employee who has been at IBM for over 35 years. I have seen many, many layoff programs over 20 years
now. I have seen tens of thousands people let go from the Hudson Valley of N.Y. Those of us who have survived, know and lived
through what this article so accurately described. I currently work with 3 laid off/retired and rehired contractors. I have seen
age discrimination daily for over 15 years. It is not only limited to layoffs, it is rampant throughout the company. Promotions,
bonuses, transfers for opportunities, good reviews, etc... are gone if you are over 45. I have seen people under 30 given promotions
to levels that many people worked 25 years for. IBM knows that these younger employees see how they treat us so they think they
can buy them off. Come to think of it, I guess they actually are! They are ageist, there is no doubt, it is about time everyone
knew. Excellent article.
Nice article, but seriously this is old news. IBM has been at this for ...oh twenty years or more. I don't really have a problem with it in terms of a corporation trying to make money. But I do have a problem with how IBM also
likes to avoid layoffs by giving folks over 40 intentionally poor reviews, essentially trying to drive people out. Just have the
guts to tell people, we don't need you anymore, bye. But to string people along as the overseas workers come in...c'mon just be
honest with your workers. High tech over 40 is not easy...I suggest folks prep for a career change before 50. Then you can have the last laugh on a company
like IBM.
From pages 190-191 of my novel, Ordinary Man (Amazon):
Throughout
it all, layoffs became common, impacting mostly older employees with many years
of service. These job cuts were dribbled out in small numbers to conceal them
from the outside world, but employees could plainly see what was going on.
The laid off
employees were supplanted by offshoring work to low-costs countries and hiring
younger employees, often only on temporary contracts that offered low pay and
no benefits – a process pejoratively referred to by veteran employees as
"downsourcing." The recruitment of these younger workers was done under the
guise of bringing in fresh skills, but while many of the new hires brought new
abilities and vitality, they lacked the knowledge and perspective that comes
with experience.
Frequently,
an older more experienced worker would be asked to help educate newer
employees, only to be terminated shortly after completing the task. And the new
hires weren't fooled by what they witnessed and experienced at OpenSwitch,
perceiving very quickly that the company had no real interest in investing in
them for the long term. To the contrary, the objective was clearly to grind as
much work out of them as possible, without offering any hope of increased
reward or opportunity.
Most of the
young recruits left after only a year or two – which, again, was part of the
true agenda at the company. Senior management viewed employees not as talent,
but simply as cost, and didn't want anyone sticking around long enough to move
up the pay scale.
This is the nail in the coffin. As an IT manager responsible for selecting and purchasing software, I will never again recommend
IBM products. I love AIX and have worked with a lot if IBM products but not anymore. Good luck with the millennials though...
I worked for four major corporations (HP, Intel, Control Data Corporation, and Micron Semiconductor) before I was hired by IBM
as a rare (at that time) experienced new hire.
Even though I ended up working for IBM for 21 years, and retired in 2013, because
of my experiences at those other companies, I never considered IBM my "family."
The way I saw it, every time I received a paycheck
from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything.
The way I saw it, every time I received a paycheck
from IBM in exchange for two weeks' work, we were (almost) even. I did not owe them anything else and they did not owe me anything.
The idea of loyalty between a corporation and an at-will employee makes no more sense than loyalty between a motel and its guests.
It is a business arrangement, not a love affair. Every individual needs to continually assess their skills and their value to
their employer. If they are not commensurate, it is the employee's responsibility to either acquire new skills or seek a new employer.
Your employer will not hesitate to lay you off if your skills are no longer needed, or if they can hire someone who can do your
job just as well for less pay. That is free enterprise, and it works for people willing to take advantage of it.
I basically agree. But why should it be OK for a company to fire you just to replace you with a younger you? If all that they
accomplish is lowering their health care costs (which is what this is really about). If the company is paying about the same for
the same work, why is firing older workers for being older OK?
Good question. The point I was trying to make is that people need to watch out for themselves and not expect their employer to
do what is "best" for the employee. I think that is true whatever age the employee happens to be.
Whether employers should be able to discriminate against (treat differently) their employees based on age, gender, race, religion,
etc. is a political question. Morally, I don't think they should discriminate. Politically, I think it is a slippery slope when
the government starts imposing regulations on free enterprise. Government almost always creates more problems than they fix.
Sorry, but when you deregulate the free enterprise, it created more problems than it fixes and that is a fact that has been proven
for the last 38 years.
That's just plain false. Deregulation creates competiiton. Competition for talented and skilled workers creates opportunities
for those that wish to be employed and for those that wish to start new ventures. For example, when Ma Bell was regulated and
had a monopoly on telecommunications there was no innovation in the telecom inudstry. However, when it was deregulated, cell phones,
internet, etc exploded ... creating billionaires and millionaires while also improving the quality of life.
No, it happens to be true. When Reagan deregulate the economy, a lot of those corporate raiders just took over the companies,
sold off the assets, and pocketed the money. What quality of life? Half of American lived near the poverty level and the wages
for the workers have been stagnant for the last 38 years compared to a well-regulated economy in places like Germany and the Scandinavian
countries where the workers have good wages and a far better standard of living than in the USA. Why do you think the Norwegians
told Trump that they will not be immigrating to the USA anytime soon?
What were the economic conditions before Regan? It was a nightmare before Regan. The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982. The economy seemed trapped in the new nightmare
of stagflation," so called because it combined low economic growth and high unemployment ("stagnation") with high rates of inflation.
And the prime rate hit 20% by 1980.
At least we had a manufacturing base in the USA, strong regulations of corporations, corporate scandals were far and few, businesses
did not go under so quickly, prices of goods and services did not go through the roof, people had pensions and could reasonably
live off them, and recessions did not last so long or go so deep until Reagan came into office. In Under Reagan, the jobs were
allowed to be send overseas, unions were busted up, pensions were reduced or eliminated, wages except those of the CEOs were staganent,
and the economic conditions under Bush, Senior and Bush, Jr. were no better except that Bush, Jr, was the first president to have
a net minus below zero growth, so every time we get a Republican Administration, the economy really turns into a nightmare. That
is a fact.
You have the Republicans in Kansas, Oklahoma, and Wisconsin using Reaganomics and they are economic disaster areas.
You had an industrial base in the USA, lots of banks and savings and loans to choose from, lots of mom and pop stores, strong
government regulation of the economy, able to live off your pensions, strong unions and employment laws along with the court system
to back you up against corporate malfeasance. All that was gone when Reagan and the two Bushes came into office.
Amazingly accurate article. The once great IBM now a dishonest and unscrupulous corporation concerned more about earnings per
share than employees, customers, or social responsibility. In Global Services most likely 75% or more jobs are no longer in the
US - can't believe a word coming out of Armonk.
I'm not sure there was ever a paradise in employment. Yeah, you can say there was more job stability 50 or 60 years ago, but that
applied to a much smaller workforce than today (mostly white men). It is a drag, but there are also lot more of us old farts than
there used to be and we live a lot longer in retirement as well. I don't see any magic bullet fix either.
Great article. What's especially infuriating is that the industry continues to claim that there is a shortage of STEM workers.
For example, google "claim of 1.4 million computer science jobs with only 400,000 computer science graduates to fill them". If
companies would openly say, "we have plenty of young STEM workers and prefer them to most older STEM workers", we could at least
start addressing the problem. But they continue to promote the lie of there being a STEM shortage. They just want as big a labor
pool as possible, unemployed workers be damned.
I've worked there 17 years and have worried about being layed off for about 11 of them. Moral is in the toilet. Bonuses for the
rank and file are in the under 1% range while the CEO gets millions. Pay raises have been non existent or well under inflation
for years. Adjusting for inflation, I make $6K less than I did my first day. My group is a handful of people as at least 1/2 have
quit or retired. To support our customers, we used to have several people, now we have one or two and if someone is sick or on
vacation, our support structure is to hope nothing breaks. We can't keep millennials because of pay, benefits and the expectation
of being available 24/7 because we're shorthanded. As the unemployment rate drops, more leave to find a different job, leaving
the old people as they are less willing to start over with pay, vacation, moving, selling a house, pulling kids from school, etc.
The younger people are generally less likely to be willing to work as needed on off hours or to pull work from a busier colleague.
I honestly have no idea what the plan is when the people who know what they are doing start to retire, we are way top heavy with
30-40 year guys who are on their way out, very few of the 10-20 year guys due to hiring freezes and we can't keep new people past
2-3 years. It's like our support business model is designed to fail.
Make no mistake. The three and four letter acronyms and other mushy corporate speak may differ from firm to firm, but this is
going on in every large tech company old enough to have a large population of workers over 50. I hope others will now be exposed.
This article hits the nail right on the head, as I come up on my 1 year anniversary from being....ahem....'retired' from 23 years
at IBM....and I'll be damned if I give them the satisfaction of thinking this was like a 'death' to me. It was the greatest thing
that could have ever happened. Ginny and the board should be ashamed of themselves, but they won't be.
Starting around age 40 you start to see age discrimination. I think this is largely due to economics, like increased vacation
times, higher wages, but most of all the perception that older workers will run up the medical costs. You can pass all the age
related discrimination laws you want, but look how ineffective that has been.
If you contrast this with the German workforce, you see that they have more older workers with the skills and younger workers
without are having a difficult time getting in. So what's the difference? There are laws about how many vacation weeks that are
given and there is a national medical system that everyone pays, so discrimination isn't seen in the same light.
The US is the only hold out maybe with South Africa that doesn't have a good national medical insurance program for everyone.
Not only do we pay more than the rest of the world, but we also have discrimination because of it.
This is very good, and this is IBM. I know. I was plaintiff in Gundlach v. IBM Japan, 983 F.Supp.2d 389, which involved their
violating Japanese labor law when I worked in Japan. The New York federal judge purposely ignored key points of Japanese labor
law, and also refused to apply Title VII and Age Discrimination in Employment to the parent company in Westchester County. It
is a huge, self-described "global" company with little demonstrated loyalty to America and Americans. Pennsylvania is suing them
for $170 million on a botched upgrade of the state's unemployment system.
In early 2013 I was given a 3 PBC rating for my 2012 performance, the main reason cited by my manager being that my team lead
thought I "seemed distracted". Five months later I was included in a "resource action", and was gone by July. I was 20 months
shy of 55. Younger coworkers were retained. That was about two years after the product I worked on for over a decade was off-shored.
Through a fluke of someone from the old, disbanded team remembering me, I was rehired two years later - ironically in a customer
support position for the very product I helped develop.
While I appreciated my years of service, previous salary, and previous benefits being reinstated, a couple years into it I
realized I just wasn't cut out for the demands of the job - especially the significant 24x7 pager duty. Last June I received email
describing a "Transition to Retirement" plan I was eligible for, took it, and my last day will be June 30. I still dislike the
job, but that plan reclassified me as part time, thus ending pager duty for me. The job still sucks, but at least I no longer
have to despair over numerous week long 24x7 stints throughout the year.
A significant disappointment occurred a couple weeks ago. I was discussing healthcare options with another person leaving the
company who hadn't been resource-actioned as I had, and learned the hard way I lost over $30,000 in some sort of future medical
benefit account the company had established and funded at some point. I'm not sure I was ever even aware of it. That would have
funded several years of healthcare insurance during the 8 years until I'm eligible for Medicare. I wouldn't be surprised if their
not having to give me that had something to do with my seeming "distracted" to them. <rolls eyes="">
What's really painful is the history of that former account can still be viewed at Fidelity, where it associates my departure
date in 2013 with my having "forfeited" that money. Um, no. I did not forfeit that money, nor would I have. I had absolutely no
choice in the matter. I find the use of the word 'forfeited' to describe what happened as both disingenuous and offensive. That
said, I don't know whether's that's IBM's or Fidelity's terminology, though.
Jeff, You should call Fidelity. I recently received a letter from the US Department of Labor that they discovered that IBM was
"holding" funds that belonged to me that I was never told about. This might be similar or same story .
I apologize in advance to Lambert for adding this link to his terrific daily water cooler
topics, but since Yves and NC were specifically mentioned I thought it would be interesting
to share. The video is titled, "Should we trust MMT?" with Joe Bongiovanni. It is 48 minutes
long and I only made it about 20 minutes after becoming too annoyed. Yves/NC are mentioned at
18 minutes and 40 seconds in. Joe says he was part of the NC commentariat for years, but was
banned due to his thoughts that MMT proponents are misleading and don't "tell the real
truth".
Not being an economist or comfortable enough with my understanding of MMT to know if what
he was saying had merit. Plus the style and lack of preparation from the interviewer other
than wanting her expert to debunk MMT for her right wing followers.
I'm 30 min in .skip ahead to that point to get to the meat of his discussion.
He keeps repeating that he wants monetary "reform", so that the money system 'works for
the people'. But he doesn't say what that change is or why MMT gets it wrong in its
understanding of how the system works.
He says "govt doesn't create money by spending". Except, yes, it does. It then chooses to
offset that spending later with bond auctions.
He doesn't make a distinction between public and private debt, doesn't distinguish between
currency users and issuers. No distinction between stocks and flows. No discussion of
capacity constraints, inflation.
He actually fear-mongers about the debt around the 38-39 min mark. Says there's going to
be tough times when we get austerity (in addition to environment collapsing).
He talks a lot about how 'the monetary system works', but it's clear to me he doesn't get
how the banking system works. I don't think you can understand one without the other very
well.
MMT can offer a clear explanation of why:
1) 30 yr treasury bond yields fell rapidly in the 1980s while deficits were exploding.
2) 30 yr treasury bond yields rose in 2000, hitting 7% on the 30 yr at one point, when the
government was running surpluses.
3) Japan has a functional currency and economy with massive debts and deficits for many
years.
Conventional economics has NO explanation for the above phenomenon.
Cheers Johnny – he's been here before and took umbrage to the NC crew saying that
taxation for revenue is obsolete. Don't make me go there.
Said NC doesn't like criticism and Yves had banned him I'd be banned too if I thought
that!!
Got some trolls on Youtube worked up. I'll go and finish them off after I do a little more
digging on Joe and his Kettle Pond Institute for Debt Free Money.
He had a go at Bill Mitchell on this post recently:
IMO, Tvc, if you want some relevant stuff, look at how Jimmy Dore (a comedian turned
activist) gets his head around MMT – Stephanie Kelton was good and has been linked here
and also Chris Hedges
People like JD are very influential and I can see a heightened awareness out there that we
are not going to get anywhere now by being polite and civil.
I don't remember the details, but he was banned for behavior. The problem that so often
happens is that the people on losing sides of arguments here (as in not just the moderators
but the commentariat does a good job of debunking their claims) is they don't give up and
start going into various forms of bad faith argumentation: broken record, straw manning, or
just plain getting abusive. Then they try to claim they were banned due to their position, as
opposed to how they started carrying on when they couldn't make their case.
The AMI people are a real problem, and the worst is that they use enough lingo that sounds
MMT-like that they confuse people about MMT. They are also presumptuous as hell. I was part
of an Occupy Wall Street group, Alternative Banking. Every week, a group came and kept trying
to hijack the discussion to be about Positive Money. They got air time because that's Occupy
but everyone else regarded them as an annoyance.
One Sunday, the president of AMI showed up in a suit, uninvited, and expected to be able
to take over the group and lecture. The rules were everyone on stack got only 2 or 3 minutes
each (I forget how long) and then had to cede the floor. Since everyone else was too polite,
I was the one who had to shut him up by blowing up at him and telling him he was totally out
of line and had no business abusing the group's rules. That is the only time in my WASPy life
I have carried on like that in a public setting. Broke up the meeting, which reconvened only
after he left.
"... US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the DPR includes oil from the region of tight oil plays that is conventional oil, also it is a model that is not very good so I ignore the DPR ..."
Any guess what the price of crude would be today if we had no fracking in N. America?
Wild guess is all I've got, but I'm saying $142 (and much lower economic growth over the past
9 yrs- maybe even flat averaged for the whole period).
Any other speculations on this?
USA LTO is ~7.5 million bpd. That exceeds global spare capacity over demand as-is today by at
least four times. So if the world was still trying to consume what it is today, we would be
several million short and would have been short by seven figures for several years.
I think we would have found out if there really are any huge but uneconomical fields out
there by now as the panic from that set in a few years ago. A shortage on that scale means
arbitrary prices pending demand cap/destruction.
US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the
DPR includes oil from the region of tight oil plays that is conventional oil, also it is a
model that is not very good so I ignore the DPR .
WAG on oil price with zero LTO output is $120/b in 2017$, plus or minus $20/b.
Canada (offshore), Hebron is expected to produce around 150,000 barrels a day, from about
40,000 barrels a day now.
2018-10-22 (The Globe and Mail) It's been one year since ExxonMobil's long-awaited Hebron
platform off the southeast coast of Newfoundland started pumping crude from its first well.
It took four years, $14 billion, 132,000 cubic metres of concrete and a few thousand workers
to bring it online, and so far, it's churning out about 40,000 barrels a day, with the crude
bound for markets in the U.S. Gulf states, Europe and much of eastern North America.
Eventually, Hebron will drill 20 to 30 wells, and is expected to produce around 150,000
barrels a day.
With an expected reserve of 700 million barrels of recoverable crude, the Hebron project is
expected to operate for 30 years. As Newfoundland's fourth offshore platform, it will play a
key role in the province's plan to double overall production to more than 650,000 barrels a
day by 2030.
https://www.theglobeandmail.com/business/article-why-hebron-has-a-leg-up-on-albertas-oil-sands/
Hebron is already at 70 kbpd and has been for a few months. I thinks its expected annual
average for oil only is 135 and it will take a year or so to get there as the coming wells
will be less productive that the first ones. In the mean time the three other platforms are
in decline (Terra Nova was originally due to be taken off line next year – not sure
what the latest thinking is). They dropped about 35 kbpd last year but that may accelerate as
Hibernia is coming off a secondary plateau.
Yeah, that's going to get a lot worse. It's counting Iran production, and not what it can
sell. A lot in floating storage, and being stored close to China and elsewhere. US is the
only one with an increase, and that increase is on a hiatus until new pipelines come on,
regardless of the EIA overstated production numbers. So, we would be short before any demand
increase, or non-OPEC declines. But, never worry, as IEA says peak oil is just a figment of
our imagination
"The Saudi government said it would take another month to complete a full investigation,
which would be overseen by Mohammed.
Mohammad will find that Mohammad had nothing to do with the issue."
Perhaps an anti-KSA Boycott, Divestment, Sanctions (BDS) Movement will get started.
Consumers and competitors might find the idea appealing.
Nice ideas for new KSA flag designs at this link here (I most like the chainsaw instead of
the current sword design- reminds me of Scarface- Mo Bin Clownstick™ is about as
legitimate and sophisticated as a coke runner): https://www.moonofalabama.org/2018/10/saudis-admit-khashoggi-murder.html
The Sultan is playing his hand well (drip drip drip Turkish Int. leaks to the news with an
intensifying puke factor- one recent read that Khashoggi was dismembered alive and dissolved
in acid). Has Mo Bin Clownstick™ met his match? https://lobelog.com/the-geopolitics-of-the-khashoggi-murder/
I can't help but wonder about all those guys he threw into a hotel prison and shook down for
billions of dollars. They can afford a lot of media with the money they had remaining.
From the report: The $3.9 billion in negative cash flows in the first two quarters of 2018 represented an
improvement over the first halves of 2016 and 2017, when red ink totaled $11 billion and $7.2
billion, respectively.
These 33 companies have had positive net income since 2017Q4 and long term debt reached
its peak for these companies in 2018Q1 at 138 billion with a gradual decrease to 126 billion
in 2018Q2. As prices continue to rise debt will gradually be paid down,
When I look at that report I see an improving situation for these companies. I would
prefer it if they broke the data into two groups, oil focused and natural gas focused
companies. There has been a better recovery in oil prices than natural gas prices though it
looks like we might see a spike in natural gas prices if we have a colder than normal
winter.
India's crude oil imports, the average for the first 9 months of 2018 is up +279 kb/day
compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGtWDoX4AAYDwJ.jpg
India's crude oil refinery processing, the average for the first 9 months of 2018 is up +231
kb/day compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGttFOW4AAr0Uy.jpg
Saudi Arabia spare capacity, there seems to be a consensus that Saudi Arabia can produce 11
million b/day. I guess that producing above that level would be subject to maintenance,
outages and natural decline? (Also I'm guessing that the Khurais field expansion might not be
ready until later in 2019?)
2018-10-22 Saudi Arabia Energy Minister Al Falih speaks to TASS
Saudi Arabia now in October is producing 10.7 million b/day.
And is likely to go up, in the near future, to 11 million b/day on a steady basis.
Our total production capacity is currently 12 million b/day.
And that could be increased to 13 million b/day with an investment of $20 to $30 billion.
Interview with TASS: http://tass.com/economy/1026924
Exxon in Brazil holds potential 41 billion barrels based on preliminary studies
2018-10-18 RIO DE JANEIRO and HOUSTON (Bloomberg) -- In a single year, Exxon Mobil has
gone from being a tiny bit player in Brazil to the second-largest holder of oil exploration
acreage, trailing only state-controlled Petroleo Brasileiro.
The last 24 concessions the U.S. giant bought with its partners may hold 41 billion bbl,
based on preliminary studies, according to Eliane Petersohn, a superintendent at Brazil's
National Petroleum Agency, or ANP. While the existence of the oil still needs to be
confirmed, along with whether its extraction will be cost-effective, it's a huge figure --
almost double Exxon's current reserves.
The Irving, Texas-based company is betting big in particular on Brazil's offshore, where a
single block is currently producing more than all of Colombia and profitability compares to
the best U.S. tight oil, according to Decio Oddone, the head of ANP.
It should take six to eight years for oil to start flowing if economically viable deposits
are discovered, according to ANP.
https://www.worldoil.com/news/2018/10/18/exxon-makes-major-bet-on-brazil-as-petrobras-eases-its-grip
Why does the dollar continue to possess a hegemonic status a decade after the crisis that
seemed to signal an end to U.S.-U.K. dominated finance? Gillian Tett of the
Financial Times offers several reasons. The first is the global reach of U.S.
based banks. U.S. banks are seen as stable, particularly when compared to European banks. Any
listing
of the largest international banks will be dominated by Chinese banks, and
these institutions have expanded their international business . But the Chinese banks will
conduct business in dollars when necessary. Tett's second reason is the relative strength of
the U.S. economy, which grew at a 4.1% pace in the second quarter. The third reason is the
liquidity and credibility of U.S. financial markets, which are superior to those of any
rivals.
The U.S. benefits from its financial dominance in several ways.
Jeff Sachs of Columbia University points out that the cost of financing government deficits
is lower due to the acceptance of U.S. Treasury securities as "riskless assets." U.S. banks and
other institutions earn profits on their foreign operations. In addition, the use of our
banking network for international transactions provides the U.S. government with a powerful
foreign policy tool in the form of sanctions
that exclude foreign individuals, firms or governments from this network .
There are risks to the system with this dependence. As U.S. interest rates continue to rise,
loans that seemed reasonable before now become harder to finance. The burden of
dollar-denominated debt also increases as the dollar appreciates. These developments exacerbate
the repercussions of policy mistakes in Argentina and Turkey, but also affect other countries
as well.
The IMF in its latest Global Financial Stability (see also here )
identifies another potential destabilizing feature of the current system. The IMF reports that
the U.S. dollar balance sheets of non-U.S. banks show a reliance on short-term or wholesale
funding. This reliance leaves the banks vulnerable to a liquidity freeze. The IMF is
particularly concerned about the use of foreign exchange swaps, as swap markets can be quite
volatile. While
central banks have stablished their own network of swap lines , these have been
criticized .
The status of the dollar as the primary international currency is not welcomed by foreign
governments. The Russian government, for
example, is seeking to use other currencies for its international commerce. China and
Turkey have offered some support, but China is invested in promoting the use of its own
currency. In addition, Russia's dependence on its oil exports will keep it tied to the
dollar.
But interest in formulating a new international payments system has now spread outside of
Russia and China.
Germany's Foreign Minister Heiko Maas has called for the establishment of "U.S. independent
payment channels" that would allow European firms to continue to deal with Iran despite the
U.S. sanctions on that country.
Chinese electronic payments systems are being used in Europe and the U.S. The dollar may
not be replaced, but it may have to share its role as an international currency with other
forms of payment if foreign nations calculate that the benefits of a new system outweigh its
cost. Until now that calculation has always favored the dollar, but the reassessment of
globalization initiated by the Trump administration may have lead to unexpected
consequences.
The debate about peak oil demand always tends to focus on how quickly electric vehicles will
replace the internal-combustion engine , especially as EV sales are accelerating. However, the
petrochemical sector will be much more difficult to dislodge , and with alternatives far
behind, petrochemicals will account for an increasing share of crude oil demand growth in the
years ahead.
"... Ship of Fools is no apology for Trumpism. Indeed, Carlson calls Trump "vulgar and ignorant." But he rightly points out that Trump "didn't invade Iraq or bail out Wall Street. He didn't lower interest rates to zero, or open the borders, or sit silently by as the manufacturing sector collapsed and the middle class died." Basically, Donald J. Trump is not your average American politician. Thank God. ..."
"... Well, Ship of Fools excoriates finance capitalism and the class that has constantly reaped economic benefits out of the labor of American workers without contributing anything of substance to the American body politic. The Democrats used to be the party of populist rabble rousers like Huey Long and Al Smith. ..."
"... Explicit in this critique of America's Ruling Class is the fact that democracies are unstable and prone to self-destruction. In modern America, the elite do not attend to the population, cynical race-mongering is used to win votes at the cost of internal peace, and chicken hawks like Max Boot and William Kristol still receive adulation in the Main Stream Media despite their disastrous record of cheering on military misadventures that kill thousands of Americans. (To say nothing of their fanatical opposition to Trump -- despite the fact that he won the presidency when their catspaws McCain and Romney ignominiously failed). Ship of Fools correctly notes that this is what an empire looks like in its final days. ..."
"... Jake Bowyer [ Email him ] is the pseudonym of an American college student. ..."
Since the late fall of 2016, Democrats and other Leftist types have been decrying President
Donald J. Trump as "not normal" and a "threat to democracy." Of course, this is hogwash of the
most rank sort. The same people lambasting Trump for his supposed " authoritarianism " are the
same people who have created the modern American oligarchy. Tucker Carlson , the popular Fox News who wrote
the single most brilliant and prescient Main Stream Media article on the Trump phenomenon:
Donald Trump Is Shocking, Vulgar and Right | And, my dear fellow Republicans,
he's all your fault, by Tucker Carlson, Politico, January 28, 2016.
For Carlson, moral and social rot in the United States starts at the very top -- the place
where Democrats and Republicans
https://vdare.com/posts/they-want-to-lose-gop-congress-sounds-retreat-on-border-wall-funds-democratic-priorities
to maintain unpopular elite rule. Carlson compares this American elite to blind drunk captains
steering a sinking ship. Making matters worse: the fact that, in keeping with Carlson's
nautical parallel, "Anyone who points out the consequences of what they're [the elite] doing
gets keelhauled." Gavin
McInnes (banned from Twitter ) and
Alex
Jones (banned from
everything ) would agree.
Ship of Fools is no apology for Trumpism. Indeed, Carlson calls Trump "vulgar and
ignorant." But he rightly points out that Trump "didn't invade Iraq or bail out Wall Street. He
didn't lower interest rates to zero, or open the borders, or sit silently by as the
manufacturing sector collapsed and the middle class died." Basically, Donald J. Trump is not
your average American politician. Thank God.
For much of Ship of Fools , Carlson comes off sounding like someone with his heart
in the center-left. Some cheeky Twitter users might even dub Carlson's latest book National
Bolshevism.
Why? Well, Ship of Fools excoriates finance capitalism and the class that has
constantly reaped economic benefits out of the labor of American workers without contributing
anything of substance to the American body politic. The Democrats used to be the party of
populist rabble rousers like Huey Long and Al Smith.
But Carlson points out that "the Democratic Party is now the party of the rich." Rather than
attacking mega-wealthy people
like Amazon's
Jeff Bezos or Apple's Tim Cook , the
modern American Left is completely in thrall to money and
corporate power. This hurts every American not in the upper income bracket.
Republicans are no better. They remain wedded to the idea of being the party of business,
and as such many Republican elected officials support Open Borders because that would provide
their donors with an endless supply of cheap labor. This support comes at the cost of angering
a majority of Republican voters.
In sum, both parties have given up on the native-born American workers. And, beginning in
2016, American workers began pushing back at the ballot box.
Ship of Fools is a bleak book. It is also much better than the usual fluff penned
(or signed) by Fox News pundits. Carlson tells uncomfortable truths and
engages with topics that until very recently were only considered fit for the fringe Right
(like VDARE.com ).
Take for instance the displacement of white Americans, especially white working-class
Americans. America is a nation of 200 million white people. Native-born whites pay more in
taxes, provide the majority of America's soldiers, sailors, Marines, and airmen, and are the
offspring of the people who built this country. For this hard work and loyalty,
foreign-born editors at the New York Times tweet
"#CancelWhitePeople." Hordes of
Antifa types cheer on the displacement of native-born whites, while the political elite do
nothing to combat rising drug overdose deaths and suicides in the Midwest, rural Northeast, and
South. As Carlson warns, " White
identity politics will be a response to a world in which identity politics is the only game
there is."
And, as anti-white vitriol increases and whites are demoted from majority status, Carlson
predicts that white interest groups will form and flex their muscles when they feel that their
backs are up against the wall.
At several points in Ship of Fools , Carlson sincerely grieves for the lost
Liberal-Left of his childhood. He misses the environmentalists who cared about littering, not
about some abstract thing called climate change. He misses those Leftists who cried about
injustice in the world rather than ranting and raving at the behest of the elite class. Without
an honest Left, America could further descend into corporate anarcho-tyranny
-- a place where businesses control free speech and only a small sliver of people enjoy the
benefits of the modern and high-tech economy.
Ship of Fools ends with a warning: either practice democracy or be prepared for
authoritarian rule.
"In order to survive, democracies must remain egalitarian," Carlson argues."When all the
spoils seem to flow upward, the majority will revolt in protest."
Explicit in this critique of America's Ruling Class is the fact that democracies are
unstable and prone to self-destruction. In modern America, the elite do not attend to the
population, cynical race-mongering is used to
win votes at the cost of internal peace, and chicken hawks like
Max Boot and William
Kristol still receive adulation in the Main Stream Media despite their disastrous record of
cheering on military misadventures that kill thousands of Americans. (To say nothing of their
fanatical opposition to Trump -- despite the fact that he won the presidency when their
catspaws McCain
and Romney ignominiously failed). Ship of Fools correctly notes that this is what an
empire looks like in its final days.
In this sense the elites may be right to characterize President Trump as a populist. After
all, Julius
Caesar gave the common man order, security, and bread in the face of a cold and sterile
system. By attempting to dismantle the elite consensus, Trump, Trumpism
, and America
First may just be the first entries in a new age of all-American Caesarism.
We should only be so lucky!
Jake Bowyer [ Email him ] is the pseudonym of an American college
student.
I enjoyed the book immensely even though I'm a socialist myself. Tucker's disdain for wars,
technology companies, and the ruling class are a breath of fresh air. I also enjoy his show
but I do wish he wouldn't talk over the guests he disagrees with.
There must be a reason why people like j g strijdom and curmudgeon, with their slimy
unsubstantiated charges, despise Tucker Carlson. I suspect it is this:
New Tucker book condemns both neoliberalism and neocon foreign policy
Notable quotes:
"... Tucker states that the USA's neoliberal elite acquired control of a massive chunk of the country's wealth. And then successfully insulated themselves from the hoi polloi. They send their children to the Ivy League universities, live in enclosed compounds with security guards, travel in helicopters, etc. Kind of like French aristocracy on a new level ("Let them eat cakes"). "There's nothing more infuriating to a ruling class than contrary opinions. They're inconvenient and annoying. They're evidence of an ungrateful population... Above all, they constitute a threat to your authority." (insert sarcasm) ..."
I think the US society is entering a deep, sustained political crisis and it is unclear
what can bring us back from it other then the collapse, USSR-style. The USA slide into
corporate socialism (which might be viewed as a flavor of neofascism) can't be disputed.
Looks like all democracies are unstable and prone to self-destruction. In modern America,
the elite do not care about lower 80% of the population, and is over-engaged in cynical
identity politics, race and gender-mongering. Anything to win votes.
MSM is still cheering on military misadventures that kill thousands of Americans,
impoverish millions, and cost trillions. Congress looks even worse. Republican House leader
Paul Ryan looks like 100% pure bought-and-paid-for tool of multinational corporations...
The scary thing for me is that the USA national problems are somewhat similar to the ones
that the USSR experienced before the collapse. At least the level of degeneration of
political elite of both parties (which in reality is a single party) is.
The only positive things is that there is viable alternative to neoliberalism on the
horizon. But that does not mean that we can't experience 1930th on a new level again. Now
several European countries such as Poland and Ukraine are already ruled by far right
nationalist parties. Brazil is probably the next. So this or military rule in the USA is not
out of question.
Ship of Fools is what the US empire and the US society looks like now. And that's not
funny. Look at <a
href="https://www.amazon.com/Ship-Fools-Selfish-Bringing-Revolution-ebook/dp/B071FFRJ48">"Ship
of Fools: How a Selfish Ruling Class Is Bringing America to the Brink of
Revolution"</a> by Tucker Carlson hits the mark when he says that the career
politicians and other elites in this country have put the USA on a path of
self-destruction.
Some other factors are also in play: one is that a country with 320 million population
can't be governed by the same methods as a country of 76 million (1900). End of cheap oil is
near and probably will occur within the next 50 years or so. Which means the end of
neoliberalism as we know it.
Tucker states that the USA's neoliberal elite acquired control of a massive chunk of the
country's wealth. And then successfully insulated themselves from the hoi polloi. They send
their children to the Ivy League universities, live in enclosed compounds with security
guards, travel in helicopters, etc. Kind of like French aristocracy on a new level ("Let them
eat cakes"). "There's nothing more infuriating to a ruling class than contrary opinions.
They're inconvenient and annoying. They're evidence of an ungrateful population... Above all,
they constitute a threat to your authority." (insert sarcasm)
Donald Trump was in many ways an unappealing figure. He never hid that. Voters knew it.
They just concluded that the options were worse -- and not just Hillary Clinton and the
Democratic Party, but the Bush family and their donors and the entire Republican
leadership, along with the hedge fund managers and media luminaries and corporate
executives and Hollywood tastemakers and think tank geniuses and everyone else who created
the world as it was in the fall of 2016: the people in charge. Trump might be vulgar and
ignorant, but he wasn't responsible for the many disasters America's leaders created .
There was also the possibility that Trump might listen. At times he seemed interested in
what voters thought. The people in charge demonstrably weren't. Virtually none of their
core beliefs had majority support from the population they governed .Beginning on election
night, they explained away their loss with theories as pat and implausible as a summer
action movie: Trump won because fake news tricked simple minded voters. Trump won because
Russian agents "hacked" the election. Trump won because mouth-breathers in the provinces
were mesmerized by his gold jet and shiny cuff links.
From a reader review:
The New [Neoliberal] Elite speaks: "The Middle Class are losers and they have made bad
choices, they haven't worked as hard as the New Elite have, they haven't gone to SAT Prep
or LSAT prep so they lose, we win. We are the Elite and we know better than you because we
got high SAT scores.
Do we have experience? Uh....well...no, few of us have been in the military, pulled KP,
shot an M-16.... because we are better than that. Like they say only the losers go in the
military. We in the New Elite have little empirical knowledge but we can recognize patterns
very quickly."
Just look at Haley behavior in the UN and Trump trade wars and many things became more
clear. the bet is on destruction of existing international institutions in order to save the
USA elite. A the same time Trump trade wars threaten the neoliberal order so this might well
be a path to the USA self-destruction.
On Capital hill rancor, a lack of civility and derisive descriptions are everywhere.
Respect has gone out the window. Left and right wings of a single neoliberal party (much like
CPSU was in the USSR) behave like drunk schoolchildren. Level of pettiness is simply
amazing.
Our commenter psychohistorian and others interested in public banking, and the
concept of money as a public utility rather than a private (and profit-gouging) instrument,
may want to watch the latest Keiser Report, which has an interview with Ellen Brown.
Brown relates that the city of Los Angeles has on its ballot for the November elections a
measure to create a city-owned bank. This was put on the ballot by the city council itself,
prompted by a groundswell of support coming from constituents.
The rapid-fire interview doesn't go deeply into the politics behind this citizen
initiative, but it seems like a happy story of young millennials looking for an alternative
to Wall Street banks, and learning from Brown and others about the strong value of the public
bank.
An interesting turn of events. The interview starts in the second half of the show at
14:40:
"... By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives ..."
"... Treatise on Money ..."
"... State Theory of Money ..."
"... Money and Credit in Capitalist Economies ..."
"... Understanding Modern Money ..."
"... Modern Money Theory ..."
"... Payback: Debt and the shadow side of wealth ..."
"... Reclaiming the State ..."
"... Austerity: The History of a Dangerous Idea ..."
"... permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. ..."
"... that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. ..."
"... income inequality ..."
"... even after paying interest ..."
"... It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945). ..."
"... After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. ..."
"... "Taxes or other obligations (fees, fines, tribute, tithes) drive the currency." ..."
"... "JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability." ..."
I was asked to give a short presentation at the MMT conference. What follows is the text
version of my remarks, some of which I had to skip over in the interests of time. Many readers
might want to skip to the bullet points near the end, which summarize what I include in
MMT.
I'd also like to quickly respond to some comments that were made at the very last session of
the conference -- having to do with "approachability" of the "original" creators of MMT. Like
Bill Mitchell, I am uncomfortable with any discussion of "rockstars" or "heroes". I find this
quite embarrassing. As Bill said, we're just doing our job. We are happy (or, more accurately
pleasantly surprised) that so many people have found our work interesting and useful. I'm happy
(even if uncomfortable) to sign books and to answer questions at such events. I don't mind
emailed questions, however please understand that I receive hundreds of emails every day, and
the vast majority of the questions I get have been answered hundreds, thousands, even tens of
thousands of times by the developers of MMT. A quick reading of my Primer or search of NEP (and
Bill's blog and Warren's blogs) will reveal answers to most questions. So please do some
homework first. I receive a lot of "questions" that are really just a thinly disguised pretense
to argue with MMT -- I don't have much patience with those. Almost every day I also receive a
2000+ word email laying out the writer's original thesis on how the economy works and asking me
to defend MMT against that alternative vision. I am not going to engage in a debate via email.
If you have an alternative, gather together a small group and work for 25 years to produce
scholarly articles, popular blogs, and media attention -- as we have done for MMT -- and then
I'll pay attention. That said, here you go: [email protected] .
As an undergraduate I studied psychology and social sciences -- but no economics, which
probably gave me an advantage when I finally did come to economics. I began my economics career
in my late 20's studying mostly Institutionalist and Marxist approaches while working for the
local government in Sacramento. However, I did carefully read Keynes's General Theory
at Sacramento State and one of my professors -- John Henry -- pushed me to go to St. Louis to
study with Hyman Minsky, the greatest Post Keynesian economist.
I wrote my dissertation in Bologna under Minsky's direction, focusing on private banking and
the rise of what we called "nonbank banks" and "off-balance sheet operations" (now called
shadow banking). While in Bologna, I met Otto Steiger -- who had an alternative to the barter
story of money that was based on his theory of property. I found it intriguing because it was
consistent with some of Keynes's Treatise on Money that I was reading at the time.
Also, I had found Knapp's State Theory of Money -- cited in both Steiger and
Keynes–so I speculated on money's origins (in spite of Minsky's warning that he didn't
want me to write Genesis ) and the role of the state in my dissertation that became a
book in 1990 -- Money and Credit in Capitalist Economies -- that helped to develop the
Post Keynesian endogenous money approach.
What was lacking in that literature was an adequate treatment of the role of the
state–which played a passive role -- supplying reserves as demanded by private bankers --
that is the Post Keynesian accommodationist or Horzontalist approach. There was no discussion
of the relation of money to fiscal policy at that time. As I continued to read about the
history of money, I became more convinced that we need to put the state at the center.
Fortunately I ran into two people that helped me to see how to do it.
First there was Warren Mosler, who I met online in the PKT discussion group; he insisted on
viewing money as a tax-driven government monopoly. Second, I met Michael Hudson at a seminar at
the Levy Institute, who provided the key to help unlock what Keynes had called his "Babylonian
Madness" period -- when he was driven crazy trying to understand early money. Hudson argued
that money was an invention of the authorities used for accounting purposes. So over the next
decade I worked with a handful of people to put the state into monetary theory.
As we all know, the mainstream wants a small government, with a central bank that follows a
rule (initially, a money growth rate but now some version of inflation targeting). The fiscal
branch of government is treated like a household that faces a budget constraint. But this
conflicts with Institutionalist theory as well as Keynes's own theory. As the great
Institutionalist Fagg Foster -- who preceded me at the University of Denver–put it:
whatever is technically feasible is financially feasible. How can we square that with the
belief that sovereign government is financially constrained? And if private banks can create
money endogenously -- without limit -- why is government constrained?
My second book, in 1998, provided a different view of sovereign spending. I also revisited
the origins of money. By this time I had discovered the two best articles ever written on the
nature of money -- by Mitchell Innes. Like Warren, Innes insisted that the dollar's value is
derived from the tax that drives it. And he argued this has always been the case. This was also
consistent with what Keynes claimed in the Treatise, where he said that money has been a state
money for the past four thousand years, at least. I called this "modern money" with intentional
irony -- and titled my 1998 book Understanding Modern Money as an inside joke. It only
applies to the past 4000 years.
Surprisingly, this work was more controversial than the earlier endogenous money research.
In my view it was a natural extension -- or more correctly, it was the prerequisite to a study
of privately created money. You need the state's money before you can have private money.
Eventually our work found acceptance outside economics -- especially in law schools, among
historians, and with anthropologists.
For the most part, our fellow economists, including the heterodox ones, attacked us as
crazy.
I benefited greatly by participating in law school seminars (in Tel Aviv, Cambridge, and
Harvard) on the legal history of money -- that is where I met Chris Desan and later Farley
Grubb, and eventually Rohan Grey. Those who knew the legal history of money had no problem in
adopting MMT view -- unlike economists.
I remember one of the Harvard seminars when a prominent Post Keynesian monetary theorist
tried to argue against the taxes drive money view. He said he never thinks about taxes when he
accepts money -- he accepts currency because he believes he can fob it off on Buffy Sue. The
audience full of legal historians broke out in an explosion of laughter -- yelling "it's the
taxes, stupid". All he could do in response was to mumble that he might have to think more
about it.
Another prominent Post Keynesian claimed we had two things wrong. First, government debt
isn't special -- debt is debt. Second, he argued we don't need double entry book-keeping -- his
model has only single entry book-keeping. Years later he agreed that private debt is more
dangerous than sovereign debt, and he's finally learned double-entry accounting. But of course
whenever you are accounting for money you have to use quadruple entry book-keeping. Maybe in
another dozen years he'll figure that out.
As a student I had read a lot of anthropology -- as most Institutionalists do. So I knew
that money could not have come out of tribal economies based on barter exchange. As you all
know, David Graeber's book insisted that anthropologists have never found any evidence of
barter-based markets. Money preceded market exchange.
Studying history also confirmed our story, but you have to carefully read between the lines.
Most historians adopt monetarism because the only economics they know is Friedman–who
claims that money causes inflation. Almost all of them also adopt a commodity money view --
gold was good money and fiat paper money causes inflation. If you ignore those biases, you can
learn a lot about the nature of money from historians.
Farley Grubb -- the foremost authority on Colonial currency -- proved that the American
colonists understood perfectly well that taxes drive money. Every Act that authorized the issue
of paper money imposed a Redemption Tax. The colonies burned all their tax revenue. Again,
history shows that this has always been true. All money must be redeemed -- that is, accepted
by its issuer in payment. As Innes said, that is the fundamental nature of credit. It is
written right there in the early acts by the American colonies. Even a gold coin is the
issuer's IOU, redeemed in payment of taxes. Once you understand that, you understand the nature
of money.
So we were winning the academic debates, across a variety of disciplines. But we had a hard
time making progress in economics or in policy circles. Bill, Warren, Mat Forstater and I used
to meet up every year or so to count the number of economists who understood what we were
talking about. It took over decade before we got up to a dozen. I can remember telling Pavlina
Tcherneva back around 2005 that I was about ready to give it up.
But in 2007, Warren, Bill and I met to discuss writing an MMT textbook. Bill and I knew the
odds were against us -- it would be for a small market, consisting mostly of our former
students. Still, we decided to go for it. Here we are -- another dozen years later -- and the
textbook is going to be published. MMT is everywhere. It was even featured in a New
Yorker crossword puzzle in August. You cannot get more mainstream than that.
We originally titled our textbook Modern Money Theory , but recently decided to
just call it Macroeconomics . There's no need to modify that with a subtitle. What we
do is Macroeconomics. There is no coherent alternative to MMT.
A couple of years ago Charles Goodhart told me: "You won. Declare victory but be magnanimous
about it." After so many years of fighting, both of those are hard to do. We won. Be nice.
Let me finish with 10 bullet points of what I include in MMT:
1. What is money: An IOU denominated in a socially sanctioned money of account. In almost
all known cases, it is the authority -- the state -- that chooses the money of account. This
comes from Knapp, Innes, Keynes, Geoff Ingham, and Minsky.
2. Taxes or other obligations (fees, fines, tribute, tithes) drive the currency. The ability
to impose such obligations is an important aspect of sovereignty; today states alone monopolize
this power. This comes from Knapp, Innes, Minsky, and Mosler.
3. Anyone can issue money; the problem is to get it accepted. Anyone can write an IOU
denominated in the recognized money of account; but acceptance can be hard to get unless you
have the state backing you up. This is Minsky.
4. The word "redemption" is used in two ways -- accepting your own IOUs in payment and
promising to convert your IOUs to something else (such as gold, foreign currency, or the
state's IOUs).
The first is fundamental and true of all IOUs. All our gold bugs mistakenly focus on the
second meaning -- which does not apply to the currencies issued by most modern nations, and
indeed does not apply to most of the currencies issued throughout history. This comes from
Innes and Knapp, and is reinforced by Hudson's and Grubb's work, as well as by Margaret
Atwood's great book: Payback: Debt and the shadow side of wealth .
5. Sovereign debt is different. There is no chance of involuntary default so long as the
state only promises to accept its currency in payment. It could voluntarily repudiate its debt,
but this is rare and has not been done by any modern sovereign nation.
6. Functional Finance: finance should be "functional" (to achieve the public purpose), not
"sound" (to achieve some arbitrary "balance" between spending and revenues). Most importantly,
monetary and fiscal policy should be formulated to achieve full employment with price
stability. This is credited to Abba Lerner, who was introduced into MMT by Mat Forstater.
In its original formulation it is too simplistic, summarized as two principles: increase
government spending (or reduce taxes) and increase the money supply if there is unemployment
(do the reverse if there is inflation). The first of these is fiscal policy and the second is
monetary policy. A steering wheel metaphor is often invoked, using policy to keep the economy
on course. A modern economy is far too complex to steer as if you were driving a car. If
unemployment exists it is not enough to say that you can just reduce the interest rate, raise
government spending, or reduce taxes. The first might even increase unemployment. The second
two could cause unacceptable inflation, increase inequality, or induce financial instability
long before they solved the unemployment problem. I agree that government can always afford to
spend more. But the spending has to be carefully targeted to achieve the desired result. I'd
credit all my Institutionalist influences for that, including Minsky.
7. For that reason, the JG is a critical component of MMT. It anchors the currency and
ensures that achieving full employment will enhance both price and financial stability. This
comes from Minsky's earliest work on the ELR, from Bill Mitchell's work on bufferstocks and
Warren Mosler's work on monopoly price setting.
8. And also for that reason, we need Minsky's analysis of financial instability. Here I
don't really mean the financial instability hypothesis. I mean his whole body of work and
especially the research line that began with his dissertation written under Schumpeter up
through his work on Money Manager Capitalism at the Levy Institute before he died.
9. The government's debt is our financial asset. This follows from the sectoral balances
approach of Wynne Godley. We have to get our macro accounting correct. Minsky always used to
tell students: go home and do the balances sheets because what you are saying is nonsense.
Fortunately, I had learned T-accounts from John Ranlett in Sacramento (who also taught
Stephanie Kelton from his own, great, money and banking textbook -- it is all there, including
the impact of budget deficits on bank reserves). Godley taught us about stock-flow consistency
and he insisted that all mainstream macroeconomics is incoherent.
10. Rejection of the typical view of the central bank as independent and potent. Monetary
policy is weak and its impact is at best uncertain -- it might even be mistaking the brake
pedal for the gas pedal. The central bank is the government's bank so can never be independent.
Its main independence is limited to setting the overnight rate target, and it is probably a
mistake to let it do even that. Permanent Zirp (zero interest rate policy) is probably a better
policy since it reduces the compounding of debt and the tendency for the rentier class to take
over more of the economy. I credit Keynes, Minsky, Hudson, Mosler, Eric Tymoigne, and Scott
Fullwiler for much of the work on this.
That is my short list of what MMT ought to include. Some of these traditions have a very
long history in economics. Some were long lost until we brought them back into discussion.
We've integrated them into a coherent approach to Macro. In my view, none of these can be
dropped if you want a macroeconomics that is applicable to the modern economy. There are many
other issues that can be (often are) included, most importantly environmental concerns and
inequality, gender and race/ethnicity. I have no problem with that.
A JG is to discontinue NAIRU or structural under-unemployment with attendant
monetarist/quasi inflation views. Something MMT has be at pains to point out wrt fighting a
nonexistent occurrence due to extended deflationary period.
Its double entry accounting counting both sides of the equation. Fed deposits money into
bank requires 4 entries, a double entry for the Fed and for the bank. Typical double entry
accounting only looks at the books of 1 entity at a time. Quadruple Entry accounting makes
the connection between the government monetary policy and private business accounting. I'm
not an accountant, I may have butchered that.
think about banks and reserves, your money is on the bank's liability side (and your
asset), while the reserves are on the bank's asset side (and gov't or fed's liability.)
i think its the reserves that quadruple it, reserves are confusing because when you move
$5 from a bank account to buy ice cream its not just one copy of the $5 that moves between
checking accounts, there is another $5 that moves "under the hood" so to speak in reserve
world
Very briefly, double entry bookkeeping keeps track of how money comes in/out, and where it
came from/went. Cash is the determining item (although there may be a few removes). Hence,
say I buy a $20 dollar manicure from you. I record my purchase as "Debit (increase) expense:
manicure $20, credit (decrease) cash, $20". Bonus! If my bookkeeping is correct, my debits
and credits are equal and if I add them up (credits are minus and debits are plus) the total
is zero – my books "balance". So, double-entry bookkeeping is also a hash-total check
on my accounting accuracy. But I digress.
On your books, the entry would be "Debit (increase) cash $20, credit (decrease)
sales, $20".
So, your double-entry book plus my double-entry books would be quadruple-entry
accounting.
#7 was my immediate stopper, too. It drives me nuts when people introduce 2-3-4 letter
acronyms with no explanation (I work for the DoD and I'm surrounded by these "code words". I
rarely know what people are talking about and when I ask, the people talking rarely know what
these TLAs – T hree L etter A cronyms – stand for either!).
Next question regarding #7: What is ELR?
Other than #7, I really appreciate this article. NC teaches and/or clarifies on a daily
basis.
This quick, entertaining read is IMHO nothing less than a "Rosetta Stone" that can bring
non-specialists to understand MMT: not just how , but why it differs from
now-conventional neoliberal economics. I hope it finds a wide readership and that its many
references to MMT's antecedents inspire serious study by the unconvinced (and I hope they
don't take Wray's invitation to skip the 10 bullet points).
This piece is a fine demonstration of why I've missed Wray as he seemed to withdraw from
public discourse for the last few years.
Thank you! The (broad) analogies with my own experience are there. I had a decidedly
"mainstream" macro education at Cambridge (UK); though many of the "old school"
professors/college Fellows who, although not MMT people as we'd currently understand (or
weren't at *that* stage – Godley lectured a module I took but this was in the early
1990s) were still around, in hindsight the "university syllabus" (i.e. what you needed to
regurgitate to pass exams) had already steered towards neoliberalism. I never really
understood why I never "got" macro and it was consistently my weakest subject.
It was later, having worked in the City of London, learned accountancy in my actuarial
training, and then most crucially starting reading blogs from people who went on to become
MMT leading lights, that I realised the problem wasn't ME, it was the subject matter. So I
had to painfully unlearn much of what I was taught and begin the difficult process of getting
my head around a profoundly different paradigm. I still hesitate to argue the MMT case to
friends, since I don't usually have to hand the "quick snappy one liners" that would torpedo
their old discredited understanding.
I'm still profoundly grateful for the "old school" Cambridge College Fellows who were
obviously being sidelined by the University and who taught me stuff like the Marxist/Lerner
critiques, British economic history, political economy of the system etc. Indeed whilst I had
"official" tutorials with a finance guy who practically came whenever Black-Scholes etc was
being discussed, an old schooler was simultaneously predicting that it would blow the world
economy up at some point (and of course he was in the main , correct). I still had to fill in
some gaps in my knowledge (anthropology was not a module, though Marxist economics was), with
hindsight I appreciate so much more of what the "old schoolers" said on the sly during quiet
points in tutorials – Godley being one, although he wasn't ready at that time to
release the work he subsequently published and was so revolutionary. Having peers educated
elsewhere during my Masters and PhD who knew nothing of the subjects that – whilst
certainly not the "key guide" to "proper macro" described in the article – began to
horrify me later in my career.
This is really great. Thanks a ton, as Yves would say.
I know I have used to "rock star" metaphor on occasion, so let me explain that to
me what is important in excellent (i.e., live) rock and roll is improvisational
interplay among the group members -- the dozen or so who understood MMT in the beginning, in
this case -- who know the tune, know each other, and yet manage to make the song a little
different each time. It's really spectacular to see in action. Nothing to do with spotlights,
or celebrity worship, or fandom!
I'm no MMT expert, but I think
this article does a good job of juxtaposing MMT with classic (non-advanced)
macroeconomics. I quote:
In the language of Tinbergen (1952), the debate between MMT and mainstream macro can be
thought of as a debate over which instrument should be assigned to which target. The
consensus assignment is that the interest rate, under the control of an independent central
bank, should be assigned to the output gap target, while the fiscal position, under control
of the elected budget authorities, should be assigned to the debt sustainability target. [
] The functional finance assignment is the reverse -- the fiscal balance under the budget
authorities is assigned to the output target, while any concerns about debt sustainability
are the responsibility of the monetary authority.
What about interest rate fixing? The central bank would remain in charge of that, but in
an MMT context this instrument would lose most of its relevance:
[W]hile a simple swapping of instruments and targets is one way to think about
functional finance, this does not describe the usual MMT view of how the policy interest
rate should be set. What is generally called for, rather, is that the interest rate be
permanently kept at a very low level, perhaps zero. In an orthodox policy framework, of
course, this would create the risk of runaway inflation; but keep in mind that in the
functional framework, the fiscal balance is set to whatever level is consistent with price
stability.
It may be a partial reconstruction of MMT, but to me this seems to be a neat way to
present MMT to most people. Saying that taxes are there just to remove money from the economy
or to provide incentives is a rather extreme statement that is bound to elicit some fierce
opposition.
Having said that, I've never seen anyone address what I think are two issues to MMT: how
to make sure that the power to create money is not exploited by a political body in order to
achieve consensus, and how to assure that the idea of unlimited monetary resources do not
lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry
would probably be a good example).
The best comparison of MMT with neoliberal neoclassical economics, in my view, is Bill
Mitchell's blog post, "How to Discuss Modern Monetary Theory" ( http://bilbo.economicoutlook.net/blog/?p=25961
). I especially recommend the table near the end as a terrific summary of the differences
between the mainstream narrative and MMT.
Thanks! I have enormous respect for Mitchell, given the quantity and quality of his
blogging. However, my only nitpick is that a lot of his blog entries are quite long and "not
easily digestible". I have long thought that one of those clever people who can do those 3
minute rapid animation vids we see on youtube is needed to "do a Lakoff" and change the
metaphors/language. But this post of Mitchell (which I missed, since I don't read all his
stuff) is, IMHO, his best at "re-orienting us".
Saying that taxes are there just to remove money from the economy or to provide
incentives is a rather extreme statement that is bound to elicit some fierce
opposition.
Yes this is a frightening statement. The power to tax is the power to destroy. If this is
a foundation point of the proposal then
Having said that, I've never seen anyone address what I think are two issues to MMT: how
to make sure that the power to create money is not exploited by a political body in order
to achieve consensus, and how to assure that the idea of unlimited monetary resources do
not lead to misallocation and inefficiencies (the bloated, awash-with-money US military
industry would probably be a good example).
Bingo. My thoughts exactly. Too much power in the hands of the few. Easy to slide into
Orwell's Animal Farm – where some people are more equal than others.
MMT is based upon very good intentions but, in my view, there is a moral rot at the root
of the US of A's problems, not sure this can be solved by monetary policy and more
centralized control.
And the JG? Once the government starts to permanently guarantee jobs
I suggest you delve into what is proposed by the MMT – PK camp wrt a JG because its
not centralized in the manner you suggest. It would be more regional and hopefully
administrated via social democratic means e.g. the totalitarian aspect is moot.
I think its incumbent on commenters to do at least a cursory examination before heading
off on some deductive rationalizations, which might have undertones of some book they read
e.g. environmental bias.
Skippy, I read the article, plus the links, including those links of the comments. I will
admit that I am a little more right of center in my views than many on the website.
The idea is interesting, but the administration of such a system would require rewriting
the US Constitution, or an Amendment to it if one thinks the process through, would it not? I
think of the Amendment required to create the Federal Reserve System when I say this.
One thing I really don't like at all -- and I've crossed swords with many over this -- is
that we do tend to take (not just in the US, this is prevalent in far too many
places) things like the constitution, or cultural norms, or traditions or other variants of
"that's the way we've always done this" and elevate them to a level of sacrosanctity.
Not for one moment am I suggesting that we should ever rush into tweaking such devices
lightly nor without a great deal of analysis and introspective consultations.
Constitutions get amended all the time. The Republic of Ireland changed its to renounce a
territorial claim on Northern Ireland. The U.K. created a right for Scotland to secede from
the Union. There's even a country in Europe voting whether to formally change its name right
now. Britain "gave up" its empire territories (not, I would add speedily, without a lot of
prodding, but still, we got there in the end). All of which were, at one time or another,
"unthinkable". Even the US, perhaps the most inherently resistant to change country when it
thinks it's being "forced" to do so, begrudgingly acknowledged Cuba.
Why would a jobs guarantee require a constitutional amendment? The federal government
creates jobs all the time, with certain defined benefits. This would merely expand upon that,
to potentially include anyone who wants a job.
There are a couple different aspects of this that people are getting mixed together, I
think. The core of MMT is not a proposal for government to implement. Rather, it is simply a
description of how sovereign currencies actually operate, as opposed by mainstream economics,
which has failed in this regard. In other words, we don't need any new laws to implement MMT
– we need a paradigm shift.
The Jobs Guarantee is a policy proposal that flows from this different paradigm.
It has been stated many times that it is to inform policy wrt to potential and not some
booming voice from above dictating from some ridged ideology.
Persoanly as a capitalist I can't phantom why anyone would want structural under –
unemployment. Seems like driving around with the hand brake on and then wondering why
performance is restricted or parts wear out early.
Thinking of the Federal Reserve Act being enabled by the Federal Income Tax of the 16th
Amendment.
Using Federal taxes to fund the JG; I do not think that this aspect of it (and others)
would survive a Constitutional challenge. Therefore ultimately an Amendment might be
needed.
Then again I may be wrong. Technically Obamacare should have been implemented by an
Amendment were strict Constitutional law applied.
Rights to health care and jobs are not enumerated in either the Constitution or Bill of
Rights, as far as I am aware.
Not opposed to some of the principles of MMT, just don't understand, in this modern age
where effectively all currency is electronic digits in a banking computer system, the issue
of a currency must be tied to taxes. In years past, where currency was printed and in one's
pocket, or stuffed under a mattress, or couriered by stagecoach, then yes – taxes would
be needed. But today can we not just print (electronically) the cash needed for government
operations each year based upon a fixed percentage of private sector GDP? Why therefore do we
need government debt? Why do we need an income tax?
Skippy, I have lived and worked in countries without income tax (but instead indirect tax)
and where government operating revenue was based upon a percentage of projected national
revenue. I have been involved in the administration of such budgets.
I am in favor of government spending, or perhaps more accurately termed investing, public
money on long-term, economically beneficial projects. But this is not happening. The reality
is that government priorities can easily be hijacked by political interests, as we currently
witness.
While I agree that political highjacking is possible and must be dealt with, this is not
strictly speaking part of an economic theory, which is what MMT is. While MMT authors may
take political positions, the theory itself is politically neutral.
Income taxes, tithes, or any other kind of driver is what drives the monetary circuit.
Consider it from first principles. You have just set up a new government with a new currency
where this government is the monopoly issuer. No one else has any money yet. So, the
government must be the first spender. However, how is this nascent government going to
motivate anyone to use this new currency? Via taxation, or like means, that can only be met
by using the national currency, whatever form that currency may take, marks on a stick,
paper, an entry in a ledger, or the like.
Thank you for this explanation. I understand that, for example, this is why the Federal
Reserve Act of 1913, I believe, created the Federal Reserve and Federal Income Tax at the
same time.
But the US economy functioned adequately, survived a civil war, numerous banking crises,
experienced industrialization, national railways, etc without a central bank or federal
income tax from the 1790's to 1913.
To me, the US's state of perpetual war is enabled by Federal Income Tax. Without it the
MIC would collapse, I am certain.
Functioned adequately
During the 150 yr hard money period we had recessions/depressions that we're both far more
frequent (every three years) and on avg far deeper than what we have had since fdr copied the
brits and took us off the gold standard. Great deprecession was neither the longest or
deepest.
Two reasons
Banks used to fail frequently, a run on one bank typically leading to runs on other banks,
spreading across regions like prairie fires if your bank failed you lost all your money.
Consequences were serious.
During GR so many banks failed in the Midwest, leading to farm foreclosures, the region was
near armed insurrection in 1932. Fiat meant that the fed can supply unlimited liquidity.
Since then banks have failed but immediately taken over by another. Critically, no depositor
has lost a penny, even those with far more exposed than the deposit insurance limit. No runs
on us banks since 1933.
Second, we now have auto stabilizers, spending continues during downturns because gov has no
spending limit. Note previously in an emergency gov borrowed. 10 mil from J.P. Morgan.
But at what cost? no depositor loses money, yet huge amounts are required to be printed,
thus devaluing the "currency". So is the answer inflation that must by necessity become
hyperinflation?
I don't understand why it is important to protect a bank vs. making it perform its function
without risking collapse. This is magical thinking as we have found very few banks in this
world not ready and willing to pillage their clients, be it nations or just the little
folk.
Why would anyone trust a government to do the right thing by its population? When has that
ever worked out in favor of the people?
I can not understand the trust being demanded by this concept. It wants trust for the users,
but in no way can it expect trust or virtue from the issuer of the "currency"
also, I can't help but think MMT is for growth at all costs. Hasn't the growth shown that
it is pernicious in itself? Destroy the planet for the purpose of stabilizing "currency".
Our federal reserve gave banks trillions of dollars, and then demanded they keep much of
it with the Fed and are paid interest not to use it. It inflated the "currency" in
circulation yet again and now it is becoming clear a great percentage of people in our
country can no longer eat, no longer purchase medications, a home, a business
If being on a hard money system as we were causes recessions and depressions, would we
find that it was a natural function to cut off the speculators at their knees?
How does MMT promote and retain value for the actual working and producing people that
have no recourse with their government? I would like to read about what is left out of this
monumental equation.
US had a federal income tax during the civil war and for a decade or so after.
I have always assumed that mass conscription and the Dreadnought arms race led to the
implementation of the modern taxing/monetary system. (gov't needed both warfare and
welfare)
Taxes, just as debt, create an artificial demand for currency as one must pay back their
taxes in {currency}, and one must pay back debt in {currency}. It doesn't have to be an
income tax, and I think a sales tax would be a better driver of demand than an income
tax.
The US had land sales that helped fund government expenditures in the 1800s.
Not all taxes are income taxes. Back in the day (20's/30's/40's),my grandfather could pay
off the (county) property taxes on his farm by plowing snow for the county in the winter --
and he was damned careful to make sure that the county commissioners' driveways were plowed
out as early as possible after a storm.
In the 30's/40's the property tax laws were changed to be payable only in dollars.
So Grandpa had to make cash crops. Things changed and money became necessary.
But today can we not just print (electronically) the cash needed for government
operations each year based upon a fixed percentage of private sector GDP?
The élites could, but it would be totally undemocratic and the economics profession's
track record of forecasting growth is no better than letting a cat choose a number written on
an index card.
Why therefore do we need government debt?
There is no government debt. It's just a record of interest payments Congress has agreed
to make because the wealthy wanted another welfare program.
Why do we need an income tax?
The only logically consistent purpose is because people have too much income.
I think the point they're driving at, is that by requiring the payment of taxes in a
particular currency, a government creates demand for that currency. There are other uses for
federal taxes, not the least of which is to keep inflation in check.
Government debt is not needed, at least not at the federal level. My understanding of it
is that it's a relic from the days of the gold standard. It's also very useful to some rather
large financial institutions, so eliminating it would be politically difficult.
Wray has said in interviews that the debt (and associated treasury bonds), while not
strictly necessary in a fiat currency, is of use in that it provides a safe base for
investment, for pensioners and retirees, etc.
Sure, it could be eliminated by (a) trillion dollar platinum coins deposited at the
Federal Reserve followed by (b) slowly paying off the existing debt when the bonds mature or
(c) simply decreeing that the Fed must go to a terminal and type in 21500000000000 as the US
Gov account balance (hope I got the number of zeroes correct!).
It could be argued that the US doesn't strictly need taxes to drive currency demand as
long as our status as the world reserve currency is maintained (see oft-discussed
petrodollar, Libya, etc). If that status is imperiled, say by an push by a coalition of
nations to establish a different currency as the "world reserve currency") taxes would be
needed to drive currency demand.
I think most of this is covered in one way or another here:
Government debt is not actually a 'real thing'. It is a residue of double-entry
bookkeeping, as is net income (income minus expenses, that's a credit in the double-entry
system). It could as well be called 'retained earnings (also a 'book' credit in the
double-entry system). If everybody had to take bookkeeping in high school there would be far
few knickers in knots!
There are two kinds of government 'debt': the accumulated deficit which is the money in
circulation not a real debt, and outstanding bonds which is real in the sense that it must be
repaid with interest.
However, the government can choose the interest rate and pay it (or buy back the bonds at
any time) with newly minted money at no cost to itself, cf. QE.
seems to me that the guaranteed jobs would be stigmatized, and make it harder for people
to get private sector jobs. "once youre in the JG industry, its hard to get out" etc.
how much of a guarantee is the job guarantee supposed to be? ie. at what point can you get
fired from a guaranteed job?
Yes, my mind wandered into the same territory. While I agree that something needs to be
done, it also has the potential to strike at the heart of a lean, merit-based system by
introducing another layer of bureaucracy. In principle, I am not against the idea, but as
they say, "God (or the Devil – take your pick) is in the details ".
If you haven't already read it, "Reclaiming the State" by Mitchell and Fazi (Pluto Press
2017) provides a detailed and cogent analysis of how neoliberalism came into ascendency, and
how the principles of MMT can be used to pave the way to a more humane and sustainable
economic system. A new political agenda for the left, drawing in a different way upon the
nationalism that has energized the right, is laid out for those progressives who understand
the necessity of broadening their appeal. And the jobs guarantee that MMT proposes has
NOTHING to do with MacJobs and Amazon workers. It has to do with meeting essential human and
environmental needs which are not profitable to meet in today's private sector.
Job guarantee, or govt as employer of last resort -- now there is a social
challenge/opportunity if there ever was one.
Well managed, it would guarantee a living wage to anyone who wants to work, thereby
setting a floor on minimum wages and benefits that private employers would have to meet or
exceed. These minima would also redound to the benefit of self-employed persons by setting
standards re income and care (health, vacations, days off, etc) *and* putting money in the
pockets of potential customers.
Poorly managed it could create the 'digging holes, filling them in' programs of the
Irish Potato Famine
ore worse (hard to imagine, but still ). It has often been remarked that the potato blight
was endemic across Europe, it was only a famine in Ireland -- through policy choices.
So, MMT aside (as being descriptive, rather than prescriptive), we are down to who
controls policy. And that is *really* scary.
In terms of power, the government has the power to shoot your house to splinters, or blow
it up, with or without you in it. We say they're not supposed to, but they have the ability,
and it has been done.
The question of how to hold your government to the things it's supposed to do applies to
issues beyond money. We'd best deal with government power as an issue in itself. I should
buckle down and get Mitchell's next-to-newest book Reclaiming the State .
I don't claim to fully understand MMT yet, but I find Wray's use of the derogatory term
"gold bugs" to be both disappointing and revealing. To lump those, some of whom are quite
sophisticated, who believe that currencies should be backed by something of tangible value
(and no, "the military" misses the point), or those who hold physical gold as an insurance
policy against political incompetence, and the inexorable degradation of fiat currencies, in
with those who promote or hold gold in the hopes of hitting some type of lottery, is
disingenuous at best.
OMT seemingly has no reason to exist being old school, but for what it's worth, the
almighty dollar has lost over 95% of it's value when measured against something that matters,
since the divorce in 1971.
I found this passage funny, as in flipping the dates around to 1791, is when George
Washington set an exchange rate of 1000-1 for old debauched Continental Currency, in exchange
for newly issued specie. (there was no Federal currency issued until 1861)
So yeah, they burned all of their tax revenue, because the money wasn't worth jack.
Farley Grubb -- the foremost authority on Colonial currency -- proved that the American
colonists understood perfectly well that taxes drive money. Every Act that authorized the
issue of paper money imposed a Redemption Tax. The colonies burned all their tax
revenue.
Gold bug is akin to money crank e.g. money = morals. That's not to mention all the
evidence to date does not support the monetarist view nor how one gets the value into the
inanimate object or how one can make it moral.
Gold doesn't historically perform as a hedge but as a speculative trade. Those who think
it can protect them from political events typically don't realize that a gold standard means
public control of the gold industry, thereby cutting any separation from the political
process off at the knees.
When a government declares that $20 is equal in value to one ounce of gold, it also
declares an ounce of gold is equal to $20 dollars. It is therefore fixing, through a
political decision subject to political changes, the price of the commodity.
Nonsense. When fiat currencies invariably degrade, and especially at a fast rate, gold has
proven to be a relative store of value for millennia . All one need do is to look at
Venezuela, Argentina, Turkey, etc., to see that ancient dynamic in action today.
You, and others who have replied to my comment, are using the classical gold standard as a
straw man, as well. Neither I, nor many other gold "bugs" propose such a simple solution to
the obviously failed current economy, which is increasingly based on mountains of debt that
can never be repaid.
gold has proven to be a relative store of value for millennia.
As long as one is mindful that gold is just another commodity, subject to the same
speculative distortions as any other commodity (see Hunt brothers and silver).
But that is obviously false, given that no other commodity has remotely performed with
such stability over such a long period of time.
It is true that over short periods distortions can appear, and the *true* value of gold
has been suppressed in recent years through the use of fraudulent paper derivatives. But
again, I'm not arguing for the return of a classical gold standard.
Don't worry, I'm likely to be at least equally dense!
I didn't mean to suggest that there is some formula from which a *true* value of precious
metals might be derived. I simply meant that gold has clearly been the object of price
suppression in recent years through the use of paper derivatives (i.e. future contracts). The
reason for such suppression, aside from short-term profits to be made, is that gold has
historically acted as a barometer relating to political and economic stability, and those in
power have a particular interest in suppressing such warning signals when the system becomes
unstable.
So, while the Central Banks created previously unimaginable mountains of debt, it was
important not to alarm the commoners.
The suppression schemes have become less effective of late, and will ultimately fail when
the impending crisis unfolds in earnest.
As long as one is mindful that gold is just another commodity, subject to the same
speculative distortions as any other commodity
It sounds good in theory, but history says otherwise.
The value remained more or less the same for well over 500 years as far as an English
Pound was concerned, the weight and value of a Sovereign hardly varied, and the exact weight
and fineness of one struck today or any time since 1817, is the same, no variance
whatsoever.
Thus there was no speculative distortions in terms of value, the only variance being the
value of the Pound (= 1 Sovereign) itself.
" who believe that currencies should be backed by something of tangible value"
As I understand it, MMT also requires that currency be backed by something of tangible
value: a well managed and productive economy. It doesn't matter in the least if your debt is
denominated in your own currency if you have the economy of Zimbabwe.
Sounds reasonable in theory, but that was supposed to be the case with the current
economic system, as well, and we can all see where that has led.
I'm not arguing that there isn't a theoretically better way to create and use
"modern" money, but rather doubt that those empowered to create it out of thin air will ever
do so without abusing such power.
Oh, I agree with you. In no universe that I am aware of would the temptation to create
money beyond the productive capacity of the economy to back it up be resisted. I think
Zimbabwe is a pretty good example of where the theory goes in practice.
That's exactly wrong. Zimbabwe had a production collapse. Same amount of money to buy a
much smaller amount of goods. The gov responded not by increasing goods, but increasing money
supply.
Mark Blyth has a good discussion of the gold standard in his book Austerity: The
History of a Dangerous Idea . He makes the point that, in imposing the adjustments
necessary to keep the balance of payments flowing, the measures imposed by a government would
be so politically toxic, that no elected official in his or her right mind would implement
them, and expect to remain in office. In short, you can have either democracy, or a gold
standard, but you can't have both.
Also, MMT does recognize that there are real world constraints on a currency, and that is
represented by employment, not some artificially-imposed commodity such as gold (or bitcoin,
or seashells, etc). The Jobs Guarantee flows out of this.
As mentioned above, you, among others who have replied to my original comment, are using
the classical gold standard as a straw manl. Neither I, nor many other gold "bugs", propose
such a simple solution for the failed current economic system, which is increasingly based on
mountains of debt that can never be repaid.
increasingly based on mountains of debt that can never be repaid.
Huh? I listed two ways they could be repaid above. In the US, the national debt is
denominated in dollars, of which we have an infinite supply (fiat). In addition, the Federal
Reserve could buy all the existing debt by [defer to quad-entry accounting stuff from Wray's
primer] and then figuratively burn it. Sure, the rest of the world would be pissed and
inflation *may* run amok, but "can never" is just flat out wrong.
Of course it can be extinguished through hyperinflation. I didn't think that it would be
necessary to point that out. No "may" about it, though, as if the U.S. prints tens of
trillions of dollars to extinguish the debt, hyperinflation will be assured.
I didn't think that it would be necessary to point that out.
Sorry, but I'm an old programmer; logic rules the roost. When one's software is expected
to execute billions of times a day without fail for years (and this post is very likely
routed through a device running an instance of something I've written). Always means every
time, no exceptions; never means not ever, no matter what.
I'm sure that there is no one solution proposed, though an alternative to the current
system which seems plausible would be a currency backed by a basket of commodities, including
gold.
Hi Tinky, much late but still. Gold will have value as long as people believe it has
value. But what will they trade it for? The bottom line is your life.
I don't have any gold, too expensive, and it really has no use. But I remember Dimitri Orlov's
advice : I am long in needles, pins, thread, nails and screws, drill bits, saws, files,
knives, seeds, manual tools of many sorts, mechanical skills and beer recipes. Plus I can
sing.
The vast majority of people who hold physical gold are well aware of the value of having
skills and supplies, etc., in case of a serious meltdown. But it's not a zero-sum game, as
you suggest. Gold will inexorably rise sharply in value when today's fraudulent markets
crash, and there will be plenty of opportunities for those who own it to trade it for other
assets.
Furthermore, as previously mentioned, gold's utility is already on full display,
to those who are paying attention, and not looking myopically through a USD lens.
"Mountains of debt that can never be repaid" is a propaganda statement with no reference
to any economic fact. Why do you feel that this "debt" needs to be "repaid"? It is simply an
accounting artifact. The "debt" is all of the dollars that have been spent *into* the economy
without having been taxed back *out*. The word "debt" activates your feels, but has no
intrinsic meaning in this context. Please step back from your indoctrinated emotional
reaction and understand that the so-called national "debt" is nothing more than money that
has been created via public spending, and "repaying" it would be an act of destruction.
I keep telling (boring, annoying, infuriating) people that, in the simplest terms, the
national debt is the money supply and they won't grasp that simple declaration. When I said
it to my Freedom Caucus congress critter (we were seated next to each other on an exit aisle)
his head started spinning, reminding me of Linda Blair in The Exorcist.
As I said to my congress critter, if the debt bother's y'all so much, why not just pay it
off, dust off your hands, and be done with it?
Personally, if I were President for a day, I'd have the mint stamp out 40 or so trillion
dollar platinum coins just to fill the top right drawer of the Resolute desk. Would give me
warm fuzzy feelings all day long.
p.s. I also told him that the man with nothing cares not about inflation. He didn't like
that either.
"those, some of whom are quite sophisticated, who believe that currencies should be backed
by something of tangible value (and no, "the military" misses the point), or those who hold
physical gold as an insurance policy against political incompetence, and the inexorable
degradation of fiat currencies"
I suspect that Wray exactly means that these people are the goldbugs, not the ones who
speculate on gold.
The whole point that currencies should be backed by something of tangible value IMO is
wrong, and I think the MMTers agree with me on this.
If so, then he should clarify his position, as again, lumping the billions –
literally – of people who consider gold to be economically important, together as one,
is disingenuous.
I think people that consider gold to be a risk hedge understand its anthro, per se an
early example of its use was a fleck of golds equal weight to a few grains of wheat e.g. the
gold did not store value, but was a marker – token of the wheat's value – labour
inputs and utility. Not to mention its early use wrt religious iconography or vis-à-vis
the former as a status symbol. Hence many of the proponents of a gold standard are really
arguing for immutable labour tokens, problem here is scalability wrt high worth individuals
and resulting distribution distortions, unless one forwards trickle down sorts of
theory's.
Not to mention in times of nascent socioeconomic storms many that forward the idea of gold
safety are the ones selling it. I think as such the entire thing is more a social psychology
question than one of factual natural history e.g. the need to feel safe i.e. like commercials
about "peace of mind". I think a reasonably stable society would provide more "peace of mind"
than some notion that an inanimate object could lend too – in an atomistic
individualistic paradigm.
I once had an co-worker that was a devout Christian. When he realized I wasn't religious,
he asked me, incredulously, how I was able to get out of bed in the morning. Meaning, he
couldn't face a world without meaning.
I think a lot of people feel that same way about money. They fight over it, lie for it,
steal it, kill for it, go to war over it, and most importantly, slave for it. Therefore, it
must have intrinsic value. I think gold bugs are in this camp.
Talking about Warren's blog ( http://moslereconomics.com/ ), everytime I try to go there,
Cloudflare asks me to prove that I am human. Anyone know what's up with that? It's the only
website I've ever seen do that.
That's a good suggestion. Unfortunately, as I sometimes find, you can pass ALL the major
test-sites but something (a minor, less-used site using out-of-date info?) can give you
grief. NC site managers once (kindly) took the time to explain to me why I might have
problems that they had no ability to address at their end. I had to muck around with a link
given earlier to Bill Mitchell's blog before my browser would load it.
I think there can be quirks that are beyond our control (unfortunately) – for instance
I think a whole block of IP addresses (including mine) used by my ISP have been flagged
*somewhere* – no doubt due to another customer doing stuff that the checker(s) don't
like. (The issue I mentioned above was more likely due to a strict security protocol in my
browser, however.)
Monetary policy in terms of interest rates is not just weak, it also tends to treat all
targets the same. Fiscal policy can be targetted to where it is felt it can do the most
good.
Christine Desan's book, "Making Money," exhaustively documents the history of money as a
creature of the state. Recall as well that creating money and regulating its value are among
the enumerated POWERS granted to our government by we, the people. Money, indeed, is
power.
Hmmm Randy Wray states that " permanent Zirp (zero interest rate policy) is probably a
better policy since it reduces the compounding of debt and the tendency for the rentier class
to take over more of the economy. "
But just last week, Yves stated that " that one of the consequences of the protracted
super-low interest rate regime of the post crisis era was to create a world of hurt for
savers, particularly long-term savers like pension funds, life insurers and retirees. "
[ https://www.nakedcapitalism.com/2018/09/crisis-caused-pension-train-wreck.html
]
So are interest rates today too high, or too low? We're getting mixed messages here.
IMO, interest rates are too low . Beyond the harmful effect to savers, it also
drives income inequality . How? When interest rates are less than inflation, it is
trivial to borrow money, buy some assets, wait for the assets to appreciate, sell the assets,
repay the debt, and still have profit left over even after paying interest . Well,
it's trivial if you're already rich and have a line of credit that is both large and
low-interest. If you're poor with a bad FICO score, you don't get to play the asset
appreciation game at all.
The rates between riskier and less risky borrowers will still be reflected in the
different rates given to each.
The low rates encourage greater risk taking to increase the reward(a higher rate of
return). This is what leads to the gross malinvestment.
Case in point: the low rates led to more investments into the stock market, where the
returns are unlimited. This is what led to the income inequality of Obama's term, as
mentioned above.
I cannot speak for Yves, nor or Randy, but IMO, interest rates are too low for people who
depend on interest for their living -- as an old person, I have seen my expected income drop
to about zilch when I had expected 7 to 10% on my savings. Haha! So yeah, too low for us who
saved for 'retirement'.
Too high for people financing on credit, since a decent mortgage on a modestly-priced
house will cost you almost the same as
the house . And that doesn't even begin to look at unsecured consumer credit (ie, credit
card debt), which is used in the US and other barbaric countries for medical expenses, not to
mention student debt. The banks can create the principal with their keystrokes, but they
don't create the interest. Where do you suppose that comes from? Hint: nowhere, as in
foreclosures and bankruptcies.
Wray's statement reflects his preferences from an operational policy perspective.
Sovereign government debt cares no risk and therefore should not pay interest. The income
earned from that interest is basically a subsidy and all income when spent caries a risk of
inflation induced excess demand. Therefore who unnecessarily add the risk to the economy and
potential risk needing to reduce other policy objectives to accommodate unnecessary interest
income subsidies to mostly rich people?
Yves comment reflects the reality of prior decades of economic history. Even if Wray's
policy perspective is optimal, there are decades of people with pensions and retirement
savings designed around the assumption of income from risk-free government debt. It's this
legacy that Yves is commenting on and is a real problem that current policy makers are just
ignoring.
As for your comments on how low cost credit can be abused, I believe you'll find most MMT
practitioners would recommend far more regulation on the extension of credit for
non-productive purposes.
I just wrote a note to Randy:
The origin of money is not merely for accounting, but specifically for accounting for DEBT --
debt owed to the palatial economy and temples.
I make that clear in my Springer dictionary of money that will come out later this year:
Origins of Money and Interest: Palatial Credit, not Barter
Can somebody help me out here? It seems to me that the US macroeconomic policy has been
operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).
Since then, insofar as I understand MMT, fiat has been printed and distributed to flow
primarily through the MIC and certain other periodically favored sectors (e.g. the Interstate
Highway System). Then, rather than destroying this fiat through taxation, the sectoral
balances have been kept deliberately out of balance: Taxes on unearned income have been
almost eliminated with an eye to not destroying fiat, but to sequestering as much as possible
in the private hands of the 1%. This accumulating fiat cannot be productively invested
because that would cause overproduction, inflation, and reduce the debt burden by which the
1% retains power over the 99%. So the new royalists, as FDR would have styled them, keep
their hoard as a war chest against "socialists".
I get all this, more or less, and I appreciate that it is well and good and important that
MMTers insistently point out that the emperor has no clothes. This is a necessary first step
in educating the 99%.
But I don't see MMT types discussing the fact that US (and NATO) macroeconomic policy
already has a Job Guarantee: if you don't want to work alongside undocumented immigrants on a
roof or in a slaughterhouse or suffer the humiliation of US welfare, such as it is, you can
always get a job with the army, or the TSA, or the police, or as a prison guard, or if you
have some education, with a health unsurance company or pushing drone buttons. You only have
to be willing to follow orders to kill–or at least help to kill–strangers.
(Okay, perhaps I overstate. If you're a medical doctor or an "educator" with university
debt you don't have to actively kill. You can decline scant Medicaid payments and open a
concierge practice, or you can teach to the test in order that nobody learns anything
moral.)
It is difficult to get a man to understand something, when his salary depends on his not
understanding it. Wouldn't it be clarified matters if MMTers acknowledged that we already
have a JG?
We have been operating on MMT since the end of WW2, with 2 exceptions in 1968 when Silver
Certificate banknotes no longer were redeemable for silver, and in 1971 when foreign central
banks (not individuals!) weren't allowed to exchange FRN's for gold @ $35 an ounce
anymore.
It's been full on fiat accompli since then and to an outsider looks absurd in that money
is entirely a faith-based agenda, but it's worked for the majority of all of lives, so nobody
squawks.
It's an economic "the emperor has no clothes" gig.
It seems to me that the US macroeconomic policy has been operating under MMT at
least since FDR (see for example Beardsley Ruml from 1945).
Yup, you are correct, IMO. And about the jobs guarantee, too. The point of MMT is not that
we have to adopt, believe in, or implement it, but that *this is how things work* and we need
to get a %&*^* handle on it *STAT* or they will ride it and us to the graveyard. The
conservatives and neo-cons are already on to this, long-time.
I believe the chant is:
We can have anything we want that is available in our (sovereign) currency and for which
there are resources
What we get depends on what we want and how well we convince/coerce our 'leaders' to make
it so.
JG is geared toward community involvement to create an open-ended collection of potential
work assignments, not top-down provision of a limited number of job slots determined by
bureaucrats on a 1% leash.
About every 80 years, there has been a great turning in terms of money in these United
States
Might as well start with 1793 and the first Federal coins, followed in 1861 by the first
Federal paper money, and then the abandonment of the gold standard (a misnomer, as it was one
of many money standards @ era, most of them fiat) in 1933.
We're a little past our use-by date for the next incarnation of manna, or is it already
here in the guise of the great giveaway orchestrated since 2008 to a selected few?
After learning MMT I've occasionally thought I should get a refund for the two economics
degree's I originally received. One of the primary mainstream teachings that I now readily
see as false is the concept of money being a vale over a barter economy. It's lazy,
self-serving analysis. It doesn't even pass a basic logical analysis let alone archeological
history. Even in a very primitive economy it would be virtually impossible for barter to be
the main form of transaction. The strawberry farmer can't barter with the apple farmer. His
strawberries will be rotten before the apples are ripe. He could give the apple farmer
strawberries in June on the promise of receiving apples in October, but that's not barter
that's credit. The apple farmer could default of his own free will or by happenstance (he
dies, his apple harvest is destroyed by an act of god, etc ). How does the iron miner get his
horse shoed if the blacksmith needs iron before he can make the horse show? Credit has to
have always been a key component of any economy and therefore barter could never have been
the original core.
After learning MMT I've occasionally thought I should get a refund for the two
economics degree's I originally received.
Agreed. Richard Wolff notes that in most Impressive Universities there are two schools,
one for Economics (theory) and another for Business (practice). Heh. I say, go for the
refund, you was robbed.
All the Rupee* has done over time is go down in value against other currencies, and up in
the spot price measured in Rupees even as gold is trending down now, and that whole stupid
demonetization of bank notes gig, anybody on the outside of the fiat curtain looking in, had
to be laughing, and ownership there is no laughing matter, as it's almost a state financial
religion, never seen anything like it.
* A silver coin larger than a U.S. half dollar pre-post WW2, now worth a princely 1.4
cents U.S.
Not an economist, but I appreciate both the applicability of MMT and the fierce, but often
subtle resistance its proponents have encountered academically, institutionally and
politically. However, I have questioned to what extent MMT is uniquely applicable to a nation
with either a current account surplus or that controls access to a global reserve
currency.
How does a nation that is sovereign in its own currency, say Argentina for example (there
are many such examples), lose 60 percent of its value in global foreign exchange markets in a
very short time period?
Is this due primarily to private sector debts denominated in a foreign currency (and if
so, what sectors of the Argentine economy undertook those debts, for what purposes, and to
whom are they owed?), foreign exchange market manipulation by external third parties, the
effective imposition of sanctions by those who control the global reserve currency and
international payments system, or some combination of those or other factors?
MMT makes more sense than orthodox neoliberal accounts of currency and sovereign spending
to me, as it does a better job of acknowledging reality. MMT recognizes that currency is an
artifice and that imagined limitations on it are just that, and real resources are the things
which are limited. Neoliberal economics acts as if all sorts of byzantine factors mean
currency must be limited, but we can think of resources, and the growth machine they feed, as
being infinite.
"Taxes or other obligations (fees, fines, tribute, tithes) drive the
currency."
Specifically, what does "drive" mean? Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Cryptocurrencies, which are not supported by taxes, have no value?
"JG is a critical component of MMT. It anchors the currency and ensures that achieving
full employment will enhance both price and financial stability."
Specifically, what do "anchors" and "critical component" mean? Do they mean:
1. Since JG does not exist, the U.S. dollar is unanchored and MMT does not exist?
2. Providing college graduates with ditch-digging jobs enhances price and financial
stability?
3. Forcing people to work is both morally and economically superior to giving them money and
benefits?
"Drive" means "creates initial demand for":
1. No, not for an established currency.
2. See 1.
3. Crypto is worth what you can buy with it.
"Anchors" means it acts against inflation and deflation. "Critical component" means the
economy works better if it has it.
1. Yes and no.
2. Yes, if no-one else will hire them.
3. No element of force is implied.
"... "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," ..."
"... "We haven't seen anything like this since the 1940s," ..."
"... "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012." ..."
"... "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," ..."
"... "frontier areas," ..."
"... "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska." ..."
"... "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," ..."
"The warning signs are there – the industry isn't finding enough oil." That's the
start of a new report from Wood Mackenzie. The report concludes that a supply gap could emerge
in the mid-2020s as demand rises at a time when too few new sources of supply are coming
online.
By 2030, there could be a supply shortfall on the order of 3 million barrels per day (mb/d),
WoodMac argues. By 2035, it balloons to 7 mb/d, and by 2040, it reaches 12 mb/d. "Barring
technology breakthrough beyond what we already assume, we'll need new oil discoveries,"
the report says.
The seeds of the problem were sown during the oil market downturn that began in 2014. Global
upstream exploration spending plunged from $60 billion in 2014 to just $25 billion in 2018,
according to WoodMac. Unsurprisingly, that translated into a steep decline in new discoveries.
In the early part of this decade, the oil industry was discovering around 8 billion barrels of
oil annually. That figure has plunged by three quarters since 2014.
The precise figures vary, but Rystad Energy came a similar conclusion, noting that the total
volume of new oil and gas reserves discovered plunged to a record low in 2017. "We haven't
seen anything like this since the 1940s," Sonia Mladá Passos, Senior Analyst at
Rystad Energy, said in a December 2017
statement . "The most worrisome is the fact that the reserve replacement ratio in the
current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent
in 2012."
This year, the industry has had a bit more success. Spending is on the rebound and new
discoveries are on
track to rise by about 30 percent, although that is heavily influenced by the developments
in Guyana, where ExxonMobil and Hess Corp. have reported nearly a dozen discoveries, and hope
to ramp up production to around
750,000 bpd by 2025.
It still may not be enough. Even if the industry were to somehow return to the good ol' days
prior to the 2014 market crash, and begin discovering around 8 billion barrels of oil each
year, it would only delay the supply crunch into the 2030s, according to WoodMac.
But, of course, that rate of discovery remains far below those levels, so the supply crunch
may take place much sooner. Moreover, because large-scale projects take several years to
develop, the activity taking place today will determine the supply mix in the mid- to
late-2020s.
WoodMac says that the rate of discovery is highly correlated with the level of spending, so
closing the supply gap will require more capital. And because of the run up in oil prices this
year, the industry will have a lot more cash to throw around.
The problem for the industry is that over the last few years the mindset, and the demands of
shareholders, have shifted from production growth to profitability and investor returns.
Shareholders are pressuring executives to return cash in the form of dividends and share
buybacks. Energy stocks are not the darlings of Wall Street in the way they once were,
particularly prior to the 2014 market meltdown. That puts extra pressure on oil and gas
companies to dish out more of their earnings to investors rather than plowing it back into the
ground.
But that means less spending on exploration. "The mind set for most E&Ps is still to
be conservative, and default is to return capital to shareholders. Yet the duty to
shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to
find its way into exploration to sustain the business in the long term," WoodMac said in
its report.
Shale output will continue to grow, especially after new pipelines come online in Texas,
which will ease the current bottleneck. But the large-scale increases in production in the
medium-term will come from "frontier areas," WoodMac says, as the string of
discoveries in Guyana prove. WoodMac says the areas with the highest potential include
"Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South
Africa; Australia and Alaska."
For now, the level of activity is not enough to stave off the supply crunch, WoodMac warns,
unless there is a dramatic increase in spending. "More explorers need to get in on the
action if the spectre of 'peak supply' is to be kept at bay," the consultancy says.
Employment at less than a living wage is not "employment."
True, this "living wage" issue has become now America's chronic illness. Once one begins
to look at the real estate dynamics, even for a good earners living in such places as
Seattle, Portland (not to speak of L.A. or SF) becomes simply not affordable, forget buying
anything decent. Hell, many rents are higher than actual mortgages, however insane they
already are.
The breakout in Brent crude prices above $80 this week has prompted analysts at the sell
side banks to start talking about a return to $100 a
barrel oil . Even President Trump has gotten involved, demanding that OPEC ramp up
production to send oil prices lower before they start to weigh on US consumer spending, which
has helped fuel the economic boom over which Trump has presided, and for which he has been
eager to take credit.
But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should
relax. That's because supply fundamentals in the US market suggest that the recent breakout in
prices will be largely ephemeral, and that crude supplies will soon move back into a
surplus.
Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil
prices remains very much intact. And in an interview with MacroVoices , Berman laid out his argument using a handy
chart deck to illustrate his findings (some of these charts are excerpted below).
As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum
inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by
comparing them to the five year average for any given week. This smooths out purely seasonal
changes.
And as he shows in the following chart, changes in comparative inventory levels have
precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the
charts below illustrate, once reported inventories for US crude oil and refined petroleum
products crosses into a deficit relative to comparative inventories, the price of WTI climbs;
when they cross into a surplus, WTI falls.
Looking back to March of this year, when the rally in WTI started to accelerate, we can on
the left-hand chart above how inventories crossed below their historical average, which Berman
claims prompted the most recent run up in prices.
Comparative inventories typically correlate negatively to the price of WTI. But
occasionally, perceptions of supply security may prompt producers to either ramp up - or cut
back - production. One example of this preceded the ramp of prices that started in 2010 when
markets drove prices higher despite supplies being above their historical average. The ramp
continued, even as supplies increased, largely due to fears about stagnant global growth in the
early recovery period following the financial crisis.
The most rally that started around July 2017 correlated with a period of flat production
between early 2016 and early 2018.
Meanwhile, speculators have been unwinding their long positions. Between mid-June 2017 and
January 2018, net long positions increased +615 mmb for WTI crude + products, and +776 for WTI
and Brent combined. Since then, combined Brent and WTI net longs have fallen -335 mmb, while
WTI crude + refined product net long positions have fallen -225 mmb since January 2018 and -104
mmb since the week ending July 10. This shows that, despite high frequency price fluctuation,
the overall trend in positioning is down.
And as longs have been unwinding, data show that the US export party has been slowing, as
distillate exports, which have been the cash cow driving US refined product exports, have
declined. Though they remain strong relative to the 5-year average, they have fallen relative
to last year. This has accompanied refinery expansions in Mexico and Brazil.
Meanwhile, distillate and gasoline inventories have been building.
Meanwhile, US exports of crude have remained below the 2018 average in recent weeks, even as
prices have continued to climb.
This could reflect supply fears in the global markets. The blowout in WTI-Brent spreads
would seem to confirm this. However, foreign refineries recognize that there are limitations
when it comes to processing US crude (hence the slumping demand for exports).
In recent weeks, markets have been sensitive to supply concerns thanks to falling production
in Venezuela and worries about what will happen with Iranian crude exports after US sanctions
kick in in November.
But supply forecasts for the US are telling a different story than supply forecasts for
OPEC. In the US, markets will likely remain in equilibrium for the rest of the year, until a
state of oversupply returns in 2019. But OPEC production will likely continue to constrict,
returning to a deficit in 2019.
Bottom line: According to Berman, the trend of secular deflation in oil prices remains very
much intact. While Berman expects prices to remain rangebound for the duration of 2018 - at
least in the US - it's likely markets will turn to a supply surplus next year, sending prices
lower once again.
Karlof1 I could be wrong of course but one example of why none of that would matter is
when the US dollar for all practical purposes winks out of existence and that could happen
right now as we speak. Why would that happen you may ask? It would happen whenever someone
"beyond personal wealth" like the usual finance suspects decides it is the way for them to
make enormous amounts of profit out of the resulting worldwide instability before any of
their competitors beat them to it. The longer they wait the more likely someone else will
jump the gun and surprise them.
I don't think the US has two years worth of "blood" left in it before that happens.
In a sense nothing will be left when each and every dollar becomes at least 20 trillion
times less valuable. If the response to that happening is the same as the early 20ieth
century response (Germany) then nothing will be left at all considering the difference in
technology and differences in circumstance (everybody already have the weapons ready). If the
response is the late 20ieth century response (USSR) then maybe something will be left but the
USSR was both lucky and relatively solvent in comparison to the current US. The starting
point for the US is several magnitudes worse in both examples. The world can't afford to
carry the US at cost any more than the US can't right now and like the US haven't been able
to for decades, the required wealth doesn't exist.
The nascent USA had its national capital sacked and presidential residence burnt during
what's known as the War of 1812, yet it continued to exist politically. Same during Civil
War. During the Revolutionary War, the USA had a national government and 13 separate state
governments, all of which continued to function as the war raged. There've been at least two
Coups--1963 and 2000--but the USA continued its political existence. Even the Germany
destroyed by WW2 still existed politically. Destroying political entities is
very--extremely--difficult, which is why it seldom occurs. Rome's central authority ceased in
the mid 6th century but its provinces continued as did the Eastern portion of the Roman
Empire. Russia's governmental system was drastically altered during and after Russia's Civil
War, but Russia continued to exists as a political entity. The USSR was an imperial governing
edifice built atop numerous national political entities. It did vanish, but the nations
comprising it didn't; indeed, new nations were born as a result.
As for the dollar and its international position, even those nations desirous of undoing
dollar hegemony have said it cannot be done overnight as the overall system is both too
complex and too fragile for hasty adjustments to be made stably . Moreover, for better
or worse, the Outlaw US Empire's an integral component of the global economy, which motivates
those changing the system to arrive at a Soft Landing, not a Hard Crash.
Catastrophism belongs in the realm of Geology, not Geopolitics, although the former will
certainly affect the latter. Geopolitics can certainly enable an ecological crisis such as
the Overshoot we're now entering, but that's several magnitudes less than what rates as a
geological catastrophe--and not all such catastrophes are global.
In my own words then. According to Cook the power elites goal is to change its
appearance to look like something new and innovative to stay ahead of an electorate who are
increasingly skeptical of the neoliberalism and globalism that enrich the elite at their
expense.
Since they do not actually want change they find actors who pretend to represent change
, which is in essence fake change. These then are their insurgent candidates
Trump serves the power elite , because while he appears as an insurgent against the
power elite he does little to change anything
Trump promotes his fake insurgency on Twitter stage knowing the power elite will counter
any of his promises that might threaten them
As an insurgent candidate Trump was indifferent to Israel and wanted the US out of
Syria. He wanted good relations with Russia. He wanted to fix the health care system,
rebuild infrastructure, scrap NAFTA and TTIPS, bring back good paying jobs, fight the
establishment and Wall Street executives and drain the swamp. America First he said.
Trump the insurgent president , has become Israel's biggest cheerleader and has launched
US missiles at Syria, relations with Russia are at Cold War lows, infrastructure is still
failing, the percentage of people working is now at an all time low in the post housewife
era, he has passed tax cuts for the rich that will endanger medicare, medicaid and social
security and prohibit infrastructure spending, relaxed regulations on Wall Street, enhanced
NAFTA to include TTIPS provisions and make US automobiles more expensive, and the swamp has
been refilled with the rich, neocons , Koch associates, and Goldman Sachs that make up the
power elites and Deep State Americas rich and Israel First
@34 pft... regarding the 2 cook articles.. i found they overly wordy myself...
however, for anyone paying attention - corbyn seems like the person to vote for given how
relentless he is being attacked in the media... i am not so sure about trump, but felt cook
summed it up well with these 2 lines.. "Trump the candidate was indifferent to Israel and
wanted the US out of Syria. Trump the president has become Israel's biggest cheerleader and
has launched US missiles at Syria." i get the impression corbyn is legit which is why the
anti-semitism keeps on being mentioned... craig murrary is a good source for staying on top
of uk dynamics..
(a) talk coherently
(b) have some kind of movement consisting of people that agree with what is says -- that
necessitates (a)
Then he could staff his Administration with his supporters rather than a gamut of
conventional plutocrats, neocons, and hacks from the Deep State (intelligence, FBI and
crazies culled from Pentagon). As it is easy to see, I am describing an alternate reality.
Who is a Trumpian member of the Administration? His son-in-law?
The swamps been filled with all kinds of vile creatures since the Carter administration.
This is when the US/UK went full steam ahead with neoliberal globalism with Israel directing
the war on terror for the Trilateral Empire (following Bibis Jerusalem conference so as to
fulfill the Yinon plan). 40 years of terror and financial mayhem following the coup that took
place from 1963-1974. After Nixons ouster they were ready to go once TLC Carter/Zbig kicked
off the Trilateral era. Reagan then ran promising to oust the TLC swamp but broke his
promise, as every President has done since .
The thing is the Americans, contrary to the rest of the world, doesn't use the annualised
rate to calculate their GDP growth, buth the quarterly rate "normalised". This leads to
absurd growth rates in the USA, such as the eye-popping 4.1% growht in Q2 2018 etc. etc. (see
the link above for more information).
Bill Clinton (2000) was the last POTUS which affered a quarterly growth above the peak of
his predecessor, but this is easily explainable: George H. W. Bush was a one-term POTUS (a
rarity post-Carter), and he governed through much of the 1990-92 recession of the Western
Civilization (specially in the UK, Germany and Japan). Clinton caught pretty much the last
innovation cycle capitalism could do: the internet era, which would burst precisely in 2001
(dotcom bubble). George W. Bush reaped the recovery of the recession in 2002, and the
financial capital continue to growth to an apex in 2006 or 2007 (depending on the country you
live): that was the last time capitalism, all things considered, could state it "delivered"
(at least to the first world countries); the 2008 meltdown would only affect the "emergent
economies" in the end of 2011, after 2012, capitalism stopped "delivering" to the whole
world.
Notice I'm not including China (which suffered a little bit in 2009, the aftermath of the
great recession). That's because China is not a capitalist country, therefore the economic
rules of globalization don't apply to the Chinese in the classic way.
Putin has stated publicly at least two times that, if he could go back in time to do one
thing, he would go back to 1991 and save the USSR. I will forever wonder: what if the USSR
survived for 17 more years? The world would be in a completely different (much better)
situation it is now.
- This is a repost of the recent Palisade
Weekly Letter –
Earlier this week –
news went by relatively unnoticed by the ' mainstream ' financial media (CNCB and such)
that Beijing's started selling their U.S. debt holdings.
Putting it another way – they're dumping U.S. bonds. . .
"China's ownership of U.S. bonds, bills and notes slipped to $1.17 trillion, the lowest
level since January and down from $1.18 trillion in June."
And although they're starting to sell U.S. bonds – expect it to be at a slow and
steady pace. They don't want to risk hurting themselves over this.
I believe China may be selling just enough to get the attention of Trump and the Treasury. A
soft warning for them not to take things too far with tariffs and trade.
Yet already just as news hit the wire that China was selling bonds a few days ago –
U.S. yields spiked above 3%. . .
Don't forget that China's the U.S.'s largest foreign creditor. And this is an asset for
them.
And although them selling is worrisome – the real problems started months ago. . .
Over the last few months, my macro research and articles are all finally coming together.
This thesis we had is finally taking shape in the real world.
I wrote in a detailed piece a few months back that foreigners just aren't lending to the
U.S. as much anymore ( you can read that here ).
I called this the 'silent problem'. . .
Long story short: the U.S. is running huge deficits. They haven't been this big since the
Great Financial Recession of 08.
And it shouldn't come as a surprise to many.
Because of Trump's tax cuts, there's less government revenue coming in. And that means the
increased military spending and other Federal spending has to be paid for on someone else's
tab.
The U.S. does 'bond auctions' all the time where banks and foreigners buy U.S. debt –
giving the Treasury cash to spend now.
But like I highlighted in the 'silent problem' article (seriously, read it if you haven't)
– foreigners are buying less U.S. debt recently. . .
This is a serious problem because if the Treasury wants to spend more while collecting less
taxes, they need to borrow heavily.
This trend's continued since 2016 and it's getting worse. And with the mounting liabilities
(like pensions and social security and medicare), they'll need to borrow trillions more in the
coming years.
So, in summary – the U.S. has less interested foreign creditors at a time when they need
them more than ever.
But wait, it gets worse. . .
The Federal Reserve's currently tightening – they're raising rates and selling bonds
via Quantitative Tightening (QT – fancy word for sucking money out of system).
This is the second big problem – and I wrote about in 'Anatomy of a Crisis' (
read here ). And
even earlier than that
here .
So, while the Fed does this tightening, they're creating a global dollar shortage. . .
As I wrote. . . "This is going to cause an evaporation of dollar liquidity – making
the markets extremely fragile. Putting it simply – the soaring U.S. deficit requires an
even greater amount dollars from foreigners to fund the U.S. Treasury . But if the Fed is
shrinking their balance sheet , that means the bonds they're selling to banks are sucking
dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into
the economy). This is creating a shortage of U.S. dollars – the world's reserve currency
– therefore affecting
every global economy."
The Fed's tightening is sucking money – the U.S. dollar – out of the global
economy and banks. And they're doing this at a time when Foreigners need even more liquidity so
that they can buy U.S. debt.
How is the Treasury supposed to get funding if there's less dollars out there available? And
how can they entice investors if Foreigners don't have enough liquidity to fund U.S. debt?
These Emerging Markets must use their dollar reserves to prop up their own currencies and
economies today. They can't be worrying about funding U.S. pensions and other bloated spending
when their economies are crumbling.
These two themes I've written about extensively – the decline of foreign investors and
the Fed's tightening – have gotten us to this point today.
And the U.S. is extremely fragile because of both problems. . .
Here's the worst part – China probably knows this . That's why they're selling just
enough U.S. bonds to spook markets.
But if the trade war and soon-to-be a currency war continues, no doubt China will sell more
of their debt – sending yields soaring.
I just got done last week detailing how U.S. debt servicing costs (interest payments) are
already becoming very unsustainable ( click here if you missed it
).
At this point they're literally borrowing money just to pay back old debts – that's
known as a 'ponzi scheme'.
This is why I believe the Fed will eventually cut rates back to 0% – and then into
negative territory. And instead of sucking money out of the economy via QT, they're going to
start printing trillions more.
How else will the Treasury be able to get the funding they need?
I'll continue to keep you up to date with what's going on and how it all fits together.
But I think the two big problems I wrote about above are now converging into a new massive
problem. And I don't see any way out of it unless the Fed monetizes the U.S. Treasury and
outstanding debts. And that will cause massive moves in the markets.
I'm sure Trump will eventually
tweet , "Oh Yeah? Foreigners don't want to buy the U.S. debt? Blasphemy! Who needs you all
when we have a printing press!"
Or something like that. . .
TimeTraveller , 1 hour ago
I'm really starting to get sick of these crap reports from Palisade Research. Again they
are totally wrong on so many levels.
1. China is selling Treasuries, because they are pre-empting a debt crisis in their own
country and need Dollar financing for their overleveraged companies and their banking sector.
Also, China is lending money to every 3rd world country that needs infrustructure for it's
Belt and Road Initiative. Building ports, bridges and railways across Asia and Africa, costs
money.
2. Selling Treasuries will weaken the Dollar, so making the RMB stronger. China does NOT
want the RMB stronger because it erodes their exporters margins and competetiveness. Why
would they want to hurt themselves just to punish their biggest customer?
To even suggest China is "using the Nuclear option" of dumping Treasuries just shows your
total ignorance of the real world.
Palisade are clueless
ConanTheContrarian1 , 1 hour ago
OTOH, the crisis in Emerging Markets and the effect of capital flight on China are just
two of the MANY things not mentioned in this article. There has been tension building into
financial warfare between China and the US ever since they pegged the yuan low to the dollar
in 1987. The US is doing things under the table to China, China to the US, and they're both
quite capable of paying Adam Tumerkan (and others) to write hit pieces against the other
side. Think deeply before choosing a side.
"The short-term investment focus adopted since 2014 offers a finite set of opportunities
over a limited period of time, and this period is now clearly coming to an end as seen by
accelerating decline rates in many countries around the world," Kibsgaard pointed out.
BAU won't get it done – no quick fixes, 'new shale revolution' or 'reserve
production' to get us through – my interest is mostly how we (as a society and culture)
will react as constraints on the resource 'haves' and 'have nots' set in.
Went through Irma in South Florida last Fall – and in general order was maintained
– but really only out of Gas for about 3 days – and was more of a shock type
shortage. A very slow decline of world supply will hit those who can't pay for it most
– and maybe wake up enough through higher prices to begin planning for what will be the
greatest energy transition that must take place!
The big oil companies are selling a story of long term stability to their investors, partly
so they can justify the long term investments needed for the mega-projects where they get
most of their oil and cashflow (some of those see no net return for many years). They only
need to sell themselves to their investors, not their customers who just buy the cheapest or
most convenient, be it crude to refineries or petrol to motorists.
The service companies live more year to year – they get hired to help develop and
drill a field and then their workload drops a lot except for some well servicing during
operation. Schlumberger is selling itself to its customers (the 'operators' who are the
E&P companies) and investors as the go to guy for the next couple of years as activity
tries to pick up but faces increasing issues as the easy (and now not so easy but still
OK-ish) oil goes away.
Schlumberger is not a typical service provider to the producers, although that is a large
portion of their business. Since their purchase of Cameron International and other oilfield
manufacturing companies, they have been providing facility engineering and fabrication
services to the oil producers worldwide.
In point of fact, Schlumberger does have the information that the producers have, and then
some. They use those numbers as a basis for facility engineering, and as such are arguably in
a better position to interpret them than the producer as of late.
I've regularly read the BP annual report, and have come to regard it as little more than a
curiosity. Schlumberger, Shell and Total have a firmer grip on the world oil situation, based
on my read of their CEO's comments. However that may be confirmation bias on my part. We
shall see .
Probably the more important item is Russian reserves my estimate is we are at 90% depletion
for existing technology and OIP at cost for western Russian reserves. At this point a squeeze
plan in Syria would ensure foreign reserve earnings to into wars and not fuels outcome is
standard wars as a result of miss spending income
Yes, I assume they have some problems since they reformed the tax system in favor of upstream
risky projects and at the same time imposed more taxes on downstream refineries. But to
assume Russia has problems is like assuming the whole world has a problem. Could be perfectly
right, but why expose Russia as opposed to others? Russia has a lot of higher cost oil; just
look at the land mass and offshore mass. How could there not be prospects? Some inside
knowledge is sorely lacking, since I like most western people don't have connections in that
part of the world.
80% of the world's oil has peaked, and the resulting oil crunch will flatten the
economy.
New scientific research suggests that the world faces an imminent oil crunch, which
will trigger another financial crisis.
A report by HSBC shows that contrary to the commonplace narrative in the industry, even
amidst the glut of unconventional oil and gas, the vast bulk of the world's oil production
has already peaked and is now in decline; while European government scientists show that the
value of energy produced by oil has declined by half within just the first 15 years of the
21st century.
The upshot? Welcome to a new age of permanent economic recession driven by ongoing
dependence on dirty, expensive, difficult oil unless we choose a fundamentally different
path.
Then they say: The HSBC report you need to read, now
Real issue is giants, your article in 2015 real issue is 90% ..real issue is squeeze play in
motion in Syria..goal? if don't have it, don't drill it at home, no rig increases so 'end
game' is cut off Isreali/Saudi friendly arab gas to Europe own Caspian area (city I recall
owned by Ukraine under British treaty Yelsin) in end no WW2 buildup during economic issues
(Russia 5M/day, Saudi similar) no Hilter, just preempt what's left..
I downloaded it then, and just had to look at the date the file was created. You probably
also have it in your hard-drive.
It provided a nice confirmation to my thesis that Peak Oil won't happen in the future. It
is taking place now, and the date we entered the Peak Oil plateau was 2015. You also
forecasted that, as I did.
You are correct. Hey, I am 80 years old and I just can't remember shit anymore.
Okay, I posted a few days ago that I thought peak oil would be in 2019. Perhaps I was
wrong. Hell, I have been wrong quite a few times. But now perhaps peak oil is right now.
Perhaps? We shall see.
But my point is everyone seems to be agreeing with me now. Old giant fields are seeing an
ever increase in decline rates. I predicted this a long time ago. Once the water hits those
horizontal laterals at the very top of the reservoir, the game is over.
The decline rate in those old giant fields is increasing at an alarming rate.
Obviously! Fucking obviously. It could not possibly be otherwise. Thank you and
goodnight.
Memory is less necessary these days with internet, computers, and smart phones, where
searches can be run in a moment. Don't worry too much about that.
"But my point is everyone seems to be agreeing with me now."
I discovered your blog in 2014 when looking for confirmation on my suspicion that the oil
price crash was going to result in Peak Oil. I was impressed to see that you were there years
before through your analyses. I have a lot of respect for you and your intellectual capacity,
and I agree with you in many things, besides Peak Oil, including the population problem, and
your worries about the environment.
I don't believe the world cannot increase its oil production, I just believe it won't do
it. Both Saudi Arabia and Russia have the capacity to go full throttle on what they have
left. Shaybah is the most recent supergiant in KSA and expected to produce until 2060 at
current output. No doubt they could increase production from Shaybah by a lot, but it is not
in their interest to do so. Russia lacks the capacity to quickly increase its production, but
there's still plenty of oil in Eastern Siberia, so they could also produce more. Again it is
also unlikely, as it would require an investment and effort that goes against their own
interest.
Peak Oil is not happening because the world is trying to produce more oil and failing, it
is happening by a combination of economical, geological, and political factors that could not
be easily predicted and that were set in motion in the early 2000's when the low-hanging
fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached
its production limit. Political errors, like taking out Gaddafi, added unnecessary
difficulties. The collapse of Venezuela is the latest political cause. And when things start
to go wrong, it never rains, but it pours.
"Peak Oil is not happening because the world is trying to produce more oil and failing, it is
happening by a combination of economical, geological, and political factors that could not be
easily predicted and that were set in motion in the early 2000's when the low-hanging fruit
of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its
production limit."
Isn't this just a distinction without a difference? It's peak oil.
The issue is that Peak Oil has been misunderstood by most people. The argument that Peak Oil
won't happen until this or that date because ultimate reserves are such or such, so often
read in this forum, is incorrect. Even economically recoverable reserves are not decisive. To
make the problem intractable there are many liquids so some might peak while others don't so
discussions about Peak Oil are endless.
But it is very simple. Peak Oil is when the world no longer gets the oil it needs to keep
expanding its economy. And the best way to measure it is through C+C, because crude oil is
what we have been getting since the late 19th C ans is the stuff that produces everything our
economy needs, from asphalt to diesel, plane fuel, and gasoline. NGL won't cut it. Biofuels
won't cut it.
And Peak Oil is being determined by economical and political factors, besides the
geology.
The difference matters because Peak Oil is going to get almost everybody by surprise. Most
won't realize what is the cause of all the troubles we are going to get and they'll be
reassured that there is plenty of oil to be extracted, which is true but irrelevant.
Thanks for the reply. I also tremble at the prospect of what is to happen because of the
failure of the predictions last decade. I can only describe it through an analogy (being a
lay reader and a writer):
In the 2000s, people were saying that we had an ugly wound and that we had better do
something about it. But instead of properly addressing the wound, we just wrapped it in
gauze, and when the blood stopped showing through, we said, "See? All better." That's my
analogy for the "shale revolution" -- it was essentially a Bandaid. The complacency has only
worsened in the last ten years.
This has just made the infection all the worse. When pus starts showing through the
dressing and we unwrap it this time -- we're going to find gangrene.
I am re-reading Joseph Tainter's 1998 book "The collapse of complex societies." It is a
sober reading that shows that in the end the laws of entropy and diminishing returns always
produce the same result. We are not more intelligent than the people that preceded us. If
anything we can only be stupider on average. We just have a very high opinion of
ourselves.
Time for a wake up and a little bit more darwinism in our lives. The problem is the pain.
With so many people it is just going to be unbearable. On a scale never imagined, not even by
writers of bad sci-fi.
That would be a more important definition of peak oil to me, and I think we are definitely
there. Then we have the absolute production definition, which was the original definition, as
to production. It is now anticlimactic to your definition. As to the date or year it happens,
who cares? More importantly, now, is when demand will lower enough to stop draining
inventories. At what oil price will that start occurring? How fast will alternate sources
replace unmet demand? New directions and everyone is likely to be wrong on estimates. EIA and
IEA were totally useless before, and that will probably not change in the near future.
Looking in the past won't give us much, and the future is anybody's guess.
As to current prices, $68 oil won't get any extra interest from E&Ps outside of the
Permian that is stalled. To any measurable extent. Close to $80 oil is not expanding interest
very much outside of the US. We are just living on borrowed time.
Oil prices are likely to continue to rise, especially if your estimates of future
production (roughly similar to my estimates, but perhaps a bit more pessimistic) are correct,
unless consumption of oil stops increasing. My guess is that oil (C+C) consumption will
continue to increase at 400 to 800 kb/d each year , until oil prices get to about $150/b or
more (around 2025 to 2027),by that time or soon after ( maybe 2030) oil consumption growth
may stop either because of the expansion of electric and natural gas powered transport or
because of a second Great Financial Crisis. My hope is it will be the former, but I think the
latter scenario is much more likely.
Hopefully Keynes' General Theory will make a comeback before then.
Ron Wrote:
"I predicted this a long time ago. Once the water hits those horizontal laterals at the very
top of the reservoir, the game is over. "
FWIW: That's already happened. when it occurs, they drill a new horizontal above the old
one. The new lateral also have valves on there ports. so that when the water breaches one or
more of the ports, they shut them off to reduce water cut. I posted Saudi Aramco tech
articles here back between 2014 and 2016 when they were available on the SA website.
Hi Carlos, thanks for the trip down memory lane. I tend to agree with peak oil being now
(ish). From what I recall the peak month for C+C was, so far, in November 2016. I suppose
there is also a peak day, a peak weak, and a peak year. Folks seem to like packaging time in
various proportions. Hell, there's probably a peak decade and a peak hour. My guess is the
peak year will be 2018. I like, because I'm a bit thick at maths, how Ron has added trailing
12 month average to his world production chart. I just look at the 12 month trailing average
for each December to get an idea of how much was produced in each calendar year. It seems
that 12 month trailing average for December 2018 will beat that of 2017. My guess is 2019
won't beat 2018. Or will any other year after that. So, if Ron say's 2019, and I say 2018,
then it seems that I think he is wrong lol he's probably 100 times smarter than me so doesn't
lose sleep over it lol. Up until this time I have always agreed with Ron on peak oil. But
now, I throw down the gauntlet! 2018 vs 2019. Two will enter, one will leave.
The exact week, month, or year when maximal production is reached has only historical
interest. The point is that since the end of 2015 the 12-month averaged C+C production has
barely increased (EIA data) despite the increase in demand.
Dec 2015 80,564 100.0%
Dec 2016 80,579 100.0%
Dec 2017 80,936 100.5%
Apr 2018 81,363 101.0%
We will have to see how it evolves over to the next December, but so far it is annualized
to a 0.4% increase. To me we are in a bumpy plateau since late 2015 and all those meager
gains and more will be lost in the next crisis. The problem will be evident to many when
after the crisis we are not able to increase production above those values.
Peak Oil is a situation, not a date, and we are in that situation since late 2015. The oil
that the world demands cannot be produced so prices are going up, and up. I suppose it is
possible that the powers that be intervene to reduce global oil demand by favoring a crisis
in developing countries, like Argentina, Brazil, Turkey, South Africa, through interest rate
changes. Wait, it is already happening. It is a dangerous tactic, as crises can spread
around, and the interest rise weakens the economy.
Well one has to define the plateau a bit better. If we make the bounds wide enough one
could say the peak was 2005 or even 1980 and we have been on a bumpy plateau since that
point.
Better in my view to define peak as peak in centered 12 month average output wth center
between month 6 and 7.
I use a 13-month centered average, so it is symmetrical with 6 months at each side.
But really, after a clear period of production growth 2010-2014, there was a strong growth
in production 2014-2015 in response to falling prices, and then production got stuck in late
2015.
It is not a question if we are in a plateau (or very reduced growth) period, but what
happens afterwards. After the previous plateau 2005-2009 there was a clear fall 2009-2010,
before tight oil saved the day.
The recent plateau is due to excess inventory and the resulting low oil price level. Oil
inventories have been reduced over the past 12 to 18 months and as oil prices increase,
output will also increase with perhaps a 6 to 12 month lag. How much will it need to rise
above the Dec 2015 level before you no longer consider that output has not risen above your
"plateau". Give me a number, is it 81.5 Mb/d, 82 Mb/b, I prefer to use a year rather than 13
months, that's 182 days on either side of the middle of the 12 month period. On leap years we
can use Midnight of day 183
One issue that has been corrected is that reserve requirements for large banks have
increased.
Also lenders are more careful with their mortgages making a housing bubble less
likely.
In addition, the assumption that higher oil prices played a major role in the GFC is
incorrect.
Perhaps there is a looming recession, whether this happens in 2018, 2030 or some other
year we will only know when it occurs.
Someone who predicts a recession every year will be right eventually.
I maintain my guess of 2023 to 2027 for the 12 month centered average c+c peak and severe
recession GFC2 starting 2029 to 2033, lasting 5 to 7 years.
Second oil reserves have been flat since around 2010, and declining recently for the first
time since the 1970s. Note, before someone points it out, they don't count Canadian Bitumen.
This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way
below replacement level. Yet so-called "proven" reserves keep going up, up and up.
"This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way
below replacement level. Yet so-called "proven" reserves keep going up, up and up."
Well to some degree, technology has been able to extract more oil from a field. Thus a
field discovered in 1950 with an initial proven reserve of 100mbbls, may have 125mbbls or
proven reserves as technology has improved recovery rates. That said technology improvements
likely don't match the paper proven reserves.
The Venezuelan heavy oil reserves are overstated (I assume the large bump prior to 2010 is
the booking of the Magna Reserva in the Orinoco Oil belt, which i know are fake). It's fairly
easy to eyeball the better number by substracting 300 billion a flat line around 1200. If you
want to add future bookings in that heavy oil belt, add up to 50 billion gradually. Dont
forget that at the current decline rate Venezuela will be producing about 1.1 million BOPD in
december, and IF things go as I think they will sometime in the first half of 2019 exports
will drop to zero for a few months.
Third gas reserves also flat. If condensate and NGLs have been meeting the increased demand
that crude has been unable to, then that might be about to stop.
@ Lochearn who is correcting my genealogical representation of empire
Yes, you are more correct than I. That said, does it go back even further to the founding
of monotheistic religions? We are referring to social control by an elite in my mind more
than the Jewish bankers part of your genealogy. I admit to the bankers part but see that
bankers group as the encourage/control entity for the other monotheistic religions.
Has that system dynamic changed/evolved seriously since the Roman era? We have usury. We
have inheritance. We have banking. The concept of private property evolved along with the
mythical moral fig leaf of rule-of-law. We call it the Western form of "civilization".
Psycho Historian: I have been reading a Great Courses book on the history of the Achaemenid
rmpire that ruled Persia and one interesting tidbit from my reading is that temples and their
priests made loans to property (though turned did not accept deposits). So religious
institutions got into the banking business early.
In his talks about his upcoming book, Hudson has said that besides the Palace the Temples
were the first sources of credit. But their relation to society then vastly differs from what
evolved as both Palace and Temple become corrupted by greed.
So religious institutions got into the banking business early.
Achaemenids? I think this was rather late. IIRC temples in Ur, Sumer and Babylon were in
the business long before the Achaemenid period.
However Ur, Sumer and Babylon also seem to have had a general debt amnesty about every 7
years. There was a sound political or economic rationale for this. Something about the idea
that one was not supposed to grind the faces of the poor into the gravel, nor destroy the
fabric of society.
The temples were the only organizations that had the administrative ability to do this.
Temple, at least in Mesopotamia is a bit of a misnomer. As I understand it, the "temple" was
the home of the god, the royal palace and the seat of the civil service all rolled into
one.
You might find David Graeber's book Debt : The First 5,000 Years interesting. He
discusses why the temples were in the money lending business. It's a rather fun read and
comes in hard cover and completely free pdf. https://libcom.org/files/__Debt__The_First_5_000_Years.pdf
did not accept deposits
I never thought of it, but yes of course. Given their functions they would not take
deposits. They were loaning from state resources and did not need deposits. They would not
have even understood the concept.
I am not sure if this applies during the Achaemenid period but it seems likely.
"... Serious border enforcement, demanding our wealthy allies do more for their own security, infrastructure investment, the (campaign's) refutation of Reaganomics, acknowledging the costs of globalism, calling BS on all of the dominant left PC pieties and lies, were themes of Trump's campaign that were of value. ..."
Serious border enforcement, demanding our wealthy allies do more for their own security,
infrastructure investment, the (campaign's) refutation of Reaganomics, acknowledging the
costs of globalism, calling BS on all of the dominant left PC pieties and lies, were themes
of Trump's campaign that were of value.
Trump was able to harness and give voice to some very important energies. But being Trump,
he's poisoned these issues for a couple of generations. No serious leader will be able to
touch these things.
Add this to all the institutional and political ruin he has created.
"... Tucker Carlson went off last week on how the US welfare system is gamed by major corporations like Amazon and Walmart to keep workers' wages below a basic level of being able to support one's self and family. ..."
"... How about reducing these companies' tax deductions for wages by an estimate of the welfare benefits, e.g. "Food Stamps," etc., their workers use to stay afloat? ..."
You missed the pithiest soundbite that succinctly sums it all up:
We privatised profits and we socialised risk and losses.
We continue to do so in a major way to prop up our oligarch class.
Capitalism died a long time ago in the US, and its death is not just evident in the way
banks are coddled.
Tucker Carlson went off last week on how the US welfare system is gamed by major
corporations like Amazon and Walmart to keep workers' wages below a basic level of being able
to support one's self and family.
How about reducing these companies' tax deductions for wages by an estimate of the welfare
benefits, e.g. "Food Stamps," etc., their workers use to stay afloat?
"We can look to Iceland for an example of how to handle the next crisis."
No, we should follow the example of Vietnam and execute a few bankers and other
oligarchs.
The Asian country that best overcame the 1997 crisis was Malaysia.
Under then PM Mahathir, the country defied the IMF and refused to take loans from it.
Instead of obeying the Washington Consensus rules, Malaysia applied completely unorthodox
measures: fixing the peg of the ringgit to the dollar, selective foreign exchange controls,
de- internationalisation of the ringgit. As a consequence, Malaysia preserved all her
assets.
Ironically, such unorthodox crisis measures are now recognised as innovative and efficient
by the same vulture IMF.
The 1997 crisis followed the trademark asset rip off script set up by the financial
industry loan sharks. The same script has repeated time and again over decades.
On a slightly related topic, "Let's put forward a People's Agenda."
India just created one of the worlds largest Public Banks.
The mother of all banks is coming today
. . .
A banking behemoth will take birth at Delhi's Talkatora Stadium today when Prime
Minister Narendra Modi inaugurates the India Post Payments Bank (IPPB).
"... But to an extent hardly imaginable in 2008, all the world's leading economies are locked in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it launched against Turkey, as an integral component of its drive to secure the United States' geopolitical and economic interests at the expense of friend and foe alike. ..."
"... But while they are deeply divided as to their economic and geo-political objectives, the capitalist ruling classes are united on one essential question. However the next stage of the ongoing breakdown of world capitalism proceeds, they will all strive by whatever means considered necessary to make the working class the world over pay for it. ..."
"... In 2008, capitalist governments around the world, above all in the US, derived enormous benefit from the decades-long suppression of the class struggle by the trade unions and the parties of the political establishment. The rescue operation they carried out on behalf of parasitic and criminal finance capital would not have been possible without it ..."
"But to an extent hardly imaginable in 2008, all the world's leading economies are locked
in a perpetually escalating cycle of economic warfare. This global trade war is spearheaded
by the Trump White House, which sees trade sanctions and tariffs, such as the onslaught it
launched against Turkey, as an integral component of its drive to secure the United States'
geopolitical and economic interests at the expense of friend and foe alike.
The character of world economy has undergone a major transformation in the past decade in
which economic growth, to the extent it that it occurs, is not driven by the development of
production and new investments but by the flow of money from one source of speculative and
parasitic activity to the next."
"But while they are deeply divided as to their economic and geo-political objectives, the
capitalist ruling classes are united on one essential question. However the next stage of the
ongoing breakdown of world capitalism proceeds, they will all strive by whatever means
considered necessary to make the working class the world over pay for it.
This is the lesson from the past decade which, in every country, has seen a deepening
attack on wages, social conditions and living standards as wealth is redistributed up the
income scale, raising social inequality to unprecedented heights.
In 2008, capitalist governments around the world, above all in the US, derived enormous
benefit from the decades-long suppression of the class struggle by the trade unions and the
parties of the political establishment. The rescue operation they carried out on behalf of
parasitic and criminal finance capital would not have been possible without it."
"... In 2004, the historian Walter McDougall concluded that as early as the Civil War, America was a "nation of hustlers." During Reconstruction, Walt Whitman wrote that "genuine belief" seemed to have left America. "The underlying principles of the States," Whitman said, "are not honestly believed in, nor is humanity itself believed in." ..."
"... Accumulation of capital is the dominant, even definitional, American idea, which is why Calvin Coolidge famously remarked, "The chief business of the American people is business." ..."
"... Christopher Lasch had a slightly more prosaic way of measuring the pain of progress. "The triumph of corporate capitalism," he wrote, "has created a society characterized by a high degree of uniformity, which nevertheless lacks the cohesiveness and sense of shared experience that distinguish a truly integrated community from an atomistic society." ..."
"... Rather than a "marketplace of ideas," the United States is a mere marketplace, and just like at any store in the shopping mall, whatever fails to sell is removed from the shelves. Today's trend is tomorrow's garbage. ..."
"... We focus on immigration because it is a clear threat to the American tradition with clear and obvious solutions. ..."
"... While I appreciate that the writer is trying to link immigration with big business and culture, the argument as a whole doesn't come together. He needs to define what he means by "corporate capitalism," "identity," and "culture"; otherwise, this is nothing more than a incoherent rant. Is he talking about popular entertainment, the arts, academic institutions, civil society, religion? How exactly is the existence of a Walmart or the popularity of smartphones to blame? Quoting Walt Whitman and Calvin Coolidge doesn't really get us anywhere. ..."
"... Yes of course a commercial culture is prosperous, dynamic, cosmopolitan, rootless, greedy, materialistic, cynical, plebian and vulgar. And yes, of course in a market-dominated culture, all other systems of indoctrination (i.e. church and state) are constantly on the defensive. ..."
"... That is not 'no' culture; it is a highly distinctive culture. It tends to neglect the high arts and excel at the low arts; it favors novelty over tradition, spectacle over reflection, passion over balance. Again, 'twas ever thus; as is the inevitable cooling of these innovations to new formalisms for the next generation to rebel against, and enrich. ..."
"... So, what should replace corporate capitalism -- socialism, distributism, non-corporate capitalism, what? ..."
Donald Trump, during a recent stop on his "Anarchy in the UK" tour, argued that the mass influx of immigrants into Europe is causing
Great Britain and other nations to "lose their culture." The fear of cultural dilution and transformation as a consequence of shifting
demographics is widespread, and it resonates in the United States, too, especially among those who support the current president.
Stephen Bannon, Tucker Carlson, and other popular right-wing figures have warned of threats to national identity in an American
context, contending that Mexicans will not assimilate and that Islam is incompatible with liberal democracy and secular governance.
Liberals and libertarians often respond by recalling the long tradition of assimilation in American history, along with the outrage
that often accompanies new arrivals. Nearly every ethnic group, from the Italians to the Chinese, has been the target of political
and social hostility. It is an old story, but one worth telling, and it is an old debate, but one worth having. Border sovereignty,
even to someone like me who probably favors more liberal immigration laws than most TAC readers, is a legitimate issue and
not to be easily dismissed.
The current conversation about traditionalism, national identity, and cultural preservation, however, is so narrow to render it
counterproductive and oblivious. For those truly worried about the conservation of traditional culture, to focus solely, or even
primarily, on immigration is the equivalent of a gunshot victim rushing to the barber for a haircut.
Rather than asking whether American culture is at risk of ruination, it is more salient to inquire, after decades of commercialization,
Madison Avenue advertising onslaughts, the erasure of regional differences, and the "Bowling Alone" collapse of community, whether
America even has a culture.
In 2004, the historian Walter McDougall concluded that as early as the Civil War, America was a "nation of hustlers." During
Reconstruction, Walt Whitman wrote that "genuine belief" seemed to have left America. "The underlying principles of the States,"
Whitman said, "are not honestly believed in, nor is humanity itself believed in."
Prophesizing with his pen that democratic structures and procedures would prove insufficient to cultivate a truly democratic culture,
Whitman likened the American obsession with commercial conquest and pecuniary gain to a "magician's serpent that ate up all the other
serpents." Americans, Whitman warned, were dedicating themselves to creating a "thoroughly-appointed body with no soul."
When Whitman wrote the essay in question -- "Democratic Vistas" -- the United States had open borders and immigrants freely entered
the "new world" for reasons of freedom and financial ambition. Even if they attended churches in their native languages and lived
in ethnic enclaves, they often found that they could matriculate into the mainstream of Americana through pursuit of the "American
dream," that is, hope for monetary triumph. Accumulation of capital is the dominant, even definitional, American idea, which
is why Calvin Coolidge famously remarked, "The chief business of the American people is business."
Capitalism is a formidable engine, enabling society to advance and allowing for high standards of living. But to construct an
entire culture around what Coolidge identified as "buying, selling, investing, and prospering," especially when capitalism becomes
corporate and cronyist, is to steadily empty a culture of its meaning and purpose.
Few were as celebratory over the potential for meaning and purpose in American culture as Whitman, who drew profound inspiration
from America's natural beauty and regional diversity. So what force was most responsible for the widespread desecration of America's
own Garden of Eden? All arguments about immigration aside, changing demographics did not transform the country into the planetary
capital of asphalt and replace its rich terrain with the endless suburban sprawl of office complexes, strip malls, and parking lots.
The reduction of the American character to a giant Walmart and the mutation of the American landscape, outside of metropolitan areas,
to the same cloned big box stores and corporate chains is not a consequence of immigration.
The degradation of the American arts and the assault on history and civics in public school and even higher education curricula
is not the result of immigrants flooding American streets. Amy Chua has argued quite the opposite when it comes to America's increasingly
imbecilic and obscene pop culture. Many immigrant families try to keep their children away from the influence of reality television,
the anti-intellectual reverence for celebrities, and the vigilant commercialization of every aspect of life.
The same cultural killer is responsible for all the assaults on American identity visible as daily routine, from environmental
destruction to the endangerment of independent retailers and "mom and pop" shops. That culprit is corporate capitalism. It is a large
entity that, like any killer, justifies its death toll with dogmatic claims of ideology. "Progress," everyone from the owner of the
local diner to the out-of-work art teacher is told, has no room for you.
In his song "The West End," John Mellencamp gives an angry account of the disappearance of a small town:
For my whole life
I've lived down in the West End
But it sure has changed here
Since I was a kid
It's worse now
Look what progress did
Someone lined their pockets
I don't know who that is
Progress, as Mellencamp succinctly captures in song, often comes at someone else's expense, and translates to enrichment for the
few who benefit.
Christopher Lasch had a slightly more prosaic way of measuring the pain of progress. "The triumph of corporate capitalism,"
he wrote, "has created a society characterized by a high degree of uniformity, which nevertheless lacks the cohesiveness and sense
of shared experience that distinguish a truly integrated community from an atomistic society."
The irony Lasch describes is tragic. A culture of corporate capitalism demands conformity, and most people cooperate. But because
its center is hollow, few people feel any sense of connection to each other, even as they parrot the same values. It is no wonder
that most forms of rebellion in the United States are exhibitions of stylized individualism -- inspiring theater and often enlivening
to observe, but politically fruitless.
Rather than a "marketplace of ideas," the United States is a mere marketplace, and just like at any store in the shopping
mall, whatever fails to sell is removed from the shelves. Today's trend is tomorrow's garbage.
Those concerned about tradition and cultural longevity can lament immigration and condemn "open borders." But if they are serious
about American identity, they should begin and end with the villainous corporate enterprise that has waged war on it since the late
19th century.
Whatever culture remains in this country can often be found in the places where people still maintain at least a symbolic link
with their immigrant roots.
Many of the immigrants came to the dream of America believing the myth. That they could be anything hard work would bring them,
regardless of rank or class of birth, title, family name, or religious prejudice. For the most part, this was sufficiently true
that they prospered. They became "us". This [perhaps naive] belief in the dream made most of them, and their children, our most
loyal and law-abiding citizens.
It was indeed the robber barons of the 19th century that pushed us down the path of self-destruction.
I feel vindicated. Some years ago, Rod Dreher pilloried me for being obsessed with how destructive corporate capitalism had become
to American culture, values and social cohesion. I think his epiphany came, when supposedly "conservative" big business turned
out to be on the other side in the culture wars.
I hear you, Mr. Masciotra. I'm not especially fond of large for-profit corporations. But they wouldn't occupy monopolistic positions
and enjoy rapacious profits and latitude for enormous misdeeds if the public were firmly opposed to that sort of thing. Americans
generally love a winner, even if the "winning" is fraudulent or coerced, as long as they personally aren't coerced or defrauded.
It's all about the money, or at least the belief that the money might come.
Thank you for this refreshing piece which points the finger to a place where those on the left and right can actually make a difference.
Of course, making any changes will require dismantling some the mythology of the American prosperity gospel, but it starts with
great articles like these.
The system didn't become corrupt in the 80s, it's been that way for much longer. And there have been hustlers and " well meaning
" Corporate yes men making dishonest money off of their compatriots for centuries (everywhere, I might add).
So the question is, do we want to continue to encourage this behavior or do we dare to dream of another reality ?
Well crafted and thoughtful. Years ago, Walker Percy observed that America was unique among nations in that it was simultaneously
the most religious country and the most materialistic country in the world. Fast forward to 2018 and while religion appears to
be in decline "getting and spending" continues apace.
Agreed but lets be honest with ourselves. We have to go where the kindling is dry and abundant to start a proverbial fire. America
does have a culture. To see that all one need do is visit Nashville, the Ozarks or farm country in nebraska. Where there are still
people the culture survives. That is a stoical dispensation. The culture does go back to Hellenism but Americana does have it's
own ways. Go visit Europe for any amount of time or dare I say it Asia and American culture becomes obvious.
Thanksgiving is a uniquely American holiday that, in my opinion, best represents American culture and how it is different from
all else.
Corporate Capitalism has always been American culture and life. Basic Taylorism on the assembly line was over 100 years in which
men spent 50 -- 60 hours a week performing a single task very quickly.
What is American art? Would we consider Chuck Berry and Elvis Presley great American art and music? I do but the original reaction
of older Americans was 1950s R&R was complete degradation of music. (Some of the racial language was very colorful by good citizens.)
Or what Star Wars or Godfather. Or maybe the modern Marvel 'universe' has a degree of great pop art.
Certainly well argued but for one important element that has been omitted; one ingredient which bundles everything together into
one integrated picture. That necessary item can be summed with these two words, "buy in." Corporate capitalism would never hold
sway except for the acquiescence of the populace which wanting the quantity of commodities had gathered in the shopping malls
but now remain isolated in the front of their computer screens or cell phones.
Rather than there being the tyranny of the marketplace bringing forth this dominance of goods over people and the legerdemain
of monetized value displacing our organic relationship to the land, it is this anonymous accommodation to the denigration of the
high arts and the erosion to our culture which is the ultimate culprit.
In a word, it is the tyranny of the masses which pulls apart any endeavor at creating and sustaining a hierarchy of value rewarding
all enterprise which appeases public taste by appealing to the lowest common denominator. Fore it is through this tyranny that
capitalism has built its avaricious edifice.
Suffice it to say that the target "corporate capitalism" remains the straw man, that ethereal and empty concept devoid of blood
and sinews. Where then does one find the source to this dilemma but in that which is of both flesh and blood namely humanity.
The problem lies with the populace.
What is called for here is an awakening but not through a reckoning as that would only cause humanity to roll over and return
to its slumber. And if crisis and collapse serves not the catalyst for such an awakening what then will provide such an arousal?
Until such a time, we remain asleep and the institutions of our dream life will rule us.
Corporate capitalism is not the source. It is not even at the source. We are the source until such a time as we awaken.
excellent points. oh, and ironically (or not), from the Middle Ages (Europe) through the 19th century (American West), it was
not uncommon for a barber to also perform ad hoc surgery/medical procedures, or to share space with the town's 'doctor', so in
some instances it was prudent to go to the barbershop if shot
"Liberals and libertarians often respond by recalling the long tradition of assimilation in American history, along with
the outrage that often accompanies new arrivals."
Apples and oranges. The welfare state didn't exist then, so it was assimilate or fail. 1/3 of all culturally similar to existing
US culture Europeans returned to Europe.
Today, "Press 2 for Spanish", the welfare state (give birth on US soil to a US citizen for family access to benefits [or steal
an ID], then chain migrate the rest of your family), the Internet, and identity politics discourage assimilation and allow extremely
large cultural enclaves which are politically divisive as pointed out MANY years ago by the not exactly "right wing" former WH
press secretary for LBJ, Bill Moyers, in one of his many excellent documentaries.
We focus on immigration because it is a clear threat to the American tradition with clear and obvious solutions. The
author paints this focus of the Trumpian and dissident right as exclusionary, but it is not; at the same time arguing for his
own exclusionary anti-capitalist platform. Quite frankly, I don't know what it's doing on TAC, but I will take the time to respond.
The criticism of anti-immigration on the right is a straw man argument. The dissident right is not merely anti-immigration,
it is more broadly anti-multiracialist. Many understand and agree with the author on the problems of capitalism, but also see
racial and cultural integration as an additional threat to the American tradition. His point about how the immigration (into America)
didn't cause the hellspace of suburbia is true, since only up until 1965 did we make sure immigrants were white and could integrate
well into society. However, he ignores the history of black empancipation and subsequent desegregation that led to massive internal
migration from the South into cities like Detroit, Chicago, and Baltimore. There weren't always majority black, my friend. The
very real problems that this internal migration presented to ethnically homogenous, culturally rich, urban white neighborhoods
in the 20th century were the driving force behind the suburban sprawl. We colloquially refer to this phenomenon as "white flight,"
and many on the left and the right see it as unjustified "racism."
The curious reader would do well to investigate this claim to see if maybe white flight might have actually been very justified,
maybe a gross historical injustice was done to those now ethnically cleansed communities, and maybe racial desegregation is partly
to blame for the author's perceived lack of (white) culture in America.
Thank you for reading.
"Capitalism" is cronyist by nature. "Capitalism" itself requires an extensive set of laws that benefit some economic arrangements
over others. Now the reason for this is because nations need development, and that means they need capital, and that means they
need to create laws that ensure that the people who have capital feel willing and confident enough to invest it in that country.
But once you've opened the pandora's box of bankruptcy laws, limit liability, and other "terms and conditions" of investment
and capital, you're going to have a system that lends itself to cronyism when you have no other counter-balancing power from labor.
My brilliant iPad just deleted my response. So, quickly, capitalism is partly curable by antitrust and protectionism, but proto-amnesty
mass immigration is not curable, and it more quickly distorts national identity than does capitalism, which takes a very long
time to alter society's frame. Mass immigration does that relatively quickly. Also, immigration has as many rackets as capitalism
does -- for the one, capital gains tax cuts, and for the other, H1-B visas.
only up until 1965 did we make sure immigrants were white and could integrate well into society
The immigration act of 1924 which choked off most immigration was about reducing white immigration. It didn't actually affect
Mexican immigration. The largest beneficiaries the post-1965 immigration laws have been Asian immigrants who everyone argues integrate
perfectly well.
ethnically homogenous, culturally rich, urban white neighborhoods
Any of the residents of those neighborhoods in Chicago would have been quick to deny they were "ethnically homogeneous" because
they would have pointed out how they were mixed neighborhoods of Greeks, Poles, Slovenes, etc.
Its about time someone on this site placed at least 50% of the blame when it comes to demise of the American Middle Class as well
as ' culture ' -- ( such as it is seeing we have no well defined codified ' culture ' because we are and have been since the beginning
so diverse ) -- on the American Corpocracy .
But the fact is the other 50% of the blame must fall firmly upon the shoulders of the greedy speculators and investors convinced
every year should be a profitable year and they should of received next year's profits yesterday
Along with the American Consumer addicted to cheap goods 60% of which they have no need for nor ever use .
So what is the answer ? First we need to move towards a Responsible Capitalism rather than the Ayn Rand addled narcissist Hyper-
Capitalism rapidly approaching Anarcho -- Capitalism we're currently immersed in from the Oval Office on down
Second the American Consumer needs to accept paying what something is worth .. be it service , goods or food .. rather than
thinking the entire world is a discounted oyster at their beck and call
And Third .. with the onus once again falling firmly upon the shoulders of the discount addled American consumer . We need
to get over the theater of convenience shopping ( online ) and get back to supporting local businesses who pay taxes to our local
community and are in fact our neighbors
Problem is all of the above solutions require both compromise , authentic thought as well as discernment
None of which ( for the most part ) currently exists in this over polarized ' Collective Stupidity of America ' zeitgeist we're
firmly entrenched in
Lecture over . Donuts , bagels and coffee in the virtual break room .
English colonials brought to the American continent both English Law -- based on private property -- which has turned into Corporate
Market Capitalism (Citizens United, eh?), and the Enlightenment idea of the centrality of Individual Freedom, which has turned
into the rank Individualism of our current Me-Myself-and-I cultural ethos.
Democracy and a healthy culture, in my view, depend upon holding in balance the needs/desires/rights of both the Individual
and the broader Common Good. There now seems to be little left of a Social Covenant that includes all Americans, which is central
to a viable culture.
I'll say this when it comes it integration: people in the past weren't forced to integrate in the least. A friend of mine has
a grandmother that speaks Russian, only Russian, and no English. As long as she remained in her little enclave in the US, why
need to speak English? In my native Cincinnati the "Over the Rhine" neighborhood had beer gardens, German schools, German newspapers,
and German street signs. Only a fire and I am sure some Progressive 'encouragement' broke the neighborhood up.
White in America use to mean Anglo-Saxon and Protestant. To be Wet was to be Catholic and to be Catholic was to be an immigrant.
Dry was honest, hard working, and true. Wet was disorderly, murderous, and poor. Irish weren't white, Poles weren't white, and
the Italians most certainly weren't white.
My question is why are we poo pooing Latina values? Family centric, conservative, Catholic/Christian, and hard working (come
on, either immigrants are stealing our jobs or they are welfare leeches, pick one!). Their food is delicious and the music is
fun.
The latina vote should be the Republican vote if they would just get over themselves. Spanish is just as much a Romance language
as French or Italian. Get with the program, declare them white, and let's enjoy a super majority with taco Tuesday.
@BradD
Nothing is necessarily wrong with "Latin" values per se . The problem is with massive amounts of Illigeal immigration coming all
from one area. I'm sorry but integration and assimilation is extremely important, just look at Europe for an idea of what happens
to countries that don't integrate immigrants well.
Also, if "Latin" values are great and desirable then why would such a massive amount of people be bum rushing our southern
borders?
Can you please tell me one example of a country in Latin America that has been successful for an extended period of time? I
cannot even think of one. When people come in small waves they can integrate and learn the value of our institutions, laws, freedom,
liberty ect They basically become American w/ Latin heritage. When they come en mass, they keep their societies values a lot longer
and stay in enclaves a lot longer as well. As an example not too long ago I was in the southern part of Houston Texas and the
Galveston area and I cannot tell you the number of cars, houses and business that have the Mexican flag up instead of the USA
flag! That is all kinds of wrong to me. If Mexico is so great, than they should just move on back and set up shop there.
Ding, ding, ding
We have a winner here. America is promoted as merchant culture, bread or bombs. The peoole termed colonists were largely corporate
sponsored. So when people continue to arrive, they figure starting their store or buying the "right" things is American culture.
And for everything else, they just say, "We have our own, thank you."
While I appreciate that the writer is trying to link immigration with big business and culture, the argument as a whole doesn't
come together. He needs to define what he means by "corporate capitalism," "identity," and "culture"; otherwise, this is nothing
more than a incoherent rant. Is he talking about popular entertainment, the arts, academic institutions, civil society, religion?
How exactly is the existence of a Walmart or the popularity of smartphones to blame? Quoting Walt Whitman and Calvin Coolidge
doesn't really get us anywhere.
I would be happy to defend free enterprise in America and would even credit the business and marketing practices in America
for inculcating customer service as a uniquely American trait. You can tell you're in America when people act politely and aim
to serve you -- even illiterate young people know this. Go to any country in Europe, and you'll find a whole staff of people from
the airport, to the stores, to the hotel frowning at you for having the nerve to have want of their services. And that's just
a side benefit. The main thing business does is finance the creation of culture at all levels. Any civilization's golden age followed
from societal prosperity, not from a more democratic and tasteful distribution of wealth.
If we're talking about the arts and influence, America is still the most dynamic in the world, being a great producer of movies,
music, books, and all the rest. Even the existence of a site like TAC should cause one to reflect on just how nice it is to live
in a country that permits open discourse and values quality writing and ideas -- and for no cost at all to the reader. We can
despair all we like of the decline of the Oscars, or the stupidity of modern art, or the pointlessness of postmodernist ideology,
but it says something that we can even have this conversation. I'm not sure other cultures, outside those in elite circles, even
think about this stuff.
Wow, something Fran Macadam and I agree on! Surely there is enough there for some bright politician to make a central platform
plank out of?
A number of commenters point out that this isn't just imposed on us, we also embrace it (or just succumbed to the propaganda/advertising).
Fixing the problem will require efforts to curb corporate power as well cultural change from the ground up to embrace real values
beyond just capitalism.
Re: Today, "Press 2 for Spanish", the welfare state (give birth on US soil to a US citizen for family access to benefits [or steal
an ID], then chain migrate the rest of your family), the Internet, and identity politics discourage assimilation
The evidence, notably from language learning, shows that today's immigrants assimilate at about the same rate others did in
the past. And yes, you could hear other languages in the US in the past also. There were places in Detroit I remember in childhood
where all the signs were in Polish. Going farther back 19th century nativists were horrified that entire communities in the Midwest
spoke German. Early on, our eighth president, Martin Van Buren, grew up speaking Dutch in the Hudson Valley.
As for the welfare state, well, there were lots of mutual aid societies which provided help -- we were not a social Darwinist
nation. And don't forget the Civil War pensions to which a significant fraction of the population was entitled.
Mr. Mascriota tells us: "Border sovereignty, even to someone like me who probably favors more liberal immigration laws than most
TAC readers, is a legitimate issue and not to be easily dismissed."
And yet, Mr. Mascriotra, last Sept 9th (2017) at "Salon" you wrote an article entitled "The case for open borders: Stop defending
DACA recipients while condemning the 'sins' of their parents":
"As an English instructor and tutor, I've met young men and women from Ethiopia, China and Nigeria, and I have taught students
whose parents emigrated from Mexico to the United States 'illegally.' If I were an insecure coward afraid to compete in a multicultural
society, and convinced my future children would become deadbeats without the full force of white privilege to catapult them into
success, I would advocate for the deportation of immigrant families similar to those of my students, and I would repeat mindless
bromides like 'America First' and 'Build that Wall.' One of the costs of racism, xenophobia, or any form of pathetic provincialism
is that freezes the prejudicial person in a permanent state of mediocrity President Donald Trump's decision to end DACA, and his
demand that Congress 'fix the' nonexistent 'immigration problem,' demonstrates a stunning streak of sadism, projecting yet another
signal to his rabid and anti-American base of closed-minded losers If the 'real Americans' are afraid to compete with immigrants
for jobs, prestige, or cultural authority, they only indict themselves as weak, self-entitled and easy to panic. In a word, 'snowflakes'.
A bureaucratic permission slip is trivial compared to the imperative of human freedom -- freedom that should transcend what are
largely artificial borders."
@Mr. Soprano: I think Baltimore was a special case as a Southern city (which it historically was up to maybe WW1, maybe WW2.)
Don't know its demographics pre-WW2 but I'd bet dollars to donuts it was substantially more black pre-WW1 than Chicago, which
was nearly all white up to about 1915 even though it was founded by a Francophone Black man Jean Baptiste Pont du Sable.
David Masciotra: Not sure what I think about the ironmongery in your left ear, but this piece is excellent. My only criticism
-- mild at that -- concerns the analogy in your third paragraph:
" to focus [our worries] on immigration is the equivalent of a gunshot victim rushing to the barber for a haircut."
This article is timely, but only because its complaints are perennial. 'Twas ever thus.
Yes of course a commercial culture is prosperous, dynamic, cosmopolitan, rootless, greedy, materialistic, cynical, plebian
and vulgar. And yes, of course in a market-dominated culture, all other systems of indoctrination (i.e. church and state) are
constantly on the defensive.
That is not 'no' culture; it is a highly distinctive culture. It tends to neglect the high arts and excel at the low arts;
it favors novelty over tradition, spectacle over reflection, passion over balance. Again, 'twas ever thus; as is the inevitable
cooling of these innovations to new formalisms for the next generation to rebel against, and enrich.
A similar cycle applies to demographics. Today's scary outsider becomes tomorrow's stodgy insider, after they buy their way
in. I therefore second BradD's motion to declare Hispanics to be white; and Asians too.
All those disturbed by demographic transitions should contemplate this truism: that by the middle of next century every man,
woman and child now alive shall be dead, and replaced by people not born yet.
This includes you, which makes it personal. What a way to run a world! But if you can put up with 100% population turnover
by 2150, then language and skin tint seems (to me at least) a trivial detail.
***
Self-critique: The preceding analysis has a flaw, namely that this is not simply a 'commercial' culture; it is a 'capitalistic'
culture, which is the least free form of commercial culture.
Go to any country in Europe, and you'll find a whole staff of people from the airport, to the stores, to the hotel frowning
at you for having the nerve to have want of their services.
Americans, in my experience, mistake lack of slavish over-friendliness as rudeness. I have realized this because I am a fairly
reserved kind of person, and "reserved" gets coded as "aloof" or "snobbish."
European retail still follows the "sole proprietor" model of service -- it's assumed that by shopping there you're effectively
entering someone else's home, and you must act accordingly. In the US, lacking a formal class system, the retail experience is
one coded towards allowing the customer to feel as though he is a noble with servants to attend on him that he can order around.
The store is selling that experience.
Related to this is why middle class and upper middle Americans are so upset by the DMV and the Post Office. It's the only place
where money does not buy them any better service, and they cannot use the threat of talking to the manager to have the service
personnel fired in order to get what they want.
America's customer service culture is probably one of our most culturally dysfunctional aspects, all rooted in middle class
insecurity.
If this were actually, a Conservative website, that valued Western ideals? Do you really believe such excuses or something outside
of myself like the "devil made me do it" will pass mustard with "God" or "St. Peter?"
I strongly endorse Jon's (much earlier comment). It is not corporations that ruin culture but we who demand what they give. Corporations
are just a convenient funding vehicle to produce goods. Yes they often mass market them. But it is we who like the marketing.
If we were appalled, or turned away and it ignored it, they would change. In the end, when the spiritual life is subordinate to
the material, our appetites and the corporations that serve them are a guaranteed outcome.
late to this thread but what is American identity? How is it different from let's say a Danish identity? I have a good number
of coworkers from other countries: Asians, South Americans, some Germans or Swedes. When I visit them, do you think I find their
homes, their families (or their priorities for that matter) different from that of born-here American? If so, I must have missed
it
Auguste Mayrat hit the nail on the head. This article is garbage. It's sad that so many commentators agree with it. America is
full of culture: pro and college sports, movies, TV shows, technology, books, music of all kinds all consumed throughout the world,
as people from all countries love and admire American culture. Find a country that produces more culture than America. You can't.
Churches and schools proliferate here. What's so bad about corporations? If you own an iPhone or a television or a car or shop
at the mall, or ride a plane or go on a cruise, you're a hypocrite to be against corporations. Corporations provide goods and
services that people want, not to mention jobs. The author of this piece is an intellectual lightweight, and those who agree with
his views are the type of blind sheep that communists find useful. The author neither specified what's bad about corporations,
nor provides any solutions. Can believe TAC publishes such drivel.
Sunday, August 12, 2018Back That A$$et Up ... From the first sentence of
Michael Sproul's There's No Such Thing as Fiat Money (2007) :
I make the claim that fiat money does not exist, and that the money that is commonly called
fiat money is actually backed by the assets of its issuer.
Who would argue against the premise that modern currencies are backed by the
issuer's assets? The questions that remain are: How broad a definition of "assets" is being
considered? And does "asset backing" justifiably negate the meaning of "fiat", or is this mere
semantics?
In any event, I would counter argue that the meaning of "fiat" is possibly in need of
clarification. And such clarification would then allow for the sensible conclusion that fiat
money does indeed exist. Sproul's premise is a good launch pad for clarifying just what it is
that backs the US Dollar.
Many have said that the US military "backs" the dollar. And indeed, the US Deep State and
its Military Industrial Corporatist alliance represents a huge investment in strategic
worldwide military deployment. That investment is an asset, and it does in part back the
dollar. There are other factors, that are considered in the foreign exchange marketplace, and
there are varying opinions as to which factors bear such weight upon the prime factor :
relative changes in purchasing power. As we have discussed before, usage is a considerable factor in determining a
currency's relative purchasing power, which in turn supports further usage, in a circular
fashion. In times past, there were set fundamentals that established relative fiat currency
exchange value: the country's stability, its industrial base, trade practices and metrics,
population demographics and economic condition, debt to GDP, and so on.
As our real world has progressed into a world of derivative statistic and valuation, through
the rise of financialization, those fundamental factors have evolved to include other factors
that are brought to bear upon a modern digital currency's backing.
Does the depth of a currency in global derivative positions act as a form of backing?
This is a factor which did not exist prior to the existence of derivatives. Does that depth not
guarantee further usage, and that further usage not create greater depth? Does the currency
function successfully as a systemic weapon against other currency issuers? Again, relatively
recent dollar era phenomena.
But there is an incredibly powerful, hugely overlooked factor which begins only around 2008,
which backs the US dollar. I will tell you now that it is the US Government's control
over its people which gives the US dollar the largest share of "asset backing" of any
other factor under consideration - in the FX market and otherwise.
When the US Government publicly bailed out the global banking system and made the
American people the guarantor of that bailout, an incredible precedent was set. It proved to
the families that the issuer of the US Dollar could obligate its tax base to an unrepayable
debt, and that tax base would neither understand, nor care enough about the consequences of
that precedent ... to stand up and fight against the fraud and thievery that keeps the 99% in
perpetual bondage, and the 1% in a risk free position to do as they please.
The issuer has proven to generational wealth that it can divert the attention of the tax
base from the world's most egregious robbery, and do it again every so often, including to
other middle classes who hold wealth, as it moves from country to country. And they will do so
in equally powerful police states, combined with well developed welfare states, as the fiat
wealth concept manages the debt slaves of any culture, keeping them pacified under the doctrine
of "debt as wealth".
You will watch in amazement as China eventually "becomes" the USA in this regard. To the
North, there is one proud people, who thrive on the adversity which shapes their strong
cultural identity - who will be a thorn in the dollar's side - but they will be dealt with, as
opportunity allows.
This modern state of affairs is an incredible asset which the global corporatist banking
cartel (the BIS led global central banking system) has endowed upon the US Dollar - and it's
rival issuers are part and parcel to that system. Until China, India and Russia's central banks
(along with their strategic but smaller allied CBs) achieve a true Coup d'etat (either publicly
- or more likely privately) and begin to act independently from BIS mandate, the world's middle
classes will never have any enduring prosperity - only the fleeting type that comes with
targeted booms, busts and the fraud and bailouts they enable.
Much more importantly ... that Coup will NEVER HAPPEN as long as the American people agree
to the dollar contract they are so deeply sworn to. Americans have been taught to accept the
double standard they now live by. They can default on debt and lose everything they own, but
their lenders can never default - they will be bailed out by whatever wealth remains. There is
no other society on earth who have been so culturally conditioned to accept slavery and
socialism as the generation of Americans whose OBEDIENCE backs the dollar today. That
compliance, coupled with contempt for the wealth of their fellow man, and the social justice
herd mentality, makes the family's smile with exceeding confidence ... that this dollar empire
can milk much more middle class wealth across the globe as it spreads its "debt as wealth"
religion even further into systemic entrenchment.
And this Trump fellow. He and Wilbur are doing well to earn the trust of generational
wealth.
An unexpected wildcard can always be drawn, including an international war. But the
Roacheforque's will profit from war as well - nonetheless, and just the same. Generational
wealth aways profits from the spread of global corporatism, as they are both the authors and
benefactors of it.
This we learn ... from the flower of understanding.
Earlier estimates of OPEC have now changed, and there is no increase from June. Probably, a
slight decrease from SA. From OPEC sources, not Platts. I think they would start increasing
if Iran drops, but not much otherwise. I think Sauds and Kuwait joint venture is set up for
that potential.
Changing the way I gage things, into a much simpler format. Now, I look at world inventory
drops, and look at current increases from OPEC and US. Neither will change much, so inventory
drops should continue. Opec needs to come up with a lot more, or it will look damn scary in
2019. With pipeline constraints, Canada is pretty much out of the picture for further
increases this year, and not much, elsewhere.
Yes the outlook for OPEC's July production is looking more flat now. This is a strange
situation because Platts is one of OPEC secondary sources and so I assume that they see all
the numbers
Thank you. This news confirms that world production is stagnating. Possibly very close to the
decline. We will have to be attentive to the inventories. It will be the first place that the
nations get hold of in order to supply themselves with oil.
Dearth of investments in oil projects mean a spike in prices above $100 could be on the
horizon
Crude across the globe is being used up faster than it is being replaced, raising the
prospect of even higher oil prices in the coming years. The world isn't running out of oil. Rather, energy companies and petro-states -- burned by
2014's price collapse -- are spending less on new projects, even though oil prices have more
than doubled since 2016. That has sparked concerns among some industry watchers of a massive
price spike that could hurt businesses and consumers. The oil industry needs to replace 33 billion barrels of crude every year to satisfy anticipated
demand growth, particularly as developing countries like China and India are consuming more
oil. This year, new investments are set to account for an increase of just 20 billion barrels,
according to data from Rystad Energy.
The industry's average decline rate -- the speed at which output falls without field
maintenance or new drilling -- was 6.3% in 2016 and 5.7% last year, the Norway-based
consultancy said. In the four years before the crash, that decline rate was 3.9%.
Any shortfall in supply could push prices higher, similar to when oil hit nearly $150 a
barrel in 2008, some industry participants say. "The years of underinvestment are setting the scene for a supply crunch," said Virendra
Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production
deficit could come as soon as the end of next year, potentially pushing oil above $100 a
barrel.
SNIP In parts of Brazil and Norway, decline rates are already above 10-15%, Energy Aspects' Mr.
Chauhan said. Output from Venezuela's aging fields fell by more than 700,000 barrels a day over
the past year, according to the IEA. In June, Angola's output hit a 12-year low, while Mexico's
production is down nearly 300,000 barrels a day since the middle of 2016, despite efforts to
open up the industry and reverse declines, the IEA said. "Nobody is really stepping in," said Doug King, chief investment officer of the $140 million
Merchant Commodity hedge fund. "People still got burned by the downturn."
Rystad has first half figures for discoveries a bit better than last year, though more on the
gas side than oil, but there was a billion barrel Equinor discovery in Brazil this week that
will make things look better. I thought things were worse, partly because I assumed the
Guyana discoveries would count as appraisals and be back dated against 2016 and 2017, but it
looks like they are new fields. Overall though it still shows a big drop over the past few
years.
A "remarkable" recovery from "abnormally" low levels – complete bollocks, and pretty
close to self-contadictory. Everything is, and always will be, awesome in the oilprice
universe, if not they'd lose their revenue stream.
In a press conference this morning, the Russian president said his country doesn't plan to
abandon holding reserves in U.S. dollars though he said that the risk of sanctions is prompting
Russia to diversify its foreign currency assets.
"Russia isn't abandoning the dollar,"
Putin said in answer to a question
about the sharp decline in its holdings of U.S. Treasuries in April and May.
"We need to minimize risks, we see what's happening with sanctions."
"As for our American partners and the restrictions they impose involving the dollar," he
added,
"I think that is a major strategic mistake because they're undermining confidence in
the dollar as a reserve currency."
Putin did however caution that the US is making a big mistake if it hopes to use the dollar as a
political weapon:
"
Regarding our American partners placing limitations, including those on dollar
transactions, I believe is a big strategic mistake
. By doing so, they are undermining
the trust in the dollar as a reserve currency"
In this vein, Putin added that many countries are discussing the creation of new reserve
currencies, noting that China's yuan is a potential reserve currency, but concluded:
"We will continue to use the US dollar unless the United States prevents us from
doing so."
The Russian president also emphasized the need for other currencies in global trade and the
emergence of new reserve currencies like the ruble.
Additionally, President Putin said he's ready to hold a new summit with U.S.
counterpart Donald Trump in either Moscow or Washington,
praising him for sticking to his
election promises to improve ties with Russia.
"One of President Trump's big pluses is that he strives to fulfill the promises he
made to voters, to the American people,"
Putin told a press conference at the BRICS
summit in Johannesburg.
"As a rule, after the elections some leaders tend to forget what they promised the
people but not Trump."
Putin, who said he expects to meet Trump on the sidelines of the G-20
The Anglo Zionist empire not only weaponizes the USD, but
also "democracy" and "human rights".
The golden days of the 1990s
where Uncle Scam could enjoy unrivalled power are gone. Like all
greedy full spectrum empires, abusing unipolar power with wild
abandon and arrogance is now starting to hurt.
Sandbox the Zionist infil
traitors
and take down
the tentacles of the Deep State, and let America join the global
polity of great nations in a new paradigm of peaceful coexistence,
rather than following the directives of that small, paranoid tribe
bent on full spectrum dominance.
One thing that makes me optimistic is that more people are
becoming aware and are questioning the apparatus and narratives of
the old world order. It was alot different 10 years ago, when I felt
like I was a very small minority with a multipolar view, drowned out
in a sea of denial.
Trump and his ZH crybabies
whine on about how "unfairly the rest of the world has been
treating the US" but they 'conveniently' forget that most of
today's problems (wars, financial instability, fiat
currency) originate from the US Reserve Currency Status and
the Breton Woods system which the US has been using UNFAIRLY
to it's advantage for Many DECADES in order to finance wars
and manipulate the price of commodities.
But that's too difficult to grasp for most Trumptards...
They're too busy screaming "sieg heil" for the Orange Jew!
*) They complain about foreign wars and the MIC,
yet vote for someone who promised to INCREASE the
Pentagon's already enormous budget
*) The complain about "the Jews," "Israhell," and
"the ZOG," and yet they vote for someone who is in bed
with Israel and Netanyahu and has a Jewish-American
lawyer who fucks him over
*) They complain about the "banksters," and yet
they vote for someone who makes a Deep State
Goldmanite (Mnuchin) his Treasure Secretary
*) They complain about The Deep State and The
Swamp, and they vote for someone who hires Pompeo,
Haspel and Bolton
*) They complain about the massive amounts of debt
and the fiat currency system, and yet they vote for
someone who calls himself "The King of Debt" and calls
for a massive increase in military spending
I guess now the ZH Trumptards only have one
'weapon' left: downvotes!
I'm not your classic fanboy of Trump, but he has to
work with those cretins somehow, and not turn into
a degenerate pedophile in the process. He was the
lesser of two evils presented in the 2 party
duopoly, sadly, that's what modern 'democracy' has
become; a Hobson's choice.
So far, he's doing
alright, given the circumstances, and everything
stacked against him.
"He was the lesser of two evils presented in
the 2 party duopoly,..."
I completely
agree with that assessment, but what I fail to
understand is how the supposedly "highly
educated readers of ZH," can be so fucking
stupid to blindly believe all the Trump
bullshit.
Being the lesser of two evils is still not
being very good I'm afraid, and being the lesser
of two evils means that he still kinda sucks.
That is what we're witnessing every day: a
stupid narcissistic idiot who can barely play
0,5D chess, let alone 4D chess...
The system that churns out leadership in
America is fundamentally flawed and corrupted
to the bone, yet once in a blue moon, an
"insider outsider" as I like to call them,
like Jackson, Kennedy and Trump, slips
through. And that's when decades happen in a
few years.
Who blindly believes bs? Trump is provably
the most honest politician since the
invention of recording devices. Just having
an uncontested birth certification and school
records is a big head start. Who do you think
would make your paycheck (subsidy?) go higher
than President Trump. Trump is threatening a
lot of people's sinecures and subsidies. Who
wants to guarantee more NPR wannabee hacks a
good paycheck?
What a lot of folks seeem to overlook is that
the lesser of two evils is still, wait for
it, ... evil. This is a highly subjective
measurement of course, the beauty of all that
evil being in the minds eye, of the beholder
..
What do we have ? IMO the jury is still
out on that one. I had hoped that President
Trump would talk straight to the American
people. Particularly in regards to the true
state of the overall economy. But those of us
who have tried to inform friends & family on
these subjects have run up against that solid
wall of denial. Most people don't want to
hear the truth. They fight against it with
everything they've got. Between the Deep
State attacking Trump to maintain their
privileges & power, and a dumbed down
population aggressively in denial - the
president has a Herculean challenge.
Fine, we are Trump fan boyz and Putin fan
boyz, and we'll believe whatever we choose to
believe, for our own reasons, and we don't
owe anyone a stinkin explanation why!
You
can open your eyes, and see why we support,
fight for, defend, and will keep fighting for
Trump! He's the Hope that we can Change the
vampirous system that's defenestrated
everyone playing by the rules!
He's a narcissistic idiot who can barely
play multidimensional chess? You don't say!
Anyhow, even if he were, and he isn't, he's
OUR narcissistic idiot who beat the living
daylights, out of the prissy, elitist,
wicked, and thieving a**holes arrayed against
him!
So how come your folks couldn't win
against a narcissistic idiot? Because your
folks are the narcissistic idiots, who can't
come to terms with the reality that Hope of
True Change is here, and embodied in Trumpus
Maximus Magnus!!
You don't like that he's a Maximux Magnus?
Fine, you can suck my pinkie!...
There is a clear battle going on and at 70+
years of age, I give President Trump a huge
helping of credit just to deal with it all,
without going insane in the process. One thing
though... He had better corral the
dirty-dealers around him, along with the
hag
and those involved from the previous
administration, or it will eventually overwhelm
him. Guaranteed.
Indeed, its a battle for the
soul
of America. The pedophiles, degenerates, Zionists, imperialists must not win. A purge is needed and coming. I hope he survives like Jackson, and doesn't go the way of Kennedy. In any case, he has a big following, but I fear a civil war type scenario is coming no matter what happens. The vitriol and partizanship is at toxic levels.
It's obvious that the NWO crowd weaponizes
populations. Obummer wanted his internal
force 'as well funded & equipped as the
military '. And, theyve been working hard
with their propaganda machine to overturn
the American people's 2nd Amendment.
This is likely one of the most delicate &
dangerous times in American history.
So let's see ... Hillary in conjunction with obama
demonized Iran and Russia (Crimea... have you
forgotten?) for years prior to trump ... overthrew
Libya and stirred the pot in Syria via proxies ...
and Bernie Sanders was against these wars AND
against unfettered globalization ... all part and
parcel of the neoconservative PNAC doctrine ....
but trump trying to implement peace and diplomacy
with Russia and North Korea is 'bad' ... but since
at the same time he increases the budget for the
MIC and he is 'bad' for doing so and he is pissing
off our so-called 'trade partners' as manufacturing
has essentially left the US ... so he is to pick a
fight with the MIC internally to the nation on top
of everything else including pissing of the
globalist cretins in our so called intelligence
(where are those WMDs) ... okie dokie ...
x
Ignored says:
07/27/2018 at 3:53 am Iran would not try to block anything unless it is under attack by the
US. The Pentagon is opposed to such an attack, but Trump is heavily influenced by Netanyahu and
is advised by the same neocons who got the US into the fiasco in Iraq. Given the inability of
the US Congress to enforce the constitution by denying the Prsident to start a war without a
congressional declaration of war, it seems the USA may be on its way to destroy the world
economy to please an extremist Israeli right wing government.
I write destroy the world economy because it's doubtful Iran would respond as anticipated by
the Americans, who have a tendency to fight wars with strategies based on previous wars and an
excess of complex gadgets and extremely expensive technology. I don't know what they have in
mind, but I'm sure it would be unexpected, calibrated to avoid nuclear retaliation, and may
evolve over time. But I'm sure others will see the risks, and the oil market will take off into
the $100's and possibly $200's unless there's adults left in the USA senate to block this
craziness.
Hightrekker x
Ignored says:
07/26/2018 at 9:51 am I agree– and with all those KSA installations just
15 minutes away by unstoppable missile technology (1970 midrange seems a little
hard for current technology), we have a quandary, not a problem.
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 3:57 am Exactly. But I'm not sure US National Security advisor
Bolton knows anything about low technology midrange missiles and drones, some of
which, in a pinch, can be piloted by small light weight kamikaze martyrs.
Eulenspiegel x
Ignored says:
07/26/2018 at 10:24 am The worst thing for a date to guess is politics.
There are 10 countries that have to grow oil production to avoid peak oil –
these with still big reserves.
One knocked out itself – Venezuela
One is under attack from the USA – Iran
Irak isn't that stable, either.
A hot war can break out every moment, or a civil war devasting and blocking
infrastructure for years, while other countries deplete.
Or peace can come and these ressources can get used.
These combined 10 mb/d alone will determine peak oil – by 5 years or more in
either direction. These 10 mb/day can't be replaced by russion oil tsars, US rednecks
with too much Wallstreet money or Saudis opening secret valves of instant oil wonder
production.
Venezuela can get a new government and increase production by a big amount, helped
by international money. It has the ressources to get one of the big producers when the
tar oil is lifted.
So in my eyes, it looks like somewhere between 2020 and 2030, perhaps even
later.
Couldn't agree with you more regarding OPEC reserve estimates, they are all full of
shit, and no one except a handful of people in those countries would know how much they
have left.
Solving this peak oil timing is more similar to a quantum mechanics problem rather
than a Newtonian mechanics one. It complexity, lack of transparency and political and
economic implication make it impossible to have a deterministic answer, its pure
probability, and also speculations.
Like you i think all these projections are wrong. Maybe we will extract a lot more
oil with newer technologies or new field discoveries and end up cooking the planet with
climate change, and we won't see a "peak oil" for 100s of years who knows.
TechGuy x
Ignored says:
07/26/2018 at 2:54 pm "The peak oil experts were dreadfully wrong with their HL 15
years ago, so what prevents their being just as wrong now? "
Why is Oil at $70/bbl? Back in 1999 its was about $10/bbl. If there no supply
constraints why did the price increase ~7 fold in less than 20 years? Also why the need
to to drill for Shale Oil (Source Rocks) & develop in Deep & ultradeep
water?
Conventional oil peaked in 2005, All the growth is coming from offshore & Shale.
New Oil discoveries have dropped off the cliff. We found almost nothing in 2017. Oil
Discoveries peaked in 1960s and been in permanent decline. Thus if we are discovery
less and less new oil fields every year, below the rate of consumption, Oil production
will have to fall to match discoveries at some point in the future.
Other clues:
1. Oil Majors perfer to drill on Wall street (aka using debt to fund stock buybacks)
instead of developing new fields for future production.
2. Shale Debt: Shale drilling never made a profit, except for using OPM (other People's
money) to fund CapEx\OpEx.
3. US invaded or targeted with Regime change in Middle East Oil producing nations. Only
Iran remains and you can already hear the War drumbeats for Iran.
Reply
Michael B x
Ignored says:
07/26/2018 at 3:31 pm Indeed, and thanks. Note that your answer has to do not
with HL but with obvious signs & symptoms. Believe me, I've been watching, too.
The uncertainty is killing me.
Fernando Leanmex
Ignored says:
07/27/2018 at 4:25 am Michael, I have never been a peak oiler. I come at this from
a different perspective: about 30 years ago I noticed exploration results were
decaying, and started working in areas which would allow producing oil and gas in the
far future from sources we weren't tapping much at the time.
I remember sitting in a meeting around 1990 and suggesting to managers in a
committee I was briefing that we needed to focus on locking up hydrocarbon molecules,
wherever they were, cut down exploration and use that money on technology and getting
access.
This is one reason why eventually I got involved in gas conversion to liquids, heavy
oil, and the former Soviet Union, which to us appeared like a happy hunting ground,
including its Arctic targets in the Barents, Kara, Yamal, etc. I also had colleagues
who went into deep water, EOR, North America Arctic, and of course the hydraulic
fracturing of vertical horizontal wells drilled in low perm formations.
So in my case I've been about 30 years now working on replacing conventional oil
barrels with more difficult barrels. And those difficult barrels require higher prices.
So the question is, what can poor countries afford?
Reply
Michael B x
Ignored says:
07/27/2018 at 5:13 am So, "not a peak oiler" means you think the fate of
conventional oil is not really all that important, and cost is the ultimate
arbiter, not the resource?
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 6:19 am Not a peak oiler means I don't use Hubbert
Linearization or similar techniques. In the past, my job has included the
estimate of resources (not reserves). The preferred technique was to estimate
technical reserves, meaning we supposedly didn't focus on economics. But I
couldn't have staff working out numbers doing endless iterations and model runs
for highly speculative cases, so I gave them the guidance to assume a really
high price, a higher OPEX and CAPEX environment, and prepare conceptual field
redevelopments and marginal field developments or targeting really low quality
reservoirs. We devoted about 5% of the time budget for this effort. And I told
head office I wasn't about to use more manpower working such hypothetical
figures, because we had to focus on reserve studies, and preparing projects to
move reserves along the reserve progression pathway so we could meet our
targets.
The fate of conventional oil is already written, in the sense that most of
the extra oil we get from conventional fields comes from redevelopments which
rely on higher prices, and EOR. The typical field with say 45% recovery factor
can be pounded hard to push it to say 55%, going above 55% gets mighty hard,
and pushing to 60% is nearly impossible. So there are limits, which involve the
huge amount of resources (cash, steel, chemicals, and people) we use up to get
those extra barrels.
One issue to consider is that these redevelopments which include EOR are not
contributing that much extra rate. They stop decline, get a slight bump, and
then yield a slower decline rate for 10-20 years. This means investments take
tine to payout and if the world is suffering from acute shortages they don't
help that much. The on,y fast reaction comes from fracturing "shales" and low
permeability sands, infills in newer fields, and workovers.
Reply
Michael B
x Ignored says:
07/27/2018 at 6:53 am Thanks. If you were doing this in the 90s, sounds
like you were "predicting" the future!
Reply
Hickory
x Ignored says:
07/27/2018 at 9:20 am Sure sounds like a long explanation for your
understanding of 'peak conventional oil'. Nothing to be ashamed of.
Reply
AdamB x
Ignored says:
07/26/2018 at 10:08 am With oil discoveries the last 3 years in the toilet due to lack
of capital investment and lack of major fields its just a matter of time mathematically. Be
thankful we still have time before peak production hits cause I don't think it will be fun
post peak. Hopefully still 5 years until its official maybe less When will Ghawar give up
the ghost .?
Reply
Dennis Coyne x
Ignored says:
07/26/2018 at 11:21 am Saudi Arabia may keep going for many years at 10 Mb/d,
probably until 2030, perhaps beyond.
Reply
AdamB x
Ignored says:
07/26/2018 at 12:02 pm One can hope .they can produce 10 Mb/d to infinity
according to their reserve numbers which never budge .I'd be curious what posters
think their reserves are. 175-225 GB?
Reply
Survivalist
x Ignored says:
07/26/2018 at 2:27 pm It'll be interesting to see how KSA shakes out when
oil consumption begins to zero in on oil production, and exports decrease..
ELM.
Dennis Coyne x
Ignored says:
07/26/2018 at 10:58 am Another consideration is discoveries and reserve appreciation.
Consider estimates of conventional C+C using Hubbert Linearization by Jean Laherrere which
have gradually increased from 1998 (1800 Gb) to 2016 (2500 Gb.) In addition, there is not
any particular reason that output would tend to follow a "Hubbert" type logistical
function.
Generally estimates based on Hubbert Linearization would be a minimum estimate in my
view.
In addition conventional oil Extraction rates (output divided by producing reserves) in
the World (5.6% in 2016) are far lower than the United States (14.8% in 2016, all C+C), so
there is the potential that with higher oil prices the average extraction rate for the
World may increase. The World conventional extraction rate was about 11.6% in 1979. A
gradually increasing rate of extraction might allow a plateau in output to be extended for
many years (to 2030 at least). Impossible to predict of course, the number of scenarios
that can be created is large.
One such scenario is presented below (peak in 2025 at 85.5 Mb/d of C+C or 4275
Mt/year).
The analysis using the logistic function does not account for this potential.
Dennis Coyne x
Ignored says:
07/26/2018 at 6:49 pm I disagree. Oil prices are more likely to increase than
to fall to $30/b and more of these companies are likely to be profitable as oil
prices rise, also 3 of the top companies are profitable, so a "well run" oil
company can indeed be profitable, those that are less well run will either change
the way they operate or they will go out of business. The better companies buy the
worthwhile assets on the cheap and life goes on.
It's called capitalism folks.
Also the DPR is not very good, I ignore that report and use EIA's tight oil
estimates (link below) and shaleprofile.com for good information.
GuyM
x Ignored says:
07/27/2018 at 9:12 am "Also the DPR is not very good", is an understatement.
I have never seen an analysis use so many different fruits to come up with
bananas expected.
Reply
Minqi Li x
Ignored says:
07/26/2018 at 3:55 pm I suppose by "decline rate" they are talking about the
"legacy decline"
Reply
Guym x
Ignored says:
07/26/2018 at 5:48 pm As an example, I will use approximate data from a fairly
good tier 2 well in the Eagle Ford. It starts off production at 33k the first
month, and drops rapidly after that to reach 8k by the final month. Let's say it
produces 175k the first year, which would be profitable at today's prices. The next
year it produces 55k, and the next year 36k. By the fourth year it is producing
less than 100 barrels a day, and by the sixth year it is questionable to keep up.
Little better than stripper status. Tier three stuff is much worse, it may reach
stripper status by the third year. Eventually, all will be tier two and three
status wells. That's the majority of reserves estimated. Estimating future
production from current production doesn't touch on reality. Eventually, to keep up
on initial production, you would have to drill twice as many wells. But, you won't
keep up with twice as many, because the decline rates will be higher. There is a
lot of difference between a 600k EUR well, and a 300k EUR, or a 150k EUR. 2042 for
US peak? Not hardly.
Reply
I agree, probably 2023 to 2025 will be the US peak, after that decline is
likely to be rapid because mostly tier 2 and tier 3 wells will be left, high
oil prices may make them profitable, but it will be impossible to keep up with
the decline rate of legacy wells after 2025 and US output will decline rapidly
(4 or 5% per year) after 2030.
Reply
TechGuy
x Ignored says:
07/26/2018 at 7:48 pm One snag: The Shale Debt starts coming due in
2019 and continues through to 2024. Shale drillers were successful since
the borrowed at rock bottom interest rates and investors practically fought
each other begging Shale drillers to take their money. Not so sure it will
work if interest rates are higher, and The Shale sweet spots aren't
endless.
Reply
Guym
x Ignored says:
07/26/2018 at 8:49 pm That might slow the start up, for sure. If
the price of oil gets high enough, that will barrier will be short
lived.
Reply
TechGuy
x Ignored says:
07/27/2018 at 2:43 pm As oil prices increase so does the costs.
It takes a lot of diesel to haul Water, Sand, and oil. Shale
drillers never really made a real profit, even when Oil was over
$100/bbl. One must consider the EROEI for Shale & rising
CapEx\OpEx as the cost of Oil rises.
Second, its likely that consumers cannot afford high oil prices.
As prices rise, Consumers will cut back and it will plunge the
global economy back into recession. Perhaps the Worlds Central
banks can coach something back into the global economy, but it
won't work over the long term.
FWIW: Some of the recent data is showing weakness in the global
economy: Housing sales are falling and prices in the hot regions
are flatlining. Trumps tariffs are also taking a toll as global
trade is falling. And there are cracks in the developing world
credit markets. We might see a stock market correction this fall,
which would likely see commodity prices fall (including Oil).
Reply
Hickory
x Ignored says:
07/27/2018 at 10:37 pm " consumers cannot afford high oil
prices. As prices rise, Consumers will cut back and it will
plunge the global economy back into recession."
Well, that likely depends on how fast and far the prices go.
Slow steady rise can be well tolerated pretty far. Energy is so
cheap for what you get, after all.
Many other countries have a much better GDP/unit energy
consumed than the USA, and with price pressure the USA could
get there too. I suspect we could shed 10-20% of our oil
consumption without big effect, particularly if we did it
slowly. For example, it wouldn't affect the GDP at all if we
slowed down to max 60 mph. Painless saving of energy, if you
choose good music.
It is the fast changes in price that really tend to hurt.
Reply
TechGuy
x Ignored says:
07/27/2018 at 11:45 pm "I suspect we could shed 10-20%
of our oil consumption without big effect, particularly if
we did it slowly."
It doesn't work that way. Consumers cut back on
spending, from eating out, going on vacations. They loss
confidence and delay major purchases like new cars, homes,
etc.
Most of the population commute to work well below 60
mph. Traffic usually limits speeds to 40 mph or less during
commuting hours.
To understand how high oil prices affect the economy
just research the events around 2007/2008. Schools &
business were planning to reduce work & school days to
3 or 4 days a week. Thieves were draining fuel from parked
trucks and cars. The higher oil prices caused food prices
to soar, which lead to the arab spring in Africa & the
middle east. Europe had frequent riots. Airlines &
shipping companies impose fuel surcharges. People homes had
utilities shutoff. since they could afford their energy
bills.
Funny how quickly people forget the aftermath of high
energy prices. Doesn't anyone read or study economics?
GoneFishing x
Ignored says:
07/26/2018 at 5:28 pm Nice report. Production decline is a short time away if we
don't keep drilling.
Speaking of legacy wells, the huge number of abandoned wells from the past is
leaving us a legacy of leakage. The even bigger number of recent wells will continue
that legacy.
Fernando Leanmex
Ignored says:
07/27/2018 at 4:33 am 150 year old wells in the eastern USA could indeed leak
methane. But I would not rely much on Arstechnica, it's a blog run by a guy with a
liberal arts degree very well crafted to be a cheering section for renewables. It
may even be subsidized by Yingli Green, a Chinese solar panel maker.
Reply
Fred Magyar
x Ignored says:
07/27/2018 at 6:57 am Are you seriously claiming that a peer reviewed
scientific paper, in the 'Proceedings of The National Academy of Sciences of
The United States of America' is somehow untrustworthy because it's conclusions
were mentioned by Ars Technica?!
Identification and characterization of high methane-emitting abandoned oil
and gas wells
Abstract Recent measurements of methane emissions from abandoned oil/gas wells show
that these wells can be a substantial source of methane to the atmosphere,
particularly from a small proportion of high-emitting wells. However,
identifying high emitters remains a challenge. We couple 163 well measurements
of methane flow rates; ethane, propane, and n-butane concentrations; isotopes
of methane; and noble gas concentrations from 88 wells in Pennsylvania with
synthesized data from historical documents, field investigations, and state
databases. Using our databases, we (i) improve estimates of the number of
abandoned wells in Pennsylvania; (ii) characterize key attributes that
accompany high emitters, including depth, type, plugging status, and coal area
designation; and (iii) estimate attribute-specific and overall methane
emissions from abandoned wells. High emitters are best predicted as unplugged
gas wells and plugged/vented gas wells in coal areas and appear to be unrelated
to the presence of underground natural gas storage areas or unconventional
oil/gas production. Repeat measurements over 2 years show that flow rates of
high emitters are sustained through time. Our attribute-based methane emission
data and our comprehensive estimate of 470,000–750,000 abandoned wells in
Pennsylvania result in estimated state-wide emissions of 0.04–0.07 Mt
(1012 g) CH4 per year. This estimate represents 5–8% of annual
anthropogenic methane emissions in Pennsylvania. Our methodology combining new
field measurements with data mining of previously unavailable well attributes
and numbers of wells can be used to improve methane emission estimates and
prioritize cost-effective mitigation strategies for Pennsylvania and
beyond.
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 8:33 am I am an academy member. I also know how to search
for methane leaks. And I'm aware the academy publishes papers which lack
the quality one would like to see. But if you want credibility, I would
skip Arstechnica and link directly to the paper.
The Arstechnica editor has an axe to grind, publishes a bunch of
garbage, therefore I never pay attention to it. Regarding the paper itself,
it's not representative of what goes on in say Texas. There are areas in
Texas (say Spindletop) where gas leaks should be present from the wells
drilled with cable tools in the old days. But a better sense for what goes
on now is gained from looking at wells drilled and abandoned in Texas and
Louisiana in the last 40 years.
Regarding Pennsylvania methane leaks, in the overall picture they are
meaningless. There are coal mining regions in India and China which can be
seen as very large hot spots from satellites.
Fred Magyar
x Ignored says:
07/27/2018 at 3:11 pm Hippity hoppity! Off to a tea party
with the Mad Hatter and Alice! As in A Large Ion Collider
Experiment at the LHC. Much more fun than dealing with the
crippled egos of idealogues.
Cheers!
Reply
If the wells are plugged, the concrete eventually fails (30 years) so we
have an ongoing source of methane that could last for centuries. Millions
of wells across the US, much more across the world.
And guess what, those ideas of storing CO2 underground, well now we have
millions of pathways for the CO2 to escape, so actual sites would be few
and far between.
The original Canadian study I read a few years ago has disappeared from
the internet. It showed the long term potential leakage of well systems.
Reply
Dave Kimblex
Ignored says:
07/26/2018 at 6:11 pm All this Hubbertian analysis is useful to set a ceiling on
production, but the world's economy runs on making a profit and so producers have a minimum
price they must receive, while the end consumers have a maximum price they can afford to
pay.
In mid-2008 the effect of a 72% price rise in 18 months caused a $1.75 trillion extra
cost on OECD oil imports and the world economy crashed. Recovery required the USG to
guarantee loans to frackers to get the production numbers up. I am not saying that they
won't try that again, but this can only go so far. Surely next time this happens, no one
will be able to avoid the obvious conclusion that there is no future profit in oil
production, and the oil industry will have its share prices downgraded, reducing the
collateral for loans, whereupon they will go out of business in a puff of smoke.
This will happen long before any URR impacts, so I wonder at how much this analysis is
worth.
Reply
Guym x
Ignored says:
07/26/2018 at 8:25 pm USG guaranteed loans to frackers???? Interest rates for
everyone was low then, but I don't remember reading about any guarantees. Drilling
horizontals is a little past SBA stuff.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 1:56 am If the "oil industry" means the IOCs then they are a minor
player now. The NOCs dominate the reserves and production, of course they all seem to
be having money issues as well but maybe they manifest in a slightly different way
– i.e riots, uprisings and infrastructure collapse.
It's already noticeable that many of the big companies are switching to share buy
backs (Total, Shell, Anadarko) and less development spending even as the price has been
rising. The one which has switched the other way is ExxonMobil, and not
uncoincidentally it is the only one with really good recent discoveries. That straight
line H/L for the rest of the world is just the tail run out on existing discoveries,
most of which are also already developed and wouldn't be taken off line even with
bankruptcies for the operators. If only as chemical feedstock oil is way better in
almost every way than anything that could be made from water/CO2/renewable energy so if
civilisation lasts long enough most of it will be used.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 1:44 am Forcing a logistic curve on some of those production histories
might give some big errors, though maybe they cancel out overall. Hubbert said himself that
H/L wouldn't work well on production that had been artificially constrained by a cartel
(e.g. OPEC for Saudi, Kuwait, UAE, Iran and Iraq) or environmental moratoria (e.g. some US
and Canada oil). For oil sands they tend to be built on 50 year project lives, with steady
production and a fast fall off rather than a traditional decline curve. About 50 mmbbls of
reserve is already tied into operating, steady production. Future developments will be
similarly constrained with the additional limit from environmental objectives to both the
extraction and pipelines. Logistics curves might still come close if the reserve estimates
are good, but that is also the biggest unknown as other comments have said.
Reply
Minqi Li x
Ignored says:
07/27/2018 at 2:54 pm Projections are not meant to be predictions. Even EIA or IEA
say that. But they are always useful to illustrate given certain assumptions, what will
or what are likely to happen.
That has been said, given our understanding of the inherent limitations of
projections/data, a careful and cautious application of these projections does provide
us some idea regarding the likely range of future development. For example, the
projection for the US oil used in this report is likely to be too optimistic especially
for years after 2025, as many have pointed out. That will reinforce the case for a
global peak oil before 2025
In addition to production, I think the consumption data in the report also provides
some interesting information. I wonder if someone cares to comment about that.
Reply
Guym x
Ignored says:
07/27/2018 at 7:37 pm Well, obviously consumption can't be over production for
any great amount, or we won't have inventory. Peak production precedes any mythical
peak demand. Consumption mostly follows production is my guess. At probably a much
higher price than today.
Reply
"Pioneer spent $818 million on capital expenditures (CapEx) for additions to oil and gas
properties (drilling and completion costs) during Q1 2018, brought on 63 horizontal wells
in the Permian, and only added 9,000 barrels per day of oil equivalent over the previous
quarter"
So it's round about 13 million $ per well, not 7 million.
Reply
Fernando Leanmex
Ignored says:
07/27/2018 at 8:38 am The number of wells brought on isn't proportional to wells
drilled. And the CAPEX isn't proportional to wells drilled. Therefore it's hard to
derive a per well cost from such figures.
Reply
GuyM x
Ignored says:
07/27/2018 at 9:06 am Yeah, there a lot of DUCs, and you have to consider that
Pioneer lays out some bucks for its gathering system and gas processing plant in the
Permian. Hard to isolate per well from total capex figures.
Reply
(Sale of oil) – well cost – variable cost per barrel = profit
does not work that good – there are lots of hidden costs even under CAPEX,
that are almost as high as completion costs when these 7 million$ / well are
right.
And I think these cost are not one time cost just only in this quarter –
there is alway a pipeline to build, a convertert to install, a gravel road to the
site to build and so on.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 3:42 pm Rystad has first half figures for discoveries a bit better than
last year, though more on the gas side than oil, but there was a billion barrel Equinor
discovery in Brazil this week that will make things look better. I thought things were
worse, partly because I assumed the Guyana discoveries would count as appraisals and be
back dated against 2016 and 2017, but it looks like they are new fields. Overall though it
still shows a big drop over the past few years.
With over 3000 platforms, 25,000 miles of pipeline, all unsecure in the Gulf of Mexico,
they provide a lucrative target in any conflict with the US. Energy disruptions and
environmental calamities would reek havoc. Surely there is a plan to quickly secure the Gulf
from under/over/on the water threats? If not get at it.
More Oilprice.com industry pimping. The world uses 36 billion barrels (Gb) of crude per
year. Plus they are quoting boe, or barrels equivalent. Gas is not crude. The article should
read: "The world is still pumping 9 barrels for every 1 it finds". D day is not something the
industry doesn't wants advertised.
Look at the graph again. Draw a trend line from left to right across the peaks from 2014
til now. Is the line pointing up or down? That's peak oil.
So there's been an up tick this year. How much has been discovered. Ooooh, 4.5 billion
barrels. Sounds like a lot to you? What's the world consumption rate expressed in millions of
barrels per DAY? Don't know? It's around 90 million barrels per DAY. Look it up if you doubt
me. If you divide 4.5 billion by 90 million, you'll calculate how many DAYS it takes to
consume 4.5 billion barrels. To make it easier for you, just reduce the fraction by stroking
6 zeros off each number. That's 4,500/90. Not too hard. That's 50 DAYS of supply!!! OK, maybe
another 4.5 billion will be found in 2H2018. Oooooh, another 50 DAYS worth. We're
saved!!!
In the last paragraph, what's the Reserve Replacement Rate? 10% . That's not so good.
Also, a large portion of the newly discovered oil is offshore, in ultra deep reservoirs.
Do you think that might be more expensive to produce?
As for abiotic oil, as Laws of Physics pointed out, even if that desperate theory were
true -- which it isn't -- it's the rate of replacement that matters, and it's nowhere near 90
million barrels per day.
So, fore-warned is fore-armed, but if you'd rather bury your head in the sand that's your
prerogative.
"... After the Creation of the "CIA" Unelected, Unconstitutional CIA Intelligence Agency Interfered In Foreign Presidential Elections At Least 81 Times In 54 Years. The US was found to have interfered in foreign elections at least 81 times in 31 countries between 1946 and 2000 – not counting Libya, Syria, Turkey, Ukraine, The US-backed military coups or regime change efforts, Proxy-Wars. Just saying ..."
"... Tucker Carlson has been analyzing policies/ideas on a deeper level this year. He is painting US a big picture for us to see. It's quite refreshing to see Fox News actually allow objective truth be aired on on occasion. ..."
"... The Intelligence Agencies are the Praetorian Guard in the United States. ..."
"... Party politics is a means of control. When you come to realize that we all have a tendency to agree that the major issues have no party loyalty, and we're all on the same side, you can look past minor differences and move forward to working for the greater good... ..."
"... I just saw another Tucker Carlson news clip that Tony Podesta is offered immunity to testify against Paul Manafort? WTF? Why aren't Podestas charged?! ..."
"... Neocons, military industrial complex and liberal leftists have penetrated deeply into the government intelligence communities, wall street banking, both houses of Us congress, mainstream media as well as Hollywood people, even in an academia. This country is deep sh*t. I am surprised liberal leftists have not crucified Tucker Carlson yet for speaking out. ..."
"... Russiagate is DemoKKKrat horse cookies. Putin is correct. DemoKKKrats are bad losers. $1.2 billion gone, servers gone! ..."
Guys Did you know: After the Creation of the "CIA" Unelected, Unconstitutional CIA
Intelligence Agency Interfered In Foreign Presidential Elections At Least 81 Times In 54
Years. The US was found to have interfered in foreign elections at least 81 times in 31
countries between 1946 and 2000 – not counting Libya, Syria, Turkey, Ukraine, The
US-backed military coups or regime change efforts, Proxy-Wars. Just saying.
¯\_(^)_/¯
Tucker Carlson is a special character. 95% of time i disagree with Tucker but 5% of time
he's just exceptionally good. In April his 8 minute monologue was epic. I love Jimmy Dore's
passion... specially when he pronounes "they're lying!!!" Jimmy clearly hates liars ;-) We
love you Jimmy for your integrity and intelligence.
Weapons of mass destruction, 9/11, Bin Laden, Lybia, Gulf of Tonkin, Opium fields in
Afghanistan, Operation Mockingbird, Operation Paperclip..... A few reasons not to trust your
CIA and FBI. I am sure you guys can name some more.
Tucker Carlson has been analyzing policies/ideas on a deeper level this year. He is
painting US a big picture for us to see. It's quite refreshing to see Fox News actually allow
objective truth be aired on on occasion.
Pulling off the partisan blinders is the first step toward enlightenment... Party politics
is a means of control. When you come to realize that we all have a tendency to agree that the
major issues have no party loyalty, and we're all on the same side, you can look past minor
differences and move forward to working for the greater good...
THE CIA HAS BEEN OVERTHROWING GOVERMENTS FOR DECADES,and you wonder why Trump doesn't
trust them? It's because he doesn't want war. He ain't no saint but at least we have an anti
war President.
Morning Joe's panel said today that the Democrats need to run on this Russia conspiracy
theory, and nothing else, in order to win the midterms. If they bring up free college or
medicare for all it will "weaken their message and confuse the voters". Once again the
corporate neoliberal warmonger Democrats and their rich TV puppets are setting us up for
failure, no voter gives a damn about Russia, MSNBC wants our progressive candidates to lose
instead of reform their corrupt party!
I think what has happened to the Liberals, is that for decades and decades they were the
most progressive, tolerant party. They really did want to do more for the people and tried to
introduce things that the right would instantly point to and call "socialist!!" Corporations
started to look at these liberals as representatives they could pay off but without suspect,
unlike Republicans, who were widely known to accept money from Corporations, Big Pharma and
huge construction companies (Haliburton anyone?).
Over time, Liberals saw the benefits of
being chummy with these same big $$ companies and voted on bills, etc in the ways that would
make these corps very happy and more profitable. No one wanted to believe that Liberals were
doing the same thing as Republicans but now we know they are. It's not a secret anymore. Most
politicians aren't in it to make their country, their state or their cities better; they're
in it to make their bank accounts unbelievably huge and that's it. They're greedy people with
no integrity, pretending to serve the people.
I'm a righty, and I'm so surprised to see a liberal agree with Tucker in all the things I
care about! Imagine what we could accomplish if we put aside our differences for a time and
work on what we agree on! No more immoral wars for Israel! TRY BUSH, CHENEY, AND ALL NEOCONS
THAT LED US TO WAR WITH IRAQ FOR TREASON!!
You are so right. Thank you for bringout the truth. Neocons, military industrial complex
and liberal leftists have penetrated deeply into the government intelligence communities,
wall street banking, both houses of Us congress, mainstream media as well as Hollywood people,
even in an academia. This country is deep sh*t. I am surprised liberal leftists have not
crucified Tucker Carlson yet for speaking out.
Russiagate is DemoKKKrat horse cookies. Putin is correct. DemoKKKrats are bad losers. $1.2
billion gone, servers gone! DmoKKKrats cannot even prove climate change
Major oil producers agreed Friday to a nominal increase in crude production of about 1
million barrels per day, a bid to put a damper on high oil prices. But in practice, major oil
exporters will likely only be able to add about half that total to global markets, because many
countries are already producing at capacity or face severe threats of supply disruption.
Oil markets weren't calmed by the agreement announced Friday by the Organization of the
Petroleum Exporting Countries after a contentious week of meetings. Crude prices in New York
rose more than 3 percent to almost $68 a barrel and rose about 2 percent in London to more than
$74 a barrel.
OPEC didn't agree to increase production as such. Rather the group, with the addition of
nonmember Russia, agreed to respect its existing program of restricting supplies. But since the
group had gone well overboard and trimmed output by almost 2 million barrels a day, due in
large part to a steep falloff in Venezuelan oil production, respecting the original target will
translate into more oil for the global market -- on paper, at least.
In practice, only Saudi Arabia and Russia have the capacity to add significant amounts of
crude in the next few months. That means Friday's agreement will end up adding about 600,000
barrels of oil a day to the global market.
The contentious meeting took place under the shadow of vituperation from U.S. President
Donald Trump, who worried that high oil and gasoline prices would be politically painful ahead
of midterm elections later this year. Even after the group's decision had been announced, Trump
was still tweeting hopefully about OPEC increasing production.
"... "Conclusion. No matter what clever US energy independence calculations are out there, the fact remains that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of which come from countries where oil production has already peaked and/or where there are socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6 mb/d, far from oil independence." ..."
"... I note also that about 45% of USA imports come from Canada, as well depicted in in your Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to have much appreciation or respect for their position. ..."
US total (oil + products) inventories made a new low (from the high February 2017)
US ending stocks July 6th
Crude oil down -12.6 million barrels
Oil products down -0.7
Overall total, down -13.3 (shown on chart)
Natural Gas: Propane & NGPLs up +6.1 (not included in chart)
Chart: https://pbs.twimg.com/media/Dh1-upjXUBEOjvn.jpg
"Conclusion.
No matter what clever US energy independence calculations are out there, the fact remains
that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of
which come from countries where oil production has already peaked and/or where there are
socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6
mb/d, far from oil independence."
I note also that about 45% of USA imports come from Canada, as well depicted in in your
Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to
have much appreciation or respect for their position.
"... No doubt that the globalized elite want Friedman's "World is Flat" concept – profit maximizing world markets, world production, stateless corporations, free movement of labour and capital (without troublesome national identities) represented by an exclusive and vastly wealthy rootless elite ruling over a global worker hive. The "Empire" is only the military/enforcement side of this, with sanctions/wars against dissidents. ..."
"... Trump is in the strange situation of having been elected to fight the Empire while needing elite Imperial support to stay in his job. ..."
If history is any precedent, empires without economic foundations, sooner or later
crumble, especially when rising regional powers are capable of replacing them.
This is worth repeating. Empire and wars are expensive. For example the British world
trade network was doing fine until the "Imperial" idea came along with wars and economic
failure. The US is doing even worse in trying to fight its Imperial wars on credit.
The result is that Trump faces the real prospects of a decline in exports and popular
electoral support – especially from those adversely affected by declining markets and
deep cuts in health, education and the environment.
He may well be blindsided by a candidate who actually implements Trump's own election
platform 1) no more wars 2) domestic infrastructure spending 3) stopping mass immigration 4)
draining the swamp. Trumps electoral weakness is that didn't follow through on his
promises.
The electoral oligarchy and the mass media will force him to retreat from the trade wars
and surrender to the globalizing elites.
No doubt that the globalized elite want Friedman's "World is Flat" concept –
profit maximizing world markets, world production, stateless corporations, free movement of
labour and capital (without troublesome national identities) represented by an exclusive and
vastly wealthy rootless elite ruling over a global worker hive. The "Empire" is only the
military/enforcement side of this, with sanctions/wars against dissidents.
Trump is in the strange situation of having been elected to fight the Empire while
needing elite Imperial support to stay in his job.
On the matter of immigration, even many commentators who support ease of migration also
oppose the extension of government benefits to immigrants.
The idea, of course, is that free movement of labor is fine, but taxpayers shouldn't have to
subsidize it. As a matter of policy, many also find it prudent that immigrants ought to be
economically self sufficient before being offered citizenship. Switzerland, for instance,
makes
it harder to pursue citizenship while receiving social benefits.
This discussion often centers around officially recognized "welfare" and social-benefits
programs such as TANF and Medicaid. But it is also recognized that taxpayer-funded benefits
exist in the form of public schooling, free clinics, and other in-kind benefits.
But there is another taxpayer-supporter program that subsidizes immigration as well: the US
military.
Translation: the US government has begun laying off immigrants from taxpayer-funded
government jobs.
It's unclear how many of these jobs have been employed, but according to the Department of
Homeland security, "[s]ince Oct. 1, 2002, USCIS has naturalized 102,266
members of the military ."
The Military as a Jobs Program
Immigrants, of course, aren't the only people who benefit from government jobs funded
through military programs.
The military has long served as a jobs programs helpful in mopping up excess labor and
padding employment numbers. As Robert Reich noted in
2011 , as the US was still coming out of the 2009 recession:
And without our military jobs program personal incomes would be dropping faster. The
Commerce Department reported Monday the only major metro areas where both net earnings and
personal incomes rose last year were San Antonio, Texas, Virginia Beach, Virginia, and
Washington, D.C. -- because all three have high concentrations of military and federal
jobs.
He's right. While the private sector must cut back and re-arrange labor and capital to deal
with the new economic realities post-recession, government jobs rarely go away.
Because of this, Reich concludes "America's biggest -- and only major -- jobs program is the
U.S. military."
Reich doesn't think this is a bad thing. He only highlights the military's role as a de
facto jobs program in order to call for more de jure jobs programs supported by federal
funding.
Given the political popularity of the military, however, it's always easy to protect funding
for the military jobs programs than for any other potential jobs programs. All the Pentagon has
to do is assure Congress that every single military job is absolutely essential, and Congress
will force taxpayers to cough up the funding.
Back during the debate over sequestration, for example, the Pentagon routinely warned
Congress that any cutbacks in military funding would lead to major jobs losses, bringing
devastation to the economy.
In other words, even the Pentagon treats the military like a jobs program when it's
politically useful.
Benefits for enlisted people go well beyond what can be seen in the raw numbers of total
employed. As Kelley Vlahos
points out at The American Conservative , military personnel receive extra hazard pay "even
though they are far from any fighting or real danger." And then there is the "Combat Zone Tax
Exclusion (CZTE) program which exempts enlisted and officers from paying federal taxes in these
45 designated countries. Again, they get the tax break -- which accounted for about $3.6
billion in tax savings for personnel in 2009 (the combat pay cost taxpayers $790 million in
2009)– whether they are really in danger or not."
Nor do the benefits of military spending go only to enlisted people. The Pentagon has long
pointed to its spending on civilian jobs in many communities, including manufacturing jobs and
white-collar technical jobs.
This, of course, has long been politically useful for the Pentagon as well, since as
political scientist Rebecca Thorpe has shown in her book
The American Warfare State , communities that rely heavily on Pentagon-funded employment
are sure to send Congressmen to Washington who will make sure the taxpayer dollars keep flowing
to Pentagon programs.
Whether you're talking to Robert Reich or some Pentagon lobbyist on Capitol Hill, the
conclusion is clear: the military is both a jobs program and a stimulus program. Cut military
spending at your peril!
Military Spending Destroys Private Sector Jobs
The rub, however, is that military spending doesn't actually improve the economy. And much
the money spent on military employment would be best spent on the private, voluntary
economy.
This has long been recognized by political scientist Seymour Melman who has discussed the
need for "economic conversion," or converting military spending into other forms of spending.
Melman
observes :
Since we know that matter and energy located in Place A cannot be simultaneously located
in Place B, we must understand that the resources used up on military account thereby
represent a preemption of resources from civilian needs of every conceivable kind.
Here, Melman is simply describing in his own way what Murray Rothbard explained in
Man, Economy, and State . Namely, government spending distorts the economy as badly as taxation
-- driving up prices for the private sector, and withdrawing resources from private sector
use.
The military actually destroys jobs in the civilian economy. The higher profits from
cost-plus military manufacturing cause manufacturers to abandon more competitive civilian
endeavors; and the permanent war economy takes engineers, capital and resources away from
civilian production.
But, as a classic case of "the seen" vs. "the unseen," it's easy to point to jobs created by
military spending. How many jobs were lost as a result of that same spending? That remains
unseen, and thus politically irrelevant.
Military fan boys will of course assure us that every single military job and every single
dollar spent on the military is absolutely essential. It's all the service of "fighting for
freedom." For instance, Mitchell Blatt writes , in the
context of immigrant recruits, "I'm not worried about the country or origin of those who are
fighting to defend us. What matters is that our military is as strong as it can be." The idea
at work here is that the US military is a lean machine, doing only what is necessary to get the
job done, and as cost effectively as possible. Thus, hiring the "best" labor, from whatever
source is absolutely essential.
This, however, rather strains the bounds of credibility. The US military is more
expensive than the next eight largest militaries combined . The US's navy is ten times
larger than the next largest navy. The US's air force is the largest in the world, and the
second largest air force belongs, not to a foreign country, but to the US Navy.
Yet, we're supposed to believe that any cuts will imperil the "readiness" of the US
military.
Cut Spending for Citizens and Non-Citizens Alike
My intent here is not to pick on immigrants specifically. The case of military layoffs for
immigrants simply helps to illustrate a couple of important points: government jobs with the
military constitute of form of taxpayer-funded subsidy for immigrants. And secondly, the US
military acts as a job program, not just for immigrants but for many native-born Americans.
In truth, layoffs in the military sector ought to be far more widespread, and hardly limited
to immigrants. The Trump Administration is wrong when it suggests that the positions now held
by immigrant recruits ought to be filled by American-born recruits. Those positions should be
left unfilled. Permanently.
No you retarded fuck, the military is a taxpayer-funed merc army supporting the overseas
hegemonic goals of American-style Corporatism . That the military is full of the sons and
daughters of poor people is only because rich whites won't send their trustfund babies to
kill brown people for oil.
No, asshole. It's about money. About cash and gold. Profit. Markets. Growth. About cheap
or free resources. Access to labor. New customers.
War makes companies rich, it might be the ONLY way they can get rich. War is waged when GM
wants to sell trucks to the Pentagon. When Boeing wants to sell jets. When MIT wants money
for arms research. When NATO wants a reason to exist. The dogs of war are loosed when oil
gets tight. When countries won't "accept our cultural freedoms". When trade agreements aren't
enough to open up new markets.
Isreal has fleeting nothing to do with it, except maybe when war aligns with their
perceived need for hegemony in their own sphere. But by loading all this on Isreal you
encourage others to miss the real fox in the henhouse. You could wipe Isreal off the Earth
tomorrow and still have wars for profit for a thousand years to come.
This nation was born in war. It has practiced war since that day and will be at war with
the rest of the world until humans are killed to the last and the last ounce of profit from
war is had.
or from systematic corruption of all US Institutions and the politicization of all US
Institutions... you need a job, you want to work here, you say this, and you do this, ... tow
the line, no politics, no whistleblowing,... and we won't blackball your ass from the
industry... got it... u got debts, keep ur nose clean!
Yes the pay sucks but you get more done before 8am than most people do in a week. But
seriously its a pretty good gig in the long run. Medical care a decent retirement system,
travel a chance to meet and integrate with different cultures and kill them...its pretty
cool.
Excluding a small percentage, the military is much like the DMV. We have a cartoon vision
of all enlisted being GI Joe, ready to grab a gun and fight evil. This in not the case at
all. Most positions are very simple, repetitive bureaucratic positions. Really is a giant
Jobs program to keep people busy.
"The idea at work here is that the US military is a lean machine, doing only what is
necessary to get the job done, and as cost effectively as possible."
I managed to erase my own comment on this. And my comment was simple, the only true
measurement of market balance for oil going forward is global inventory level. Everything
else is perhaps manipulation or guesses.
I agree, with all the intentional and unintentional confusion it stays confused. I stay
confused trying to figure out what is confused. Inventory levels will be the only clear
measure of what is happening. US inventories should not be dropping fast, as we are about the
only country with increased production, but we dropped over 30 million last month. That's
really not small potatoes, as commercial stocks are just a little over 400 million. Though, I
think the US will be one of the last that would hit the danger zone.
Good point. My intention was not to give more confusion. These are forecasts from eia and, I
always like to remind this, they forecasted Brent averaging 105$ for 2015 in the STEO of
October 2014. They never forecast big surplus or deficit.
I messed with the numbers of the STEO from 2018 to guess when the are reliable. Inventory
levels are accurate for the US from the monthly report, which is 3 months old (april for July
STEO). Other inventory levels are less accurate, but stock changes are reliable from 4-5
month data.
Global inventories increased in April (0.74 Mb/d) and May (1.14 Mb/d). This would be quite
a change, as April would be a record inventory build since January 2017, and it would be
followed by another record. This have to be confirmed later.
So, now I know what I will look for in these STEO.
How does this fit with production and consumption?
I thought we have still increasing consumption of about 1.5 mb/year, and production in
April/May didn't jumped thad much – Opec flat and Permian already near it's pipeline
bottleneck.
As much as I know, many storages are unknown, especially Opec / China. There are these
satellite measurements, but there are additional deep storages.
Gathering all comsumption / raffinery input / production data would give an additional
picture. Still not easy.
With 1mb/day surplus we should go soon into the next oil price crash to 30-40.
Even if we haven't hit peak yet, the fact that production is likely to be going up by a
snail's pace the next 3 years is a problem. If consumption just goes up 0.75% a year we need
600K extra a year. That seems like a big challenge to a layman like myself.
Well what will happen is that the price of oil will hit $150-$200 a barrel to ration demand.
Which will cause much pain and ruction and gnashing of teeth among the voters, but Europe
has had those oil equivalent prices owing to taxation for quite some time and they manage
high living standards. $200/bbl probably destroys 10 million a day in superfluous 'Becky
driving by herself to the mall in a 3 ton SUV for no reason' kind of demand and incentivizes
quite a bit of production.
The transition period will be moody for sure, but at $200/bbl, the amount of economic EOR
targets in the US is somewhere in excess of 70 BBO from old conventional fields from the
industry reports I have seen – its just not economic to do since there isn't enough CO2
available to flood them, so you need to use more expensive techniques which require very high
prices (ethane flooding might be useful????). Worldwide its hundreds of billions. High prices
that encourage us to use the resource wisely and not waste the goddamn stuff liberally would
be a godsend, if we could quit wasting gigatons of plastic bullshit and 40% of our food
– i.e. if everything made from oil was more expensive as well.
It would be painful economically, but Mad Max isn't coming our way. After 5 years of pain,
we might actually finally get our shit together and research some goddamn alternatives.
I believe sugar cane ethanol is very competitive at $120 per barrel. This allows converting
grass cattle grazing ground to cane. I believe soy and palm will also become very attractive
crops. And I suspect countries like Haiti and Nicaragua will continue having riots.
Yes, I believe you are right. The future energy picture is complex, but authors writing books
about this say sugar cane ethanol could have EROEI (energy return on energy invested) of up
to 4. Even based on mechanised agriculture. And the big advantage of this crop is that it is
not very nitrogen intensive, the biggest fertilizer, currently energy intensive when it comes
to natural gas usage. Even when it comes to preindustrial crop rotation, the nitrogen
intensive main food crops were often rotated with legume crops which were not nitrogen
intesive in the hope to rebuild nitrogen content in the earth. So very long term, sugar cane
ethanol is a superb type of renewable energy. (that is what I read, no expert).
Brazil has the biggest potential out there when it comes to size, and it is not
inconceivable that they can cover much of domestic fuel demand with this outside aviation and
possibly shipping (no need for diesel and gasoline ;-)). It would be in competition with food
crops and concerns about deforestation, but still; a big potential there. Brazil is well off
in a more renewable future btw, having loads of hydro power, wind power, in addition to
biomass power (sugar cane the most promising).
"[Exxon's] approach is a gamble in a new era of energy breakthroughs such
as fracking and electric vehicles. Many of Exxon's competi-tors are
transforming their businesses to move away from oil exploration, and
have begun to spend carefully and diversify into renewable
energy ."
"'Most investors like Exxon, but they like other companies better,'
said Mark Stoeckle, chief executive of Adams Funds, which owns about $100
million in Exxon shares. 'The market is not willing to reward Exxon for
spending today in hopes that it will bring good returns
tomorrow.'
"Exxon has been pledging to produce more oil and gas for years, but its
output of about four million barrels a day is no higher today than it was
after its merger with Mobil Corp. in 1999. Even if Exxon succeeds in
doubling last year's earnings of $15 billion (excluding
impairments and tax reform impacts) by 2025, as Mr. Woods vowed in his
eight-year spending plan, it would still be making far less than in 2008, when it
set what was then a record for annual profits by an American
corporation, at $45 billion .
"Exxon's fracking prospects in the Permian basin in West Texas and New
Mexico, developed by its XTO unit, remain among its most profitable
opportunities, the company says. Still, its U.S. drilling
business has lost money in 11 of the last 15 quarters."
"... Kevin Shipp, former Central Intelligence Agency (CIA) officer, intelligence and counter terrorism expert, held several high-level positions in the CIA. His assignments included protective agent for the Director of the CIA, counterintelligence investigator searching for moles inside the CIA, overseas counter terrorism operations officer, internal security investigator, assistant team leader for the antiterrorism tactical assault team, chief of training for the CIA federal police force and polygraph examiner. Mr. Shipp was the senior program manager for the Department of State, Diplomatic Security, Anti-Terrorism Assistance global police training program. He is the recipient of two CIA Meritorious Unit Citations, three Exceptional Performance Awards and a Medallion for high risk overseas operations. Website/book: fortheloveoffreedom.net ..."
Fake News, Fake Money, How to Tell the Difference Posted on February
21, 2018 | Leave
a comment Why is it so hard these days to tell fact from fiction? Who can be trusted to
tell us what's really going on? Can the New York Times and Washington Post still be believed?
And what about money? Can we still trust the dollar, the euro, the pound sterling? What
supports national currencies, anyway? Is this Bitcoin thing real or fake money, and should I
buy some?
Here's a compelling presentation by Andreas Antonopoulos, that addresses all of these
questions. Antonopoulos is a technologist and entrepreneur and probably the most knowledgeable
and insightful expert on bitcoin, blockchain technology and the profound changes that lie just
ahead.
Now take a deep dive into the political realities of our time by watching this presentation
by CIA officer Kevin Shipp, in which he exposes the Shadow Government and the Deep State. If
you question his credibility here is a brief bio from Information Clearing House:
Kevin Shipp, former Central Intelligence Agency (CIA) officer, intelligence and counter
terrorism expert, held several high-level positions in the CIA. His assignments included
protective agent for the Director of the CIA, counterintelligence investigator searching for
moles inside the CIA, overseas counter terrorism operations officer, internal security
investigator, assistant team leader for the antiterrorism tactical assault team, chief of
training for the CIA federal police force and polygraph examiner. Mr. Shipp was the senior
program manager for the Department of State, Diplomatic Security, Anti-Terrorism Assistance
global police training program. He is the recipient of two CIA Meritorious Unit Citations,
three Exceptional Performance Awards and a Medallion for high risk overseas operations.
Website/book: fortheloveoffreedom.net
Hi Steve, this is exactly what we have been talking about for the last 8 years. To make
matters worse there seems to be a completely irrational belief that Shale will save the day.
Outside of the fact that shale is not processable without heavier crude, and it is at best
energy neutral, and probably negative, it is also long term unaffordable. There are 1.7
million Shale wells in the US. Over the next 5 years 1.4 million of those wells will have to
be replaced to just keep production even. That will be $6.2 trillion even if done on the
cheap. $6.2 trillion is equal to the total cost of all the finished product that will be
consumed by the US for the next 12.8 years (@ $75/barrel). Expending 12.8 years of sales
revenue to produce 5 years of oil is just not going to happen!
There seems to be a black out on this terrible situation. Some of that may be just plain
ignorance, but I suspect that the main reason is that it is politically unspeakable. For that
reason nothing is being spoken. As I have been saying for some time no one should expect big
oil, big government, or big anything to come riding to the rescue. The individual is now
completely on their own. Chose your options with discretion.
Agreed. The U.S. Shale Oil Ponzi Scheme will likely begin to disintegrate within the next
1-3 years. Already, the Permian oil productivity per well has peaked.
Then when the next Shale Oil ENRON event takes place... watch as the dominos fall.
@SRSrocco, U.S. Tight Oil depends on cheap credit. Regardless of oil prices.
Once cheap credit dries up and the previous debts are unable to be paid by drilling new
wells, the entire scheme falls apart.
Oil prices do not drive U.S. Tight Oil as much as cheap credit from easy loans.
Eventually, U S. Tight Oil using new credit cards to pay debts on old credit cards will
catch up with a vengence. Rising interest rates will be the catalyst. Rising oil prices only
prolong the increasing debt.
Didn't the EIA publish something not long ago stating their concerns that we could see oil
shortages by 2020? And around the same time, I recall that the Saudi Oil Minister came out
and stated that without more investment, we would likely see oil shortages by 2020. And then
at the recent OPEC meeting, I believe it was the Oil Minister from UAE who stated that we
need to find a new North Seas equivalent oil field EVERY YEAR to meet projected demand, which
of course is not going to happen. It has been a long slow grind since 2008 to get to this
point, but from here on out I anticipate that things will start unraveling at an ever faster
pace. Big changes on the way. But one thing that will NEVER happen is that the POTUS or some
other world leader comes out and says we are running short on energy. Instead it will be
Trade Wars, the damned Russians or some other lame propaganda -- anything but the truth.
The mitigation section of the study was most telling. It simply stated that local
sustainable economies would replace the modern era. These economies included local food
production and energy production. As this process unfolds, I simply do not see how a high
rise is going to remain habitable.
Zero hedge put a news story a while ago where (I think 2016) the US oil industry lost more
in that it earned in the previous 7 years (mining in general), so more investment wouldn't
have been coming in the US anyway - the price wasn't high enough to justify it.
Worldwide we are going to see some almightly crunch, whether it will arrive after 2020
will be seen. Ironically it might save Trump anyway if the world is seen to be beset by a oil
supply crunch since its hard to blame that on him.
The U.S. needs to get off its dead ass and start developing better batteries, solar power,
and other alternative energy sources. This was talked about in 1973, during the Oil Embargo
days, and its just astonishing the U.S. has done little since to ween itself off of oil. And
now we now have a tariff against Chinese made solar panels. DUH!!! How dumb can you get?
Look at the energy density of those power sources. You'll never run an industrial
civilization off of them. Electric cars may be great for zipping a couple of people around
town from day to day, but you're never going to run the large mining and shipping equipment
needed for our society. If you want to do that, you're going to have to develop viable
breeder reactors and the technology to manufacture liquid fuels with that energy - and this
is doable.
Right. There is nothing.....NOTHING....that can replace oil and gas as it is used and
utilized by the modern industrial society. Nothing......
What needs to happen right now is a steady rise in prices that will condition our
population to start learning to do with less cheap, easy energy. We have got to curb usage to
give society a chance to begin to learn another way.
The major obstacle to doing this responsible, rational action? The egregious, criminal
banking system that has gotten the world awash in debt to feed their greed. Any cut back in
the use of energy will destroy the economy and their gravy train.
The trend is definitely against EU. But Britain may be crushed, like Brazil and Argentina into accepting neoliberal world order
for longer.
Notable quotes:
"... Maybe Johnson the Brexiter can now launch an inner party coup and push Theresa May out. According to a YouGov poll she lost significant support within her conservative party. Besides the Brexit row she botched a snap election, lost her party's majority in parliament and seems to have no clear concept for anything. It would not be a loss for mankind to see her go. ..."
"... Boris the clown, who wins within his party on 'likability' and 'shares my political outlook', would then run the UK. A quite amusing thought. Johnson is a man of no principles. While he is currently pretending to hold a pro-Brexit position he would probably run the same plan that May seems to execute: Delay as long as possible, then panic the people into a re-vote, then stay within the EU. ..."
"... There is an excellent piece in the Boston Review on the EU- https://bostonreview.net/class-inequality/j-w-mason-market-police ..."
"... Iy makes the point that "The European Union offers the fullest realization of the neoliberal political vision. Its incomplete integration -- with its confusing mix of powers -- is precisely the goal." ..."
"... It traces the neo-liberal project, designed to prevent democracy from controlling economic policy, back to von Mises and Hayek. Nothing is more mistaken for critics of imperialism than to buy the line that the EU represents internationalism in any sense. The fact that some racists oppose the EU-just as others support it as a 'white" bastion -- is no reason to give an institution which is profoundly and purposefully undemocratic the benefit of the doubt. ..."
"... It is a wondrous sight to see Western [neo]Liberal Democracy crumbling before our eyes. Have a look at the very founders and protectors of "freedom" corrupt to the very marrow of their bones. ..."
"... Anything bad that can happen to the UK is well-deserved. The home, the womb of Russophobia, lies and illegal wars, as well as the hub of spying against American citizens, is exposed as thoroughly bankrupt politically. ..."
"... EU is bound to collapse but Britain might be tempted to wait it out, and maybe it is the game in London: not to be the first. The most dynamic destructive work in progress is the Euro that benefit to none of its 18 members (the euro-zones) but Geramny and Nederland. Italy has understood it but is using the refugees crisis to enlarge the contestation to non-euro zone countries (Visegrad group and more). ..."
"... As Nato is the real and only cement in this enlarged un-united Europe, in an epoch of accelerating change (collapse maybe) the famous Wait and see of the Brits has just muted in a slow fox-trot. ..."
"... But the puffed up Brits do not even see this danger and would blithely fall into the arms of the mafiosi from across the pond. ..."
"... Brexit is rebellion against the US imposed world order. London money has gone along and profited from the US imposed order, but the ordinary Brits may not have. They may not know where they are going, but they do know where they do not want to be. ..."
"... ditto... status of colony... isn't that what the globalists, corporations, neo liberals and etc want? get rid of any national identity as it gets in the way of corporations having the freedom to rape and pillage as needed.. ..."
"... Trump has reversed some 70 years of US strategy to gain nothing. It is quite remarkable. Strategic vandalism is a good description. ..."
"... The thing about UK and the EU is the UK is basically the US 51st state and the US is a defacto commonwealth nation. The colonization of Europe by the US was never meant to encompass the UK and the City. As they are basically one and the same. ..."
"... EU could not possibly have been a US/CIA idea as it actually works. Yes it is undemocratic, usurps national aspirations, perverts local economies, coddles oligarchs, and all that. But that does not mean it is a US idea. ..."
"... Single union political aspirations have been around for centuries and in many countries. Dare I suggest that it is actually based on the Soviet Union of peoples and most likely a Leninist or Trotskyist plot!! :)))) ..."
"... What do the City of London, the Vatican and Washington DC have in common? Actually, Jerusalem shares many of the same traits. Bonus points for the most creative euphemism for "usurious bank." ..."
"... From my perspective, Nation-States have not been the loci of power for some time (if they ever really were). The US, with its awesome military might and (former) industrial capabilities has served as the enforcement arm of that usurious supra-national cabal throughout "the American Century." ..."
"... Obtainimg strong mandate Cameron went to Brussels to supposedly negotiate better deal with EU ESPECIALLY for security while in fact he went there trying to bully the shape future EU integration especially in political realm and even more in realm of banking Union and integration and coordination of banking rules, laws and unified controlling authorities, via threatening Brexit which would be a deadly blow to EU propaganda glue that holds together this melting pot of divided as never before nations and never since medieval times united national elites integrated in EU ruling bureaucracy. ..."
"... First it was devastating impact of further EU integration on UK banking as London has become legal under U.K. law illegal in EU, money laundering capital of the world and criminal income is huge part of the revenue of the City , US is second. ..."
"... At the passage of Brexit I believed the purpose to be to allow the City of London (the bankers) unlimited financial freedom, perhaps especially in their entering into agreements with the Chinese. This could not be the case under the original EU rules. It will be interesting to see how this works out. ..."
"... The reality of the brexit which the Tory government is determined to raiload through has been designed by elites to better oppress the hoi polloi and to sell it to the masses it has been marketed as a means of restoring 'white power'. ..."
"... That is really saying something because the current version of the UK is one of the sickest, greed is good and devil take the hindmost societies I have ever experienced -- up there with contemporary israel and the US, 1980's South Africa and by the sound of it (didn't experience it firsthand like the other examples, all down to not existing at the time) 1940's Germany. ..."
"... Brexit is nether the problem or the solution, it was just another distraction to keep the mass occupied, whilst they assist stripped the uk and a large part of the world! ..."
"... Every brexiteer I've asked why they voted for out, begins by saying "For once they had to listen to us" and that's usually followed by "there's too many people here" or "it's the E.Europeans". (My response to the europhiles is that you knew the EU was finished a dozen years ago, when all the Big Issue sellers turned into Romanian women.) UK cities are thick with destitute E.Europeans. ..."
...Hours before Boris Johnson quit his position, Brexit Secretary David Davis resigned from Prime Minister May's cabinet.
On July 6 the British government held a cabinet meeting at Chequers, the private seat of the prime minister. Following the meeting
it published
a paper (pdf) that took a weird position towards exiting the European Union. If it would be followed, Britain would practically
end up with staying in the EU, accepting nearly all its regulations and court decisions, but without any say over what the EU decides.
The paper was clearly written by the 'Remain' side. The two top Brexiters in May's cabinet felt cheated and resigned. More are likely
to follow.
The majority of the British people who voted to leave the EU must feel duped.
My hunch is that Prime Minister Theresa May was tasked with 'running out the clock' in negotiations with the EU. Then, shortly
before the March 2019 date of a 'hard Brexit' would arrive without any agreement with the EU, the powers that be would launch a panic
campaign to push the population into a new vote. That vote would end with a victory for the 'Remain' side. The UK would continue
to be a member of the European Union.
No matter how the Brexit vote will go, the powers that are will not allow Britain to exit the European Union.
Is that claim still justified?
Maybe Johnson the Brexiter can now launch an inner party coup and push Theresa May out. According to a YouGov poll she
lost significant
support within her conservative party. Besides the Brexit row she botched a snap election, lost her party's majority in parliament
and seems to have no clear concept for anything. It would not be a loss for mankind to see her go.
Boris the clown, who wins within his party on 'likability' and 'shares my political outlook', would then run the UK. A quite
amusing thought. Johnson is a man of no principles. While he is currently pretending to hold a pro-Brexit position he would probably
run the same plan that May seems to execute: Delay as long as possible, then panic the people into a re-vote, then stay within the
EU.
Then again - Boris may do the unexpected.
How do the British people feel about this?
Posted by b on July 9, 2018 at 11:43 AM |
Permalink
Did you notice how quickly th E U sided with the U K over Salisbury ? That was the deal.
Remain in EU and we're back you!
Then again could have been we'l create a false flag you back us and we'll stay , a suttle nuonce.
The likelihood is that the blairite faction in the Parliamentary Labour Party-which has no real political differences with the
Tories and is fanatically pro EU, as all neo-liberals are- will prop up the May government. Or a Tory government headed by another
Remainer, with Blairites in the Cabinet.
This will prevent the General Election which Tories of all parties fear.
Iy makes the point that "The European Union offers the fullest realization of the neoliberal political vision. Its incomplete
integration -- with its confusing mix of powers -- is precisely the goal."
It traces the neo-liberal project, designed to prevent democracy from controlling economic policy, back to von Mises and
Hayek. Nothing is more mistaken for critics of imperialism than to buy the line that the EU represents internationalism in any
sense. The fact that some racists oppose the EU-just as others support it as a 'white" bastion -- is no reason to give an institution
which is profoundly and purposefully undemocratic the benefit of the doubt.
@Jeff - #1 - You are correct. There will not be another referendum.
I would add that there is some chance, however small, that on March 29th the British government will tell the EU that they
just have no way to meet the requirements of Article 50 and would the EU please allow them to continue as a member of the EU and
forget about all the shenanigans of the past 2 years. The EU has said previously that they will accept such a result and allow
the UK to continue as a member. The Brexiteers will have a total meltdown, and May will most likely be thrown out of office, but
most businesses and many individuals will be quite happy for this whole thing to just go away.
It is a wondrous sight to see Western [neo]Liberal Democracy crumbling before our eyes. Have a look at the very founders
and protectors of "freedom" corrupt to the very marrow of their bones.
In the US Trump, in the UK the Torys the democracies are now openly imperial and openly corrupt. Rule of law - ask the Skripals.
Brexit, Russia, Skripals, Russia, junkies and poisons Russians - minority government - ministers resigning right and left deadlines
looming no solutions in sight.
Western civilization is based on the Enlightenment and the Enlightenment and all its ideas of "democracy" are failing. Democracy
is not a religion, it is not the end of history, it is not sacred and immutable - checks and balances have failed utterly. This
sweetly written little essay says it all.
Look for countries to unilaterally bail from the EU with little or no advance notice. They will simply abrogate and that will
trigger an avalanche of others joining in. There are various good economic reasons why they would do that, but I think the groundswell
of populism fueled by anger over the open borders cataclysm will be the prime driver.
Anything bad that can happen to the UK is well-deserved. The home, the womb of Russophobia, lies and illegal wars, as well
as the hub of spying against American citizens, is exposed as thoroughly bankrupt politically.
The current path to chaos
is well-trod. Now, we can expect national attention is on the team in Russia in the semi-finals, while the government crumbles
and tumbles. But afterward, especially if Kane fails to bring the Cup home? Oh, the chaos. Of course, it will all be Putin and
Russia's fault.
UK. Despicable. How long it has taken for folks to realize Theresa May always has been a stalking horse. Highly Likely the
UK will stew in its own piss. Put that in their White Hall dossiers, and stamp it "Kremlin Plot".
Britain won't be staying in the EU and nor will the EU be accepting May's fantasy ideas for a future relationship giving the UK
free trade on everything it needs. There's a remote possibility that a new UK government could begin working on re-joining the
EU (Article 49), but there are plenty in Europe who would not let the UK re-join, at least not in the near future.
Friday the
13th is coming soon, scary stuff ?
The "Don't take No for an answer" is rather misleading. Made to vote again ..only after changes to the Treaty. France's vote
against the EU Constitution was accepted and when the Dutch also rejected it, it didn't happen.
EU is bound to collapse but Britain might be tempted to wait it out, and maybe it is the game in London: not to be the first.
The most dynamic destructive work in progress is the Euro that benefit to none of its 18 members (the euro-zones) but Geramny
and Nederland. Italy has understood it but is using the refugees crisis to enlarge the contestation to non-euro zone countries
(Visegrad group and more).
Now we have this Nato meeting coming and the abomination of Donald meeting Vlad that scares the whole neo-lberals, borgists,
russian haters, warmongers.
As Nato is the real and only cement in this enlarged un-united Europe, in an epoch of accelerating change (collapse maybe)
the famous Wait and see of the Brits has just muted in a slow fox-trot.
Brits, especially the Leave voters, have no real idea what the consequences of leaving the EU are, nor do they care that much.
What is uppermost in their minds is they do not want is to be in a union with "losers". Every single country on the Continent
is a loser and thus the object of contempt. The only country in Europe that is not a loser (meaning they have never lost a war)
is the United Kingdom of Roast Beef and God Save The Queen.
This British loser-phobia also explains the island nation's guttural hatred of Russia, which has bailed out Europe, and so
by definition the Brits as well, twice, thereby taking away some of the British luster. (OK the last time around they got a bit
of help from their old colonies, the Yanks, but its all the same. Yanks and Brits are the same stock.) As far as EU goes the Brits
can leave, no problem. Except that what the Continent would then be faced with was an American armed camp a few miles off shore,
not an appealing prospect to say the least. But the puffed up Brits do not even see this danger and would blithely fall into
the arms of the mafiosi from across the pond.
Boris Johnson's resignation letter. Well written.
Makes the same argument over the Checkers paper that I made above. If Johnson gets 48 back benchers on his side he could launch
a vote on no-confidence against May and possibly become PM. The Conservatives in Parliament seem quite upset over all of this.
Brexit is rebellion against the US imposed world order. London money has gone along and profited from the US imposed
order, but the ordinary Brits may not have. They may not know where they are going, but they do know where they do not want to
be.
@20 Not sure who qualifies as an 'ordinary Brit' these days. They come in all shapes and colours. I think the ones who moved to
Spain are fairly happy with the EU status quo.
Dominic Raab is the new UK Brexit point-man. The previous guy, Davies, just resigned. But Raab's appointment, I think, points
to what Brexit has been about all along -- namely, labour market reform beyond the rest of Europe, and to do this the UK must
be free of the European Human Rights council and other protections it provides for workers in the member states.
@23 psychohistorian... ditto... status of colony... isn't that what the globalists, corporations, neo liberals and etc want?
get rid of any national identity as it gets in the way of corporations having the freedom to rape and pillage as needed..
it was interesting reading near the end of bjs comments "Over the last few months they have shown how many friends this country
has around the world, as 28 governments expelled Russian spies in an unprecedented protest at the attempted assassination of the
Skripals." Guilty first - we will prove it later... maybe he really ought to consider rule from Brussels or where ever, if he
can't fathom the concept of innocent until proven guilty...
The French populace rejected the EU Constitution in 2005 during the Chirac years, and you are correct that after some changes
it was accepted under the Sarkozy government.But that happened because it was the Assembly (the parliament, i.e., the political
class) that voted on it, not the people. Can't have those deplorable citizens deciding important matters like that, now can we?
@51 pft... in so far as the cia work for the financial complex - yeah, probably.. how to create a currency - the eu - that no
one has any real control over, to compete with the us$ and yen... makes sense on that level..
Western civilization is based on the Enlightenment and the Enlightenment and all its ideas ...
When we discuss ALL ideas of the Enlightenment, we must remember this:
Wikipedia: "Enlightened absolutism is the theme of an essay by Frederick the Great, who ruled Prussia from 1740 to 1786, defending
this system of government.[1]
When the prominent French Enlightenment philosopher Voltaire fell out of favor in France, he eagerly accepted Frederick's invitation
to live at his palace. He believed that an enlightened monarchy was the only real way for society to advance.
Frederick the Great was an enthusiast of French ideas. Frederick explained: "My principal occupation is to combat ignorance
and prejudice ..."
In relatively short time, the List of enlightened despots included almost all absolute monarchs in Europe.
The awful truth for the Leave campaign is that the governing establishment of the entire Western world views Brexit as strategic
vandalism. Whether fair or not, Brexiteers must answer this reproach. A few such as Lord Owen grasp the scale of the problem.
Most seemed blithely unaware until Mr Obama blew into town last week.
Donald Trump, the presumptive Republican nominee for president, has come out in support of Brexit, saying the UK would be "better
off" outside of the European Union and lamenting the consequences of migration in the continent.
The billionaire, who secured the backing of Republican voters on a staunchly anti-immigration platform, said that his support
for the UK leaving the EU was a personal belief and not a "recommendation".
"I think the migration has been a horrible thing for Europe," Trump told Fox News late on Thursday. "A lot of that was pushed
by the EU. I would say that they're better off without it, personally, but I'm not making that as a recommendation. Just my
feeling."
Donald Trump accuses Angela Merkel of making 'catastrophic mistake' on refugees. President-elect tells The Times and Bild that
EU has become 'a vehicle for Germany'.
US President-elect Donald Trump said in a newspaper interview published on Sunday that German Chancellor Angela Merkel had
made a "catastrophic mistake" with a policy that let a wave of more than one million migrants into her country.
In a joint interview with The Times and the German newspaper Bild, Trump also said the European Union had become "a vehicle
for Germany" and predicted that more EU member states would vote to leave the bloc as Britain did last June.
"I think she made one very catastrophic mistake, and that was taking all of these illegals," Trump said of Merkel, who in
August 2015 decided to keep Germany's borders open for refugees, mostly Muslims, fleeing war zones in the Middle East.
Trump has reversed some 70 years of US strategy to gain nothing. It is quite remarkable. Strategic vandalism is a good
description.
Even when the 'light' (read truth about Brexit) is revealed, many here choose to ignore it out of sheer ignorance. For a good
description of the MOA comment section, one should consult Plato's Allegory of the Cave. And the 'left' blames external elements
for its inaptitude and demise when many it has only itself to blame.
The thing about UK and the EU is the UK is basically the US 51st state and the US is a defacto commonwealth nation. The
colonization of Europe by the US was never meant to encompass the UK and the City. As they are basically one and the same.
Its presence in the EU was never really a problem though and was useful in terms of providing a guiding hand, so long as it remained
free of the Eurozone. So I am not really sure its a change in strategy. Just another fork in the road.
It remains to be seen how it all works out. Perhaps the UK Brexit is meant to send a message to the other EU states as to the
consequences of leaving. One benefit to the US neoliberals might be that UK scraps or at least scales back its NHS due to the
economic consequences of a hard Brexit. The 0.1% will be fine at the end of the day and they are the only group that matters .
The rest are just pawns on the board.
As for Germany. Immigration in the EU was all about divide and rule and leaving fewer Euros for social programs. All part of
the neoliberal blueprint. Divide and rule is an age old tactic perfected by the British to rule the colonies. The EU and Germany
being controlled by the Anglo-American ruling elite , and basically occipied by US controlled NATO opened the doors. Reversing
this immigration can provide a plausible reason for more terrorism in Europe to empower the EU to become more of a security-police
state like US and UK.
On a side note its interesting the head of the ECB and BOE are both former Goldman Sachs employees.
Another related link suggesting the EU also serves a purpose of isolating Russia economically.
EU could not possibly have been a US/CIA idea as it actually works. Yes it is undemocratic, usurps national aspirations,
perverts local economies, coddles oligarchs, and all that. But that does not mean it is a US idea.
Zero Hedge is polishing turds now it seems.
Single union political aspirations have been around for centuries and in many countries. Dare I suggest that it is actually
based on the Soviet Union of peoples and most likely a Leninist or Trotskyist plot!! :))))
"The Marshall Plan also established the creation of the Organization for European economic cooperation. It did this in a
number of ways:
promote co-operation between participating countries and their national production programmes for the reconstruction
of Europe,
develop intra-European trade by reducing tariffs and other barriers to the expansion of trade,
study the feasibility of creating a customs union or free trade area,
study multi-lateralisation of payments, and
Achieve conditions for better utilisation of labour.
It was arguably through this persistent interlinking of many European countries economic affairs that to not cooperate would
simply be too risky.
This provided the basis for European cooperation and this was favoured by many people because cooperation was seen as a
fundamental building block in the establishment of long term European Peace."
"In relatively short time, the List of enlightened despots included almost all absolute monarchs in Europe."
You are right, and that included Catherine the Great for whom Samuel Bentham worked for some years. His brother Jeremy spent
some time with him there and was a great admirer of Catherine and Potemkin. He was a key figure in the development of liberal
ideology and political economy.
'The Enlightenment' is an historical concept which obscures more than it explains. To suggest that representative democracy's
origins lie in this nebulous thing is completely misleading -- the truth is that democracy is as old as community. If anything
'The Enlightenment' movements are the beginning of the current system whereby the trappings of popular government are hung on
the reality of a kleptocrats' oligarchy.
Just in time for Emperor Trump's arrival in Britain! I do not understand Great Britain's "democracy," (the very concept
of an aristocratic House of Lords Peerage makes my head explode... and what's this about the Monarch having the authority to appoint
a Prime Minister if he/she doesn't like the one selected?). But doesn't the party with the majority get to anoint the Prime Minister?
Wouldn't that be Labour right now if Missy May is shown the door?
Furthermore, the assertion that the UK will stay in the EU is entirely plausible. I heard, early in the days after the vote, that
the govt had not expected it to go the way it did. Plans were made for a show of Brexit but that 'the idea is that everything
stays the same' , i.e., no change. Sadly for the UK, the EU will not allow that to happen. In all probability, another vote
will indeed be called. Otherwise, it's going to be a disaster for an already divided UK for many, many years to come!
The main problem with Brexit is that it is so complex that neither the officials who were set the task of drafting it knew
little more than the Ministers themselves! NOBODY knew what the fuck to do! And they still don't!
There is every chance a Vote of No Confidence is going to be called on May's government and she will finally fall, as she must
as she is the most inept PM there has probably ever been!
What do the City of London, the Vatican and Washington DC have in common? Actually, Jerusalem shares many of the same traits.
Bonus points for the most creative euphemism for "usurious bank."
Are terms such as "The Five Eyes" and "The AZ Empire"
'trumped' by all this nationalistic furor?
From my perspective, Nation-States have not been the loci of power for some time (if they ever really were). The US, with
its awesome military might and (former) industrial capabilities has served as the enforcement arm of that usurious supra-national
cabal throughout "the American Century."
But really, does anyone here really believe that a New York City conman or the latest British "mophead" is more powerful than
the dynastic power of the Rothschilds, Warburgs or Morgans... or even the nouveau riche like the Rockefellers or Carnegies?
These are dynasties so wealthy and powerful that they don't even appear on Forbes lists of "The Richest" and no one dare mention
their names when plotting the next global conflagration.
Since David Cameron used Jimmy Cliff's " You Can Get It
If You Really Want " for his campaign,
Afshin Rattansi's interview
with that truly revolutionary artist is not so off topic. And it's well worth 12 minutes to enter a worldview we Westerners rarely
live.
I and I say "Ja Mon!"
OK. I can't post Jimmy without " The Harder They Come,
" especially as that seems to be the root of most of the comments here.
@33 -- "...and Western Australia were separate British colonies that all began as penal settlement."
Not entirely correct. Western Australia started as a capitalist investment venture (c. 1828) but suffered chronic labor shortages
as slavery was closed down (c. 1833). The colony then resorted to convict imports for a time. Much of the myth about 'criminal'
can be re-framed as political prisoners such as the Welsh Chartists (see Chartism in Wales).
One can only be confused if one ignores public and secret reasons while Cameron threatened Brexit vote already in 2015 and went
through it in 2016. Officially it was about antiterrorism, security and hence controlling immigration flagship of Tory political
campaign that brought them overwhelming electoral win as well as some noises that EU rules and laws stifle economic development
and the British lose more in EU payments than they gain.
Obtainimg strong mandate Cameron went to Brussels to supposedly
negotiate better deal with EU ESPECIALLY for security while in fact he went there trying to bully the shape future EU integration
especially in political realm and even more in realm of banking Union and integration and coordination of banking rules, laws
and unified controlling authorities, via threatening Brexit which would be a deadly blow to EU propaganda glue that holds together
this melting pot of divided as never before nations and never since medieval times united national elites integrated in EU ruling
bureaucracy.
What Cameron was scared of as far as direction of future of EU?
First it was devastating impact of further EU integration on UK banking as London has become legal under U.K. law illegal
in EU, money laundering capital of the world and criminal income is huge part of the revenue of the City , US is second.
And second point is future of British monarchy which further integration of EU into superstate would require to be abandoned
in UK as elsewhere as states were to loose all even symbolic sovereignty and turn into regions and provinces as in Roman Empire
. Needles to say that UK still powerful landed aristocracy want nothing of that sort.
Hence Cameron went to Brussels make special deal for UK and was essentially, with some meaningless cosmetic changes, rebuked
into binary decision in EU or out of it no special deal and hence he escalated with calling Brexit vote as a negotiating tool
only to increase political pressure to rig elections toward remain if deal reached . In fact as latest scandal revealed results
of exit polls were released to stock market betting hedge funds just minutes before polls were closed concluding guess what, that
remain campaign won while electoral data in hours showed Brexiters wining simply because to the last moment before closing polls
they expected EU to cave in, they did not so they continued pressure by closing openly pro Brexit win.
The pressure continues now while Cameron had to pay political price as he openly advocated staying in EU under phony deal even
Tory did not buy, and hence this seeming chaos now fooling people that there is other way but hard Brexit to keep monarchy sovereignty
and profits from global money laundering or surrender and humiliation degradation U.K. into EU colony as BJ just said.
Of course which way it goes ordinary Brits will pay but also big crack will widen in EU as national movements will have impact
of shattering dreams of quit ascending to EU superstate.
At the passage of Brexit I believed the purpose to be to allow the City of London (the bankers) unlimited financial freedom,
perhaps especially in their entering into agreements with the Chinese. This could not be the case under the original EU rules.
It will be interesting to see how this works out.
The Chinese, as they are intended to be the regional governor of Asia under the evolving global governance are key to the entire
tyrannical plan. The AGW hoax, paid for by Western oligarchs, is the public relations for the UN's Agenda 21, currently being
enforced at the local level in many parts of the US.
The Chinese oligarchs are so delighted with its tyrannical land-use provisions that they are actually calling their projects
"China's Agenda 21". You may search for it.
@ 62: Thanks for the Pilger article, a good read. There are many today, who would return us all to those days.
Herman J Kweeblefezer , Jul 10, 2018 1:05:09 AM |
72
The reality of the brexit which the Tory government is determined to raiload through has been designed by elites to better
oppress the hoi polloi and to sell it to the masses it has been marketed as a means of restoring 'white power'. Bevin
& co can whine on about the injustices of the eu for as long as their theoretical view of the world sustains them, but the brexit
which will be delivered is based on 'pragmatic realism' developed by a really nasty gang of avaricious lying c**tfaces and will
create a society far more unjust, divided and impoverished than the one that currently exists.
That is really saying something
because the current version of the UK is one of the sickest, greed is good and devil take the hindmost societies I have ever experienced
-- up there with contemporary israel and the US, 1980's South Africa and by the sound of it (didn't experience it firsthand like
the other examples, all down to not existing at the time) 1940's Germany.
Jezza was great in the house last night but he didn't
call for an immediate general election which would be pretty much SOP for any opposition facing as tattered a government (Seven
cabinet 'resignations') as bereft of ideas as the Maybot machine.
The reason he didn't - couldn't in fact, is that the UK left is as divided and dug into their positions as that tory bunch
of bastards. Far too many opposition politicians insist that a 'deal' on brexit comes first ahead of sorting out poverty and homelessness,
woeful education outcomes (unless you believe wildly juked stats) and the horror show that has been created by three decades of
relentless attacks on the health service.
We see it here from the brexiters so convinced of the rightness of their cause they ignore the institutionalised racism that
will certainly follow a tory brexit. Or the remoaners who also ignore the unsavory aspects of eu policy to try and render the
labour left impotent. Those latter types simply don't give a damn about anything which flows from this debate and division other
than killing momentum, they consider even losing the next 5 elections to tories an agreeable sacrifice for ridding the party of
Corbyn and co.
Corbyn has recognized the destructive divisiveness of Brexit and tries to ignore it because he holds with fixing the mess so
many people are in as being much more important than theoretical arguments which will change nothing for the better regardless
of impassioned exhortations by ninnies on both sides of the argument.
The thing which really pisses me off about the lefty brexiters, is that they behave as if it is a now or never situation, when
it is anything but. There is nothing to prevent a more united Labour Party who have got their mandate by actually delivering a
better life for people rather than irrelevant concepts, returning to sorting out the UK's position in the EU at a later date,
ideally at a time when the EU's intransigent support for corporate welfare has run bang smack into a leftist UK Labour government's
determination to restore public ownership of natural monopolies (rail, water, power, mail delivery etc).
The lefty brexiters claim the lefty remainers won't allow it, while the lefty remainers claim it is the lefty brexiters clogging
the works. In fact it is both gangs of selfish egotistical assholes.
NotBob @ 35.
The EU Constitution never happened. The Lisbon Treaty came along a couple of years later and this time round the Irish people
voted against it. It got amended and the Irish people accepted it. The French and Dutch (and every other EU) country chose not
to "ask the people" and left the decision to the peoples' chosen represtentatives.
The Irish Constitution has a bit in it making
it necessary to ask the people before any changes can be made to that Constitution, so every time the EU adds some bits to the
EU Treaty that require the Irish to change their own Constitution there's trouble, as those 3 million or so Irish people have
the power to scupper anything and everything for the other 500 million EU citizens. Holding a national referendum to make decisions
affecting the entire Union doesn't seem to be either fair or democratic. A single EU-wide referendum could be held when there's
a major change to the Treaties.
Political correctness is a social disease very similar to syphilis - it fucks with the brain. You really should take precautions
if socializing in those circles. Precautionary measures are available at all chemists and most public toilets.
I click on MoA now and see a pic of Boris the clown hanging from a rope. If the Brits were smart, they would connect that rope
to a weather balloon and allow Boris to ascend to the stratosphere and cruise the jet stream.
The EU is first and foremost a massive attack on democracy. At the same time it attempts to establish technocracy as the mode
of government of the future. But right only racists and overly idealistic assholes oppose the EU...
"Democracy" only being possible locally? Numbers I posted on another thread:
Members of the Shanghai Cooperation Organisation - population of 3 Billion+
EU Members - population of 500 million.
United States - population of 326 million
GDP of United States - 18.57 trillion USD
GDP of European Union - 17.1 trillion USD
GDP China, India, Russia combined (Shanghai Cooperation Organisation) -
- close to 15 trillion
You think EU countries have got a competitive chance if on their own? Or - democracy in Switzerland enables them to decide
on their relations with the outside world? Like not being part of the "single market" - they are -including free movement of people
- yes you can live and work in Switzerland if you are a EU citizen.
But right only racists and overly idealistic assholes oppose the EU
Brexit is nether the problem or the solution, it was just another distraction to keep the mass occupied, whilst they assist
stripped the uk and a large part of the world! The people we are scared to mention are the true people killing and oppressing
us. I thank Daniel@66 for naming them ! Rothchild family ect ect I would add the Rothermere family and Murdoch ! Politics are
debated, but history is made on the streets. We need to regain our sense of moral outrage (where did that go ?) there are 70 million
displaced people in the world ! It could be. You or I next !
Peter AU 1 @ 83: I agree with ADKC and IMO. There were convicts transported to the Australian colonies whose crimes can be considered
political crimes. The Tolpuddle Martyrs who came to the Sydney colony in the 1830s are one example: they were transported for
the crime of demanding an extension of voting rights to all men, among other demands. Such convicts were a small minority though.
As for Germany. Immigration in the EU was all about divide and rule and leaving fewer Euros for social programs.
"The demonization of Muslim immigration to the EU ...." - fixed it for you.
The stuff about leaving fewer euros for social programmes is propaganda. Social programmes are designed to force people to
work - they are pegged below the minimum wage.
In the case of Germany costs for refugees were accounted to the 0.7 percent of GDP Germany is supposed to spend for development
aid by the UN, thereby effectively developing Germany instead.
Alan @ 88
I am in total agreement with you on your comment regarding Boris Johnson ! His childish buffoonery, is a commen system / tactic
of a psychopath . It hides a callous disregard for human life , wins gullible friends which the psychopath manipulates to exploit
there power and influence! They are very good at scheming there own self interested plan. But (and here's the crunch ) are totally
useless at for seeing the consequences of there actions . And no regard for the victim of there actions!!! Do we want that in
charge of the nuclear button ?
There is nothing wrong/inconsistent with the idea of an interconnected world of sovereign (independent) states. The idea that
a treaty or a trade agreement means that a state is no-longer independent is ridiculous. As ridiculous as believing that an individual
who purchases a pack of polo mints is no longer free because of the need of a local shop and a manufacturer.
You are basically pushing the idea that there should be no nation states, no borders and all trade free and therefore no need
for treaties. From this comes no regulation, a poisoned environment, uncontrolled and rapacious capitalism, no rights for people,
no benefits, no protection, just work til' you die and polished off sharpish if you are no longer productive.
I don't object to an EU as a grouping of independent states acting collectively. I do object to an EU that erodes and undermines
the nation state, that seeks to remove state leaders and interfere in state elections/policies. The EU that we have is the latter
and there is no practical way to reform it to the former.
@ B. You have too high an opinion of the competence of the main political figures in the UK Governing Party.
Boris Johnson has
never been a serious contender for PM. He's good at giving a rousing speech to the Party faithful but that's it. The blue rinses
enjoy the titillation of his infidelities but they don't want someone so amoral coming anywhere near their daughters, or representing
their principles.
You knew Theresa May had no judgment the first day of her premiership, when she made BoJo her Foreign Secretary. A selection
that could kindly be described as risible. He indicated no suitability for the role before his appointment nor has since. Quite
the opposite. It was at that decision you knew all was hopeless. Brexit was going to be hopeless. Everything she was going to
be involved in was hopeless.
And so it has proved.
The vox pop that I encounter ..... the Remainers are reconciled to Brexit and just want to get on with it. The Brexiteers are
sick to death with hearing about it but not seeing anything done. Everyone had made their minds up before the election in 2015.
The Referendum campaign was a few weeks of premium entertainment watching the most reviled political figures in the land trying
to tear each others' throats out.
Every brexiteer I've asked why they voted for out, begins by saying "For once they had to listen to us" and that's usually
followed by "there's too many people here" or "it's the E.Europeans". (My response to the europhiles is that you knew the EU was
finished a dozen years ago, when all the Big Issue sellers turned into Romanian women.) UK cities are thick with destitute E.Europeans.
There's a huge disconnect between Parliament (+ media) and the people. A further example of this is the official narrative
on the Salisbury poisonings. Ask people in the street and they say "yeah, it was Vlad with the doorknob" and then they crease
up laughing. The Govt has no credibility with its "only plausible explanation".
My prediction, since the day BoJo was appointed minister for the exterior, is that the situation is so catastrophic the EU
will have to lead us by the hand through the process of brexit. The EU's priority will be the stability of the Euro. They won't
want us beggared on their doorstep and as they export 15% of their stuff to us they'll want to keep on doing that. We'll have
to have what we're given and be grateful.
The political situation in the UK is so far beyond surreal that a man dragging a piano with a dead horse on it would appear
mundane.
- It doesn't matter who the prime minister is. The UK has already adopted A LOT OF EU regulations/laws and that will make it nearly
impossible to perform a "Hard Brexit". The UK still exports A LOT OF stuff to the Eurozone and then it simply has to follow EU
regulations, no matter what the opinion of the government is. In that regard, the current EU regulation simply provides a good
framework, even for the UK. No matter what one Mrs. May or Mr. Johnson.
- As time goes by the UK can change parts of the EU
regulations to what the UK thinks those regulations should be.
- And do I think that Mrs. May and her ministers have drawn that same conclusion.
As the world continues to burn energy like there is no tomorrow, global oil and gas discoveries
fell to another low in 2017. And to make matters worse, world oil investment has dropped 45% from
its peak in 2014. If the world oil industry doesn't increase its capital expenditures
significantly, we are going to hit the Energy Cliff much sooner than later.
According to Rystad Energy, total global conventional oil and gas discoveries fell to a low of
6.7 billion barrels of oil equivalent (Boe). To arrive at a Boe, Rystad Energy converts natural
gas to a barrel of oil equivalent. In 2012, the world discovered 30 billion Boe of oil and gas
versus the 6.7 billion Boe last year:
"We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, senior analyst
at Rystad Energy. "The discovered volumes averaged at ~550 MMboe per month.
The most
worrisome is the fact that the reserve replacement ratio in the current year reached only 11%
(for oil and gas combined) - compared to over 50% in 2012."
According to Rystad's
analysis, 2006 was the last year when reserve replacement ratio reached 100%.
The critical information in the quote above is that the world only replaced 11% of its oil and
gas consumption last year compared to 50% in 2012. However, the article goes on to say that the
last time global oil and gas discoveries were 100% of consumption was back in 2006. So, even at
high $100+ oil prices in 2013 and 2014, oil and gas discoveries were only 25% of global
consumption.
As I mentioned at the beginning of the article, global oil capital investment has fallen right
at the very time we need it the most. In the EIA's International Energy Outlook 2017, world oil
capital investment fell 45% to $316 billion in 2016 versus $578 billion in 2014:
In just ten years (2007-2016), the world oil industry spent $4.1 trillion to maintain and grow
production. However, as shown in the first chart, global conventional oil and gas discoveries fell
to a new low of 6.7 billion Boe in 2017. So, even though more money is being spent, the world
isn't finding much more new oil.
I believe we are going to start running into serious trouble, first in the U.S. Shale Energy
Industry, and then globally, within the next 1-3 years. The major global oil companies have been
forced to cut capital expenditures to remain profitable and to provide free cash flow.
Unfortunately, this will impact oil production in the coming years.
Thus, the world will be facing the Energy Cliff much sooner than later.
Yeah tHis article is ridiculous, resident ZH self-purported Mensa members
like Tmos' have proven beyond any doubt that 'abiotic oil' replenishes the
world's supply of easily accessed hydrocarbons every fifteen minutes or so,
regardless of increasing consumption rates; indeed regardless of any
veritable facts whatsoever.
Worked by whole life in the oil business. Depletion is real. Abiotic oil
replenishment is Magic unicorns dancing on rainbows. Oil won't run out
ever, but the energy required to extract the oil will make remaining oil
reserves uneconomic at some point.
Strange that the oil industry does not agree with you. And it's strange
that reserves all over the world are not stable but decreasing. Your
Mensa idol is full of shit.
The rant of a coddled establishment chickenhawk, who is quite overrated, relative to the
positions accorded to him (Nasty people don't deserve kindness.)
Notable quotes:
"... When Tucker Carlson on his prime time program last July 11, 2017, demanded that Peters provide facts and figures for his accusations, Peters immediately exploded and implied that program host Carlson was a "Hitler apologist." It was a classic argument and instance of reductio ad Hitlerum. ..."
"... Ralph Peters is one of the nuttiest neocons around, and Fox was smart to dump him. I recall an article long ago where he suggested that the US Govt. should address the drug addition problem in the USA by assassinating drug dealers on the streets in the USA ..."
"... He lives off scraps from neocons by selling his soul for BS talking points and collects a monthly check from Uncle Sam after 20 years of sitting at a desk doing BS intel work, as I once did for a year. It seems he missed his chance at killing commies in Nam by touring Europe, as Fred Reed explained ..."
"... Last week, Fox News host Tucker Carlson, received well deserved praise for taking to task the permeating anti-Russian biases. The highlight of Carlson's exchanges was his encounter with Ralph Peters, who for years has spouted grossly inaccurate propaganda against Russia. Antiwar.com and Russia Insider, are among the counter-establishment English language venues commenting on the Carlson-Peters discussion. The US foreign policy establishment realist leaning National Interest carried a lengthy piece on Carlson's challenge to the neocon/neolib foreign policy perceptions. For the record, more can and should be said in reply to Peter's comments. ..."
"... Peters' characterization of Russia targeting civilian areas is disingenuous. Over the years, the matter of collateral damage is something periodically brought up in response to those killed by US and Israeli military actions. ..."
"... Some Kiev regime elements positively reference the 1995 Croat ethnic cleansing of Krajina Serbs (known as Operation Storm) as a solution for ending the rebel position in Donbass. Russia doesn't seek a massive refugee problem in Donbass and some other parts of the former Ukrainian SSR. As is, a sizeable number of Ukrainian residents have fled to Russia. ..."
Or, recall those on-camera Fox News Russia experts -- think here of General Jack Keane or
the unhinged Colonel Ralph Peters who literally foamed at the mouth when talking about Putin,
calling him "the new Hitler," and who asserted that Putin had committed "worse crimes" than the
German dictator. (Peters is so anti-Russian that he finally
left the Fox News network in March 2018 )
When Tucker Carlson on his prime time program last July 11, 2017, demanded that Peters
provide facts and figures for his accusations, Peters
immediately exploded and implied that program host Carlson was a "Hitler apologist." It was
a classic argument and instance of reductio ad Hitlerum.
Ralph Peters is one of the nuttiest neocons around, and Fox was smart to dump him. I recall
an article long ago where he suggested that the US Govt. should address the drug addition
problem in the USA by assassinating drug dealers on the streets in the USA.
He lives off scraps from neocons by selling his soul for BS talking points and collects a
monthly check from Uncle Sam after 20 years of sitting at a desk doing BS intel work, as I
once did for a year. It seems he missed his chance at killing commies in Nam by touring
Europe, as Fred Reed explained:
Last week, Fox News host Tucker Carlson, received well deserved praise for taking to
task the permeating anti-Russian biases. The highlight of Carlson's exchanges was his
encounter with Ralph Peters, who for years has spouted grossly inaccurate propaganda
against Russia. Antiwar.com and Russia Insider, are among the counter-establishment English
language venues commenting on the Carlson-Peters discussion. The US foreign policy
establishment realist leaning National Interest carried a lengthy piece on Carlson's
challenge to the neocon/neolib foreign policy perceptions. For the record, more can and
should be said in reply to Peter's comments.
Peters falsely claims that Russia hasn't made a concerted effort in confronting ISIS. In
one of his more accurate moments, CNN's Wolf Blitzer said that the ISIS claimed shoot down
of a Russian civilian airliner over Egypt, was in response to Russia's war against ISIS.
You've to be either a liar or clueless to not recognize why Russia has actively opposed
ISIS. The latter sees Russia as an enemy, while having a good number of individuals with
roots in Russia and some other parts of the former USSR.
Peters' characterization of Russia targeting civilian areas is disingenuous. Over the
years, the matter of collateral damage is something periodically brought up in response to
those killed by US and Israeli military actions.
Peters offers no proof to his suspect claim that Russian President Vladimir Putin kills
journalists. There're numerous anti-Putin advocates alive and well in Russia. That country
does have a violence problem. Recall what the US was like in the 1960s thru early
1970′s. For that matter, Bernie Sanders isn't blamed for the pro-Sanders person who
attempted to kill Republican lawmakers.
Given the situations concerning Kosovo and northern Cyprus, Peters is being a flat out
hypocrite regarding Crimea. Donbass is a civil conflict involving some Russian support for
the rebels, who're overwhelmingly from the territory of the former Ukrainian SSR. These
individuals have a realistic basis to oppose the Kiev based regimes that came after the
overthrow of a democratically elected Ukrainian president.
During the American Revolution, most of the pro-British fighters were said to be
colonists already based in America. Furthermore, the American revolutionaries received
significant support from France. With these factors in mind, the Donbass rebels don't seem
less legit than the American revolutionaries.
Some Kiev regime elements positively reference the 1995 Croat ethnic cleansing of
Krajina Serbs (known as Operation Storm) as a solution for ending the rebel position in
Donbass. Russia doesn't seek a massive refugee problem in Donbass and some other parts of
the former Ukrainian SSR. As is, a sizeable number of Ukrainian residents have fled to
Russia.
Putin isn't anti-US in the manner claimed by Peters. Moreover, Peters is clearly more
anti-Russian (in a narrow minded way at that) than what can be reasonably said of how Putin
views the US. Putin's obvious differences with neocons, neolibs and flat out Russia haters
isn't by default anti-US. He was the first foreign leader to console the US following 9/11.
The Russian president has been consistently on record for favoring better US-Russian ties
(even inquiring about Russia joining NATO at one point), thereby explaining why he has
appeared to have preferred Trump over Clinton.
Some (including Trump) disagree with that view, which includes the notion that the
Russians (by and large) prefer predictability. As a general rule this is otherwise true.
However, Clinton's neocon/neolib stated views on Russia have been to the point where many
Russians felt willing to take a chance with Trump, whose campaign included a comparatively
more sympathetic take of their country. At the same time, a good number of Russians
questioned whether Trump would maintain that stance.
A field is creamed by massive infill drilling with horizontal wells that skim the very top
of the reservoir. The decline rate is the[n] drastically reduced while the depletion rate is
drastically increased. Things will go just great until the water hits those horizontal wells
at the top of the reservoir. Then production will drop like a rock.
I assume this is the money quote. These methods comprise the "game changer" that scuttled
peak oil predictions circa 2005.
By demurring a prediction as to when the stone might–will!–drop, you're
acknowledging the deplorable state of the data. This should give us pause. We might call this
the New Peak Oil Reticence.
Let's grant that what you say is true (I'm certainly not qualified to refute it). If you
know it (that is, that the rock will drop), then "they" know it, and by "they" I mean those
who are in the business of developing these "creaming" methods. They must know it.
No one producing country is looking at the global problem. They are only concerned with their
own country and the problems at home. Most are old men who realize that they will be long
dead if there is ever a catastrophe. And most, like the contributors to this blog, believe
that there will never be a catastrophe. They believe that renewables, or fusion energy, or
God, human ingenuity, or something else will save us from any type of collapse.
But the point is, the oil barons of each individual country, are not even remotely
concerned with the collapse of civilization as we know it. They believe God, or Allah, or
human ingenuity, will simply not allow that to happen.
"And most, like the contributors to this blog, believe that there will never be a
catastrophe. They believe that renewables, or fusion energy, or God, human ingenuity, or
something else will save us from any type of collapse."
But doesn't that require, like, planning? Plenty of planning?
I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have
a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good
estimate of when peak oil occurs, based on current findings and technology. Improvements in
either would probably only affect the tail of the decline rate. Which, based on the immense
overstatement of EIA, and the creaming you mentioned, the tail should have much more of a
decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little
over a year hiatus on the Permian final push due to pipeline and other constraints. We all
know 2042 is a bad projection for the US, it will get there as soon as it can. It will get
there as soon as it can, because the oil price will be high enough to beg, borrow, or steal
to get there. For that reason, all other sources will be staining to get there at the same
time. We are in the final stage, I do think.
Yes, I agree with you on Dr. Minqi Li's paper. I am not sure, however, that the Permian will
show enough yearly increase to hold off the peak until 2023.
"... I believe due to OPEC massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of all giant fields, the expected peak dates here are highly inaccurate. ..."
In the table below I have converted the data Dr. Minqi Li presented in metric tons per year
to million barrels per day. Again, this is C+C plus natural gas liquids.
2017
At Peak
Year Peak
BPD Increase
us
11.47
15.08
2042
3.61
Saudi
11.29
12.17
2030
0.88
Russia
11.13
12.01
2033
0.88
Canada
4.74
7.85
2049
3.11
Iran
4.70
5.40
2039
0.70
Iraq
4.44
6.51
2042
2.07
China
3.S6
4.32
2015
UAE
3.53
4.38
2037
0.84
Kuwait
2.93
3.35
2040
0.42
Brazil
2.87
3.03
2025
0.16
Rest of W
27.13
33.22
2004
Total World
88.10
90.95
2021
2.85
The source for this chart is the same as the table above. I believe due to OPEC
massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of
all giant fields, the expected peak dates here are highly inaccurate.
Well, all except three. The rest of the world did peak in 2004, China did peak in 2015, and
the world will peak by 2021 or before. Congratulations to Dr. Minqi Li, the most accurate
future peak there is the one that he calculated. Guym x Ignored says:
07/04/2018 at 8:10
am
I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have
a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good
estimate of when peak oil occurs, based on current findings and technology. Improvements in
either would probably only affect the tail of the decline rate. Which, based on the immense
overstatement of EIA, and the creaming you mentioned, the tail should have much more of a
decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little
over a year hiatus on the Permian final push due to pipeline and other constraints. We all
know 2042 is a bad projection for the US, it will get there as soon as it can. It will get
there as soon as it can, because the oil price will be high enough to beg, borrow, or steal
to get there. For that reason, all other sources will be staining to get there at the same
time. We are in the final stage, I do think.
Ron, many thanks for your very informative post about world oil (as always) and your
comments on my post.
However, like much of the peak oil community, having missed some of the previous peak
oil predictions, now I may err on the conservative side. Many have criticized the EIA
projections and OPEC reserves. But again, even with those projections/reserves, the world
oil production is still projected to peak in 2021. This suggests that world oil production
may indeed peak in the near future. As I promised, I will follow up with part 2 on
this.
Regarding China, China's oil consumption growth has re-accelerated as its oil production
is in decline. This development may have some major impact on global economy/geopolitics in
the coming years. On top of that, China is (or will soon become) the world's largest
natural gas importer.
World cumulative oil production up to 2017 was 192 billion metric tons. The world's
remaining recoverable oil resources are estimated to be 276 billion metric tons and ultimately
recoverable oil resources are estimated to be 468 billion metric tons. By comparison, the BP
Statistical Review of World Energy reports that the world oil reserves at the end of 2017 were
239 billion metric tons.
World oil production is projected to peak at 4,529 million metric tons in 2021.
2017 Production and Peak Production are in million metric tons; Cumulative Production, RRR
(remaining recoverable resources or reserves), and URR (ultimately recoverable resources) are
in billion metric tons. For Peak Production and Peak Year, regular characters indicate
historical peak production and year and italicized blue characters indicate theoretical peak
production and year projected by statistical models. Cumulative production up to 2007 is from
BGR (2009, Table A 3-2), extended to 2017 using annual production data from BP (2018).
(Originally published as [US Dollar Hegemony has to go] in AToL on
April 11. 2002)
There is an economics-textbook myth that foreign-exchange rates are
determined by supply and demand based on market fundamentals. Economics tends
to dismiss socio-political factors that shape market fundamentals that affect
supply and demand.
The current international finance architecture is based on the US dollar
as the dominant reserve currency, which now accounts for 68 percent of global
currency reserves, up from 51 percent a decade ago. Yet in 2000, the US share
of global exports (US$781.1 billon out of a world total of $6.2 trillion) was
only 12.3 percent and its share of global imports ($1.257 trillion out of a
world total of $6.65 trillion) was 18.9 percent. World merchandise exports
per capita amounted to $1,094 in 2000, while 30 percent of the world's
population lived on less than $1 a day, about one-third of per capita export
value.
Ever since 1971, when US president Richard Nixon took the dollar off the
gold standard (at $35 per ounce) that had been agreed to at the Bretton Woods
Conference at the end of World War II, the dollar has been a global monetary
instrument that the United States, and only the United States, can produce by
fiat. The dollar, now a fiat currency, is at a 16-year trade-weighted high
despite record US current-account deficits and the status of the US as the
leading debtor nation. The US national debt as of April 4 was $6.021 trillion
against a gross domestic product (GDP) of $9 trillion.
World trade is now a game in which the US produces dollars and the rest of
the world produces things that dollars can buy. The world's interlinked
economies no longer trade to capture a comparative advantage; they compete in
exports to capture needed dollars to service dollar-denominated foreign debts
and to accumulate dollar reserves to sustain the exchange value of their
domestic currencies. To prevent speculative and manipulative attacks on their
currencies, the world's central banks must acquire and hold dollar reserves
in corresponding amounts to their currencies in circulation. The higher the
market pressure to devalue a particular currency, the more dollar reserves
its central bank must hold. This creates a built-in support for a strong
dollar that in turn forces the world's central banks to acquire and hold more
dollar reserves, making it stronger. This phenomenon is known as dollar
hegemony, which is created by the geopolitically constructed peculiarity that
critical commodities, most notably oil, are denominated in dollars. Everyone
accepts dollars because dollars can buy oil. The recycling of petro-dollars
is the price the US has extracted from oil-producing countries for US
tolerance of the oil-exporting cartel since 1973.
By definition, dollar reserves must be invested in US assets, creating a
capital-accounts surplus for the US economy. Even after a year of sharp
correction, US stock valuation is still at a 25-year high and trading at a 56
percent premium compared with emerging markets.
The Quantity Theory of Money is clearly at work. US assets are not growing
at a pace on par with the growth of the quantity of dollars. US companies
still respresent 56 percent of global market capitalization despite recent
retrenchment in which entire sectors suffered some 80 percent a fall in
value. The cumulative return of the Dow Jones Industrial Average (DJIA) from
1990 through 2001 was 281 percent, while the Morgan Stanley Capital
International (MSCI) developed-country index posted a return of only 12.4
percent even without counting Japan. The MSCI emerging-market index posted a
mere 7.7 percent return. The US capital-account surplus in turn finances the
US trade deficit. Moreover, any asset, regardless of location, that is
denominated in dollars is a US asset in essence. When oil is denominated in
dollars through US state action and the dollar is a fiat currency, the US
essentially owns the world's oil for free. And the more the US prints
greenbacks, the higher the price of US assets will rise. Thus a strong-dollar
policy gives the US a double win.
Historically, the processes of globalization has always been the result of
state action, as opposed to the mere surrender of state sovereignty to market
forces. Currency monopoly of course is the most fundamental trade restraint
by one single government. Adam Smith published Wealth of Nations in
1776, the year of US independence. By the time the constitution was framed 11
years later, the US founding fathers were deeply influenced by Smith's ideas,
which constituted a reasoned abhorrence of trade monopoly and government
policy in restricting trade. What Smith abhorred most was a policy known as
mercantilism, which was practiced by all the major powers of the time. It is
necessary to bear in mind that Smith's notion of the limitation of government
action was exclusively related to mercantilist issues of trade restraint.
Smith never advocated government tolerance of trade restraint, whether by big
business monopolies or by other governments.
A central aim of mercantilism was to ensure that a nation's exports
remained higher in value than its imports, the surplus in that era being paid
only in specie money (gold-backed as opposed to fiat money). This trade
surplus in gold permitted the surplus country, such as England, to invest in
more factories to manufacture more for export, thus bringing home more gold.
The importing regions, such as the American colonies, not only found the gold
reserves backing their currency depleted, causing free-fall devaluation (not
unlike that faced today by many emerging-economy currencies), but also
wanting in surplus capital for building factories to produce for export. So
despite plentiful iron ore in America, only pig iron was exported to England
in return for English finished iron goods.
In 1795, when the Americans began finally to wake up to their
disadvantaged trade relationship and began to raise European (mostly French
and Dutch) capital to start a manufacturing industry, England decreed the
Iron Act, forbidding the manufacture of iron goods in America, which caused
great dissatisfaction among the prospering colonials. Smith favored an
opposite government policy toward promoting domestic economic production and
free foreign trade, a policy that came to be known as "laissez faire"
(because the English, having nothing to do with such heretical ideas, refuse
to give it an English name). Laissez faire, notwithstanding its literal
meaning of "leave alone", meant nothing of the sort. It meant an activist
government policy to counteract mercantilism. Neo-liberal free-market
economists are just bad historians, among their other defective
characteristics, when they propagandize "laissez faire" as no government
interference in trade affairs.
A strong-dollar policy is in the US national interest because it keeps US
inflation low through low-cost imports and it makes US assets expensive for
foreign investors. This arrangement, which Federal Reserve Board chairman
Alan Greenspan proudly calls US financial hegemony in congressional
testimony, has kept the US economy booming in the face of recurrent financial
crises in the rest of the world. It has distorted globalization into a "race
to the bottom" process of exploiting the lowest labor costs and the highest
environmental abuse worldwide to produce items and produce for export to US
markets in a quest for the almighty dollar, which has not been backed by gold
since 1971, nor by economic fundamentals for more than a decade. The adverse
effect of this type of globalization on the developing economies are obvious.
It robs them of the meager fruits of their exports and keeps their domestic
economies starved for capital, as all surplus dollars must be reinvested in
US treasuries to prevent the collapse of their own domestic currencies.
The adverse effect of this type of globalization on the US economy is also
becoming clear. In order to act as consumer of last resort for the whole
world, the US economy has been pushed into a debt bubble that thrives on
conspicuous consumption and fraudulent accounting. The unsustainable and
irrational rise of US equity prices, unsupported by revenue or profit, had
merely been a devaluation of the dollar. Ironically, the current fall in US
equity prices reflects a trend to an even stronger dollar, as it can buy more
deflated shares.
The world economy, through technological progress and non-regulated
markets, has entered a stage of overcapacity in which the management of
aggregate demand is the obvious solution. Yet we have a situation in which
the people producing the goods cannot afford to buy them and the people
receiving the profit from goods production cannot consume more of these
goods. The size of the US market, large as it is, is insufficient to absorb
the continuous growth of the world's new productive power. For the world
economy to grow, the whole population of the world needs to be allowed to
participate with its fair share of consumption. Yet economic and monetary
policy makers continue to view full employment and rising fair wages as the
direct cause of inflation, which is deemed a threat to sound money.
The Keynesian starting point is that full employment is the basis of good
economics. It is through full employment at fair wages that all other
economic inefficiencies can best be handled, through an accommodating
monetary policy. Say's Law (supply creates its own demand) turns this
principle upside down with its bias toward supply/production. Monetarists in
support of Say's Law thus develop a phobia against inflation, claiming
unemployment to be a necessary tool for fighting inflation and that in the
long run, sound money produces the highest possible employment level. They
call that level a "natural" rate of unemployment, the technical term being
NAIRU (non-accelerating inflation rate of unemployment).
It is hard to see how sound money can ever lead to full employment when
unemployment is necessary to maintain sound money. Within limits and within
reason, unemployment hurts people and inflation hurts money. And if money
exists to serve people, then the choice becomes obvious. Without global full
employment, the theory of comparative advantage in world trade is merely
Say's Law internationalized.
No single economy can profit for long at the expense of the rest of an
interdependent world. There is an urgent need to restructure the global
finance architecture to return to exchange rates based on purchasing-power
parity, and to reorient the world trading system toward true comparative
advantage based on global full employment with rising wages and living
standards. The key starting point is to focus on the hegemony of the
dollar.
To save the world from the path of impending disaster, we must:
#
promote an awareness among policy makers globally that excessive dependence
on exports merely to service dollar debt is self-destructive to any economy;
# promote a new global finance architecture away from a dollar hegemony
that forces the world to export not only goods but also dollar earnings from
trade to the US;
# promote the application of the State Theory of Money (which asserts that
the value of money is ultimately backed by a government's authority to levy
taxes) to provide needed domestic credit for sound economic development and
to free developing economies from the tyranny of dependence on foreign
capital;
# restructure international economic relations toward aggregate demand
management away from the current overemphasis on predatory supply expansion
through redundant competition; and restructure world trade toward true
comparative advantage in the context of global full employment and global
wage and environmental standards.
This is easier done than imagained. The starting point is for the major
exporting nations each to unilaterally require that all its exports be
payable only in its currency, so that the global finance architecture will
turn into a multi-currency regime overnight. There would be no need for
reserve currencies and exchange rates would reflect market fundamentals of
world trade.
As for aggregate demand management, Asia leads the world in both
overcapacity and underconsumption. It is high time for Asia to realize the
potential of its market power. If the people of Asia are to be compensated
fairly for their labor, the global economy will see its fastest growth
ever.
The USA elite might now want abandoning of GATT and even WTO as it does not like the results. That single fraud on the west has
had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought
outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics.
Notable quotes:
"... The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever. Here's the most current data while this chart shows importation history since 1980. ..."
"... the only time a biological or economic entity can become energy independent is upon its death when it no longer requires energy for its existence. ..."
"... A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also they could see US consumption growing far larger than US production. ..."
"... The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive maneuverings around China investments in key EV sectors. ..."
"... In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly. ..."
"... I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good. ..."
"... That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics. ..."
"... Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets. ..."
The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever.
Here's the most current data
while this chart shows importation
history since 1980.
As I've said before, the only time a biological or economic entity can become energy independent is upon its death when
it no longer requires energy for its existence.
What I am looking at are strategic reserves, not how much oil is currently produced. With shale it now has those reserves and
shale oil I think is now at the point where production could quickly ramp up to full self sufficiency if required. Even if the
US were producing as much oil as they consumed, they would still be importing crude and exporting refined products.
A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also
they could see US consumption growing far larger than US production.
@Peter AU 1 #28 Thank you for that stimulating post. I just have to respond. And thanks to b and all the commenters here, it is
my daily goto post.
The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends
to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology
dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive
maneuverings around China investments in key EV sectors.
In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers
are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly.
I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement
on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific
achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good.
That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all
because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific
and manufacturing politics.
By gross ignorance and foolish under-investment, the USA of WAR and its coterie of killers have eaten their future at their
people's expense.
Light sweet vs heavy sour. Light means it contains a lot of diesel/petrol. Sweet means low sulphur. Many oils are heavy sour.
Canada sand. the stuff they get from that is thick bitumen with high sulpher. The sulpher needs to be removed and the bitumen
broken down into light fuels like diesel and petrol.
Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the
US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets.
The great game for the US now is control or denial. Access to oil as a strategically critical resource is no longer a factor
for the US.
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality – judiciously, as
you will – we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're
history's actors . . . and you, all of you, will be left to just study what we do." Karl Rove.
The squealing and consternation coming from the UK indicates that the empire has changed course and the UK is left sitting
on its own shit pile.
Fun to look at this analysis, and plug in a one million shortage from North America.
Obviously, there would not be a one million drop in Iran, as it would be sold somewhere.
We might be seeing similar articles about gas over the next couple of years. Driving a bit
less is maybe a good thing, pensioners and children freezing to death and industry shut down
with rolling blackouts is maybe less negotiable.
Suppose there is too little oil and the price doesn't change. Producing countries will be
sure their own countries have a sufficient amount so regardless of price, that oil isn't
leaving the country. It stays right there for consumption. External price is meaningless to
that country, as it should be.
There are countries that produce about what they consume. Mexico is one. Argentina. Their
oil isn't going anywhere. A higher price elsewhere tries to get it exported? Clearly the govt
will stop anything like that. Just as the US did with its export ban in the 70s. Price
doesn't matter if bans are in place.
Oh, and another annoying thing in that article. Something like . . . if supply shrinks,
only "demand destruction" can avoid some sort of catastrophe. This is absurd. Demand is not
destroyed. The desire for oil will grow with population. The population demands oil. It is
consumption that is destroyed by lack of supply. Can't consume what doesn't exist.
Besides which, if some level of "grim" is approached, then some decision is going to be
made to liberate that Orinoco heavy from the horrible popularly elected government that
controls it. As I noted before, there is a large ethnic Russian population in Venezuela. The
1917 revolution sent many people there, fleeing confiscation. Liberation may not go
smoothly.
Mexico doesn't use what it produces, it doesn't have the refining capacity – it exports
crude and imports products.
Invading Venezuela wouldn't necessarily stop the decline in production – their
equipment and wells are falling apart, to get back to where they were a couple of years ago
would require a five year occupation, probably with forced labour (or really high wages), and
the investment money all coming from the invading country, with no net returns for longer
than that.
Demand is usually defined with some relation to price, not assuming a commodity is free.
"... tier plays that have been a bust. With the seismic and visualisation technology improvements the E&Ps should know better where and where not to drill. They seem to be more selective with falling wildcat numbers (and that is not much of a function of price that I can see as it has been happening since 2010) and yet the commercial discovery rates are staying fairly low. I can only interpret that as indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates in mature fields, and rising, and few new prospects how can there not be a peak? ..."
"... Saudi ministers spout out any thing that comes to mind to support flip-flop policies and their feud with Iran seems to be bubbling in the background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and target for higher production, which is 100% guaranteed not to be met even remotely. ..."
I think if the world economy starts to drop, which is overdue and looking increasingly likely
every time Trump opens his mouth, and keeps the oil price down then it's likely we'll be in a
slow but accelerating decline. That might be a good thing – the further the peak is
pushed out the steeper the decline when it comes.
What has surprised my most recently has been the fall in discoveries for oil and, maybe
more so, gas, and with that the number of new fron tier plays that have been a bust. With
the seismic and visualisation technology improvements the E&Ps should know better where
and where not to drill. They seem to be more selective with falling wildcat numbers (and that
is not much of a function of price that I can see as it has been happening since 2010) and
yet the commercial discovery rates are staying fairly low. I can only interpret that as
indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates
in mature fields, and rising, and few new prospects how can there not be a peak?
The oil drop might have been more expected than the gas, and was predicted by some when
peak oil was first mentioned, I think gas less so, but perhaps the price has had a bigger
effect there. Whatever the cause many countries have been banking on ever rising supplies,
either by pipeline or LNG, that might not be forthcoming.
Having said that simple economic arguments rarely seem to work as predicted, oil supplies
would have peaked well before now without, mostly non-proftable, LTO; Venezuela production
should be rising not a basket case; Saudi ministers spout out any thing that comes to
mind to support flip-flop policies and their feud with Iran seems to be bubbling in the
background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and
target for higher production, which is 100% guaranteed not to be met even remotely.
At the moment the traders don't seem certain which way to turn – falling/rising
supplies, short/long term demand rise/fall – you can see why they tend to fixate on US
crude stocks, everything else is too complicated. The next few Wednesday/Thursday trading
patterns will be interesting.
(ps if anything highlights the state of the oil industry at the moment it's that Fram, a
two well, eight year life-cycle, gas condensate tie-back with about 10 mmboe reserves, has
been the main headline news on at least four of the trade magazines this week.)
A little short by over 2 million a day. Perry has to know the Permian is on a hiatus for
at least a year. That's probably over a million. Iran push is for another million. Yeah,
that's a little short. Idiocy reigns. Russia just called for tariffs against the US. Any
assistance from Russia ain't gonna happen.
The slow motion train wreck in progress. No one knows why the driver of the Lower for
Longer Train has picked up speed down the curving stretch .
Ok, I'll forgo the train wreck series. Yeah, it's serious. So was the ridiculous pricing
we've had for the past four years, and no one but the people who relied on oil income
complained. There was not enough for capex to get new oil. The trainweck happened already.
U.S. oil production is booming at record levels, and U.S. oil exports have also reached
new highs -- 3 million barrels a day in the last week, according to government data.
Those exports are more than most OPEC countries can produce each day and only lag two OPEC
countries, Saudi Arabia and Iraq, in terms of exports.
And if you read far enough down in that article they do mention imports, as if they hardly
matter.
As U.S. production has grown, U.S. imports have decreased. The U.S. imported a
relatively high 8.4 million barrels per day last week.
Okay, the US exported 3 million barrels per day and imported 8.4 million barrels per day.
Yet the headline says the US exported more oil than most OPEC countries. Is this Orwellian
Newspeak?
We all agree that 2+ 2 = 5, but what we don't know is which one belongs to the thought
police. I agree the Permian will produce 1.3 million this year, just take the rat cage off my
head.
"the US exported 3 million barrels per day and imported 8.4 million barrels per day. Yet the
headline says the US exported more oil than most OPEC countries. Is this Orwellian Newspeak?"
At the just concluded OPEC meeting, Iran, Iraq and Venezuela were against any increase in
extraction, while the Saudis wanted an increase. What resulted is
detailed in this article . Moneygraph:
"... OPEC does not need to change its output deal since the group had already cut supply
by much more than it had agreed. What Zanganeh offered was for OPEC and Russia to pump back
up to decrease the current cuts to the initial 1.176 million barrels per day (bpd).
"Output in May 2018 was actually down by 1.9 million, somehow 62 percent or 724,000 bpd
more than what was agreed upon in 2016."
The upshot is an increase will occur but no increase will occur--understand? The
extraction amount agreed to in 2016 remains the amount OPEC will extract. There will be
no increase in that amount this year.
There sure seems to be a lot of factors pointing to a rather hard landing for this long
business cycle (10 years is a really long boom period). The central banks have a tendency to
print money when things go wrong; or use the low interest weapon if they have it. Where all
this will end up is difficult to predict just because of how complex it is.
To be more precise, after some reflection, what I fear is more stagflation. A rare historic
incidence which combines inflation with negative economic growth. That is what happens when
pouring money into an economy with scarce resources where oil is one of them. What is coming
is typically not like 2008-09 just because black swans are everywhere, and higher inflation
is the surprise coming forward in my opinion. Prices for fossil fuels will stay pretty high
in such a scenario, e.g. with the decline rates for oil overall rising steadily. Which I
think is a good thing due to the energy transition that has to happen. I think it is
realistic that we can come up with a halfway of a solution for our energy problems and that
it is good enough to secure a decent standard of living (or maybe halfway decent or okish
;-)) long into the future. But not an affluent one and it will be highly country specific.
Unless some kind of technology breakthrough is coming, but that is certainly a long time
project.
There is a narrative that oil demand will soon begin dropping due to widespread use of EV.
1 million EV just replaces 14,000 BOPD of demand. Conservatively assuming those one
million EV require $40K per unit of CAPEX, just to replace 14,000 BOPD of demand took $40
billion of CAPEX.
Likewise, to replace 1.4 million BOPD of demand via EV would take $4 trillion of
CAPEX.
Worldwide demand has been growing somewhere between 1.2-2.0 million BOPD annually,
depending on who one believes.
See where I am going with this? How do the EV disruption proponents explain away the
massive CAPEX required just to cause oil demand to flatten, let alone render it near
obsolete?
The average US car gets 25 mpg and travels 12,500 miles per year for 500 gallons of gasoline
per year.
Refineries in the US produce 20 gallons of gasoline per barrel of oil.
That gives 69,000 BOPD per day reduction per million EV cars in the US and 110,000 BOPD oil
equivalent energy due to the multiple energies put into gasoline and distillate
production.
At current rates of EV sales growth the US will reach 50 million EV cars by 2031. That should
put he US to being mostly independent of external oil for gasoline by mid 2030's and
It's tough to predict a complete transition in the US since cars as a service could greatly
reduce the numbers of cars needed, especially in dense population areas. That would mean a
much earlier transition.
If US ICE cars trend upward in mpg during that time, the demand for oil could be quite low
by the early 2030's.
All depends on continuation of trends, for which the auto manufacturers seem to be on board.
Just have to get the public charging infrastructure out ahead of the trend.
Here is an interesting article, from a couple of years ago, showing the trend and sales at
that time.
Cars get replaced all the time and the cost of new EVs will fall over time to the same
price as ICEV, so it's simply a matter of replacing the ICEV currently sold with EVs over
time, in addition cars can get better gas mileage (50 MPG in a Prius vs 35 MPG in a Toyota
Corolla or 25 MPG in a Camry.) There's also plug in hybrids like the Honda Clarity (47 miles
batttery range) or Prius Prime(25 mile range on battery) these have an ICE for when the
battery is used up.
If oil prices rise in the short term to over $100/b (probably around 2022 to 2030), there
will be demand for other types of transport besides a pure ICEV.
EVs and plugin hybrids will become cheaper as manufacturing is scaled up due to economies
of scale.
Surprising stuff. Huge oil consumption growth rates in Eastern Europe. 8+% growth %s in
Poland, Czech Republic and Slovakia. Something weird going on because Romania and Slovenia
didn't show the same thing.
Western Africa grew consumption of oil 13% last year. I'll add a !!!!. East Africa about 6%.
Both are over 600K bpd, so that growth rate is not on tiny burn.
Poland's official oil consumption growth is caused by better fighting with illegal, and
unregistered fuel imports since mid 2016. When taxes are 50% of fuel price, there is big
incentive for illegal activities. Real oil consumption probably didn't increase much.
Poland, Czech and Slovakia are going through a huge economic boom now (I live in Slovakia and
party in Czech Republic). It's visible everywhere, there wasn't this much spending and
employment ever in the last 28 years
Oil demand is mostly determined by GDP growth, oil price has a minor influence on short term
demand. World GDP grew by about 5% from 2016 to 2017 according to the IMF, so oil demand
increased by 1.8% possibly less than one would expect. Real GDP (at market exchange rates)
grew by about 3% in 2017.
The idea behind peak demand is simply that oil supply may at some point become relatively
abundant relative to demand in the future (date unknown). When and if that occurs, OPEC may
become worried that their oil resources will never be used and will begin to fight for market
share by increasing production and driving down the price of oil to try to spur demand. That
is the theory, I think we are probably 20 to 40 years from reaching that point for
conventional oil.
Oil still contributes quite a bit to carbon emissions and while I agree coal use needs to
be reduced (as carbon emissions per unit of exergy is higher for coal than oil), I would
think it may be possible to work on reducing both coal and oil use at the same time. Using
electric rail combined with electric trucks, cars and busses could reduce quite a bit of
carbon emissions from land transport, ships and air transport may be more difficult.
It's better to sell half of your ressources for 90$ / barrel than all at 30$ / barrel.
The gulf states will always have cheap production costs at their side, they will earn more
at each price of oil. Why not make big money, especially when at lower production speed the
production costs are much lower (less expensive infrastructure).
And in the first case you can sell chemical feedstock for a few 100 years ongoing for a
good coin. Theocracies and Kingdoms plan sometimes for a long time. When you bail out
everything at sale prices, you end with nothing ( and even no profit).
You assume half the resource can be sold at $90/b, at some point in the future oil supply
may be greater than demand at a price of $90/b, so at $90/b no oil is sold and revenue is
zero.
In a situation of over supply there will be competition for customers and the supply will
fall to the point where supply and demand are matched. Under those conditions OPEC may decide
to drive higher cost producers out of business and take market share, oil price will fall to
the cost of the most expensive (marginal) barrel that satisfies World demand.
I don't think we are close to reaching this point, but perhaps by 2035 or 2040 alternative
transport may have ramped to the point where World demand for oil falls below World Supply of
oil at $90/b and the oil price will gradually drop to a level where supply and demand
match.
Older wells are declining at about 8% per year. A 25 BOPD well with a 10 BOPD economic limit
should have 70,000 barrels of oil left to produce in about 12 years.
Is it safe to assume that newer wells will behave the same as older wells?
Some petroleum engineers that have commented at shaleprofile.com (Enno Peters wonderful
resource) that the high level of extraction from newer wells will likely lead to a thinner
tail.
illustrates this, notice how the 2014 and 2015 wells fall below the 2010 well profile
after 24 months, the same is likely to occur for 2016 and later wells. Also note that the
2010 well profile is representative (close to the mean) for 2009 to 2012 average well
profiles.
Dennis, i would say the decline rate (8%) is very safe to use for all LTO wells, i would
definitely apply it after the 6th year of well life, because by then what counts is rock
quality and fluid type. This is only good for a bulk projection.
By the way I tweaked my price model when I was preparing my CO2 pathway. I took into
account the Venezuela crash, the difficulties the Canadians have moving their crude, etc. The
price projection is $88 per barrel Brent for evaluating projects which start spending in
2019. I also prepared a different look for very long term projects which start spending in
2023: $110 per barrel.
Don't forget these aren't prices predicted for those particular years. They are prices one
can use to evaluate long term projects such as exploring in the Kara Sea, offshore West
Africa deep water, the African rifts, Venezuela heavy oil developments, etc. These prices are
plugged in and escalated with inflation for the 20-30 year project period. Real prices should
oscillate back and forth around these values.
Norwegian crude oil & condensate production (without NGLs) at 1,321
kb/day in May, down -223 m/m, down -297 from 2017 average or -18%. The main reasons that
production in May was below forecast is maintenance work and technical problems on some
fields. http://www.npd.no/en/news/Production-figures/2018/May-2018/ Almost down to the Sept 2012 low at 1,310 kb/day
This is what happens when there are no sizeable new fields coming online for 1/2 year and as
G.Kaplan has mentioned not enough allocation for supply disruptions are included in the
forecast.
A brutal decline, even if this month is an anomaly as NPD say.
Looking at the field numbers (only through April) it looks like Troll Oil is in decline a bit
earlier and a bit steeper than expected. It's the biggest oil producer still bu has dropped
fairly consistently and slightly accelerating from 161 kbpd in October to 121 in April. It's
all horizontal wells and requires continuous drilling to maintain production, it's close to
exhaustion with only 10% remaining at the end of 2017 (about R/P of 3 years) and had been
holding a good plateau around 150 for a few years. The gas is due to be developed starting in
2021 so the oil rim would need to be depleted by then, but maybe dropping a bit sooner than
expected – is a reservoir not behaving as modelled a "technical problem"?
I don't know about the price as it depends on the demand side and the global economy looks to
me increasingly rocky, but the supply side analysis looks pretty good, except as you say a
bit conservative. One thing missing was consideration of increasing decline rates on mature
fields, especially offshore, partly a result of accelerating production in the high price
years and partly because of an increasing ratio for deep and ultra deep water. Additionally I
think the lack of increase in non-US drilling rigs as the price has risen is relevant and
partly represents a shortage of in-fill prospects and short cycle appraisals.
If they are relying on GoM to add the 300 kbpb (or more into 2020) that EIA are predicting
then I think they are going to be short by 400 to 500 kbpd for a 2020 exit rate.
(I don't follow the chart showing new OPEC developments, the numbers can't be number of
projects, probably kbpd added, or maybe mmbbls reserves, and I'm betting they've mixed in gas
with the oil.)
As in all these investment type analyses they don't look too far ahead and there's a kind
of tacit assumption that everything will be sorted out with more investment later on, but
five years of low discoveries and accelerated development of the good ones means there's
actually not that much new to invest in, and if there is then ExxonMobil will be looking to
buy it.
Yeah, demand is always a big question. Hard to measure, even in the rear view mirror.
However, their constant increase of 1.2 million barrels in the US over a three year period,
should offset any question of demand. While 1.2 in 2020 is something I can't predict, 1.2
million for 2018 and 2019 is impossible without increased pipelines long before the second
half of 2019. So, I think it is way conservative.
They say "We believe we are 6-9 months ahead of consensus with our oil forecast. Why is no
one else seeing what we see?." Obviously they haven't been reading POB for the last two
years.
POB made it possible to piece together in my own way, otherwise I would be like most. Staying
confused with constant conflicting info. Predicting price is virtually impossible, as is
demand to a large extent. But, when supply is ready to fall off a cliff, then being exact is
not required.
A simple way to think about C+C demand is to assume over the long run that supply and
demand will be roughly equal (though of course there will be short term imbalances which
changes in the oil price over the short term will try to correct). From 1982 to 2017 C+C
output grew at an average annual rate of about 800 kb/d. It is probably safe to assume that
oil demand will continue to grow at roughly that pace in the absence of a severe global
recession and those are pretty rare. I define a "severe global recession" as one where real
World GDP (constant prices) based on market exchange rates decreases over an annual cycle for
one or more years. Since 1900 there have been two cases where this occurred, the Great
Depression and the Global Financial Crisis (GFC) in 2008/2009. These have been on roughly a
60 to 70 year cycle (a previous crisis occurred in 1870, but this might have only been a US
crisis and possibly not a global one.)
In any case, my guess is that a Global economic crisis may result a the World tries to
adjust to declining (or stagnant) World Oil output after 2025, probably hitting around 2030
to 2035. If economists re-read Keynes General Theory and respond to the crisis with
appropriate policy recommendations, the economic crisis may be short lived. On the other hand
a World response similar to the European response to the GFC, where fiscal austerity is
considered the appropriate response to a lack of aggregate demand (this was also Herbert
Hoover's response to the 1929 Stock Crash), then a prolonged deep depression will be the
result.
The somewhat vast majority of countries say their reserves are flat in 2017 vs 2016. They
pumped billions of barrels, but no change to reserves for . . . lemme count . . . 36
countries (of which the US was one).
World as a whole reserves total declined 0.03%.
BP's flow report is "all liquids". Dunno if that is consumption, too. And if reserves . .
. reserves are in a footnote. Crude, Condensate AND NGLs. Probably excludes algae.
What? Me worry? Rystadt says US has 79 more years of oil still available. Of course, that
is the imaginary oil. They admit that commercially recoverable oil in the world only has 13
years left. Where did we pick up another 50 billion of imaginary oil in the US this year?
India's oil consumption growth was only 2.9%. Derives from their monetary debacle early in
the year. We should see signs of whether or not that corrects back to their much higher norm
before next year.
China consumption growth 4%. Higher than India. Clearly an aberration.
KSA consumption actually declined fractionally, which allows Japan to still be ahead of them
in consumption.
US consumption growth 1%. So much for EV silliness.
Oil production seems to have left its bumpy 6 year long (2010-2015) plateau of 8.4 mb/d and
is now back to 2004 levels of 7.9 mb/d, a decline of 6% over 2 years.
Base production is the sum of the minimum production levels in each country during the
period under consideration. Incremental production is the production above that base
production. In this way we clearly see that the peak was shaped by China, sitting on a
declining wedge of all other Asian countries together. Note that growing production in Thailand
and India could not stop that decline. Now let's look at the other side of the coin,
consumption:
There has been a relentless increase in consumption since the mid 80s. The growth rate after
the financial crisis in 2008 was an average of 3% pa.
Chinese annual oil consumption growth
rates have been quite variable between 2% and a whopping 16% in 2004 which contributed to high
oil prices. Fig 4 also shows there is little correlation between GDP growth and oil consumption
growth (statistical problems?). There is nothing in this graph that could tell us that the
Chinese economy has a consistent trend to become less dependent on oil. In the years since
2011, oil consumption growth was around 60% of GDP growth.
Let's compare China with the US. China's oil consumption is catching up fast with US
consumption.
On current trends, China's oil consumption would reach US consumption levels of 20 mb/d in
just 14 years.
Contrary to misinformation by the media, the US is still a net importer of oil. Even blind
Freddy can see that there will be intense competition for oil on global markets.
All governments who plan for perpetual growth in Asia (new freeways, road tunnels, airports
etc) should fill in the above graph. Hint: We can see that Asia has diversified its sources of
oil imports but is still utterly dependent on Middle East oil
"Other Middle East" is Iran
and Oman (as Syria and Yemen no longer export oil)
China is preparing for the future by building bases to secure oil supply routes:
Proven reserves have not changed much in the last years meaning that P2 and P3 reserves have
been proved up commensurate with production. The reserve to production ratio is 16.7 years
equivalent to an annual depletion rate of 6%, a little bit higher than a reasonable rate of 5%
(R/P of 20 years).
The depletion rates vary considerably and may only be approximate as oil
reserves will have been estimated by using differing methodology and accuracy. Indonesia's
depletion rate is very high. Not shown in Fig 14 is Thailand where the depletion rate is off
the charts (almost 50%) suggesting reserves are too low.
There are some rumors that KSA has increased exports starting in May (about 0.5 m b/d more
than prior months) by drawing even more from storage. If we are to believe OPEC production
numbers from May which are steady, that must be the case. OPEC has essentially flooded the
market with exports before the meeting on Friday. The nearest month Brent future changed to
contango compared to closest month some weeks ago, but it has now all changed again to
backwardation. Point being, it seems the physical market is getting tighter again and that
the export flood may have something to do with the meeting. Or it could be that reduced
exports from Iran, Venezuela and Libya are starting to impact the market.
If the market balance overall is to change from a a deficit to near balanced, production
within OPEC has to be increased with almost maximum of whatever spare capacity available in
my opinion. The assumption is that spare capacity in reality is smaller than stated by the
agencies.
Decimation of anti-war forces and flourishing of Russophobia are two immanent features of the US neoliberalism. As long as
the maintinace fo the US global neoliberal empire depends of weakening and, possibly, dismembering Russia it is naive to expect any
change. Russian version of soft "national neoliberalism" is not that different, in principle form Trump version of hard
"netional neoliberalism" so those leaders might have something to talk about. In other words as soon as the USA denounce
neoliberal globalization that might be some openings.
Ten ways the new US-Russian Cold War is increasingly becoming more dangerous than the one we survived.
The political epicenter of the new Cold War is not in far-away Berlin, as it was from the late 1940s on, but directly on
Russia's borders, from the Baltic states and Ukraine to the former Soviet republic of Georgia. Each of these new Cold War fronts
is, or has recently been, fraught with the possibly of hot war. US-Russian military relations are especially tense today in the Baltic
region, where a large-scale NATO buildup is under way, and in Ukraine, where a US-Russian proxy war is intensifying. The "Soviet
Bloc" that once served as a buffer between NATO and Russia no longer exists. And many imaginable incidents on the West's new Eastern
Front, intentional or unintentional, could easily trigger actual war between the United States and Russia. What brought about this
unprecedented situation on Russia's borders -- at least since the Nazi German invasion in 1941 -- was, of course, the exceedingly
unwise decision, in the late 1990s, to expand NATO eastward. Done in the name of "security," it has made all the states involved
only more insecure.
Proxy wars were a feature of the old Cold War, but usually small ones in what was called the "Third World" -- in Africa,
for example -- and they rarely involved many, if any, Soviet or American personnel, mostly only money and weapons. Today's US-Russian
proxy wars are different, located in the center of geopolitics and accompanied by too many American and Russian trainers, minders,
and possibly fighters. Two have already erupted: in Georgia in 2008, where Russian forces fought a Georgian army financed, trained,
and minded by American funds and personnel; and in Syria, where in February
scores
of Russians were killed by US-backed anti-Assad forces . Moscow did not retaliate, but it has pledged to do so if there is "a
next time," as there very well may be. If so, this would in effect be war directly between Russia and America. Meanwhile, the risk
of such a direct conflict continues to grow in Ukraine, where the country's US-backed but politically failing President Petro Poroshenko
seems increasingly tempted to launch another all-out military assault on rebel-controlled Donbass, backed by Moscow. If he does so,
and the assault does not quickly fail as previous ones have, Russia will certainly intervene in eastern Ukraine with a truly tangible
"invasion." Washington will then have to make a fateful war-or-peace decision. Having already reneged on its commitments to the Minsk
Accords, which are the best hope for ending the four-year Ukrainian crisis peacefully, Kiev seems to have an unrelenting impulse
to be a tail wagging the dog of war. Certainly, its capacity for provocations and disinformation are second to none, as evidenced
again last week by the faked "assassination and resurrection" of the journalist Arkady Babchenko.
The Western, but especially American, years-long demonization of the Kremlin leader, Putin, is also unprecedented. Too
obvious to reiterate here, no Soviet leader, at least since Stalin, was ever subjected to such prolonged, baseless, crudely derogatory
personal vilification. Whereas Soviet leaders were generally regarded as acceptable negotiating partners for American presidents,
including at major summits, Putin has been made to seem to be an illegitimate national leader -- at best "a KGB thug," at worst a
murderous "mafia boss."
Still more, demonizing Putin has generated a
widespread Russophobic vilification
of Russia itself , or what The New York Times and other mainstream-media outlets have taken to calling "
Vladimir Putin's Russia ." Yesterday's enemy was Soviet Communism. Today it is increasingly Russia, thereby also delegitimizing
Russia as a great power with legitimate national interests. "The Parity Principle," as Cohen termed it during the preceding Cold
War -- the principle that both sides had legitimate interests at home and abroad, which was the basis for diplomacy and negotiations,
and symbolized by leadership summits -- no longer exists, at least on the American side. Nor does the acknowledgment that both sides
were to blame, at least to some extent, for that Cold War. Among influential American observers
who at least
recognize the reality of the new Cold War , "Putin's Russia" alone is to blame. When there is no recognized parity and shared
responsibility, there is little space for diplomacy -- only for increasingly militarized relations, as we are witnessing today.
Meanwhile, most of the Cold War safeguards -- cooperative mechanisms and mutually observed rules of conduct that evolved
over decades in order to prevent superpower hot war -- have been vaporized or badly frayed since the Ukrainian crisis in 2014,
as the
UN General Secretary António Guterres, almost alone, has recognized : "The Cold War is back -- with a vengeance but with a difference.
The mechanisms and the safeguards to manage the risks of escalation that existed in the past no longer seem to be present." Trump's
recent missile strike on Syria carefully avoided killing any Russians there, but here too Moscow has vowed to retaliate against US
launchers or other forces involved if there is a "next time," as, again, there may be. Even the decades-long process of arms control
may, we are told by an
expert , be coming to an "end." If so, it will mean an unfettered new nuclear-arms race but also the termination of an ongoing
diplomatic process that buffered US-Soviet relations during very bad political times. In short, if there are any new Cold War rules
of conduct, they are yet to be formulated and mutually accepted. Nor does this semi-anarchy take into account the new warfare technology
of cyber-attacks. What are its implications for the secure functioning of existential Russian and American nuclear command-and-control
and early-warning systems that guard against an accidental launching of missiles still on high alert?
Russiagate allegations that the American president has been compromised by -- or is even an agent of -- the Kremlin are
also without precedent. These allegations have had profoundly dangerous consequences, among them the nonsensical but mantra-like
warfare declaration that "Russia attacked America" during the 2016 presidential election; crippling assaults on President Trump every
time he speaks with Putin in person or by phone; and making both Trump and Putin so toxic that even most politicians, journalists,
and professors who understand the present-day dangers are reluctant to speak out against US contributions to the new Cold War.
Mainstream-media outlets have, of course, played a woeful role in all of this. Unlike in the past, when pro-détente
advocates had roughly equal access to mainstream media, today's new Cold War media enforce their orthodox narrative that Russia is
solely to blame. They practice not diversity of opinion and reporting but "confirmation bias." Alternative voices (with, yes, alternative
or opposing facts) rarely appear any longer in the most influential mainstream newspapers or on television or radio broadcasts. One
alarming result is that "disinformation" generated by or pleasing to Washington and its allies has consequences before it can be
corrected. The fake Babchenko assassination (allegedly ordered by Putin, of course) was quickly exposed, but not the alleged Skripal
assassination attempt in the UK, which led to the largest US expulsion of Russian diplomats in history before London's official version
of the story began to fall apart. This too is unprecedented: Cold War without debate, which in turn precludes the frequent rethinking
and revising of US policy that characterized the preceding 40-year Cold War -- in effect, an enforced dogmatization of US policy
that is both exceedingly dangerous and undemocratic.
Equally unsurprising, and also very much unlike during the 40-year Cold War, there is virtually no significant opposition
in the American mainstream to the US role in the new Cold War -- not in the media, not in Congress, not in the two major political
parties, not in the universities, not at grassroots levels. This too is unprecedented, dangerous, and contrary to real democracy.
Consider only the thunderous silence of scores of large US corporations that have been doing profitable business in post-Soviet Russia
for years, from fast-food chains and automobile manufacturers to pharmaceutical and energy giants. And contrast their behavior to
that of CEOs of PepsiCo, Control Data, IBM, and other major American corporations seeking entry to the Soviet market in the 1970s
and 1980s, when they publicly supported and even funded pro-détente organizations and politicians. How to explain the silence of
their counterparts today, who are usually so profit-motivated? Are they too fearful of being labeled "pro-Putin" or possibly "pro-Trump"?
If so, will this Cold War continue to unfold with only very rare profiles of courage in any high places? 9. And then there is the
widespread escalatory myth that today's Russia, unlike the Soviet Union, is too weak -- its economy too small and fragile, its leader
too "isolated in international affairs" -- to wage a sustained Cold War, and that eventually Putin, who is "punching above his weight,"
as the cliché has it, will capitulate. This too is a dangerous delusion.
As Cohen has shown previously ,
"Putin's Russia" is hardly isolated in world affairs, and is becoming even less so, even in Europe, where at least five governments
are tilting away from Washington and Brussels and perhaps from their economic sanctions on Russia. Indeed, despite the sanctions,
Russia's energy industry and agricultural exports are flourishing. Geopolitically, Moscow has many military and related advantages
in regions where the new Cold War has unfolded. And no state with Russia's modern nuclear and other weapons is "punching above its
weight." Above all, the great majority of Russian people have rallied behind Putin because t
hey believe
their country is under attack by the US-led West . Anyone with a rudimentary knowledge of Russia's history understands it is
highly unlikely to capitulate under any circumstances.
Finally (at least as of now), there is the growing war-like "hysteria" often commented on in both Washington and Moscow. It
is driven by various factors, but television talk/"news" broadcasts, which are as common in Russia as in the United States, play
a major role. Perhaps only an extensive quantitative study could discern which plays a more lamentable role in promoting this frenzy
-- MSNBC and CNN or their Russian counterparts. For Cohen, the Russian dark witticism seems apt: "Both are worst" ( Oba khuzhe
). Again, some of this American broadcast extremism existed during the preceding Cold War, but almost always balanced, even
offset, by truly informed, wiser opinions, which are now largely excluded.
Is this analysis of the dangers inherent in the new Cold War itself extremist or alarmist? Even SOME usually reticent specialists
would seem to agree with Cohen's general assessment. Experts gathered by a centrist Washington think tank
thought that on a scale of 1 to 10,
there is a 5 to 7 chance of actual war with Russia. A former head of British M16 is
reported as saying
that "for the first time in living memory, there's a realistic chance of a superpower conflict." And a respected retired Russian
general tells
the same think tank that any military confrontation "will end up with the use of nuclear weapons between the United States and
Russia."
In today's dire circumstances, one Trump-Putin summit cannot eliminate the new Cold War dangers. But US-Soviet summits traditionally
served three corollary purposes. They created a kind of security partnership -- not a conspiracy -- that involved each leader's limited
political capital at home, which the other should recognize and not heedlessly jeopardize. They sent a clear message to the two leaders'
respective national-security bureaucracies, which often did not favor détente-like cooperation, that the "boss" was determined and
that they must end their foot-dragging, even sabotage. And summits, with their exalted rituals and intense coverage, usually improved
the media-political environment needed to enhance cooperation amid Cold War conflicts. If a Trump-Putin summit achieves even some
of those purposes, it might result in a turning away from the precipice that now looms
"... If Money=Debt, the battle over money can only be won by individuals wisely choosing whom they become indebted too. As the wise Michael Hudson points out, "Debts that can't be paid, won't be paid." ..."
"... Money is the creation of the elite to control the rest of the masses. It screws the rest of the masses by constraining what they can get their hands on while the elite can get their hands on anything they want. ..."
"... IMO the point of the article was to hint that objections (or refusal to engage with) MMT is largely political in nature. ..."
"... Skippy said it above: these are likely bad faith actors who disguise their classism and political desires with talk of "positive money" and the like. Debate clubs won't win this one. ..."
"... As I understand it, MMT is simply a more honest way of explaining the current reality, the problem being that the 1% would like to keep that a secret so that money is only created for the things that they can profit from, like war. ..."
"... MMT necessarily requires the exorbitant privilege of having the US dollar accounting for 60% of world trade & financial transactions with the US economy representing only 20% of world GDP. ..."
"... The Entrepreneurial State ..."
"... money and credit are used almost entirely for speculation, usury, and rent extraction ..."
"... In a normal economy, government spending is financed by taxes and borrowing, meaning that no new spending power has been created, as IS the case with new bank loans. ..."
"... You can fool part of the people all of the time, and all of the people part of the time. ..."
"... handing all credit creation to the central banks is not only technically impossible in a modern economy, it's a dangerous folly ..."
"... Wealth, Virtual Wealth and Debt, 2nd edition. ..."
"... The Order of Time ..."
"... "The debts are owed to government banks. A government can do what the U.S. can't do. The government can forgive debts, at least those that are owed to itself, without creating a political backlash. If a viable corporation has run up too much debt, the government can forgive it. This is better than letting the debt close down a factory or force it be sold to a predatory asset management firm as occurs in the United States. That is the advantage of having public credit and why credit should be public. That's how it was in Babylonia. Rulers were able to cancel debts all the time in the 3rd millennium and 2nd millennium BC, because most debts were owed to the palace or the temples. Rulers were cancelling debts owed to themselves. ..."
"... China can cancel business debt owed to itself. It can proclaim a clean slate. It can minimize debt service to whatever it chooses. But imagine if Chase Manhattan and Goldman Sachs are let in. It would be much harder for the government to raise real estate taxes leading to defaults on the banks. It could save the occupants by making new loans to those who default – based on lower land prices. ..."
"... Well, you can imagine the international furor that would erupt. Trump would threaten to atom bomb Peking and Shanghai to save his constituency. His constituency and that of the Democrats are the same: Wall Street and the One Percent. So China may lose its ability to write down debts if it lets in foreign banks." ..."
"... that this is a Chicago School / Friedmanesque monetary policy is made clear by Positive Money ..."
"... It seems there are greater similarities between China and the US than may be visible at first glance. China builds real estate for a shrinking population, invests for an over-indebted client (the US, which even insists on a drastic reduction of the bilateral trade deficit) and finances all this with money it does not have ..."
The same money that went into TARP would have bought a whole lot of nonperforming
mortgages. You wouldn't have needed a large bailout if the money actually made it's way to
main street.
Slightly off-topic, but if its true that this is a right wing proposal using naïve
left/Green supporters to give a progressive fig leaf, it wouldn't be the first time this has
happened. You can see the same phenomenon with Brexit, where many supposed left wingers have
often bought unthinkingly into many right/libertarian memes about 'freedom' from the EU. The
core reason they could do this is the effective abandonment by the left of arguments about
money and capital to the conservative and libertarian right from the 1980's onward.
One of the many reasons I love NC so much is that it has tried to fill the gap left by so
much of the mainstream left and much of the Greens in analysing economics issues in forensic
technical detail. Articles like this are absolutely invaluable in building up a proper
intellectual program in understanding the central importance of macroeconomics in building a
fairer society.
God, country, apple pie, balanced budget, freedom, democracy, pay-as-you-go, ingredients
in the hash of right/libertarian memes, all supposedly 'common sense' but actually
nonsense, spread thick, intended to distract us while our ruling class steals everything not
tied down.
I think the left saw its audience washed away by a tidal wave of this clever, well-funded
nonsense, so they stopped arguing about money and capital because they found it embarrassing
to be caught talking to themselves.
Of course back in the 1970s, much of the working-class had was doing well enough that they
thought the argument about money had been settled, and in their favor. Little did they know
that their 'betters' were planning on clawing-back every penny of wealth that they'd managed
to accumulate in the post-war years.
So here we are, the working class that was formerly convinced that anyone could live well
if they just worked hard, are finding that you can tug on your boot-straps with all your
might, and get no where.
I think you're right in that the wrong narrative is now dominant.
I don't think this was done intentionally – I think the people pulling the strings
don't know for sure what will happen, either.
The 'common sense' you mention is the best explanation most people have available. They
look at macroeconomics through the lens of their own household budget. Of course a balanced
budget responsible application of money makes sense Most people don't have a money printer in
their basement.
The battle is for the soul of humanity. A leadership that is working toward reducing
inequality and injustice in the world will adopt policies reflecting a more positive outlook
on the human condition. Those implementing austerity revile the masses of humanity, wether
stated or not. The masses are to be controlled, not enlightened or cared for.
The West has gained supremacy in the world by using the strategy of Divide and Conquer.
This thought process is so engrained in the psyche, that it heavily influences every form of
problem solving by using outright war and financial oppression as primary tools to achieve
these ends.
There would need to be a fundamental shift in thinking from Western leadership in order to
bring about a change that would focus on wellbeing over profit, which does not seem
forthcoming.
If Money=Debt, the battle over money can only be won by individuals wisely choosing
whom they become indebted too. As the wise Michael Hudson points out, "Debts that can't be
paid, won't be paid."
The main problem I see is the definition of what "Winning" would be. The definition
determines the policy.
"There would need to be a fundamental shift in thinking from Western leadership in order
to bring about a change that would focus on wellbeing over profit, which does not seem
forthcoming."
Money is the creation of the elite to control the rest of the masses. It screws the
rest of the masses by constraining what they can get their hands on while the elite can get
their hands on anything they want. The tipping point will be when there are sufficient
numbers who understand money isnt necessary to live and have nice things, it actually exists
to deprive them of such.
We've been fighting this same 'war' for a very long time.
Everybody now just has to make up their mind. Is money money or isn't money money.
Everybody who earns it and spends it every day in order to live knows that money is money,
anybody who votes it to be gathered in as taxes knows money is not money. That is what
makes everybody go crazy. -Gertrude Stein – All About Money
As far as I can tell, about 1% of us believe that money is not money, and the rest of us
believe that money is money.
Most of us believe that money is money because as Gertrude Stein said: Everybody who earns
it and spends it every day in order to live knows that money is money
So here's the problem: the 1% of the people, the ones who believe that money is not money,
are in charge of everything.
It's not natural that so few people should be in charge of so much, and that they should
be in charge of 'everything' is truly crazy. (Please excuse the slight digression)
The people who are in charge of everything believe that it's right, proper, indeed
'natural' that they be in charge of everything because they believe that no one could do as
good a job of being in charge of everything because they think they are smarter than
everybody else.
The reason that the 1% of people believe they are smarter than everybody else is rooted
largely in what they believe is their self-evident, superior understanding of money; that is
to say, the understanding that money is not money.
The trouble is, the difference between the 1%'s understanding of money, and the common
man's understanding of money is not evidence of the 1%'s superior intellect, so much as of
their lack of a moral compass and their ability to rationalize the depraved indifference they
show to their fellow man.
Maybe this thought is callous, but perhaps it would be useful to have a real-world
demonstration that this is a bad idea. How systemically important is the Swiss economy? US
abandoned its monetarist "quantity of reserves" experiment after a relatively short time.
Again, it sounds callous, but perhaps a year or two of distress in a small test
environment
(that is starting from a pretty good place and has a good social safety net
would be helpful to the world at large in terms of deprecating a bad idea. Perhaps MMT
will be the last approach standing?
Could it be that Wolf's "we need experiments" rhetoric is actually opposed to "positive
money", but he recognizes that the idea won't go away until it is badly spanked? Even if not,
maybe there is something to the idea that experimentation could be used to distinguish bad
ideas from less bad (the good ideas won't be tested, I reckon, until all the various flavors
of "bad" have been tried and rejected).
IMO the point of the article was to hint that objections (or refusal to engage with)
MMT is largely political in nature. See Marriner Eccles and his observation regarding
the political enemies of full employment.
Skippy said it above: these are likely bad faith actors who disguise their classism
and political desires with talk of "positive money" and the like. Debate clubs won't win this
one.
If the Swiss go through with it and it inevitably fails there will always be an excuse.
They didn't do positive money "hard enough" or whatever.
What I'd like to know is if the Swiss go through with it and it fails, is there anything
other than central bank independence that needs to be changed? Fundamentally it's still fiat,
operating within a democracy. Does it not come down to who decides how much and for what
purpose?
Maybe I'm missing something, but it strikes me as the elites getting their revenge in
first. There go my people and all that. Maybe I am missing it.
the good ideas won't be tested, I reckon, until all the various flavors of "bad" have
been tried and rejected.
So, you don't think current conditions are convincing enough?
As for me, I'm more than convinced, that left to themselves, our elites have an endless
bag of bad ideas, and every one of them results in their further enrichment at our
expense.
I'm convinced; have been persuaded that MMT is the right way to think about "money" since
shortly after I encountered it almost a decade ago.
As I understand it, this is a referendum. If the people don't like the outcome, they
presumably would have power to reverse it. Throw the bastards out and replace with new
bastards who will try something different.
As I understand it, MMT is simply a more honest way of explaining the current reality,
the problem being that the 1% would like to keep that a secret so that money is only created
for the things that they can profit from, like war.
So the issue is that since enough money can be created for the needs of the rest of us,
why is that not happening?
It would appear to me that almost any efforts by the 1% to create a 'new' plan is in
reality, an effort to make sure that the 99% never reap any advantage even if we were to
unanimously come to understand the MMT is really the most realistic perspective.
It's almost as if the 1% has decided to change the rules because the rest of us are
starting to understand that there is no technical reason we can't finance a more equitable
economy.
It's good to explain the current reality more honestly.
Even more honestly would be to explain that reality, which is a man-made system, doesn't
have to be that way, unlike scientific explanations, for example, one for how gravity works.
That particular physics explanation comes with the understanding that we can't change how
gravity works.
The word 'theory' in the sense most people with more than 10 years of education associate
with it is that
1. You will fail to advance to the next grade, or the next class if you don't understand
it.
2. If you don't understand it, you are under pressure to show you agree with the theory, lest
you fail the exam.
3. The reality described by the theory is unalterable, which is often the case with natural
science theories, but not really the case with social/economic/political theories, unless
they deal with human nature, which is hard to change.
If I say there is a theory to explain that on Mars, you drive on the right side of the
road on odd-numbered days, and on the left side on even-numbered days, you would say, I
appreciate the clear explanation of your wonderful theory, but I don't like it, I don't like
how that system is designed. And I want to change it!!!!!!!!!!!!
Yesterday, I watched one of many Mark Blyth videos on YouTube where he was talking about
why people hold on to stupid economic ideas. He offered a variety of interesting hypotheses,
most of which were not necessarily mutually exclusive.
Even a theory that fails basic tests of correspondence with reality -- neoclassical
economics being the prime example -- may prove to be a reliable means of coordinating
behavior on a huge scale. That we indoctrinate people in colleges and business schools in
neoclassical economics has been the foundation for neoliberal politics; even if the theory is
largely rubbish by any scientific standard, the rhetorical engine is easy to operate once you
have a few basic concepts down. And, immunity to evidence or critical reason may actually be
politically advantageous.
Econ 101 is taught as a dogma. The student is under pressure to learn the answers for the
exam, as you say. All the rhetorical tropes -- not just deficit hysteria, but regulatory
burdens, tax incentives, "free markets" (you see many actual markets? no, I didn't think so)
and on and on -- are as easy to recite mindlessly as it is to ride a bicycle.
We have an ideology that prevents thinking or even seeing, collectively.
Well, your wish has been answered – about 160 years ago. Lincoln's issuance of
Greenback's allowed the Union Army to exist. No borrowing, no MMT debt incurred.
MMT experts point out regularly that the Federal government spends out of nothing. Issuing
bonds is a political holdover from the Gold Standard era, but separately, those bonds do have
some use because a lot of investors like holding a risk free asset.
The government spends by the Fed debiting the Treasury's account. That's it.
We don't go around worrying about issuing bonds to pay for the next bombing run in the
Middle East. The US has all sort of official off budget activity as well as unofficial (why
do you think the DoD is not able to account for $21 trillion of spending over time? No one
points out this $21 trillion mystery is proof the USG actually runs on MMT principles).
MMT necessarily requires the exorbitant privilege of having the US dollar accounting for
60% of world trade & financial transactions with the US economy representing only 20% of
world GDP.
Such impunity is changing as we speak so for that reason only (there are others) MMT
should soon find itself non-viable.
That is not correct. Any government that issues its own currency is a sovereign currency
issuer and operates on MMT principles. Canada, Japan, England, Australia, New Zealand .the
constraint on their ability to run deficits is inflation. They will never go bankrupt in
their own currencies. They can create too much inflation.
I have the same reaction to Positive Money ideas as I do to someone who talks about
"parallel currencies". They don't understand money, banking and central banking.
While I agree whole heartedly with Clive that establishing the mini-bot currency is
subject to the law of un-intended consequences and would no doubtedly have a bumpy start and
might not even survive; but it's just another currency. Yes it would likely be subject to a
discount versus the Euro, but so what. From a banking perspective there is nothing magical
about state money or central bank money. These are the dominate means of clearing and
settling payments today, but that's because it's currently cheaper, easier and less risky.
But banking predates central banks by at least one or two hundred years (if not more).
Thinking that if you put an iron fist on the usage of state/central bank money is going to
stop banking only shows you don't understand banking. Most economies already have dual
currencies – state money and bank money – but nobody thinks of them that way
because they trade one for one. But locking the banking system out of using state money to
clear and settle payments created by lending only forces the banking system to find a new
means of acquiring liabilities (I'd suspect they get called something other than "deposits"
of course) and clearing and settling payments. It wouldn't happen overnight but it most
certainly would happen – there's too much "money" to be made.
"Most economies already have dual currencies – state money and bank money" Give me
the ratio please. Other than feeding the parking meter or doing your laundry what else do you
use state money for?
It's not exactly the gold standard, but it would have the same impact, I think. You have
to give them credit, though – they keep finding new ways to dress up this very old
idea.
Hard to get to a new answer if you don't even start with the right question.
Wolf asserts his obvious and unquestionable truth: "Money is debt".
Really?
J. P. Morgan didn't think so. When he was asked:
"But the basis of banking is credit, is it not?" , Morgan replied: "Not always. That is an evidence of banking, but it is not the money itself. Money is
gold, and nothing else" .
Ah yes, the shiny rare metal that served mankind as money for millennia.
I have a gold coin in my hand. I can exchange it for goods and services. But I can't for the
life of me figure out whose debt it is.
And no less than The Maestro (Alan Greenspan) opined the following last month:
"The gold standard was operating at its peak in the late 19th and early 20th centuries,
a period of extraordinary global prosperity, characterised by firming productivity growth and
very little inflation.
But today, there is a widespread view that the 19th century gold standard didn't work.
I think that's like wearing the wrong size shoes and saying the shoes are uncomfortable! It
wasn't the gold standard that failed; it was politics. World War I disabled the fixed
exchange rate parities and no country wanted to be exposed to the humiliation of having a
lesser exchange rate against the US dollar than it enjoyed in 1913.
Britain, for example, chose to return to the gold standard in 1925 at the same exchange
rate it had in 1913 relative to the US dollar (US$4.86 per pound sterling). That was a
monumental error by Winston Churchill, then Chancellor of the Exchequer. It induced a severe
deflation for Britain in the late 1920s, and the Bank of England had to default in 1931. It
wasn't the gold standard that wasn't functioning; it was these pre-war parities that didn't
work.
Today, going back on to the gold standard would be perceived as an act of desperation.
But if the gold standard were in place today we would not have reached the situation in which
we now find ourselves. We would never have reached this position of extreme indebtedness were
we on the gold standard, because the gold standard is a way of ensuring that fiscal policy
never gets out of line."
So let's start with a simpler definition of money: "Money stores labor so it can be
transported across space and time" .
I grew some wheat, and want to store my wheat-labor so I can use it later, or spend it
somewhere that is nowhere near my wheat pile.
But this points out why money that took no labor to produce cannot reliably store labor.
Our system materializes money from thin air. Which is precisely the point of gold: it takes
alot of labor to produce, so it has reliably stored labor for centuries. In A.D. 250 if I
wanted a good-quality men's costume (toga, sash, sandals) the cost was one ounce of gold.
Today one ounce of gold is +/-$1300, probably enough for a pretty good suit and pair of
shoes. That fact is incredible: every other currency, money, government, and country have
come and gone in the interim but gold reliably stored labor across the ages.
Cue the haters: "But gold money allows deadly deflation!!!". Yes, that scourge, when
people benefit from rising productivity (lower costs of goods and services) in what used to
be termed "Progress". Instead we're supposed to love being on a debt treadmill where
everything costs more every year, on purpose .
Just to be clear, I'm not arguing that credit should somehow be abolished. Credit is
critical, and hence so is banking. But separating money and credit would mean that every
banking crisis (extending too much credit) is not automatically also a monetary crisis,
affecting everyone, including people who had nothing to do with extending or accepting too
much debt.
Yes, you are correct. No one in the monetary reform movement wants to abolish credit
– an agreement between two entities – but to have that "credit" backed by the US
government as real money – what a racket!
Of course it should be noted that if you dig up a gold coin from two thousand years ago or
even older, it still has value just for its metal content alone. It still holds value. This
is never true of fiat currencies. In fact, it had never occurred to me before, but when you
think about it – the history of money over the past century has been to get actual
gold, gold coins, gold certificates, silver coins, etc. out of the hands of the average
people and to give them pieces of paper and now plastic as substitutes. Even the coins in
circulation today are only cheap remnants of coins of earlier eras that held value in itself.
I would call that a remarkable achievement.
I think you should avail yourself wrt the history of gold and how humans viewed it over
time, then again you could look at say South America from an anthro observation and the
social changes that occurred between Jade and Gold eras.
As far as value goes that is determined at the moment of price taking which can get blurry
over time and space.
Gold was used as religious iconography for a reason imo.
Just from the stand point that gold was in one anthropological observation – a flec
of gold to equal weight of wheat means the gold got its "value" from the wheat and had
nothing to do with some concept of gold having intrinsic value.
Not particularly in love with gold nor am I a gold bug. My own particular prejudice is
that any money system needs an anchor that will set some sort of boundaries to its growth.
Something that will not blow through the physical laws of natural growth and will acknowledge
that resources can and will be exhausted by limitless credit and growth. Personally I don't
care if it is gold or Electrum or Latinum or even Tribbles so long as it is something.
Yet MMT clearly states that growth is restricted to resources full stop. So I don't
understand your issues with anchor points, its right there in black and white.
Look I think there is a huge difference between informal credit [Greaber] and formal
credit [institutional] and the risk factors that they present. This is also complicated by
not all economies are the same e.g. steady state. In facilitating up lift [social cohesion
with benefits of currant knowlage] vs putting some arbitrary limit on credit because it suits
the perspective of those already with claims on wealth.
In addition I would proffer that MMT is not supply side dependent, just the opposite.
Economics would be much more regional in reference to resources and how that relates to its
populations needs, especially considering the democratic governance of those finite resources
without making money the linchpin to how distribution is afforded.
OpenThePodBayDoorsHAL
How dare you submit such irreverent goldbuggery ?
Your line of thought is not politically correct Sir.
Something for nothing is easier to sell and to live by, don´t you know ? as long as it
lasts.
Problem is ( as HAL would say ? ) the 50 years are almost through, so it just can´t
last much longer no matter how much we pussyfoot around reality.
It has nothing to do with being 'politically incorrect'. It has to do with goldbuggery
being completely ignorant of actual history and facts. It ascribes to gold attributes which
it never truly had even in the West, much less globally.
Some examples from objective reality:
When the Conquistadors arrived in the 'New World', they discovered an entire continent
filled with easily accessible gold and silver, and yet neither was treated by the natives as
money. They were shiny trinkets. Money was cocoa beans and pieces of linen.
When the Vikings reached the Eastern Mediterranean, the Byzantines had a hard time getting
them to accept gold as payment. Before that, the only 'precious' metal they had any interest
in was silver.
Going eastward, in feudal Japan currency was based on rice, not precious metals. Gold and
silver were used as representative tokens of large values of rice. The source of value wasn't
felt to be the metal, it was what the metal represented.
If civilization were to end today, the most well off survivors aren't going to be the ones
who stockpiled gold. It's going to be the ones who stockpiled food and water (and/or the
weapons to protect/seize such stockpiles). Gold has exactly zero inherent value. It's a
luxury item at best, in the same way fine art is. No one in the post-apocalyptic wasteland is
going to be impressed by your lumps of heavy, soft metal.
There's plenty of information available from historians, archaeologists, and
anthropologists (but emphatically not from mainstream economists) on the history of money. If
you want to 'free your mind', you'd best start with one of these fields. Not some libertarian
cesspit, where the 'intellectuals' are even more delusional than mainstream
neoclassicals.
I'll probably get slammed here for this but to tell you the truth, I see no justification
for the shape and character of the present money system in use around the world. In fact, I
absolutely refuse to believe that There Is No Alternative. The present system is one that has
evolved over the centuries and for the greater part was designed by those with wealth to
either solidify or expand their wealth.
Yesterday, in a comment, I made the point that for an economic and financial system to work
it has to be sustainable. Call that General Order Number One. But a survey of the present
system shows a system that by its very nature is seeking to transfer the bulk majority of
wealth to about 1% of the population while pushing about 90% of the population into a
neo-feudal poverty. This is nothing short of self-destructive and is certainly not
sustainable.
We tend to think of money as something permanent but the different currencies in existence
today make up only a fraction of the currencies that have ever existed. All the rest have
gone extinct. I am given to understand that when the US Federal Reserve meets, it is in a
room whose walls are adorned with examples of these extinct currencies. In fact, I even own a
few German Reichsmarks from the hyperinflation era of the early 1920s for an occaisional bit
of perspective.
OK, maybe the Swiss referendum is being used, misused and abused but it is a sign of an
arising discontent. It certainly surprises me that it was the Swiss as when I visited that
country, they were the most conservative people that I have ever met as far as money was
concerned. In any case, perhaps it is time that we all sat down and designed a money system
from the ground up. Throw away the rule book and just take a pragmatic approach. Forget
theories and justifications, just look for stuff that works.
There is no need to "experiment" with other systems of money use: we just need to regulate
the system we have but, unfortunately at present, we are in the midst of de-regulating
everything–finance, environmental protections, healthcare, education, etc., and getting
rid of other groups such as unions. The undermining of many (public) institutions is well on
its way and I do not see it ending well. I think the rich have won this round just as they
planned in the 1970's.
I imagine you would want to start from value (a mental state of persons) and labor, things
persons do to achieve stuff which they value. It would be convenient to have tokens which
represented social agreement about value, valued stuff, and labor. The social agreement could
be brought about by cooperative voluntary institutions ('credit unions') which would oversee
and guarantee the issuance of tokens (debts) by members (persons). We already do this on a
modest scale by writing checks, so it's not unheard-of.
If you want a system which doesn't just feed the elites, you have to create one which
doesn't rely on institutions dominated by or entirely controlled by the elites, such as the
government, the major corporations, large banks, and so on. You want something egalitarian,
democratic, and cooperative. It's not impossible.
Indeed it is possible and has been done in the recent past.
A key insight behind credit unions, mutual insurance and savings and loans back in the day
was that these institutions were loaning people their own money savings and should be run
without assigning hotshot managers the dubious incentive of a profit-motive or talking up
"innovation".
One of the things I object to in Richard Murphy's rhetoric and that of more careless
MMT'ers is that they implicitly concede the premise that Money is usefully thought of as a
quantitative thing, a pile of tokena circulating at some velocity. Financial intermediaries
(and yes, Richard, they are intermediaries) do create "money" in the form of credit by
matching ledger entries. For a savings and loan, which gives a mortgage to a depositor or
just a checking account to a saver, this can be a key idea supporting mutual assistance in
cooperative finance.
But, if you insist that the bank is "creating" a quantity of money that is then set loose
to drive up house prices or some similar narrative scenario, I do not see that your
storytelling is doing anyone any good.
Credit from institutions of cooperative finance -- shorn as they must be of the incentive
toward usury and rent extraction -- is actually a very useful application of money, enabling
people to take reasonable risks over their lifetimes. For example, to enable a young couple
to form a household and buy a house and gradually build up equity in home ownership against
later days. This is sensible and prosaic, a standard use of money to insure by letting a bank
or similar institution help individuals or small businesses to transform the maturities of
their assets and prospects, while certifying their credit. If your understanding of money
does not encompass such prosaic ideas as leverage and portfolios or their application to
improving the general welfare, then the "left" is up a creek without a paddle.
"Financial intermediaries (and yes, Richard, they are intermediaries) do create "money" in
the form of credit by matching ledger entries. "
That is NOT what is meant by the term,"intermediaries" here. The common belief is that banks
merely take in a depositor's money and, as an intermediary, lend that money out. An
intermediary, by definition, does not create anything. That is the accepted meaning of the
term when discussing banking. You are free to use your own definition but it will lead to
confusion.
You are incorrect as to how banking works, and you have also jalbroken moderation, which
is grounds for banning, as is clearly stated in our Site Policies, which you did not bother
to read.
Per your comments on banking, you are also engaging in agnotology, another violation of
site Policies.
Banks do not intermediate. They do not lend out of existing savings. Their loans create
new deposits. Not only has MMT demonstrated, and this has been confirmed empirically, but the
Bank of England has endorsed this explanation as correct.
You are presenting the loanable funds fallacy, a pet idea of monetarists. It was first
debunked by Keynes and later by Kaldor.
Your idea of "accepted meaning" is further confirmation you are way out of your depth here
and are a textbook case of Dunning Kruger syndrome.
The matter of who or what controls money is actually secondary to the matter of what money
is used for. Positive Money correctly identifies the fact that under our present arrangements
in the USA, UK, and most of the West, money and credit are used almost entirely for
speculation, usury, and rent extraction (though they do not, so far as I know, use the
terms). If "the people" somehow were able to gain control of money and credit, and money and
credit continued to be used almost entirely for speculation, usury, and rent extraction,
society and the people would see no net advance economically.
That's the simple overview. Allow me to lay out a couple scenarios to show why just
solving the problem of who controls money and credit does not really address our most urgent
problems.
For the first scenario, assume that it is right wing populists who have triumphed in the
fight to seize control of money and credit. Recall that in the first and second iterations of
the bank bailout proposals in USA, Congress was deluged by overwhelming public opposition to
the bailout. But in the second iteration, the Democrats mostly folded, while on the
Republican side, the closer you got to the Tea Party extreme, the stauncher the opposition to
the bailout you found. So, under right-wing populist control, we would probably see
prosecutions and imprisonment of banksters, which would likely have the intended effect of
lessening rent extraction. But we would probably also see that right-wing populists are not
much concerned about speculation and usury, so those would continue relatively unscathed.
More importantly, we could expect right-wing populist control to result in severe cutbacks
to both government and private funding of scientific research, most especially on climate
change. We would be hurried forward on our course toward climate disaster, not turned away
from it.
For the second scenario, let us assume it is a left-wing populist surge that achieves
control over money and credit. In this scenario, speculation and usury would be suppressed as
well as rent extraction. On science, there would no doubt be a surge in funding for climate
research. But I would greatly fear what left-wing populists might do to funding of space
exploration and hard sciences such as the large Hadron collider at CERN. And what would
happen to funding for military research programs like DARPA?
Can you imagine the implications of cutting those kinds of science programs? Try to think
of doing without all the spinoffs from the NASA Apollo moon landing program and the original
ARPAnet, which includes much of the capability of the miniaturized electronics in the
computer, servers, modems, and routers you are now using.
The point is, that without restoring an understanding of republican (NOT capital R
"R"epublican Party) statecraft, its focus on promoting the general welfare, and the
understanding that promoting the general welfare ALWAYS involves identifying and promoting
the leading edges of science and technology, any success in seizing control of money and
credit away from bankers (whether private or central) does not necessarily result in victory.
For an extended discussion of science and republicanism, see my The
Higgs boson and the purpose of a republic .
There will always be right-wingers, left-wingers, progressives, imperialists, etc.
One or more of them will seize control.
It would seem, then, the first thing to do, is to work on human nature, and not
discovering new devices for them (or us, ourselves), because we can not guarantee no harm to
Nature will come from colliding high energy particles.
I don't really see the left as being anti-science, it seems to me that it's the right that
wants to deny scientific findings such as climate change, etc. There are exceptions of
course, such as new-age/anti-vaxers, chem-trail theorists, etc but they are a small minority,
and I find it hard to envision a scenario where a leftist government would cut science
funding. As it is now, many if not most scientific and technical advances have originated
from what was originally military funding, including the internet we are using at this
moment.
This is a model that needs to change IMHO, there is no reason that cutting-edge science
has to be tied to the military, science could just as easily be funded for its own sake,
without the pentagon getting the money first and then having the tech trickle down to the
rest of us.
I am trying to come up with some examples where technological advances were not induced or
misused by warriors and/or libido, from the dawn of humanity till now.
Stone tools – misused for war.
Bronze/iron tools – the same.
The wheel – war chariots.
Writing – to lord over the illiterate
The steam engine – how the west was won with buffaloes going extinct.
Gun powder – war, and above.
The internet – surveillance and libido.
The smart phone – above.
Aspirin – that's all good .maybe the example I am looking for except I'm allergic to
it.
money and credit are used almost entirely for speculation, usury, and rent
extraction
Certainly on the leading edge, that is what money and credit are used for, but
"entirely"??? In the main, money remains the great lever of coordination in an economy of
vastly distributed decision-making.
The forces of predation and fraud are seriously out-of-control and they use money for
anti-social ends, protected by neoliberal ideology and the cluelessness of what passes for
the political left. Like any normal bank robber, the banksters want the system of money to
continue to work and it does continue to work, in the main, even as they play Jenga with the
towering structures of finance.
Well, I did qualify it with "almost" : ). Still, in the late 1990s I found that there was
around $60 (sixty dollars) of trading in financial markets (including futures and forex) for
every one dollar of GDP. That compares to 1.5 to 1 in 1960. The ratio probably dropped in the
aftermath of the 2007-2008 crashes, but I's be surprised if it has not surpassed 60 to 1 by
now. Have mercy on me: I haven't looked at a BIS report for a few years now.
So your solution is to keep it in the hands of the elite?! Please note that the "central
bank" under the Vollgeld initiative is completely redefined, not a central bank at all but a
government institution controlled by a democratic process.
Many banks around the world started out as state-owned and have been privatised.
I admit it is simplistic, but having a state-run not-for-profit bank being this "government
institution controlled by a democratic process" has a lot of merit to me.
It would have lending guidelines to aid investment in productive endeavours, limit the risk,
and have no part in the insane fringe financial transactions that brought about the GFC, and
who know how many other things that have gone under the radar.
This brings all currency creation into a single place, so it needs transparency and a
(proper) democratic governance.
There would probably be fewer jobs I admit, but many of these would be the top levels
enjoying fat bonuses based on winning zero-sum games.
And as a final comment – should GDP include the transactions within the financial
sector at all? Given the zEro-sum games involved, and the creation of losers as part of that,
does it actually "produce" anything at aLL?
I hate to be a nay-sayer, but the reason there were once many state banks in the US and
there is now only one is that they became cesspools of corruption. And having arm-wrestled
with CalPERS for over four years, which is more transparent than a lot of places, good luck
with getting transparency and good governance.
Mind you, that does not mean they might not be worth trying, but the assumption that they
can just be set up and will work just fine "because democracy" needs to be taken with a
fistful of salt. There needs to be a ton of careful thought re governance and lots of checks
(an inspector general with teeth at a minimum, we can see from CalPERS that boards are very
easily captured).
Bank of North
Dakota has a fascinating history, being founded during the Progressive Era, when ND had a
governor who was a member of the Nonpartisan League, a populist political party, and intended
to save North Dakota's farmers and laborers from the predations of the big banks in
Minneapolis and Chicago.
It remains the only state-owned bank in the country.
The populist
Nonpartisan League remains the most successful third party in history, and had remarkable
impact on politics in North Dakota and Minnesota. It merged with the Democratic Party in the
50s.
Ahem, I acknowledged that. What you miss is that pretty much every other state had a state
bank and they were shuttered because they became embarrassingly corrupt. The fact that past
"state bank" experiments almost universally failed makes me leery of the naive view that
they'll be hunky dory. They could be but the sort of cavalier attitude that they'll be
inherently virtuous is the road to abuse and misconduct.
" Money is debt. It is only created by government spending and bank lending. " --
Richard Murphy
We've jumped through the looking glass. The former money, gold, is NOT debt. Debt-based
money is ersatz, a ghastly fraud on humanity.
In a normal economy, government spending is financed by taxes and borrowing, meaning that
no new spending power has been created, as IS the case with new bank loans.
Daniel Nevins' book Economics for Independent Thinkers discusses how modern
economists got misled into believing the money supply governs everything, whereas earlier
19th century economists understood that bank lending is what drives expansions.
Poor Murphy, starting out with a wonky premise, only succeeds in careering into a briar
patch and wrecking his bike. He should post his pratfall on YouTube.
Fiat money can also be created without debt. That's the whole point of MMT, but it makes
Haygood's head explode so he never acknowledges it (without muttering about hyperinflation,
which never actually happens outside of disasters on the scale of a major war).
When the federal government spends money into existence -- which can be on the basis of a
democratic agenda, in countries that have actual democracies -- there's no need for a
corresponding issuance of government debt. Hence, spending power is indeed created. If the
government does create debt, the bond is an asset on the ledger of whoever buys it, and the
government spends the interest into existence. Which creates additional spending power for
the private sector. The government can choose to, or not, collect a portion of this as taxes,
which extinguishes the money. If the government collected as taxes everything it ever spent
there would be no money in circulation.
> In a normal economy, government spending is financed by taxes and borrowing,
meaning that no new spending power has been created, as IS the case with new bank
loans.
Er, new bank loans also represent borrowing that has to be paid back. The spending power
that gets created is extinguished by paying back the bank loan.
the federal government spends money into existence
a
That's a choice made by the designers of the current system.
But not the only choice.
The people, for example, can be empowered (or perhaps inherit that power, on the basis of
the Constitution amendment clause* that any power not given explicitly to the federal
government is reserved for the people), to spend money into existence.
*The Tenth Amendment declares, "The powers not delegated to the United States by the
Constitution, nor prohibited by it to the states, are reserved to the states respectively, or
to the people."
So do you gold bugs want to dispense with double entry bookkeeping or keep it and adapt it
to gold (would that entail both counterfeit money and counterfeit debt?) – gold as both
credit and debt, or just what exactly? With the gold side weighing down the ledger it's gonna
get wobbly. Maybe have to start a war to fix it? The fog of positive money. Really, JH,
you've been the best voice against war. How do you reconcile all the social imbalance that
would follow with "positive" money?
Fiat money is war finance, made permanent. Even during the gold standard, governments
would suspend gold convertibility during wars. Lincoln's greenbacks and the UK's suspension
during WW I are noteworthy examples.
So the gold standard won't stop governments declaring national security exceptions --
they've always done so. But permanent war finance is what sustains the value-subtraction US
military empire, a gross social imbalance that already plagues us by starving the US
economy of investment.
Double entry bookkeeping doesn't require that every asset have an offsetting liability. A
balance sheet with no liabilities is all equity on the right-hand side. It's what a bank
would look like if it sold off its loan portfolio and paid off its depositors -- cash on the
left side, equity on the right. If the bank then bought some gold, it would be exchanging one
asset (cash) for another (gold), with no effect on the liability/equity side.
Just look up the mintage figures, here's $20 gold coins that contain just under 1 troy oz
of pure gold in content, from 1861 to 1865. You can follow links to other denominations.
There were over 8 million ounces alone in $20 gold coins struck during the Civil War, by
the Union.
We were never on a pure gold standard, nowhere close actually.
The most common money in the land until the Federal Reserve came along, FRN's not being
backed by gold?
Why, that would've been National Banknotes, which was the currency of the land from 1863
to 1935. There were over 10,000 different banks in the country that all issued their own
currency with the same design, but with different names of banking institutions, etc.
Very hard to argue with you, but I'm tripping over this: "If the bank then bought some
gold, it would be exchanging one asset (cash) for another (gold) with no effect o the
liability equity side." Because in my mind cash isn't an asset – it's just money
– a medium of exchange and a unit of account. Where we get all messed up is when the
unit of account starts to slip (due to mismanagement) and people start to demand that money
become a store of value. When the value is society itself. And blablablah.
Sure, the value is society itself, I agree with this. But OTOH, it is for example much
better to be a woman, black person, fill in the blank, even "working class" person with a lot
of money than not in a sexist, racist, etc society.
I can't necessarily compel the forces of sexism, racism, old farts who don't agree with
me, etc through the "political process," thereby bringing my will to bear on society. But I
can move things with my dollars, This is how money gets its magic power. If people played
nice with each other, we wouldn't need money.
What about paper bugs Susan ?
Has paper buggery helped any ever ?
Why do fiat currencies always self-implode (in average) every 50 years ?
" You can fool part of the people all of the time, and all of the people part of the
time. .."
8 white men control > 50% of the world's wealth. Let's just keep going in that
direction, to where it's down to one white guy, and with debt-based money everyone else owes
him all the "money" in the world. Then we can just strangle him in the bathtub and usher in
an era of peace and prosperity.
Richard Murphy says that " handing all credit creation to the central banks is not
only technically impossible in a modern economy, it's a dangerous folly "
What is QE then, Sir ?
Our "modern" economies don´t have business cycles any more, just distorting credit
cycles.
There are no "markets" as such today, nor prices only interventions.
Even interest rates (the price of supposed "money" remember ?) are not priced by markets any
more .
Help me. Gold is not money. And it does not have and never had immutable value. Even in
the days of the gold standard, countries regularly devalued their currencies in gold terms.
It was the money that was used for commerce, not the gold. When the US government devalued
the $ in gold terms by 5%, bread at the store didn't cost more the next day, which is what
your "gold is money" amounts to. It's not correct and you need to drop it.
"The former money, gold, is NOT debt. Debt-based money is ersatz, a ghastly fraud on
humanity."
You've been on NC for years. You have to know by now that this literally, objectively,
isn't true. It just simply isn't. History and anthropology do not at all support your version
of events. People like Hudson and Graeber have extensively documented where money came from.
Debt and credit came first, then money as a token to measure them. We have warehouses full of
the freaking Sumerian transactions tablets that show it! Money is debt, always has been.
Actually, I say you have to know this by now, but given how conspicuously absent you seem
to be in the comments of Michael Hudson articles about the history of debt hosted here, maybe
you just aren't reading them. Or you are and don't like what they say and how it clashes with
your pre-established worldview, so you just ignore them. Though even if the latter, it's
still telling how you don't even attempt to refute them. Perhaps because you can't.
It's not about money; its about creating and distributing wealth. That a trivial thing
like a double-entry bookkeeping operation should stand in the way of creating the wealth the
world and its people need to survive is, of course, insane. But it is also insane to expect
different results from turning over control of the process of money creation to a wholly
owned subsidiary of governments like those of the United States and Great Britain, bent as
they are on global hegemony ("full spectrum dominance") – at ANY cost.
Whether or not China and other developing nations realize it, genuine wealth creation
– not money as debt creation ('finance capitalism') – is THE source of national
power. It is more than a little amusing to watch the neoconservatives fret about the rise of
China after having joined with their neoliberal brothers in off-shoring US and Western wealth
creation potential (in what they must have thought was an oh so clever attack on Western
living standards by forcing 'their' people to compete with the world's most desperate workers
in a global race to the bottom so their 1% patrons would have an excuse to create more money
as debt).
So long as the West remains focused on 'the price of everything and the value of nothing'
(like the human potential of their own people, for example), the developing world is soon
likely to have a monopoly that will put OPEC and its Middle Eastern dictators to shame. In
summary this is about FAR more than just about how a few 'post-industrial' democracies create
their money. The definitive work on this topic remains Soddy's Wealth, Virtual Wealth and
Debt, 2nd edition.
Just as a few days ago Carlos Rovelli, author of " The Order of Time ", has
useful insights of the political significance of LSD, he has advice for this too in the same
book:
The entire evolution of science would suggest that the best grammar for thinking about
the world is that of change, not of permanence. Not of being, but of becoming.
We can think of the world as made up of things. Of substances. Of entities. Of something
that is. Or we can think of it as made up of events. Of happenings. Of processes. Of
something that occurs. Something that does not last, and that undergoes continual
transformation, that is not permanent in time. The destruction of the notion of time in
fundamental physics is the crumbling of the first of these two perspectives, not of the
second. It is the realization of the ubiquity of impermanence, not of stasis in a
motionless time.
In other (his) words:
"The world is made up of networks of kisses, not of stones."
As long as I am feting physicists, this just came over the transom from Sabine
Hossenfelder of backreaction.blogspot.com fame. She's written a book, " Lost in Math
" and was informed that a video trailer is customary in this situation. As the first comment
there says:
"Hey, that is a GREAT statement! (And it applies to SO MUCH in life, not just
physics!)
We've all been focusing on the demand side of the Fed Reserve's liquidity pump: be it for
sound business needs. Or not (pirates).
But what happens when demand for that pump disappears because everyone is over-extended?
Because this is where Bernanke and Japan and the ECB have done "whatever it takes" to keep
that pump from going in reverse. Because in an empire created on naked shorts (currency
creation today is essentially a naked shorting process), the last thing you want is that pump
to go in reverse. That's not just creative destruction. That's house-on-fire destruction.
So Bernanke et. al. have figured out how to keep that pump from going in reverse. Simply
prop up asset prices, e.g. by reducing the asset float in treasuries, MBSs, etc. And it
worked. Yay! Right? If you're an asset holder, you're aces. If you're not an asset holder,
well you're not doing so well. In particular, if you're in that part of the economy which
depends on the velocity of money. Because velocity is at a stand still. As another blogger I
used to follow would say, price sans volume is not the right price. So from my perspective,
Bernanke (and Japan) had to destroy their economies by replacing them with zombie economies
to rescue certain players. Not just players, but playahs – the pirates that pushed us
to this end-game. So the pirates are rescued. And the average joe inherits the after effects.
But hey, those with 401Ks got rescued too, so it's not all bad. And since the 401Kers are
competitive, they generally found safe harbor in the job market too. Yay for them.
If we were not on a debt-based monetary pump, we would not end up with a zombie economy.
One which the Fed Reserve can't figure out how to solve except for creating even more demand
at the debt pump, even more over extension to mask the issue only to fall back within the
same trap again. From what I can tell, we are truly in a doom loop and at present I don't see
any creativity in getting us out of this doom loop.
So the vollgeld initiative would ostensibly be a way to extricate an economy from that
doom loop. I suspect the Swiss don't really need it as much as other nations. But why get in
the way of that type of creativity?
And I would just add that supplanting the federal reserve note with a Lincoln greenback
type of approach would work just as well. Even better since it gives the monetary powers to
the fiscal side of the Fed Gov.
I posted a version of this last night in the previous thread. But suspect nobody is going
to go to that thread anymore. So apologies for a repeat of sort. Not trying to spam.
The idea of a real estate pumped perpetual notion machine, combined with essentially an
interest free savings plan for the proles, persuaded them to come through and help rise all
boats, and who could have figured on vacation rentals helping out housing bubble deux, the
sequel.
Looking @ the real estate listings here in a vacation rental hotspot is indicative, in
that there are only a few $250k-$300k homes for sale now, whereas there used to be a dozen,
always.
Now, on the other hand, we're swimming in $500k to $1m homes that don't make the rental
cut.
You probably read the Bernank's naive confession yesterday that fiscal stimulus "is going
to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is
going to go off the cliff."
Three hundred shocked staffers in the Eccles Building cocked their heads to the side and
gasped, "He said WHAT?" So I wrote this song Technodammerung for rogue banker
Ben:
He was just a Harvard hand
Workin' the QE he planned to try
The years went by
Every night when the sun goes down
Just another lonely quant in town
And rates out runnin' 'round
It's another tequila sunset
Fed's old scam still looks the same
Another frame
Pardners in chime
proseytizing in real time
Preaching, if you can touch a dime
Why wont paper rhyme
But in their zeal and haste
And self-righteous aversion to waste
Recruit disciples in bling bling
Preaching money is a thing thing
While finger wagging the bloat
Preaching fix the rate, dont let it float
But beyond the noise
Preaching with poise
Its all about them
Their stuff, jewels and gem
Might the actions of a bank be restrained more easily by requiring all payments and stock
issuances to the executives and directors be put directly into escrow accounts to be metered
out in small amounts if the bank stays healthy over time? If the bank suffers major losses,
the escrow accounts would be the first source of funds to make up for them. No Federal
Deposit Insurance or other government payments would be made to the bank until the escrow
accounts have been reduced to zero.
Randall Wray could be made Sec Treasury, Stephanie Melton Fed Chairman and if the
plutocrats still run the rest of the political show that sets priorities, we would still be
screwed. The full employment guaranteed jobs could just as easily be strip mining coal from
national parks and forests as installing a national solar grid. It could be done with forced
low paid labor camps that maximize rent for the plutocrats. MMT seems morally neutral on how
the money is spent. For a good portion of the plutocrats, helping the poor is morally suspect
.if they consider it at all. That is the larger problem than acceptance of MMT.
I didn't see any comment here going in depth with ideas on the binding money creation
decisions with socially useful goals (saving TBTF I dont consider such a goal, except for
emergency purposes), by what type of process and stakeholders – to avoid driving us
toward becoming a 3rd world oligarchy.
The rest is just mechanics – but the most important thing is what is the social
control and social purpose of money creation. I am sure we could do just fine even with the
present system (of course since it is a MMT system), if there were some limits on speculation
with asset prices, less military spending, more democratic control of enterprises, including
banks, severe constraints on the FIRE sector, etc, etc.
In the end the problem of managing money well is a political problem. And not much is
changing there for the better, despite a growing awareness that "we have a problem" as a
society. Where are the politicians that will connect the dots and take on the responsibility
to fix the travesty that we have?
More questions than answers, I know. But what we need a change in politics – then
banking will follow.
This is a common fallacy, that MMT is bad because it isn't about communal barter tokens or
some other thing. MMT exists to empirically describe how money works in the existing economy
today. You can be any sort of ideology and embrace it, anyone can use it, just like anyone
can use science, it's not inherently biased toward any ideology unlike neoclassical economics
and its baked in neoliberalism. That doesn't make it bad, that just shows that it is what it
purports to be, an empirical description of money in our existing economy.
You want a brand new type of currency in a whole new economy, well, start organizing your
revolutionary army, because that's what that will take.
The Battle for Money -- that much, it seems to me, is true. Neoliberalism is going down,
brought down by its own (unfortunate in my view) success and hubris, and one consequence,
on-going, is the urgent political need to re-invent the institutions of money.
The institutional systems of monetary/payment/finance systems are always under a lot of
strategic pressure: they tend to develop and evolve quickly and they do not usually last all
that long -- maybe, the span of three or four human generations -- except in the collective
memory of their artifacts and debris.
There's a natural human wish that it could all be made safely automatic -- taken out of
corruptible hands and fixed with some technical governor. Whether you are a fan of democracy
or loyal to oligarchy really doesn't take anyone very far toward devising or understanding a
workable system of money.
As I said in a comment on the earlier Richard Murphy post, money is a language in which we
write (hopefully) "true" fictions to paper over uncertainty. Much of what passes for a theory
of money is just meta-fiction, akin to literary criticism of a particular genre or era. That
is certainly true of Quantity Theory (1.0 re: gold and 2.0 Friedman). It is true of related
fables, like Krugman's favorite, loanable funds.
When Murphy rejects the quantity theory of money and then turns around and talks about the
need to create "enough" money, I pretty much write him off. When he embraces the Truth of
MMT, I know he is hopeless.
It's been discussed on NC before, but despite all the theories and figures, it's really a
battle of values. I'm not pushing religion, just saying it has all the makings of a holy
war.
(come to think of it, isn't religion a big part of the history of monetary theory?)
China has yet to fall under the thumb of private banks the way the west has. State still
holds the reins of regulation tight and the government bank maintains a robust public sector.
Michael Hudson just came back from China and has this to say:
"The debts are owed to government banks. A government can do what the U.S. can't do.
The government can forgive debts, at least those that are owed to itself, without creating a
political backlash. If a viable corporation has run up too much debt, the government can
forgive it. This is better than letting the debt close down a factory or force it be sold to
a predatory asset management firm as occurs in the United States. That is the advantage of
having public credit and why credit should be public. That's how it was in Babylonia. Rulers
were able to cancel debts all the time in the 3rd millennium and 2nd millennium BC, because
most debts were owed to the palace or the temples. Rulers were cancelling debts owed to
themselves.
China can cancel business debt owed to itself. It can proclaim a clean slate. It can
minimize debt service to whatever it chooses. But imagine if Chase Manhattan and Goldman
Sachs are let in. It would be much harder for the government to raise real estate taxes
leading to defaults on the banks. It could save the occupants by making new loans to those
who default – based on lower land prices.
Well, you can imagine the international furor that would erupt. Trump would threaten
to atom bomb Peking and Shanghai to save his constituency. His constituency and that of the
Democrats are the same: Wall Street and the One Percent. So China may lose its ability to
write down debts if it lets in foreign banks."
There are advantages to restoring financial management to the nation-state, as former
Deputy Secretary of the Treasury Frank Newman has pointed out in books and lectures. The
private banks have exhausted QE to the tune of $30 trillion, none of which was invested in
the industrial economy. Why blame the Swiss for wanting to be like China?
that this is a Chicago School / Friedmanesque monetary policy is made clear by
Positive Money
The Chicago Plan of the 1930s and the unrelated Friedman suggestion of 1948 were both
predicated on the false fractional reserve theory of banking. Given that individual banks
create credit unrestrained by reserves those plans would not have had the desired result.
Positive Money knows this, though they do sometimes carelessly use the term 'fractional
reserve banking'. They think their plan is different and, to the extent that it would
actually prevent banks creating credit, it is.
It is silly to suggest that Positive Money is some Neoliberal front. Neutering the banks
is the last thing Neoliberals want, and when they want something they don't bother with
democratic methods like public pressure groups, they use think-tanks and lobbying.
Murphy's main complaint is about handing the 'quantity' decision to the Bank. I don't
think Positive Money is wedded to that idea, it is just an attempt to defuse the 'profligate
politicians' argument.
Being that NC is the place I discovered MMT, and it's been explained and debated so for so
long here, I would have expected NC readers to more broadly understand that what we have
currently would work for everyone if only our masters would allow it.
IOW, it is not necessary to reinvent our system so much as insist that it be used to
finance material benefits for all, as opposed to endless war, political repression and
bail-outs for our criminal finance sector.
How can it be that we can we finance $trillions for war at the drop of a hat, but cannot
afford to 'fix' SS, or provide universal healthcare?
It seems to me that it's a political issue, not a technical problem, or am I missing
something here?
Cui bono?
The current mission of the custodians of our "money" is to keep banks afloat. It's not to
provide general benefit, or to even preserve the buying power of the scrip they issue,
despite what you might hear about the supposed "dual mandate" (which is now a "triple
mandate": prices, employment, and the stock market).
"Financing material benefits for all" could be a bank that extends credit to a small
business. Take a look at commercial credit creation to see how well that's been going. Take a
look at velocity.
The Fed gifted Citi $174 billion on a day when they could have purchased 100% of the Citi
Class A common stock for $4B. This is the difference Michael Hudson points about about China:
their instant ability to swap debt for equity because all banks are state-owned and
because they're Communists and nobody would blink an eye .
Most interesting in The Middle Kingdom are the moves to protect the state-owned banks.
They started about 18 months ago, when people were told they could only have one Tier 1
bank-linked e-commerce account. As a result 7.5 billion (with a B) accounts were closed. Next
they said all payments systems (including WeChat and Alipay) must clear through a new central
bank clearinghouse. Two weeks ago they said not only will everything clear through these but
the actual funds will need to be transferred to the new CB account .
Ant Financial announced that in the future they would be concentrating on services to
finance and e-commerce companies, and away from providing those services themselves. They
even anticipate a name change, from Ant Financial to Ant Lifestyle. All this makes perfect
sense: President Xi will see every financial transaction in the country, and presumably apply
a Social Score filter on whether he allows it to go through. 11 million people have already
been denied the right to purchase train tickets or buy a house because they spat on a
sidewalk, jaywalked, or made the wrong comments on social media.
Wow! We are clearly past the "First they ignore you.." stage and just on the other side of
" then they ridicule you.." phase. What a basket of slurs, gross omissions of fact and
outright falsehoods is this current blog post.
Anytime Milton Friedman is invoked to slur a concept developed before he was even born,
should be an indicator that there is no substance to the argument against the democratization
of money creation.
Thanks to the internet however, one can easily visit the Positive Money site, the American
Monetary Institute and International Movement for Monetary Reform sites to see those fake
progressives in action. While you're at it, go to the Vollgeld site yourself and read what
those wolves in sheep's clothing are really saying instead of the creative writing displayed
in the blog.
How can anyone who claims to be concerned over the excesses of capitalism prostrate
themselves in front of the current banking system, the driver of capitalism as it
rides off the rails.
I can't bring myself to respond to the stream of unsubstantiated assertions presented but
need to remind people that banks, MUST create money first for the most creditworthy. I won't
insult the readers any further by naming who that class represents. A child can see that
this, by definition, must lead to the accelerating inequality we see today.
As a challenge, I ask the author to show specifically in the US code where it permits the
Federal Government to spend before its accounts at the Fed are replenished either by
borrowing or taxing. Stay tuned to these pages for the evidence .
PM just wants OMF (Overt Monetary Financing) with ZIRP and a very small horizontal money
system. MMT analysis suggests OMF with ZIRP and a much more regulated horizontal system is
needed. There is actually very little difference in their policy prescriptions. They just
arrived at them from opposite sides of the track
I'll second that but for different reasons. Buried not far beneath the surface of this
issue (money's creation, how and how much) are hugely important issues. But the discussion
never seems to get beyond everyone's favorite system for creating money. The assumption seems
to run along the lines of: if we can just come up with some scheme for government or gold
backed money, those who possess or produce the real wealth for that money to buy will forever
be content to exchange it for the money we will forever create to pay for it. There seems to
be a belief countries like China or Russia can never escape the 'dollar trap' – or if
they try we can threaten and intimidate them back in line with our "full spectrum dominance"
military. Money IS debt – and sooner or later those who hold it are going to want to
call that debt in.
Both Positive Money and MMT appear to me to just be attempts to continue 'business as
usual', operating without a real definition of wealth and trusting / hoping 'the market' will
sort it out.
Money is debt, both functionally and conceptually. This is true for most of the money used
in the Main Street economy. It is created as debt – yours to a bank when you use your
credit card or borrow money; the bank's to you when you deposit money with one. In its role
as a medium of exchange money serves as a claim on society's goods and services, its real
wealth. You don't exchange real wealth for fiat or bank-created money without the expectation
you will at some future time be able to again exchange that money for real wealth at least
equivalent to what you had to give up in exchange for the money originally.
Rather than a claim on wealth, money could be viewed as a representation of value. Value
exchange is more like a giving/sharing economy, rather than debt-swapping. I think this
psychological improvement will lead to many physical/social/environmental improvements.
Of course, in any case, people need to be willing sellers/exchangers – it's not
automatic or universal; we need some freedom to choose, and the better the conditions are
generally, the better the freedom we will have.
OK but the term, "money is debt" is used too loosely and can be very misleading. Money
does not have to be issued as debt as claimed by MMT. In fact, money can first appear as
equity on the government's balance sheet with no counterbalancing debt. So this concept is
grossly misused to imply money must be issued as debt when, in fact, once issued it may
represent a claim on the wealth of society. Proponents of MMT first make the claim
that money is debt, and that the notion that money can be issued debt-free is therefore false
on its face. Pretty clever. They slyly blur the distinction between the creation of money by
a government and the role of that money once in the economy.
How can money first appear as equity? Isn't the other side of that the deficit? Granted I
am naive on these points but I thought money was a bond of zero duration.See skippy re time
and space
. A question for Paul: Unless it is 'privatized' is there even such a thing as 'government
equity'? The way the West's financial system works nothing that can't be sold appears to have
any value. What's missing from that system – and the discipline of economics (see
below) – is a definition of wealth.
steven –
I believe we know what wealth is – but I don't understand your claim that money needs
to be privatized to be considered equity. The government declares by fiat that the money it
creates can be used to purchase goods and services in the economy.
I don't believe this is anywhere nearly correct. From all over the political spectrum
commentators lament the lost of trillions of dollars (or euros or whatever) of wealth. At
least until the effects of a financial crisis start to take hold, no physical or intellectual
capital is lost. The only thing that is lost are a few zeros on some financial ledgers.
As for money as equity, you may be technically correct, i.e. the rules of accounting may
permit governments to count the stacks of paper currency they print (in any case, small
change in terms of the total money supply) as 'equity'. But for most of us the only thing
governments possess that we would count as equity are asset classes like public
infrastructure. And until the services they provide (or the assets themselves) are sold, that
infrastructure would, from a business accounting standpoint, technically be 'worthless'.
(that last is a question?)
tegnost – There is nothing in the accounting standards that prevents the inclusion
of equity on a balance sheet. If we were under the gold standard and you happened to find a
nugget of gold in your back yard, are you telling me that you would have to imagine some kind
of "debt" to balance your household balance sheet? When Lincoln issued the Greenbacks in the
1860's there was no bond or debt associated with it. It paid soldiers wages and goods and
services during he civil war.
Just as MMT states the government isn't a household, it also isn't a commercial bank either.
It has the constitutional power to coin money as needed, no debt involved.
presumably you bought the nugget of gold when you purchased the property and it's land use
rights so it's not a virgin birth, the debt is what you purchased the land for. Maybe one of
those diamonds in the outback that hardy souls find, but those may have some territorial
claim as well.
The gold nugget has no inherent value. It's just a lump of cold metal. It will only become
valuable when you go to someone else with it and try to exchange it for something, whether it
be a currency or some kind of good. And only if the other person agrees with you that it's
valuable. This is fundamentally what money is: a token of social interaction. The gold
becomes valuable when you go to exchange it for something else. In other words when a debt
comes into play. Money is debt. Or rather, it's a measurement of debt and credit. 'Store of
value' and all that econ 101 rot is so much gibberish.
Once you realize that, then a question arises: "Well, why bother with rare metals or
pressed coins? If it's just a token, you could literally just take a stick and carve marks
into it and it would be the same thing". Yes, exactly. Which is precisely the sort of thing
we see lots of in history.
Murphy sounds like one of those indecisive chaps who dispute with everyone but have no
ideas of their own. I shall ignore him. Good luck to Switzerland. They have the courage and
political system to try the experiment and we will all know the result in early course.
What am I missing? As far as I can tell, the proposal is just Modern Money with the
central bank substituted for the Treasury. Yes, that makes it less democratic.
MMT is inflation-limited, too. That's how you know you've overshot your resources. In
fact, MMT poses a technical problem: how do you know when you've reached resource limits,
EXCEPT by observing inflation? Because without that, you have a ratchet. Of course, that's
just what we have, usually, so maybe that's evidence for the theory.
"First, this puts inflation at the core of economic policy." – is a false claim. As
quoted, it treats inflation as a limitation. The core is promoting adequate economic
activity.
Finally, he treats "money is debt" as doctrine. he doesn't justify it and it makes little
sense, ESPECIALLY in MMT. How can you pay a debt with a debt? Someone's getting cheated. MMT
actually proposes free money, to a point. I've seen elaborations of the idea, but they use a
very extended sense of "debt." And I don't see how it's even relevant to his overall
thesis.
The Swiss are pretty conservative, so I doubt they'll pass it.
No, Positive Money is not remotely MMT. Wash your mouth out.
The Positive Money types want to limit the extension of credit and put it under the
control of what Lambert called "a magic board," a regular gimmick from his days back in
debate where someone needed to be in charge but no one wanted to think hard about who or how.
In practice, a central bank would be in charge. So how democratic is that?
MMT does not fetishize money the way the Positive Money does. MMT despite having Monetary
in the name is about the role of government spending in a fiat currency system. MMT argues
that (as Kalekci did) that businesses have strong incentive (not wanting workers to get
uppity) to keep the economy at less than full employment. So the government can and should
spend to mobilize resources. And it can because its role as the currency issuer means it can
never go bankrupt, it can only create too much inflation. Taxes are what contain inflation in
MMT.
By contrast, the Positive Money types want to do it by limiting credit creation. And thus
Murphy is correct. That means their priority is to preserve the value of financial assets,
not achieve full employment.
I don't believe it is accurate to say that Positive Money "fetishizes money". Irving
Fisher acknowledged his debt to Frederick Soddy for the concept of "100% Money", the
intellectual foundation for the Positive Money movement. Soddy's intent in limiting the
creation of money to the stock of wealth available for it to purchase was to retain
independence from the state in obtaining the means of subsistence. He compared the use of
monetary policy to goose the economy to a merchant putting his or her finger on the scale,
making it difficult to impossible for money to fulfill two of its primary functions: serving
as a medium of exchange and a store of value.
So long as there was wealth available for it to purchase, he – and presumably
Fisher's Positive Money crowd – would have no objection to creating as much money as
needed to keep the economy running. What he and every other respectable economist have been
trying to bring under control is the excess money creation fueling speculation and the
seemingly inevitable boom-bust cycle accompanying the private creation of money.
Rather than curbing that excess, however, the 'solution' that seems to have been adopted
is for the US and other Western governments to absorb the excess credit (money as debt)
creation by taking it on their (governments') own books. Government debt is I believe called
'near money' in the financial markets. But neither the governments nor the bankers of
countries that no longer create real wealth have any logical right to create the money to buy
it. Just retaining the right to 'print' more money or 'near money' doesn't change that,
except perhaps in an absurdly narrow legal sense.
There are, of course, some issues like globalization intimately connected with the
construction of a logical and fair monetary system. But underlying them all, including for
countries other than the US, is a logical definition of 'wealth':
a logical definition of wealth is absolutely needed for the basis of economics if it is
to be a science."
Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT, 2nd edition, p. 102
(Soddy might have added "if government is to be a science".)
Here in lies the rub economics will never be a Science.
Firstly the medium used by most economics – philosophy – does not even have a
functioning model of time and space and is prone to fads. Magnified by scale WRT elite tastes
or self dealing. Wealth or Capital is also a bit complicated by say the Cambridge Controversy
et al. So until some very fundamental flaws are sorted, that have nothing to do with –
money – the concept of "Science of Money" is going to be a non starter.
Worst is those that use such syntax and dialectal style are going to be called into
question – over it.
I mean we had political theory, then some bolted on science to it, and called it economic
science. Which then begat a whole time line of dominance front running the political process
regardless of political incumbents.
I think Scientists that dabble in monetary theory fall victim to the same dilemma that say
religious based views do – their optics are ground before looking.
Probably best to start with the first part of Soddy's (actually John Ruskin's)
observation, "a logical definition of wealth is absolutely needed ". "Most economics" may
indeed disguise its prostitution with a veneer of philosophy or mathematics. But I don't
think you can say that about Soddy's:
A definition of wealth must be based upon the nature of physical or material wealth, in
the sense of the physical requisites which empower and enable human life-that is, which
supply human beings with the means to live, and, as an after consequence of living, to
love, think and pursue goodness, beauty and truth.p. 108
(All citations are from Soddy's Wealth, Virtual Wealth and Debt, 2nd edition- WVWD)
For that matter, according to Michael Hudson, you can not accuse the classical economists of
just dabbling in philosophy. They were ALL about freeing society from free-lunch economic
rent seekers, freeing up the resources so they could be devoted as completely as possible to
the development of "the physical requisites which empower and enable human life".
What we have to do to develop those physical requisites – and increasingly the
limitations imposed by the requirements of sustainability – is pretty well known.
Whether a science of money can be devised to help accomplish that goal or some other
mechanism for distributing the wealth made possible by advances in science and technology is
required is increasingly open to question.
Take a look at Soddy's –THE THREE INGREDIENTS OF WEALTH (DISCOVERY, NATURAL ENERGY
AND DILIGENCE). p. 61 The first two are firmly embedded in time and space.
I have read Soddy, more so I have talked with PM sorts for a long time, hence I'm not
ignorant of the camps views or actions during said time.
Onward
"a logical definition of wealth is absolutely needed ".
I did reference the Cambridge Controversy, are you informed WRT this aspect.
"A definition of wealth must be based upon the nature of physical or material wealth, in
the sense of the physical requisites which empower and enable human life-that is, which
supply human beings with the means to live, and, as an after consequence of living, to love,
think and pursue goodness, beauty and truth.p. 108"
Sorry but . "consequence of living, to love, think and pursue goodness, beauty and truth"
has nothing scientific about it.
I reiterate – Metaphilosophy has no scientific underpinnings and attempts to "brand"
it otherwise in only to burnish its credentials without any empirical satisfaction is just
rhetorical gaming.
"you can not accuse the classical economists of just dabbling in philosophy."
Hay I respect Hudson, that does not mean I worship him, hes been invaluable to the
discovery process, but, that does not mean everything he has to say is the word of dawg, nor
would I surrender my cognitive processes just because someone uses the term classical.
If I have to go that space I would favor say Veblen or Lars P. Syll where if your to own a
thing one must accept the responsibility from a social aspect and not one of atomistic
individualism.
But hay I regress . because I'm still waiting for someone to show me a few decades of a
labour market in "action".
"BTW it would be incumbent of you to redress my concerns above without forging a new path
which excludes them." – Sorry if I did that. It was not my intent. Wikipedia is my only
exposure to the Cambridge Controversy . As
I understand it, science is supposed to be all about observing the real world and then
drawing conclusions from those observations. It looks to me like the participants in the
debate were looking at their models and maybe the logic they used to construct them, not the
world they were supposed to be modeling.
"Most of the debate is mathematical, while some major elements can be explained as part of
the aggregation problem. The critique of neoclassical capital theory might be summed up as
saying that the theory suffers from the fallacy of composition;"
This kind of cant is a far cry from something like:
"Though it was not understood a century ago, and though as yet the applications of the
knowledge to the economics of life are not generally realised, life in its physical aspect
is fundamentally a struggle for energy , in which discovery after discovery brings life
into new relations with the original source. Evolutionary development has been parasitic,
higher and higher organisms arising and obtaining the requisite supplies of energy by
feeding upon the lower. But with man and the development of conscious reason, that process
as regards energy is being reversed. "
Sorry, but where does Positive Money , in any of the publications and articles, propose
any limitations on 'credit' ?
I never saw that.
Or AMI or any of these public money types for that matter?
Thank you.
You are completely correct, they don't. This is all made up propaganda against the
democratization of the money supply. What PM proposes is sound credit creation.
PM wants to establish a non democratic administration of government issuance and then
allow a return to the free banking period of the 1800s. All based on notions of EMH and QTM
contra to all the historical data from that period. So on one had PM wants to lay claim to
scientific methodology WRT money yet still cling to scientifically refuted EMH.
As far as I can discern PM proponents advance the belief that this would compel banks to
become investment entities for "productive" activities. Don't know how that would work out
considering how corporatism views society.
The positive money people have come at it from the other angle. People like Richard Werner
have been studying the problems with privately created money since the Japanese economy blew
up in the 1980s .
They have seen all the problems with privately created money and the positive money people
were very pleased when the BoE confirmed their beliefs in 2014.
The positive money people have come to the wrong conclusion through not understanding
publicly created money.
The MMT people can learn a lot about the problems of privately created money from the
positive money people.
The two camps should merge to get the big picture.
I started looking into all the problems of privately created money after 2008 and was a
latecomer to MMT.
The two merge nicely when you think about it and realise the why the positive money people
came to the conclusion they did. They just didn't understand the way publicly created money
works now.
In the case of Japan, unless I'm misunderstanding things there, presumably they've
embraced MMT out the wazoo, in that they're willing to leverage federal gov debt out the
wazoo. And yet I think the consensus still seems to be that their economy is still zombified
(still not really recovered from the debt overhang from their go go years). In which case,
why is that?
Has Japan been hamstringing their use of MMT, so it's less effective than it could be? Do
they need to up the ante, employ MMT-on-steroids to overcome the trap that they're in, say
like the US needed WWII to get out of its trap?
Withstanding MMT-on-steroids, should it be QE-on-steroids instead that get the animal
spirits rekindled? I don't have a strong sense of whether the US central bank has done more
in that department compared to the central bank of Japan. Or if indeed, the US central bank
has been more successful on that front. It's clear that animal spirits are certainly
rekindled in the US – the usual playahs are back at it. Though whether that's
unzombified our economy, I'm not so sure – I don't think it has.
If these hurdles are so difficult, seems to me we should have a monetary system that
doesn't result in a zombified economy to begin with, per the comment I was making further
above.
And yet I think the consensus still seems to be that their economy is still zombified
(still not really recovered from the debt overhang from their go go years). In which case,
why is that?
Debt Peonage. For it to work there has to be a debt jubilee (a forgiveness of peoples
debt).
" It seems there are greater similarities between China and the US than may be visible
at first glance. China builds real estate for a shrinking population, invests for an
over-indebted client (the US, which even insists on a drastic reduction of the bilateral
trade deficit) and finances all this with money it does not have ."
MMT has always stated to whom the debt is owed is the crux of the matter and in what form
denoted.
I have trouble understanding the dramas with bank issued credit when squared with say
equities, why all the focus on one and not to be inclusive of a wide assortment of other
mediums of exchange and how they are created and why.
So tell me why J – bonds are called the death trade e.g. shorters nightmare –
albeit they will tell you their shorts are being thwarted by ev'bal forces.
Couldn't resist this. That title has me intrigued so, with apologies to Winston
Churchill-
" What (neoliberals have) called the Battle of (Credit) is over the Battle of (Money) is
about to begin. Upon this battle depends the survival of (world) civilisation. Upon it
depends our own (western) life, and the long continuity of our institutions and our
(civilization). The whole fury and might of the enemy must very soon be turned on us.
(Neoliberals) knows that (they) will have to break us in this (idea) or lose the war. If we
can stand up to (them), all (the world) may be freed and the life of the world may move
forward into broad, sunlit uplands.
But if we fail, then the whole world, including the United States, including all that we have
known and cared for, will sink into the abyss of a new dark age made more sinister, and
perhaps more protracted, by the lights of perverted science. Let us therefore brace ourselves
to our duties, and so bear ourselves, that if the (United Nations) and its (Countries) last
for a thousand years, men will still say, "This was their finest hour." "
Yet then some say AET and Neoclassical economics just needs to implement PM and all will
be well.
I've yet to see any PM advocate or proponent criticize an executive or corporatism, only
banksters and some politicians. On the other hand I've seen many PM sorts back crypto based
on the argument of decentralization. So which is it, counterfeiting of national money with a
side of corruption or a case of counterfeiting ex nihilo via some arbitrary computational
source with a predominate side of corruption.
I am completely at a loss to understand how the debate about money proceeds things like
Marginalism, supply and demand as a monolith, rational agent models, theoclassical opinions
elevated to truisms [economic laws] and a reduction of human experience as a binary condition
set in stone.
I also have issues with PM advocates and their UBI agenda, due to its original proponents
views on the need to water down democracy more to keep the unwashed from just voting
themselves more money. It is in my opinion logically incoherent, that is just what has
occurred during the neoliberal period and corporatists via the democracy of money through
lobbyists – every dollar is a vote – et al.
In light of that I can only surmise that PM is actually pro elitist, not that I have
issues with some being elite, that is another story altogether, but money itself is not the
bar.
Nonetheless, you might have noticed that happy days aren't exactly here again. The real U.S.
unemployment figure -- all who are counted as unemployed in the "official" rate, plus
discouraged workers, the total of those employed part-time but not able to secure full-time
work and all persons marginally attached to the labor force (those who wish to work but have
given up) -- is 7.6
percent . (This is the "U-6" rate.) That total, too, is less than half of its 2010 peak and
is the lowest in several years. But this still doesn't mean the number of people actually
working is increasing.
Fewer people at work and they are making less
A better indication of how many people have found work is the "civilian labor force
participation rate." By this measure, which includes all people age 16 or older who are not in
prison or a mental institution, only 62.7 percent of the potential U.S. workforce
was actually in the workforce in May, and that was slightly lower than the previous month. This
is just about equal to the lowest this statistic has been since the
breakdown of Keynesianism in the 1970s, and down significantly from the peak of 67.3
percent in May 2000. You have to go back to the mid-1970s to find a time when U.S. labor
participation was lower. This number was consistently lower in the 1950s and 1960s, but in
those days one income was sufficient to support a family. Now everybody works and still can't
make ends meet.
And that brings us to the topic of wages. After reaching a peak of 52 percent in 1969, the
percentage of the U.S. gross domestic product going to wages has fallen to 43 percent , according to research by
the St. Louis branch of the Federal Reserve. The amount of GDP going to wages during the past
five years has been the
lowest it has been since 1929 , according to a New York Times report. And within
the inequality of wages that don't keep up with inflation or productivity gains, the worse-off
are doing worse.
The Economic Policy Institute
noted , "From 2000 to 2017, wage growth was strongest for the highest-wage workers,
continuing the trend in rising wage inequality over the last four decades." The strongest wage
growth was for those in the top 10 percent of earnings, which skewed the results sufficiently
that the median wage increase for 2017 was a paltry 0.2 percent, the EPI reports. Inflation may
have been low, but it wasn't as low as that -- the typical U.S. worker thus suffered a de facto
wage decrease last year.
What this sobering news tells us is that good-paying jobs are hard to come by. An EPI
researcher, Elise Gould,
wrote :
"Slow wage growth tells us that employers continue to hold the cards, and don't have to
offer higher wages to attract workers. In other words, workers have very little leverage to
bid up their wages. Slow wage growth is evidence that employers and workers both know there
are still workers waiting in the wings ready to take a job, even if they aren't actively
looking for one."
The true unemployment rates in Canada and Europe
We find similar patterns elsewhere. In Canada, the official unemployment rate held at
5.8 percent in
April , the lowest it has been since 1976, although there was a slight decrease in the
number of people working in March, mainly due to job losses in wholesale and retail trade and
construction. What is the actual unemployment rate? According to Statistics Canada's R8
figure , it is 8.6 percent. The R8 counts count people in part-time work, including those
wanting full-time work, as "full-time equivalents," thus underestimating the number of
under-employed.
At the end of 2012, the R8 figure was 9.4
percent , but an analysis published by The Globe and Mail analyzing unemployment
estimated the
true unemployment rate for that year to be 14.2 percent. If the current statistical
miscalculation is proportionate, then the true Canadian unemployment rate currently must be
north of 13 percent. "[T]he narrow scope of the Canadian measure significantly understates
labour underutilization," the Globe and Mail analysis conclude.
Similar to its southern neighbor, Canada's labor force participation
rate has steadily declined, falling to 65.4 percent in April 2018 from a high of 67.7
percent in 2003.
The most recent official unemployment figure in Britain 4.2 percent. The true figure is
rather higher. How much higher is difficult to determine, but a
September 2012 report by Sheffield Hallam University found that the total number of
unemployed in Britain was more than 3.4 million in April of that year although the Labour Force
Survey, from which official unemployment statistics are derived, reported only 2.5 million. So
if we assume a similar ratio, then the true rate of unemployment across the United Kingdom is
about 5.7 percent.
The European Union reported an official unemployment rate of 7.1
percent (with Greece having the highest total at 20.8 percent). The EU's Eurostat service
doesn't provide an equivalent of a U.S. U-6 or a Canadian R8, but does separately
provide totals for under-employed part-time workers and "potential additional labour
force"; adding these two would effectively double the true EU rate of unemployed and so the
actual figure must be about 14 percent.
Australia's official seasonally adjusted unemployment rate is 5.6 percent , according to the
country's Bureau of Statistics. The statistic that would provide a more realistic measure, the
"extended labour force under-utilisation" figure, seems to be well hidden. The most recent
figure that could be found was for February 2017, when the rate was given as 15.4 percent. As
the "official" unemployment rate at the time was 5.8 percent, it is reasonable to conclude that
the real Australian unemployment rate is currently above 15 percent.
Mirroring the pattern in North America, global employment is on the decline. The
International Labour Organization estimated the world labor force participation rate
as 61.9 percent for 2017, a steady decline from the 65.7 percent estimated for 1990.
Stagnant wages despite productivity growth around the world
Concomitant with the high numbers of people worldwide who don't have proper employment is
the stagnation of wages. Across North America and Europe, productivity is rising much faster
than wages. A 2017 study found that across those regions median real wage growth since the
mid-1980s has not kept
pace with labor productivity growth.
Not surprisingly, the United States had the largest gap between wages and productivity.
Germany was second in this category, perhaps not surprising, either, because German workers
have suffered a
long period of wage cuts (adjusted for inflation) since the Social Democratic Party
codified austerity by instituting Gerhard Schröder's "Agenda 2010" legislation. Despite
this disparity, the U.S. Federal Reserve issued a report in 2015 declaring the problem of
economic weakness is due to wages not
falling enough . Yes, the Fed believes your wages are too high.
The lag of wages as compared to rising productivity is an ongoing global phenomenon. A
separate statistical analysis from earlier this decade also
demonstrated this pattern for working people in Canada, the United States, Britain, France,
Germany, Italy and Japan. Workers in both Canada and the United States take home hundreds of
dollars less per week than they would if wages had kept up with productivity gains.
In an era of runaway corporate globalization, there is ever more precarity. On a global
scale, having regular employment is actually unusual. Using International Labour Organization
figures as a starting point, John Bellamy Foster and Robert McChesney calculate that the
"global reserve army of labor" -- workers who are underemployed, unemployed or "vulnerably
employed" (including informal workers) -- totals 2.4 billion. In contrast, the world's wage
workers total 1.4 billion. Writing in their book The Endless Crisis: How
Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China , they
write:
"It is the existence of a reserve army that in its maximum extent is more than 70 percent
larger than the active labor army that serves to restrain wages globally, and particularly in
poorer countries. Indeed, most of this reserve army is located in the underdeveloped
countries of the world, though its growth can be seen today in the rich countries as well."
[page 145]
Having conquered virtually every corner of the globe and with nowhere left to expand into
nor new markets to take, capitalists will continue to cut costs -- in the first place, wages
and benefits -- in their ceaseless scrambles to sustain their accustomed profits. There is no
reform that can permanently alter this relentless internal logic of capitalism. Although she
was premature, Rosa Luxemburg's forecast of socialism or barbarism draws nearer.
Looks like Trump adopted Victoria Nuland "Fuck the EU" attitude ;-). There might be nasty
surprises down the road as this is uncharted territory: destruction of neoliberal
globalization.
Trump proved to be a really bad negotiator. he reduced the USA to a schoolyard bully who
beats up his gang members because their former victims have grown too big.
As the owner of world reserve currency the USA is able to tax US denominated transactions both via conversion fees and
inflation. As long as the USA has dollar as a reserve currency the USA has so called "exorbitant priviledge" : "In the
Bretton Woods system put in place in
1944, US dollars were convertible to gold. In France, it was called "America's
exorbitant privilege"[219]
as it resulted in an "asymmetric financial system" where foreigners "see themselves supporting American living standards and
subsidizing American multinationals"."... "De Gaulle openly criticised the
United States intervention in Vietnam and the "exorbitant
privilege" of the United States dollar. In his later years, his support for the slogan "Vive
le Québec libre" and his two vetoes of Britain's entry into the
European Economic
Community generated considerable controversy." Charles de Gaulle -
Wikipedia
Notable quotes:
"... Errrr, that so-called "piggy bank' just happens to; ..."
"... have the world's reserve currency ..."
"... dominates the entire planet militarily since the end of the Cold War ..."
"... dictates "regime change" around the world ..."
"... manipulates and controls the world's entire financial system, from the price of a barrel to every financial transaction in the SWIFT system. ..."
"... And Trump has the ignorance, the arrogance and the audacity to be pleading 'poverty?' ..."
"We had productive discussion on having fair and reciprocal" trade and market access.
"We're linked in the great effort to create a more just and prosperous world. And from the
standpoint of trade and creating more prosperous countries, I think they are starting to be
committed to more fair trade. We as a nation lost $870 billion on trade...I blame our leaders
and I congratulate leaders of other countries for taking advantage of our leaders."
"If they retaliate they're making a tremendous mistake because you see we have a
tremendous trade imbalance...the numbers are so much against them, we win that war 1000 times
out of a 1000."
"We're negotiating very hard, tariffs and barriers...the European Union is brutal to the
United States....the gig is up...there's nothing they can say."
"We're like the piggy bank that everybody's robbing."
"I would say the level of relationship is a ten - Angela, Emmanuel and Justin - we have a very good relationship. I won't
blame these people, unless they don't smarten up and make the trades fair."
Trump is now making the 20-hour flight to Singapore, where he will attend a historic summit with North Korea leader Kim Jong
Un. We'll now keep our eye out for the finalized communique from the group. The US is typically a leader in the crafting of the
statement. But this time, it's unclear if the US had any input at all into the statement, as only the leaders from Britain,
Canada, France, Germany, Italy and Japan as well as the presidents of the European Commission and European Council remain at the
meeting. But regardless of who writes it, the statement will probably be of little consequence, as UBS points out:
Several heads of state will be heading off on a taxpayer-financed "mini-break" in Canada today. In all of its incarnations
(over the past four years, we've gone from G-8 to G-6+1) the group hasn't really accomplished much since an initial burst of
enthusiasm with the Plaza Accords and Louvre Accords in the 1980s.
By the way, Trump is right on the tariffs in my view, Europeans should lower their tariffs
and not having the US raising it.
Trump: "We're The Piggy Bank That Everybody's Robbing"
Isn't Trump great in catch phrases? Trump's base will now regurgitate it to death.
Now reconcile Trump's remarks with reality:
Professor Werner: Germany is for instance not even allowed to receive delivery of US
Treasuries that it may have purchased as a result of the dollars earned through its current
account surplus: these Treasuries have to be held in custody by the Federal Reserve Bank of
New York, a privately owned bank: A promise on a promise. At the same time, German influence
over the pyramid structure of such promises has been declining rapidly since the abolition of
the German currency and introduction of the euro, controlled by an unaccountable
supranational international agency that cannot be influenced by any democratic assembly in
the eurozone. As a result, this structure of one-sided outflows of real goods and services
from Germany is likely to persist in the short and medium-term.
To add insult to injury:
Euro-federalists financed by US spy chiefs
The documents show that ACUE financed the European Movement, the most important federalist
organisation in the post-war years. In 1958, for example, it provided 53.5 per cent of the
movement's funds.
Okay, everyone set your "team" aside for a few minutes and let's look at the facts and
reality.
Do you really believe the rest of the world has trade advantages over the US? Well, let's
consider major industries.
Agriculture.....maybe, but only sightly. Our farmers are the richest in the workd....by
far.
Manufacturers.....probably so....because we gave it away to countries with slave labor.
Manufacturers jobs were jobs where people could earn a decent living...and that had to
go..can't be cutting into corporate profits with all that high cost labor.
Defense.....need I go here? We spend more than the next 11 countries combined! We sell
more as well.
Energy.....we rule thus space because we buy it with worthless printed fiat
debt...whenever we want to....and nd if you deny us, we will bomb the hell out of you and
take it.
Technology. ....Apple, Microsoft, Intel, Google, Amazon, Oracle, Dell, Cisco.....who can
touch that line up....not to mention all the on-line outfits like Facebook and Twitter.
Finance.....the best for last. We control the printing press that prints the dollar the
rest of the world needs. We control energy and foreign policy. Don't do what we like and we
will cut you off from SWIFT and devalue the hell out of your currency...and then move in for
the "regime" change to some one who plays ball the way we like it. 85% of all international
trade takes place in dollars everyday. We have the biggest banks, Wall Street, and infest the
world with our virus called the dollar so that we can Jeri their chain at will.
Now I ask you....just where the hell is the "trade imbalances"? Sure there are some
companies or job sectors that get a raw deal because our politicians give some foreigners
unfair trade advantages here and there, but as a whole, we dominate trade by far. The poor in
our country lives like kings compared to 5.5 billion of the world's population. Trump knows
this.....or he is stupid. He is pandering to his sheeple voting base that are easily duped
into believing someone is getting what is their's.
Hey, I am thankful to be an American and enjoy the advantages we have. But I am not going
to stick my head up Trump's ass and agree with this bullshit. It is misdirection (corporate
America and politicians are the problem here, not foreign countries) and a major distraction.
Because all the trade in the world isn't going to pull us out of this debt catastrophe that's
coming.
But, if we cut through all the verbiage, we will arrive at the elephant in the room.
American manufacturing jobs have been off-shored to low wage countries and the jobs which
have replaced them are, for the most part, minium wage service jobs. A man cannot buy a
house, marry and raise a family on a humburger-flippers wage. Even those minimum wage jobs
are often unavailable to Americans because millions of illegal aliens have been allowed into
the country and they are undercutting wages in the service sector. At the same time, the
better paid positions are being given to H-1B visa holders who undercut the American worker
(who is not infrequently forced to train his own replacement in order to access his
unemployment benefits.)
As the above paragraph demonstrates the oligarchs are being permitted to force down
American wages and the fact that we no longer make, but instead import, the things we need,
thus exporting our wealth and damaging our own workers is all the same to them. They grow
richer and they do not care about our country or our people. If they can make us all into
slaves it will suit them perfectly.
We need tariffs to enable our workers to compete against third world wages in countries
where the cost-of-living is less. (American wages may be stagnating or declining but our
cost-of-living is not declining.) We need to deport illegal aliens and to stop the flow of
them over our borders. (Build the wall.) We need to severely limit the H-1B visa programme
which is putting qualified Americans out of work. (When I came to the US in 1967 I was
permitted entry on the basis that I was coming to do a job for which there were not enough
American workers available. Why was that rule ever changed?)
You are making my point. China didn't "off shore" our jobs....our politicians and
corporations did. You can't fix that by going after other countries. You fix that by
penalizing companies for using slave labor workers from other countries. Tariffs are not
going to fix this. They will just raise prices on everyone.
I can't believe you Trumptards can't see this! Once again we will focus on a symptom and
ignore the real problem. Boy, Trump and his buddies from NYC and DC have really suffered
because of unfair trade practices, right? Why can't you people see that "government is the
problem" and misdirection your attention to China, Canada, Germany, Mexico, or whomever is
just that....misdirection.
I would tax the shit out of companies like Apple that make everything overseas with slave
labor and then ship it in here to sell to Americans at ridiculous prices.
Plenty of down votes but no one has proven that I am wrong on one point.
The EU countries have free college, health care, day care and just about everything else.
All paid for because they have no military spending.
It's all on the backs of the US tax payer. Or the fed, if you prefer.
Trump is working both angles. Forcing them to pay for their own defense. Forcing them to
allow US products with no trade disadvantages. Go MAGA and fuck the EU.
This article on almost a year old but thinks are developing as predicted. Which increases its
value.
"... Since when did Trump become an expert on political science and world history anyway? Who
does he think he is lecturing? Yet another US middle school classroom?! Does he not realize that
a good number of the countries represented at the UN consider themselves Socialist?! Furthermore,
while I don't necessarily disagree with the notion that Socialist and Communist ideas have often
been a disaster in the 20th century, Socialism in the 21st century is an entirely different beast
and the jury is still very much out on this issue, especially when considering the social,
political, economic, ecological, psychological and even spiritual disaster Capitalism is now
proving to be for much of the planet. Being the President of a country as dysfunctional as the
US, Trump would be well-advised to tone down his arrogant pontifications about Socialism and
maybe even open a book and read about it. ..."
"... My guess is that all they want is to send a clear messages to the Comprador elites
running most countries that this is the "official ideology of the AngloZionist Empire" and if
they want to remain in power they better toe the line even if nobody takes this stuff seriously.
Yup, back to a 1980s Soviet kind of attitude towards propaganda: nobody cares what everybody else
really thinks as long as everybody continues to pretend to believe the official propaganda.
..."
"... Ever since the Neocons overthrew Trump and made him what is colloquially referred to as
their "bitch" the US foreign policy has come to a virtual standstill. ..."
"... Because, and make no mistake here, if the US cannot get anything constructive done any
more, they retain a huge capability to disrupt, subvert, create chaos and the like. ..."
"... However, the US themselves are now the prime victim of a decapitated Presidency and a
vindictive and generally out of control Neocon effort to prevent true American patriots to "get
their country back" (as they say) and finally overthrow the regime in Washington DC. ..."
Notable quotes:
"... Since when did Trump become an expert on political science and world history anyway? Who does he think he is lecturing? Yet another US middle school classroom?! Does he not realize that a good number of the countries represented at the UN consider themselves Socialist?! Furthermore, while I don't necessarily disagree with the notion that Socialist and Communist ideas have often been a disaster in the 20th century, Socialism in the 21st century is an entirely different beast and the jury is still very much out on this issue, especially when considering the social, political, economic, ecological, psychological and even spiritual disaster Capitalism is now proving to be for much of the planet. Being the President of a country as dysfunctional as the US, Trump would be well-advised to tone down his arrogant pontifications about Socialism and maybe even open a book and read about it. ..."
"... we all know who Trump's puppet-masters are nowadays so we know what to expect ..."
"... Trump is now clearly fully endorsing that fairytale that "The West" (in which Trump now hilariously includes Poland!) has defeated Hitler and saved the world. The truth is that the Nazis were defeated by the Soviets and that all the efforts of the Poles, French, Brits and even Americans were but a minor (20% max) sideshow to the "real event" (Those who still might believe in this nonsense can simply read this ). Yet again, that the Americans would feel the need to appropriate for themselves somebody else's victory is, yet again, a clear sign of weakness. Do they expect the rest of the planet to buy into this nonsense? Probably not. ..."
"... My guess is that all they want is to send a clear messages to the Comprador elites running most countries that this is the "official ideology of the AngloZionist Empire" and if they want to remain in power they better toe the line even if nobody takes this stuff seriously. Yup, back to a 1980s Soviet kind of attitude towards propaganda: nobody cares what everybody else really thinks as long as everybody continues to pretend to believe the official propaganda. ..."
"... Ever since the Neocons overthrew Trump and made him what is colloquially referred to as their "bitch" the US foreign policy has come to a virtual standstill. ..."
"... Because, and make no mistake here, if the US cannot get anything constructive done any more, they retain a huge capability to disrupt, subvert, create chaos and the like. ..."
"... However, the US themselves are now the prime victim of a decapitated Presidency and a vindictive and generally out of control Neocon effort to prevent true American patriots to "get their country back" (as they say) and finally overthrow the regime in Washington DC. ..."
"... It appears that for the foreseeable future Trump will continue to focus his energy on beating Obama for the status of "worst President in US history" while the Neocons will continue to focus their energy on trying to impeach Trump ..."
"... I still maintain that the worst President in history (excluding possibly Woodrow Wilson) was Bill Clinton (strongly influenced, no doubt, by Hillary.) Sure, the 90′s were a great time in America, but Clinton's evil actions (signing NAFTA, the Crime Bill, ignoring Bin Laden, and repealing Glass-Steagall to name just a few) had not yet come to fruition. ..."
"... Consider that the scene he bought into is the product of 70 years of constant propaganda aimed at the American psyche and how successful that has been. ..."
"... Hillary would not have done anything different than Trump. Trump is a dumb shit sycophant of the Deep State just like Hillary. ..."
"... "Step by step the US is getting closer to a civil war" That pretty much says it all. All it will take is for US troops to get an unexpected butt kicking somewhere, sometime. ..."
Late this morning, outraged emails started pouring in. My correspondents reported "getting
sick" and having their "heart ache". The cause of all that? They had just watched Trump's
speech at the UN...
You can read the full (rush, not official) text
here or watch the video here .
Most of it is so vapid that I won't even bother posting the full thing. But there are a few
interesting moments including those:
"We will be spending almost $700 billion on our military and defense. Our military will
soon be the strongest it has ever been"
This short sentence contains the key to unlock the reason behind the fact that while the US
military is extremely good at killing people in large numbers, it is also extremely bad at
winning wars. Like most Americans, Trump is under the illusion that spending a lot of money
"buys" you a better military. This is completely false, of course. If spending money was the
key to a competent military force, the US armed forces would have already conquered the entire
planet many times over. In reality, they have not won anything meaningful since the war in the
Pacific.
...then he suddenly decided to share this outright bizarre insight of his:
The problem in Venezuela is not that socialism has been poorly implemented, but that
socialism has been faithfully implemented. From the Soviet Union to Cuba to Venezuela,
wherever true socialism or communism has been adopted, it has delivered anguish and
devastation and failure.
Since when did Trump become an expert on political science and world history anyway? Who
does he think he is lecturing? Yet another US middle school classroom?! Does he not realize
that a good number of the countries represented at the UN consider themselves Socialist?!
Furthermore, while I don't necessarily disagree with the notion that Socialist and Communist
ideas have often been a disaster in the 20th century, Socialism in the 21st century is an
entirely different beast and the jury is still very much out on this issue, especially when
considering the social, political, economic, ecological, psychological and even spiritual
disaster Capitalism is now proving to be for much of the planet. Being the President of a
country as dysfunctional as the US, Trump would be well-advised to tone down his arrogant
pontifications about Socialism and maybe even open a book and read about it.
I won't even bother discussing the comprehensively counter-factual nonsense Trump has spewed
about Iran and Hezbollah, we all know who Trump's puppet-masters are nowadays so we know
what to expect . Instead, I will conclude with this pearl from The Donald:
In remembering the great victory that led to this body's founding, we must never forget
that those heroes who fought against evil, also fought for the nations that they love.
Patriotism led the Poles to die to save Poland, the French to fight for a free France, and
the Brits to stand strong for Britain.
Echoing the nonsense he spoke while in Poland, Trump is now clearly fully endorsing that
fairytale that "The West" (in which Trump now hilariously includes Poland!) has defeated Hitler
and saved the world. The truth is that the Nazis were defeated by the Soviets and that all the
efforts of the Poles, French, Brits and even Americans were but a minor (20% max) sideshow to
the "real event" (Those who still might believe in this nonsense can simply read this ). Yet
again, that the Americans would feel the need to appropriate for themselves somebody else's
victory is, yet again, a clear sign of weakness. Do they expect the rest of the planet to buy
into this nonsense? Probably not.
My guess is that all they want is to send a clear messages to the Comprador elites
running most countries that this is the "official ideology of the AngloZionist Empire" and if
they want to remain in power they better toe the line even if nobody takes this stuff
seriously. Yup, back to a 1980s Soviet kind of attitude towards propaganda: nobody cares what
everybody else really thinks as long as everybody continues to pretend to believe the official
propaganda.
[Sidebar: When my wife and I watched this pathetic speech we starting laughing about the
fact that Trump was so obscenely bad that we (almost) begin to miss Obama. This is a standing
joke in our family because when Obama came to power we (almost) began to miss Dubya. The
reason why this is a joke is that when Dubya came to power we decided that there is no way
anybody could possibly be worse than him. Oh boy where we wrong! Right now I am still not at
the point were I would be missing Obama (that is asking for a lot from me!), but I will
unapologetically admit that I am missing Dubya. I do. I really do. Maybe not the people
around Dubya, he is the one who truly let the Neocon "crazies in the basement" creep out and
occupy the Situation Room, but at least Dubya seemed to realize how utterly incompetent he
was. Furthermore, Dubya was a heck of a lot dumber than Obama (in this context being stupid
is a mitigating factor) and he sure did not have the truly galactic arrogance of Trump
(intelligence-wise they are probably on par)].
In conclusion, what I take away from this speech is a sense of relief for the rest of the
planet and a sense of real worry for the US. Ever since the Neocons overthrew Trump and
made him what is colloquially referred to as their "bitch" the US foreign policy has come to a
virtual standstill. Sure, the Americans talk a lot, but at least they are doing nothing.
That paralysis, which is a direct consequence of the internal infighting, is a blessing for the
rest of the planet because it allows everybody else to get things done. Because, and make
no mistake here, if the US cannot get anything constructive done any more, they retain a huge
capability to disrupt, subvert, create chaos and the like.
But for as long as the US remains paralyzed this destructive potential remains mostly unused
(and no matter how bad things look now, Hillary President would have been infinitely worse!).
However, the US themselves are now the prime victim of a decapitated Presidency and a
vindictive and generally out of control Neocon effort to prevent true American patriots to "get
their country back" (as they say) and finally overthrow the regime in Washington DC.
Step by step the US is getting closer to a civil war and there is no hope in sight, at least
for the time being. It appears that for the foreseeable future Trump will continue to focus
his energy on beating Obama for the status of "worst President in US history" while the Neocons
will continue to focus their energy on trying to impeach Trump , and maybe even trigger a
civil war. The rest of us living here are in for some very tough times ahead. As they say in
Florida when a hurricane comes barreling down on you "hunker down!".
Netanyahu has spoken, stating that Trump has given the boldest, most courageous UN speech
that he has ever heard. Well that settles that with the prescient oracle rendering his
definitive and omnipotent judgment!
A lot of old friends didn't like President Trump's UN speech today because it didn't
break cleanly with UniParty foreign policy! E.g. Paul Craig Roberts' comments here. But
it did contain these revolutionary comments on immigration and refugee policy ! The
latter especially significant because Trump has to set the quota for U.S. quota for
refugees (actually expedited, subsidized, politically favored immigrants) in the next few
days. Who knows what Trump will do! But Hillary would never even have said it
[...] For the cost of resettling one refugee in the United States, we can assist more than 10
in their home region.
[...] For decades, the United States has dealt with migration challenges here in the Western
Hemisphere. We have learned that, over the long term, uncontrolled migration is deeply
unfair to both the sending and the receiving countries.
For the sending countries, it reduces domestic pressure to pursue needed political
and economic reform, and drains them of the human capital necessary to motivate and
implement those reforms.
For the receiving countries, the substantial costs of uncontrolled migration are
borne overwhelmingly by low-income citizens whose concerns are often ignored by both media
and government.
I still maintain that the worst President in history (excluding possibly Woodrow
Wilson) was Bill Clinton (strongly influenced, no doubt, by Hillary.) Sure, the 90′s
were a great time in America, but Clinton's evil actions (signing NAFTA, the Crime Bill,
ignoring Bin Laden, and repealing Glass-Steagall to name just a few) had not yet come to
fruition.
Assuming the keen political insight Trump exhibited to get himself the job he sought still
exists, perhaps all this insane blather is proof it continues. Consider that the scene he
bought into is the product of 70 years of constant propaganda aimed at the American psyche
and how successful that has been.
Then imagine Trump feeding the ravenous American mindset for the status quo while actually
working around it. Brilliant! Then again, if he truly means what he says, all is lost.
Thank you Stephen Miller! He must be reading Peter Singer:
International support for countries bearing the greatest refugee burden also makes economic
sense: it costs Jordan about €3,000 ($3,350) to support one refugee for a year; in
Germany, the cost is at least €12,000.
Another threat to the Church is the illegal immigration control movement. If this movement
succeeds, and what is perceived by Latin Americans and other governments as an escape valve
is shut off, these governments would logically say, "Our demographic course cannot
continue." These governments would have little choice but to confront the Church and say,
"If we are to survive as governments, then we must get serious about population growth
control. Otherwise, we in Latin America are destined to become a sea of chaos. We, as Latin
Americans, must make family planning and abortion services fully available and encourage
their use." Turning off the valve to illegal immigration is therefore a serious threat to
the power of the Church.
President Trump's Message: Make The United Nations Great
In fact, he's strengthened our alliances in meetings in Washington with key allies, by
going to foreign capitals - the trip to France and the Bastille Day with America's
oldest ally, with which the United States has in recent years had something of a rocky
relationship – was strengthened enormously by that visit to Paris this year. And
the president has, you know, both on a personal level and on an alliance level, really
strengthened the alliance with France and with President Macron. In fact, he met with
him yesterday and had a very, extremely positive and friendly meeting where they talked
substantive business, but they also talked about the history of the alliance and reminisced
a bit about the grandeur of that trip to Paris in July.
The French president's suggestion that African women are breeding like animals and must
be restrained by an enlightened elite awakens primordial terrors in the hearts of the
mainstream Left and Right.
[...]
If Europeans are replaced with Africans, Western Civilization will disappear. The choices
are simple: The West, yes or no? The white race, yes or no? Our rulers have exhausted all
other options.
Peter Singer on How Political Correctness Let African Population Growth Run Amok for a
Generation
The outrage evoked by Macron's remark, however, appears to have little to do with its
inaccuracy. Macron violated a taboo that has been in place since the International
Conference on Population and Development, held under the auspices of the UN in Cairo in
1994. The conference adopted a Programme of Action that rejected a demographically driven
approach to population policies, and instead focused on meeting the reproductive-health
needs of individuals, especially women. Population targets were out; rights were in.
Don't lose hope
[...]
I shared this video here at the Unz Review before, but I would like to share it again,
because it best encapsulates and captures what I personally associate with term "Alt
Right"
"Step by step the US is getting closer to a civil war" That pretty much says it all.
All it will take is for US troops to get an unexpected butt kicking somewhere,
sometime.
Churchill himself, one of a long list of Anglo-genocidal killers (according to The Saker's
last post) admitted that, "The Red Army tore the guts out of The Wehrmacht." Is this even in
dispute?
In Russian thinking therefore, with only 20% contribution by American/UK Commonwealth
forces, we subtract that, and this is the diplomatic question. Why would Stalin's T34s not
have rolled up to The English Channel and installed compliant Communist regimes in
France/Belgium/Holland as they did in Eastern Europe?
They did the same in North Korea by installing the grandfather (Kim Il-Sung) of this young
'Rocket Man' in 1945 at the conclusion of the fighting against Japan in the far-east.
Despite the huge changes in communication in the last several decades
and the ever increasing levels of education in our society, politics have
failed to engage the vast majority and that cohort of the cynical, the alienated,
the disinterested, the lazy, the simply care less continues to grow.
In the last decade the only cause that evoked passion and engaged a larger
number, finally forcing our elected members to act was same sex marriage
.....a crescendo that took years to generate.
With the complicity of our media and the decline of that part of education
that teaches analysis, social psychology and political philosophy (let alone
teaches about basic political structures and mechanisms) our level of disengagement
from the political process appears to be at an all time high. The performance
of our legislators has become increasingly unaccountable and purely self interested
.... we have re-created the "political class" of pre-war times where alienation
was based on a lack of education and awareness and a sense of inferiority and
powerlessness DESPITE our vastly improved communication, access to information
and educational standards (not to mention affluence).
Basically, we have "dumbed down" to the extent where passion and ideology in
politics is now the preserve of fewer and fewer. In a democracy this trend is of
massive concern and a threat to its sustainability.... it also completely suits those
that are focused on concentrating power and wealth... the more that don't give
a toss the less likely you are to be encumbered by limitations, social considerations,
ethics and morality.
Until we re-engage far larger numbers into the political process, raise the levels
of awareness of political thought and choices, stop dumbing down and re-inject
some broader passion and participation into our political processes then vested
interests will continue to dominate.....and democracy will become increasingly
undemocratic !
We need a Nationalist government, which will automatically see itself as the mortal enemy of
the primary Internationalist (there used to be a song about that) force in the world today,
and which affects us greatly in terms of resource exploitation: Globalisation, or what we
used to call 'multi national corporations' or 'international capital'.
Nationalism is a decision-making tool as it always poses a question; what is good for
this country ?
When/if he mentions de-Globalisation, an Aus-Indonesian defence alliance, citizen
initiated referenda, and a Constitutional ban on donations and parties , then people
may listen, however he cannot be accused of being too imaginative or bright. He is
however advocating authoritarianism not fascism.
Fascism doesn't require a state sanctioned religion or suppression of religion
That said the Catholicism/fundamentalist Christian bent of the present cabinet and the
demonisation of any green beliefs is uncomfortably close to what you describe
And the nexus between big business and govern, the destruction of public institutions, the
reduction in the capacity of media to report truth and the vitriolic attacks on opponenents
are straws in an ill wind
You are right, it's not "fascismmmmmmmmmmmmmm".... it's Fascism. Which brings back to my
memory what Tom Elliott (the son of Liberal Party former president John Elliott) wrote in the
Herald Sun on 6 February 2015: "It's time we temporarily suspended the democratic process and
installed a benign dictatorship to make tough but necessary decisions."
"... By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... Jim Chanos, founder and managing partner of New York-based Kynikos Associates, has spent much of his career studying financial fraud. He shares his thoughts with the Institute for New Economic Thinking -- where he is a member of the ..."
"... Global Partners Council ..."
"... -- on cryptocurrency, fraud coming from China, and why fraudsters may currently be on the rise. Chanos teaches a course on the history of financial fraud at Yale University and the University of Wisconsin. ..."
Jim Chanos, founder and managing partner of New York-based Kynikos Associates, has spent
much of his career studying financial fraud. He shares his thoughts with the Institute for New
Economic Thinking -- where he is a member of theGlobal Partners Council-- on cryptocurrency, fraud coming from China, and why
fraudsters may currently be on the rise. Chanos teaches a course on the history of financial
fraud at Yale University and the University of Wisconsin.
Lynn Parramore: As someone who pays a lot of attention to financial fraud, you've noticed
that this activity has a connection to business cycles. Can you explain that and say where you
think we are right now?
Jim Chanos: I've found in my research and my teaching that what I would call the "fraud
cycle" -- instances of large-scale financial fraud over multiple platforms and companies in the
financial markets in the modern era (the last 500 years) -- follows the financial cycle with a
lag. That means that as business and particularly financial markets improve, peoples' sense of
disbelief and caution that they've often earned from the previous downturn begins to erode.
Schemes that before might have seemed too good to be true begin to be embraced.
LP: So people relax their financial vigilance.
JC: Exactly. The longer the cycle goes on, the easier it becomes for the dishonest and the
fraudsters to ply their trade because people will begin to believe in things that they
shouldn't financially. As cycles go on, we tend to see higher instances of fraud. In recent
memory, there were clearly, from a legal and prosecutorial point of view, more cases of fraud
after the dot-com bull market of the late '90s, which went from 1991 to 2000. Many of the
dot-coms turned out to be fraudulent. We then saw the Enrons and the WorldComs and the Tycos.
Frauds generally come to light after the financial cycle turns down. We saw this again after
the crisis following the bull market of 2003 to 2007.
What happens is that the new capital going into these things dries up. Many frauds are, by
their nature, Ponzi schemes that require new money and new investors to pay off the old
investors. When people want their money back, the insolvency of the venture is discovered. John
Kenneth Galbraith has this wonderful term called "the bezzle" [inventory of undiscovered
embezzlement]. That's the heart of the fraud, the nature of the fraud in the company. He points
out that in the up phase, there's this wonderful period where both the fraudsters and the
defrauded think they're getting richer. An interesting observation, right?
Of course, it works the other way on the down side. That's what I mean when I tell my
students to follow the cycles and be on guard the longer a financial and business cycle lasts
because people will get a little bit jiggy with their capital. They're willing to take risks,
willing to believe things. So today we've got bitcoin and ICOs [initial coin offerings], which
went ballistic in 2017. I suspect going forward we're going to see more and more evidence of
questionable companies as this bull market keeps advancing and aging. We're now nine years into
this bull market, same as the '90s, so I suspect that now things are starting to percolate. I
think bitcoin and the ICOs are just one manifestation of that.
LP: I just passed a huge crowd gathered around the New York Hilton Midtown for "Blockchain
Week NYC," a series of events put on to showcase the city as a hub for blockchain jobs. You
could feel the excitement in the air with all the attendees and reporters jostling on the
sidewalk. What's your take on all this hype?
JC: At one blockchain gathering there were a set of rented Lamborghinis parked outside to
entice the traders and day traders and retail investors: this, too, can be yours if you hop
aboard the blockchain and bitcoin bonanza!
I teach about a guy from the early 18th century called John Law. He was the architect of one
of the great financial frauds of all time -- the Mississippi scheme of 1718-20 in Paris. (He's
also the guy who founded New Orleans. He sent settlers there who named it after his benefactor,
the Duc d'Orléans).
Law was the first person to write about the need for foreign governments to have fiat
currencies and not be tethered to gold and silver. Because of the power of taxation and the
power of the governments through enforcement and force of arms, they could enforce their
currency to be used, and because of their ability to expand the monetary base and do all the
kinds of things that central banks now do, it was in their best interest to do so.
This was revolutionary back then. Law's failed experiment, which added lots of fraudulent
bells and whistles to that scheme in France, put the idea on the backburner for a while. But
economic historians have revisited it now and his early papers are genius. They're up there
with some of the stuff Keynes wrote in the 20th century in terms of the way he envisioned
monetary systems to work. Law points out sort of obliquely the positive ways in which the
citizenry would come to accept and trust paper money. Not only would the power of the state
compel you to accept it, but the power of the state also acted as a third party to adjudicate
problems, fraud and act as a lender of last resort in times of crisis instead of going down
into a deflationary spiral. That was the positive side.
In the new bitcoin and crypto-craze, the whole idea is that we need to get away from fiat
currencies by creating our own fiat currency for which there is no lender of last resort, no
third party adjudicator. For those who believe it's a store of value in the coming apocalypse,
the idea is that you're going to have to safeguard your key under a mountain with fingerprint
and eye scan security while the hordes are outside your bunker trying to get in to use it --
for what, I have no idea. Because for those who believe that you need to own digital currency
as a store of value in the worst-case scenario, that's exactly the case in which a digital
currency will work the least. Food would work the best!
LP: Sounds like a libertarian fantasy.
JC: That's exactly what it is. And if you say, well, fiat currency is going to bring the
world down, which could, of course, happen, then I say the last thing I'd want to own is
bitcoin if the grid goes down.
LP: It also sounds like the perfect realm for people looking to commit fraud.
JC: Well, there you go. Bitcoin is still the area for people who are trying to avoid
taxation or other examinations of their transactions. That's one thing where I think it
probably still has utility, but the governments have figured that out.
Last year, just as the mania was really going, an early convert who had gotten in early and
had made a lot of money wrote this humorous blog about trying to cash in his winnings, if you
will. He chronicled telling the exchange that he wanted to convert his bitcoins into U.S.
dollars and have them wired into his U.S. bank. It took something like eight or ten days and
numerous follow-ups and phone calls. The funniest part was his having to fax his passport to
Lithuania.
LP: That doesn't sound very high-tech or efficient.
JC: Exactly. Using a fax machine to Eastern Europe struck me as kind of the antithesis of
what you're trying to do here. So this is simply a security speculation game masquerading as a
technological breakthrough in monetary policy. Someone at Grant's interest rate conference
recently said that it was as if we had intentionally created a "monetary Somalia."
LP: So buyer beware.
JC: I think so.
LP: You recently appeared in a fascinating documentary, " The China Hustle ," which concerns the reverse
merger boom in which I believe 400 Chinese companies came to market on the U.S. stock exchange.
Can you say a bit about what these mergers are and how U.S. investors got conned?
JC: A reverse merger is simply when the company in question merges into a defunct,
U.S.-listed corporation, typically on NASDAQ, which has been moribund for years but has still
been filing with the SEC, so it may have a listing somewhere.
We can see these reverse mergers in the late '90s when they became dot-com companies, and
also in the late '70s, when gold was a hot asset and they became gold mining companies. In the
last ten years, they started to appear to take advantage of the growth of Asia and the growth
of China. It's very easy to sell small, retail investors on this idea. It sounds very
appealing.
What happens is you merge the Happy Flower High Tech Company into some defunct company and
you rename the old company with the Chinese name. Voila! The Chinese company is now public in
the U.S. without having to file an IPO [initial public offering] prospectus with the SEC. You
don't go through underwriters, a due diligence process, or a vetting process where the SEC asks
questions on the IPO. But you now have a company on NASDAQ or the U.S. Stock Exchange.
This is what "The China Hustle" was about -- this raft of companies that merged with
companies you've never heard of and created, instantaneously, reasonably large-capitalization
companies operating in China but trading in the U.S. Of course, therein lies the rub. How do
you really know what was going on in the operating company? How good was the accounting? How
good were the representations of the outside auditors and representatives of the boards? It
turned out that a lot of them were frauds.
LP: So I'm an investor and I hear that this Chinese company has come to market in the U.S.
and it has been audited by Pricewaterhouse, Deloitte, or some other well-known auditing firm. I
think it must be legit. What's wrong with this assumption?
JC: There are two big problems there. When people always ask me about the large frauds we've
dealt with, they ask, who were the auditors? And I say, who cares? Every great fraud was
basically audited, most of the time by major firms. In China it's even worse than that because
although the statements might say Pricewaterhouse, if you read the fine print it actually says,
"Pricewaterhouse reviewed the work by an affiliate in China." So it's often a smaller firm that
has a relationship with the big firm that actually does the auditing. Pricewaterhouse just puts
its stamp of approval on that.
LP: Sounds kind of like what the big credit ratings agencies did by giving triple-A ratings
to securities that were fraudulent in the lead-up to the financial crisis.
JC: Right. But you have to remember that auditors are not the financial check that most
people think they are. The financial statements are not prepared by auditors. The financial
statements in publicly traded firms are prepared by management and the auditors review the
statements. Unless they have reason to believe something is amiss or are pointed to something
being amiss by a whistleblower or short seller or journalist, they're not going to detect
anything most of the time.
LP: Auditors are not detectives.
JC: No they're not. They're really paid by the company to review the company's own financial
statements. So at the end of the day, this still comes back to the management and the board. Do
you trust them? Do you believe what they're telling you? What is your ability to check?
LP: In the case of the Happy Flower Company, I can't really check.
JC: Not only that, one of the points that the movie made very well was that even if you find
the smoking gun and the chairman runs off with all the money and you're left with nothing, the
recourse to western investors is virtually nil. None of these CEOs are prosecuted. The view of
the Chinese court system, which, I should point out, is an arm of the Communist Party, not the
Chinese state, is, "sorry, but no jurisdiction here. You're a western investor and you ought to
know better."
LP: Can the SEC do anything?
JC: The SEC did announce a crackdown after the fact, but besides monitoring companies'
ongoing disclosures and trying to halt trading in the securities if there is evidence of a
problem, there isn't a lot that the SEC can do. These are Chinese companies.
LP: How do you view the climate for financial fraud under the Trump administration? I note
that Trump's SEC nominee, who was sworn in as chair last May, was an Alibaba IPO advisor -- the
Silicon Valley lawyer Jay Clayton. You've expressed skepticism about Alibaba.
JC: I have, and so far I've been wrong, at least with respect to the stock price. But I
challenge anyone to explain to me cogently what Alibaba is doing with all its capital and
flipping companies back and forth to insider and revaluing the prices of companies upward.
Be that as it may, the real issue is, what is the sense of the administration? I'll say one
thing, when the George W. Bush administration started -- remember, he was the MBA president --
he came in on a pro-business platform and was seen as very pro-business and anti-regulation,
similar to the Trump administration. But when the wave of fraud started hitting in '01 and '02,
I have to give the John Ashcroft Justice Department a lot of credit. They did a 180 and went
after the bad guys hard.
I always joke that the two presidents who have put more executives in jail than all the rest
combined were both named Bush. W's father was instrumental in prosecuting the S&L [Saving
and Loan] crooks back in the early '90s and put about 3,000 of them in jail. I think they
realized that the public was losing money in the stock markets, not just because of the frauds,
but because the long dot-com bull market had ended. People were upset. Then when you had the
revelations of WorldCom and Enron on top of it, there was a sense that every corporation was
crooked and this was going to have exogenous impacts on the economy and the market as a whole.
I think they correctly realized that we've got to basically show that we're the cops on the
beat. And they did.
That did not happen, as you well know, after the GFC [Global Financial Crisis], for lots of
reasons, including a Justice Department that actually took the extraordinary step of admitting
that it considered economic and financial market factors in figuring out when, or if, to
prosecute a company. So justice now had an economic angle to it. We sort of know how we think
about the Trump administration -- I noted the other day that the Education Department seems to
have shut down its division investigating fraud at the for-profit education companies, which
are one of the biggest cesspools out there in terms of financial fraud and fraud upon the
taxpayer. So that's not a good sign. On the other hand, public opinion can move things quickly
as it did in the Enron case. We saw a real stepped-up effort to go after the bad guys.
I think a lot depends on circumstances at the time. We're still in the expansionary phase of
the financial cycle and, arguably, the fraud cycle, so we'll have to see what happens once that
rolls over.
LP: Let's talk about emerging markets. Do you think a big crisis could develop as investors
head back to the U.S. as the Federal Reserve raises rates here?
JC: The emerging markets are always sort of the end of the wick, right? They always go down
the most when fear is out there and they go up the most when people are euphoric. Emerging
markets had a really rough go of it from 2011 right on to 2015. They never really recovered a
lot from the GFC. Then someone hit the light switch and whether it was things changing in
Brazil or [former president] Jacob Zuma being ousted in South Africa or South America turning
the corner. I would note that Argentina issued a one hundred-year bond a year ago that was
oversubscribed, and this week Argentina went back hat in hand to the IMF [International
Monetary Fund], so we've had this amazingly quick shot across the bow in the emerging markets.
We'll see if it's the start of something bigger. But it's sort of amazing to me that after only
a two-year respite, places like Argentina and Turkey seem to find themselves in trouble again.
Time will tell.
LP: One thing you said in "The China Hustle" is that we've never seen a credit build-up like
the one we've seen in China today that hasn't been followed by a major financial crisis. That
sounds pretty worrisome.
JC: I'm always told confidently it won't matter because they owe it to themselves. Well, if
that was that were the case, then Zimbabwe would be one of the wealthiest countries in the
world today!
The build-up of China's debt and the speed of that build-up is nothing short of stunning.
There's a new book that I recommend, " China's Great Wall of
Debt ." It does a great job of chronicling just how massive this build-up has been in the
last ten years following China's stimulus in '09 to pull the world out of the GFC. You've heard
me call it the "treadmill to hell" because you have to put more and more debt on the books to
keep the growth going and this is where China is finding itself. If they don't increase the
debt, the economy hits stall speed and for all the talk about innovation and technology and
transferring to a consumer-driven, technology-driven economy, the evidence on that is kind of
scant. It's still basically an economy driven by debt-driven investment, which is still over
40% of GDP. I think when we started talk about China it was 46% and I think the most recent
number is about 43%. So it's improved slightly over the eight or nine years, but not much.
China is still basically a giant construction site and shows no signs of changing. In fact,
with the One Belt One Road Initiative [a project launched in 2013 to develop trade routes to
connect China to the world], they're trying to basically export their construction capabilities
and credit to countries along what we would call the Old Silk Road.
LP: In terms of the overall picture of fraud, are we any better off than we were after the
financial crisis?
JC: Personally, I think we're worse off. I think we were better off after the dot-com era.
Not because we enacted Sarbanes Oxley [passed by the U.S. Congress in 2002 to protect investors
from fraudulent corporate accounting activities] but because the public saw that there was
justice. The bad guys got caught and at least if I lost money, they paid the price of their
freedom. That never happened in '08 and '09 for a variety of reasons. We've just had a
continuation of the cycle and the cycle is still going.
LP: So fraudsters are emboldened?
JC: Right. And now we come back to bitcoin. What's your recourse if you lose money in an ICO
traded on an exchange offshore? If people lose lots of money, there will be an outcry, but no
recourse. So we're building into something. I suspect it's in front of us and it will be
interesting to see what happens.
LP: What happens in a capitalist system to good people who want to behave ethically? How can
they succeed in an atmosphere in which fraud and unethical behavior are constantly
happening?
JC: I think capitalism is still the best game in town, but the very best games have good
sets of rules, and, even more importantly, good umpires and referees. When the game becomes
tilted and the house has the advantage, people tend to stop playing.
When the system is seen as corrupt or dishonest, there's a political price. We saw this
after the GFC. People in New York and San Francisco and Boston might be fine with everything,
but in the South and Midwest, where you're from and where I'm from, there's still this general
sense that "the bastards got away with it and I'm still suffering." So there is an exogenous
cost to this where people don't feel that there was justice. They feel that they were taken
advantage of by those sharpies on the coasts. It brings out some of the worst in people, of
course, so that's one small step, then, away from social problems like anti-Semitism and
anti-immigrant feelings. It's us v. them. Nobody is looking after us.
Economists and financial analysts have a hard time quantifying all these things, but I think
that the point is that fair markets where there's a set of rules, where there's a cop on the
beat, where there are regulators making sure that people are adhering to the rules, are far
better markets than one in which caveat emptor is written above the casino. I think it behooves
us as a society to understand that capitalism is an amazing driver of progress and prosperity
and wealth, but it can be diverted. There's a dark side to it if we don't play by the rules and
if we don't encourage capital formation from all members of society who don't feel they're
getting a fair shake.
Everybody gets that capitalism involves risk-taking. But the asymmetric situation where
people who are dishonest get away with it while people who are honest and provide capital get
left holding the bag will really stunt capitalism. I think that's the issue which the vigilance
on fraud, why it's so important. It is part of the capitalistic system. There will always be
people trying to take advantage of other people. It's still better than when the whole system
is flawed, like totalitarian communism, where corruption starts at the very top in terms of the
planning itself. But on the other hand, the counterfactual is that it could be so much better
if everybody is participating and understands that there is a strong set of rules and penalties
when you break them and justice as well. That's what I think has been lacking in the last
generation.
Only in cryptocurrency can an enterprise that calls itself "ethical" be represented by
someone who is both an "award winning journalist" and "PR relations" pic.twitter.com/9lMcXPWSb3 -- Izabella Kaminska
(@izakaminska) June 5,
2018
Don't laugh so soon This came across my Twitter
feed a couple days ago, and I was a little taken aback.
I really like the idea of community currencies, but I'm wondering why on earth you'd want
to get them tangled up with blockchain for the purpose of trading/conversion ?
Just make a Global CC and have that be that or am I oversimplifying this?
#OrHaveIMissedSomething
PS: I also take exception to using the term Bancor as well, given what it's original purpose was. Not too sure
#JMK would be down with the blockchain .
Why wouldn't a Zimbabwe type country embrace cryptocurrency as money of the iRealm?
Seems like it wouldn't be that hard to get outsiders to believe in it, as long as it was
pretty vague, and most wouldn't know that the very same country issued $100 Trillion
banknotes not so long ago.
Zimbabwe didn't need printing facilities when they were cranking out oodles of currency,
as it was all printed in Germany. (who got stiffed on payment, if memory serves)
'John Law was the first person to write about the need for foreign governments to have
fiat currencies and not be tethered to gold and silver. Law's failed experiment, which added
lots of fraudulent bells and whistles to that scheme in France, put the idea on the back
burner for a while. But economic historians have revisited it now and his early papers are
genius.' -- Jim Chanos
This is bizarre historical revisionism. John Law didn't add "fraudulent bells and
whistles" -- fraud was the whole point of fiat currencies, then [1720 -- Mississippi
bubble] and now.
Fiat currencies were born in original sin, that is. When Bubble III blows like Kilauea,
the central banksters who engineered this global calamity may find themselves (like Law)
involuntarily expatriated by angry mobs of peasants with pitchforks.
Currency is born in sin, and may only be cleansed by the divine power of God, err, Gold.
Only by having supreme faith in its shininess will your economy be saved. Do not question how
or why, as Gold works in mysterious way. Au men.
I don't understand Jim . central banks have been staffed largely by monetarist and quasi
monetarists throughout the entire neoliberal period. Then you have the vast majority of the
politicians holding the same view.
But anyway I thought quality held true in both cases, so what agenda threatened the
quality of fiat – at onset. I mean what mob forwarded all the innovation [tm],
completely ignored poor or criminal underwriting standards, completely miss-priced risk, was
completely oblivious to obvious gaming everything for "personal" profit.
I really can't see how fiat forced some people to act in such an anti social manner by its
will alone. I mean that sort of broad social dominance is usually reserved for social
narratives.
Sorry but I really never understood the logic behind the money did it thingy .
I do wonder about folks who describe alternative forms of governance with a very clear
lack of understanding of political/economic arrangements.
You can't really have a totalitarian communism. Chanos should do some history homework on
what the USSR was, and why the system was doomed to fail starting all the way back with
Lenin. Lenin didn't believe that the Russians were ready for the revolution, he considered it
a holding pattern waiting for the revolution to happen in Germany.
Just because you (or an autocrat like Stalin) call something a communism or socialism,
doesn't make it so.
"But the asymmetric situation where people who are dishonest get away with it while people
who are honest and provide capital get left holding the bag will really stunt
capitalism."
Good. I can't think of any better evidence that the system is archaic and if left
unchecked eats itself. Chanos might think about re-reading some Marx.
"I'm always told confidently it won't matter because they owe it to themselves." Isn't
that the basis of MMT? Heck, that means Murica is heading towards eternal prosperity.
I'm still wondering if the long game is to use a crypto currency as a petro currency, to
supplant the US dollar. That way, countries (and corporations) with trade surpluses with the
US can hoard their surpluses in the crypto-cum-petro currency rather than US assets (bonds
and stocks). In an asset that has neutrality with respect to any nation state. Just like gold
used to have.
There's a book that suggests this line of thinking, but doesn't really seem to chase it
down adequately: https://www.amazon.com/dp/B07BPM3GZQ . See review
on Frances Coppola's website.
There is a 25 minute clip here that describes the creation of money and the recording of
transactions (the blockchain) and does not seem fraudulent in any way:
Just when during WW1 the British determined they were going to be backstabbed by their American cousins is unknown to me, but
hopefully my unfinished research into that era will provide an answer. Clearly, Keynes knew what would occur as he observed the
proceedings at Versailles, which prompted him to go to Marseilles to write Consequences. I greatly disagree with most of
Wikipedia's discussion of
Consequences except for this bit in the intro:
"In his book, he argued for a much more generous peace, not out of a desire for justice or fairness – these are aspects of
the peace that Keynes does not deal with – but for the sake of the economic well-being of all of Europe, including the Allied
Powers, which the Treaty of Versailles and its associated treaties would prevent. [My Emphasis]
Thanks to Wilson's stroke, we'll never know how he really felt about the last months of his administration; his wife becoming
the first de facto female president of the USA. One of the better indicators about the nascent Deep States's feeling about Versailles
is their behavior during the 1920s as it laid the ground work for the Great Depression's onslaught with Dollar Diplomacy and Teapot
Dome exemplifying its moral compass. Prohibition's gangsters and coppers provided the required distraction of the masses until
the money vanished. Then came radio, the beginnings of mass media and onset of media conglomeration.
i think what is missing in your analysis "how governments that print their own currency such as US, UK and China can print
as much as they want and use it as they like" is the key acknowledgement that the us$ has been used as world currency.
and Canada.
The US $ is the World Currency because the US is the only country in the World that exports it's currency more than $0.5 Trillion/year.
Like a virus really. It's that simple if the US didn't export $ it wouldn't be the reserve currency.
The other part about sovereigns being able to "print all they want" is a falsehood without context.
First of all, when people refer to "printing" it usually means "spending" although I'm not sure they think of it in those terms.
The actual printing of physical currency/coins moves money from checking accounts in the banking system to petty cash accounts.
No new money is created by that kind of "printing". About 2% of US $ is coins or currency, the rest exists only on balance sheets.
Secondly, a sovereign is able to buy anything for sale in it's own currency as long as the resource being bought exists and
is for sale. You can't buy something that doesn't exist. The constraint on money creation is resources not arithmetic, which is
the most widely misunderstood characteristic of fiat currencies.
Further, a sovereign that HAS NO DEBT IN A FOREIGN CURRENCY has zero risk of insolvency there is no liability (in it's own
currency) a sovereign cannot satisfy. The US holds no foreign debt. Nor does Canada, Australia, Japan, UK, etc. as far as I know.
Every member in the Eurozone is a de-facto holder of foreign debt (the Euro member countries cannot freely create Euro's. They
are more like private borrowers).
gov'ts were in a position to print their own money and not have to pay interest thru the private banking sector for it.
James, this is another myth unless you are talking about the Eurozone. The US Federal government does not pay interest to the
banking sector, it pays interest to holders of Treasury securities. To do so was a CHOICE not a requirement. Paying interest on
previously created monies was voluntary. Congress created the banking system (for the US) through the Federal Reserve Act of 1913,
which created and governs the banking system, and chose to pay interest later after WWI I believe (probably as a give-away to
bankers who didn't think they made enough money off of WWi). MRW knows a lot more about this history if he's around.
Interest paid on the "debt" (all money is debt, interest or not by definition) is a net transfer of funds to the private sector
(those who hold Treasury securities). Those funds increase the money supply. Anyone can hold Treasury securities, not just banks.
They are a risk-free investment vehicle (the only one).
Further, it is the Fed that sets interest rates, not the bond-holders ("bond vigilantes") as they are referred to. 10 years
of zero-interest rates post 2008 should be proof enough of that.
Treasury securities (bonds) move $ from a checking account at the Fed to a savings account at the FED. They are $ that earn
interest. This is all explained in the Mosler pdf I linked to.
In double-entry accounting a National Debt™ for the government is NATIONAL SAVINGS for the citizens, as are the interest payments.
All this worry about sovereign debt is silliness. Without sovereign debt the currency of issue wouldn't exist. Sovereign debt
is our money (although the elites won't let us acquire much of it).
Of course the Marxist critique of and challenge to Capitalism was central in all this ! The West was competing with the East (
simplifying)and when this situation changed with Anglo Hegemony 1990 , these balances that had seen overall development towards
the 'welfare state ' disintegrated .
Once the U S got its opportunistic run at this situation, crudely grasping for further power we rapidly reached the present
situation , with its repeat of World War scenarios , as competing economic / militarised blocs do exactly that !
Yes, Mosler not being an economist is a feature, not a bug. I agree, economists are idiots, but I suspect they're paid idiots.
What's the Upton Sinclair quote ?
From where I sit MMT savvy economists are not idiots. They are however outcasts. If your not an insider you're an outsider,
and outsiders don't get to make the big money, if they don't starve.
Here's a video excerpt regarding our pre-eminent economist Paul Krugman lest you think he isn't in on the con:
@176 paulmeli.. thanks.. i had to read your comment a few times, and it still isn't sinking in fully.. i am getting some of it,
but maybe it is my conspiracy run brain that wants to know how we've been screwed over by the banks.. that is what i believe has
happened...MRW.. haven't seen him in a good while.. every time he would come all my negative stereo types about the private banking
sector were put on hold, as i recall!
i think a lot of this has to do with exporting / importing between countries... especially the part about holding foreign debt..
how does another country pay for something? this is why we read today of how russia, china and iran are getting into financial
arrangements whereby they don't have to go thru the us$.. wasn't this a good part of the reason the usa went to war in iraq, or
libya? iraq and libya wanted to trade in euros, as opposed to us$.. well - hopefully MRW can come and bring me back to reality!
it seems the world financial markets are one big ponzi scheme... think of the derivative markets.. one is not trading in some
actual commodity.. it is increasingly opaque and shrouded in speculation, while run on computers...
i am sorry paul, but i can only go so far in my understanding here.. as i understand it, something is very wrong in the financial
system at present.. it is also the reason these financial sanction games are typically a lead up to war... one group has undue
power and influence over the worlds finances - the usa - and they exercise this clout via sanctions, and if that doesn't work
- war / regime change - etc. etc... obviously i am missing something here, but i will be damned if i buy the official hokum from
an economist! thanks for trying to educate me.. n
I despise Netanyahu but please change the headline from Netanyahoo as Yahoo was used as an antisemtic slur in the past. I'm sure
the author was not aware of this outdated meaning but it does the cause harm. Thank you.
something is very wrong in the financial system at present..
I think it's always been this way but now the corruption is so out in the open it seems like it's worse. I'm not sure it is.
The way finance corrupts is that obscene riches are offered to state leaders to sell out their own citizens for pennies on
the dollar. And they do it, because if they don't regime change will follow. It's similar to the way corporate raiders take over
businesses, sell off the assets and load the business up with debt, then sell what's left. With all of that debt said business
has no chance of success. A handful of financial guys (parasites of the worse kind) walk away with the cash.
Corporate strip-mining - the business plan is simple and it's always the same - no matter if it's a business or a country.
Something to keep in mind about all of this Iran business is that Trump can now move full speed ahead with Bolton and Pompeo in
place. I find it oddly comforting that, generally speaking, Trump and his administration make no attempt to cloak their psychopathy
in coded language. I thought these remarks from Pompeo yesterday as he addressed the lackeys at Foggy Bottom yesterday particularly
illuminating in this regard:
"I talked at my hearing about the fact that this nation is so exceptional, and so incredibly blessed and the facts that derive
from that are that it also creates a responsibility, a duty for America all across the world. And I know for certain that America
can't execute that duty, can't achieve its objectives absent you all. Absent executing America's foreign policy in every corner
of the world with incredible vigor and incredible energy. And I look forward to helping you all advance that."
Money supply increases with debt creation and decreases with debt payment. Wipe out all debt and money supply is zero. Taking
out a loan is an example of money creation. The money does not exist in the system till its deposited into your account. Paying
off the mortgage depletes the money supply.
Its true that the government does not pay interest on money the Fed loans them. Thats why so little is loaned directly to the
government until the last crash. Money is not created by interest. That money does not exist without new debt. The government
borrows the money to pay the interest.
A key reason the US is the reserve currency is OPEC. OPEC serves Big Oil interests which is interlocked with Big Banking and
requires purchases of Oil to be in USD. Hence the name Petro Dollar. OPEC may produce the oil but its The Big Oil (4 sisters)
that transports most of it to market, refines much of it and provides the equipment for OPEC members to get the oil out of the
ground.
We also export a tremendous amount of food that requires payment in USD, and US manufacturing is now in China and consumer
debt allows us to purchase a great amount of goods from China in USD. Manufacturers in China need to pay expenses in RMB so sell
USD to Chinese banks. Chinas Central Bank Prints up RMB at no interest to buy the USD and then loans it to the US at interest.
Its a perfect system and is basically why the USD will never fail unless those in control want it to.
"... Last week, after a series of controversial prime-time episodes of "Tucker Carlson Tonight," which questioned whether it is in America's best national security interest to overthrow Bashar al-Assad in Syria; what the ultimate end-game looks like, considering the post-coup mess America's made of Libya and Iraq; and if the recent alleged chemical warfare assault on children was actually the work of Assad or even if it happened -- Tucker Carlson was M.I.A. from his own show Wednesday, Thursday and Friday nights. ..."
"... I hear Tucker Carlson is MIA in the USA. Has he been Arkanicided? ..."
"... He recently did an interview totally challenging the permanent state spin on world affairs. As much as I detest the conservatives I absolutely value his honesty and calm tenacity. ..."
We're nearing apocalypse if I'm out here carrying water for Fox News' Tucker Carlson, who is
hopefully not being water-boarded as I type this.
Last week, after a series of controversial prime-time episodes of "Tucker Carlson Tonight,"
which questioned whether it is in America's best national security interest to overthrow Bashar
al-Assad in Syria; what the ultimate end-game looks like, considering the post-coup mess
America's made of Libya and Iraq; and if the recent alleged chemical warfare assault on
children was actually the work of Assad or even if it happened -- Tucker Carlson was M.I.A.
from his own show Wednesday, Thursday and Friday nights.
Tucker Carlson has a tweet up from four hours ago, saying that he will be back on Fox News
tonight, after three days off.
Posted by: lysias | Apr 23, 2018 4:13:07 PM | 123
Let's see if he continues to entertain any truth on Syria. One of the most outstanding
pieces of MSM busting work there recently. Thought he was on the edge of getting Ben Swann'd
on the back of that effort, or maybe even some threatened with some mild waterboarding.
Thanks for the Carla Ortiz post b. She is a great and brave reporter.
I hear Tucker Carlson is MIA in the USA. Has he been Arkanicided?
He recently did an interview totally challenging the permanent state spin on world affairs.
As much as I detest the conservatives I absolutely value his honesty and calm tenacity.
Amazingly BBC newsnight just started preparing viewers for the possibility that there was no
sarin attack, and the missile strikes might just have been for show, i plying Trump did it
for political reasons. Narrative changing a bit.
#Germany's state media senior correspondent (who is in Damascus right now & also visited
Douma) on primetime evening news on German television: "#Douma chemical attack is most likely
staged. A great many people here seem very convinced."
I too hope he will return soon, he seems to be one of the last sane voices of the msm.
Hopefully high viewer rates help to bring him back, but he wouldn't be the first one to
vanish from the screen, despite high ratings.
"... It is perfectly possible that the British government manufactured the whole Salisbury thing. We are capable of just as much despicable behavior and murder as the next. ..."
"... Tucker Carlson of Fox News has it nailed down.... https://www.youtube.com/watch?v=M28aYkLRlm0 ..."
"... This "civil war" has been nothing but a war for Syrian resources waged by western proxies. ..."
"... So now, In desperation borne out of their impending defeat, the imperialists have staged a chemical attack in a last throw of the dice to gain popular support for an escalation in military intervention. Like military interventions of the past, it is being justified in the name of humanitarian intervention. ..."
Why is the prime minister of the United Kinkdom on the phone discussing whether or not to bomb a Sovereign country with the highly
unstable, Donald Trump?
Can she not make up her own mind? Either she thinks it's the right thing to do or it isn't. Hopefully,
the person on the other end of the phone was not Trump but someone with at least half a brain.
Proof, let's have some proof. Is that too much to ask? Apparently so. Russia is saying it's all a put up job, show us your
facts. We are saying, don't be silly, we're British and besides, you may have done this sort of thing before.
It is perfectly possible that the British government manufactured the whole Salisbury thing. We are capable of just as
much despicable behavior and murder as the next.
Part of the Great British act's of bravery and heroism in the second world war is the part played by women agents who were
parachuted into France and helped organize local resistance groups. Odette Hallowes, Noor Inayat Khan and Violette Szabo are just
a few of the many names but they are the best known. What is not generally know is that many agents when undergoing their training
in the UK, were given information about the 'D' day landings, the approx time and place. They were then dropped into France into
the hands of the waiting German army who captured and tortured and often executed them.
The double agent, who Winston Churchill met and fully approved of the plan was Henri Dericourt, an officer in the German army
and our man on the ground in France. Dericourt organized the time and place for the drop off of the incoming agents, then told
the Germans. The information about the 'D' day invasion time and place was false. The British fed the agents (only a small number)
into German hands knowing they would be captured and the false information tortured out of them.
Source :- 'A Quiet Courage' Liane Jones.
It's a tough old world and we are certainly capable of a Salisbury set-up and god knows what else in Syria.
From The Guardian articles today that I have read on Syria, it makes absolutely clear that if you in any way question the narrative
forwarded here, that you are a stupid conspiracy theorist in line with Richard Spencer and other far-right, American nutcases.
A more traditional form of argument to incline people to their way of thinking would be facts. But social pressure to conform
and not be a conspiratorial idiot in line with the far-right obviously work better for most of their readers. My only surprise
it that position hasn't been linked with Brexit.
Did anyone see the massive canister that was shown on TV repeatedly that was supposed to have been air-dropped and smashed through
the window of a house, landed on a bed and failed to go off.
The bed was in remarkable condition with just a few ruffled bedclothes considering it had been hit with a metal object weighing
god knows what and dropped from a great height.
"More than 40 years after the US sprayed millions of litres of chemical agents to defoliate"
The Defoliant Agent Orange was used to kill jungles, resulting in light getting through to the dark jungle floors & a massive
amount of low bush regrowing, making the finding of Vietcong fighters even harder!
It was sprayed even on American troops, it is a horrible stuff. Still compared to Chlorine poison gas, let alone nerve gases,
it is much less terrible. Though the long term effects are pretty horrible.
Who needs facts when you've got opinions? Non more hypocritical than the British. Its what you get when you lie and distort though
a willing press, you get found out and then nobody believes anything you say.anymore. The white helmets are a western funded and
founded organisation, they are NOT independent they are NOT volunteers, The UK the US and the Dutch fund them to the tune of over
$40 million. They are a propaganda dispensing outlet. The press shouldn't report anything they release because it is utterly unable
to substantiate ANY of it, there hasn't been a western journalist in these areas for over 4 years so why do the press expect us
to believe anything they print? Combine this with the worst and most incompetent Govt this country has seen for decades and all
you have is a massive distraction from massive domestic troubles which the same govt has no answers too.
""I am strongly in favour of using poisoned gas against uncivilised tribes," [Winston Churchill] declared in one secret memorandum."
The current condemnation by the international community and international law is good and needs enforcement. But no virtue
signalling where there is none.
But we're still awaiting evidence that a chemical attack has been carried out in Douma, aren't we? And if an attack was carried
out, by whom. But before these essential points are verified, you feel that a targeted military response is justified. Are you
equally keen for some targeted military response for the use of chemical weapons, namely white phosphorus, in Palestine by the
Israaeli military? Unlike Douma, the use of these chemical weapons in the occupied territories by the IDF's personnel is well
documented. But we haven't attacked them yet. Funny that.
Instead of "chemicals" why not just firebomb them - you know like we did to entire cities full of women and children in WW2?
Hamburg 27 July 1943 - 46,000 civilians killed in a firestorm
Kassel 22 October 1943 - 9,000 civilians killed 24,000 houses destroyed in a firestorm
Darmstadt 11 September 1944 - 8,000 civilians killed in a firestorm
Dresden 13/14th February - 25,000 civilians killed in a firestorm
Obviously we were fighting Nazism and hadn't actually been invaded - and he is fighting Wahhabism and has had major cities
overrun...
Maybe if Assad burnt people to death rather than gassing them we would make a statue of him outside Westminster like the one
of Bomber Harris?
Remember the tearful Kuwaiti nurse with her heartrending story of Iraqi troops tipping premature babies out of their incubators
after the invasion in 1990? The story was published in pretty much every major Western newspaper, massively increased public support
for military intervention............................and turned out to be total bullshit.
Is it too much too ask that we try a bit of collective critical thinking and wait for hard evidence before blundering into
a military conflict with Assad; and potentially Putin?
Well, this is the sort of stuff that the Israelis would be gagging for. They want Assad neutralised and they are assisting ISIS
terrorists on the Golan Heights. They tend to their wounded and send them back across the border to fight Assad. What better than
to drag the Americans, Brits and French into the ring to finish him off. Job done eh?
Are you sure you are not promoting an Israeli agenda here Jonathan?
Incidentantally what did we in the west do when the Iraqis were gassing the Iranians with nerve agents in the marshes of southern
Iraq during the Iran Iraq War? Did we intervene then? No, we didn't we allowed it to happen.
Come on frip, you have to admit there was absolutely no motive for Assad's forces to carry out this attack. Why do you think the
Guardian and other main stream media outlets are not even considering the possibility the Jihadi rebels staged it to trigger western
intervention? I know, I know.. it's all evil Assad killing his own people for no other reason than he likes butchering people...
blah blah. The regime change agenda against Syria has been derailed, no amount of false flag attacks can change the facts on the
ground.
More than 40 years after the US sprayed millions of litres of chemical agents to defoliate vast swathes of Vietnam and in the
full knowledge it would be have a catastrophic effect on the health of the inhabitants of those area, Vietnam has by far the highest
incidence of liver cancer on the planet.
Then more recently we have the deadly depleted uranium from US shells that innocent Iraqis are inhaling as shrill voices denounce
Assad.
The Syrian people are heroically resisting and defeating western imperialism. This "civil war" has been nothing but a war
for Syrian resources waged by western proxies.
So now, In desperation borne out of their impending defeat, the imperialists have staged a chemical attack in a last throw
of the dice to gain popular support for an escalation in military intervention. Like military interventions of the past, it is
being justified in the name of humanitarian intervention.
But if we have a brief browse of history we can see that US & UK governments have brought only death, misery and destruction
on the populations it was supposedly helping. Hands off Syria.
"... People such as Stephen Cohen and myself, who were actively involved throughout the entirety of the Cold War, are astonished at the reckless and irresponsible behavior of the US government and its European vassals toward Russia. ..."
"... In this brief video, Stephen Cohen describes to Tucker Carlson the extreme danger of the present situation: https://www.youtube.com/watch?v=zvK1Eu01Lz0 Published on Apr 13, 2018 ..."
A normal person would answer "yes" to the three questions. So what does this tell us about
Trump's government as these insane actions are the principle practice of Trump's
government?
Does anyone doubt that Nikki Haley is insane?
Does anyone doubt that John Bolton is insane?
Does anyone doubt that Mike Pompeo is insane?
Does this mean that Trump is insane for appointing to the top positions insane people who
foment war with a nuclear power?
Does this mean that Congress is insane for approving these appointments?
These are honest questions. Assuming we avoid the Trump-promised Syrian showdown, how long
before the insane Trump regime orchestrates another crisis?
The entire world should understand that because of the existence of the insane Trump regime,
the continued existence of life on earth is very much in question.
People such as Stephen Cohen and myself, who were actively involved throughout the entirety
of the Cold War, are astonished at the reckless and irresponsible behavior of the US government
and its European vassals toward Russia. Nothing as irresponsible as what we have witnessed
since the Clinton regime and which has worsened dramatically under the Obama and Trump regimes
would have been imaginable during the Cold War. In this brief video, Stephen Cohen describes to
Tucker Carlson the extreme danger of the present situation:
https://www.youtube.com/watch?v=zvK1Eu01Lz0
Published on Apr 13, 2018
The failure of political leadership throughout the Western world is total. Such total
failure is likely to prove deadly to life on earth.
It takes a lot of courage for an addict to recover and stay clean. And it is sadly not news that drug addiction and high levels
of prescription drug use are signs that something is deeply broken in our society. There are always some people afflicted with deep
personal pain but our system is doing a very good job of generating unnecessary pain and desperation.
Mady Ohlman was 22 on the evening some years ago when she stood in a friend's bathroom looking down at the sink.
"I had set up a bunch of needles filled with heroin because I wanted to just do them back-to-back-to-back," Ohlman recalled. She
doesn't remember how many she injected before collapsing, or how long she lay drugged-out on the floor.
"But I remember being pissed because I could still get up, you know?"
She wanted to be dead, she said, glancing down, a wisp of straight brown hair slipping from behind an ear across her thin face.
At that point, said Ohlman, she'd been addicted to opioids -- controlled by the drugs -- for more than three years.
"And doing all these things you don't want to do that are horrible -- you know, selling my body, stealing from my mom, sleeping
in my car," Ohlman said. "How could I not be suicidal?"
For this young woman, whose weight had dropped to about 90 pounds, who was shooting heroin just to avoid feeling violently ill,
suicide seemed a painless way out.
"You realize getting clean would be a lot of work," Ohlman said, her voice rising. "And you realize dying would be a lot less
painful. You also feel like you'll be doing everyone else a favor if you die."
Ohlman, who has now been sober for more than four years, said many drug users hit the same point, when the disease and the pursuit
of illegal drugs crushes their will to live. Ohlman is among at least
40 percent of active
drug users who wrestle with depression, anxiety or another mental health issue that increases the risk of suicide.
Measuring Suicide Among Patients Addicted To Opioids
Massachusetts, where Ohlman lives, began formally
recognizing
in May 2017 that some opioid overdose deaths are suicides. The state confirmed only about 2 percent of all overdose deaths as suicides,
but Dr. Monica Bhare l, head of the
Massachusetts Department of Public Health, said it's difficult to determine a person's true intent.
"For one thing, medical examiners use different criteria for whether suicide was involved or not," Bharel said, and the "tremendous
amount of stigma surrounding both overdose deaths and suicide sometimes makes it extremely challenging to piece everything together
and figure out unintentional and intentional."
Research on drug addiction and suicide suggests much higher numbers.
"[Based on the literature that's available], it looks like it's anywhere between 25 and 45 percent of deaths by overdose that
may be actual suicides," said
Dr. Maria Oquendo
, immediate past president of the American Psychiatric Association.
Oquendo pointed to one study of overdoses
from prescription opioids that found nearly 54 percent were unintentional. The rest were either suicide attempts or undetermined.
Several large studies show an increased risk of suicide among drug users addicted to opioids, especially women. In
a study of about 5 million veterans, women were eight
times as likely as others to be at risk for suicide, while men faced a twofold risk.
The opioid epidemic is occurring at the same time suicides have
hit a 30-year high , but Oquendo said few doctors
look for a connection.
"They are not monitoring it," said Oquendo, who chairs the department of psychiatry at the University of Pennsylvania. "They are
probably not assessing it in the kinds of depths they would need to prevent some of the deaths."
That's starting to change. A few hospitals in Boston, for example, aim to ask every patient admitted about substance use, as well
as about whether they've considered hurting themselves.
"No one has answered the chicken and egg [problem]," said
Dr. Kiame Mahaniah , a family physician who runs the
Lynn Community Health Center in Lynn, Mass. Is it that patients "have mental health issues that lead to addiction, or did a life
of addiction then trigger mental health problems?"
With so little data to go on, "it's so important to provide treatment that covers all those bases," Mahaniah said.
'Deaths Of Despair'
When doctors do look deeper into the reasons patients addicted to opioids become suicidal, some economists predict they'll find
deep reservoirs of depression and pain.
In a seminal paper published in 2015, Princeton economists
Angus Deaton and
Anne Case tracked falling marriage rates,
the loss of stable middle-class jobs and rising rates of self-reported pain. The authors say opioid overdoses, suicides and diseases
related to alcoholism are all often "deaths of despair."
"We think of opioids as something that's thrown petrol on the flames and made things infinitely worse," Deaton said, "but the
underlying deep malaise would be there even without the opioids."
Many economists agree on remedies for that deep malaise. Harvard economics professor
David Cutle r said solutions include a good education, a steady
job that pays a decent wage, secure housing, food and health care.
"And also thinking about a sense of purpose in life," Cutler said. "That is, even if one is doing well financially, is there a
sense that one is contributing in a meaningful way?"
Tackling Despair In The Addiction Community
"I know firsthand the sense of hopelessness that people can feel in the throes of addiction," said
Michael Botticelli , executive director of the Grayken Center
for Addiction at Boston Medical Center; he is in recovery for an addiction to alcohol.
Botticelli said recovery programs must help patients come out of isolation and create or recreate bonds with family and friends.
"The vast majority of people I know who are in recovery often talk about this profound sense of re-establishing -- and sometimes
establishing for the first time -- a connection to a much larger community," Botticelli said.
Ohlman said she isn't sure why her attempted suicide, with multiple injections of heroin, didn't work.
"I just got really lucky," Ohlman said. "I don't know how."
A big part of her recovery strategy involves building a supportive community, she said.
"Meetings; 12-step; sponsorship and networking; being involved with people doing what I'm doing," said Ohlman, ticking through
a list of her priorities.
There's a fatal overdose at least once a week within her Cape Cod community, she said. Some are accidental, others not. Ohlman
said she's convinced that telling her story, of losing and then finding hope, will help bring those numbers down.
What a difference two months makes. Back in January, with jobs aplenty and Americans
spending like drunken sailors (sending their savings rate to the lowest on record), average
hourly earnings suddenly spiked, unleashing the February VIXplosion over concerns that the Fed
is behind the curve and will be forced to hike much more aggressively.
Well, fast forward to today, when all those "green shoots" are either dead or on the verge,
and after today's Personal Income and Spending report, it appears that it is stagflation that
is once looming.
First, core PCE, the Fed's favorite inflation gauge, rose 1.6%YoY in February 2017; the
biggest gain since April 2017. Meanwhile, the PCE deflator rose by 1.8%, coming hotter than
expected, just as the cellular service price collapse falls out of the Y/Y data, sending annual
inflation higher by 0.3%, and is set spook the next set of CPI data. In other words, inflation
is here.
Then there is the US consumer's reaction, and while until just a few months back the US
savings rate was at all time lows, it has since jumped to 3.4%, the highest since August 2017,
as households are no longer spending more than they can afford, a theme we observed at the end
of 2017. This also means that spending is lagging income for 3 consecutive months, as something
appears to have spooked American consumers.
That something may be wages and salaries themselves, because while the BLS' statistical
approximation of average hourly wages is just that, the BEA's personal income actually carries
wages and salaries data for both private and government workers. What it found is that after
peaking in December, wage growth for these two worker groups has declined for 2 consecutive
months, confirming what many have warned, namely that the recent period of benign wage increase
is over, and now the slowdown begins.
Firs of all Mark Galeotti is very weak. That's incurable.
I want your money poor Pinocchio -- that the new slogan of May government. Kind of
compensation for Brexit losses at Russian oligarchs expense.
What Russophobe Galiotti does not understand is that this another nail in the coffin of neoliberalism. As soon as you
start to distriminate between oligarche neoliberalism stops and nationalism starts
Notable quotes:
"... Of course, the irony is that by driving out Russian money, London would in part be doing Putin's work for him ..."
"... He has launched a " de-offshorization " campaign to try to persuade, cajole, and intimidate oligarchs and minigarchs into bringing their money back home. Along with the stabilization of the economy as a whole, this has had some limited success. While more than $31 billion flowed out of the country last year alone, this is a dramatic fall from 2014's $154 billion . ..."
"... The thought that Britain would actually be returning capital into Putin's grasp may be an uncomfortable one. After all, a third possible policy goal would be actively to seek to undermine the regime in Moscow. ..."
This is also a project in which further international cooperation would be crucial. Chasing
that money and the influence it buys out of London but seeing it find comfortable new homes in
Paris, Frankfurt, and New York is only half the job done and will do little to chasten Moscow.
Although it will be difficult to persuade others to turn away tempting business, the unexpected
support Britain is receiving from European Union partners in particular suggests this may be an
opportune moment to convince them that in its experience this money is too toxic to be safe and
that this is a Western, not just a British, problem.
Of course, the irony is that by driving out Russian money, London would in part be doing
Putin's work for him . Since 2014, the Russian economy has been in the doldrums.
Furthermore, Putin is a man who understands power better than economics, and he is unhappy to
see elites stash their money outside his grasp.
Putin is a man who understands power better than economics, and he is unhappy to see elites
stash their money outside his grasp.
He has launched a "
de-offshorization " campaign to try to persuade, cajole, and intimidate oligarchs and
minigarchs into bringing their money back home. Along with the stabilization of the economy as
a whole, this has had some limited success. While more than $31
billion flowed out of the country last year alone, this is a dramatic fall from 2014's
$154 billion .
The thought that Britain would actually be returning capital into Putin's grasp may be
an uncomfortable one. After all, a third possible policy goal would be actively to seek to
undermine the regime in Moscow. Overt efforts at regime change would be dangerous and
likely counterproductive, but London may feel that it should not pass up opportunities to
weaken the Kremlin
London may feel that it should not pass up opportunities to weaken the Kremlin
, in the hope that this may tame its appetite for playing confrontational
geopolitics.
... ... ...
Mark Galeotti is a senior research fellow at the Institute of International Affairs Prague and a visiting fellow with
the European Council on Foreign Relations.
(vox.com)The US electricity sector is in a
period of unprecedented change and turmoil . Renewable energy prices are falling like
crazy. Natural gas production continues its extraordinary surge. Coal, the golden child of the
current administration, is headed down the tubes. In all that bedlam, it's easy to lose sight
of an equally important (if less sexy) trend: Demand for electricity is stagnant. Thanks to a
combination of greater energy efficiency, outsourcing of heavy industry, and customers
generating their own power on site, demand for utility power has been flat for 10 years, and
most forecasts expect it to stay that way. The die was cast around 1998, when GDP growth and
electricity demand growth became "decoupled." This historic shift has wreaked havoc in the
utility industry in ways large and small, visible and obscure. Some of that havoc is
high-profile and headline-making, as in the recent requests from utilities (and attempts by the
Trump administration) to bail out large coal and nuclear plants.
President Donald Trump has ordered the expulsion of 60 Russian diplomats and the closure of
the Russian consulate in Seattle. It comes in response to the poisoning of Sergei Skripal in
Salisbury, which the UK has blamed on Russia. The move follows major diplomatic pressure by the
UK on its allies to follow their lead in expelling Russian diplomats. The Russian embassy in
Washington had previously urged Trump not to heed the "fake news " on Skripal's
poisoning.
British Prime Minister Theresa May has accused Moscow of being behind the poisoning of the
former spy Skripal and his daughter in the town of Salisbury in early March.
Breaking: US to expel 48 Russian embassy workers in Washington, D.C. and 12 at the Russian
mission to the U.N. U.S. says they were intel officers using diplo status as cover.
pic.twitter.com/mRuwY8Tes6
Of the 60 diplomats expelled, 12 formed part of the Russian mission to the United Nations.
In a statement, US ambassador to the UN Nikki Haley said the 12 Russians in question had "
abused their privilege of residence" in the US and had "engaged in espionage
activities that are adverse to our national security."
"... President Trump was said to complain that Tillerson disagreed with him and McMaster talked too much. Bolton seems likely to combine both of those traits in one pugnacious, mustachioed package. ..."
"... Bolton may find that in this job, he's the midlevel munchkin. Remember, the national security adviser is supposed to be the coordinator, conciliator, and honest broker among Cabinet officials, managing a process by which all get a fair say and the president makes well-informed decisions. Outgoing National Security Adviser H.R. McMaster reportedly lost favor with Defense Secretary Mattis and Chief of Staff John Kelly for failing to defer to them, and for being too emotional . ..."
John Bolton has been one of liberals' top bogeymen on national security for more than a decade now. He seems to relish the
role, going out of his way to argue that the Iraq War wasn't really a failure, calling for U.S.-led regime change in Iran and
preventive war against North Korea, and writing the foreword for a
book
that proclaimed President Obama to be a secret Muslim. He is a profoundly partisan creature, having started a
super-PAC whose largest donor was leading Trump benefactor Rebekah Mercer and whose provider of analytics was Cambridge
Analytica, the firm alleged to have improperly used Facebook data to make voter profiles, which it sold to the Trump and
Brexit campaigns, among others.
Recently Bolton's statements have grown more extreme, alarming centrist and conservative national security professionals along
with his longtime liberal foes. He seemed to
say
that the United States could attack North Korea without the agreement of our South Korean allies, who would face the
highest risk of retaliation and casualties; just two months ago he
called for
a regime change effort in Iran that would allow the U.S. to open a new embassy there by 2019, the 40th
anniversary of the Iranian Revolution and the taking of Americans hostage in Tehran. His
hostility toward Islam
points toward a set of extreme policies that could easily have the effect of abridging American
Muslims' rights at home and alienating America's Muslim allies abroad.
As worrying as these policies are, it's worth taking a step back and thinking not about Bolton, but about his new boss, Donald
Trump. Trump reportedly considered Bolton for a Cabinet post early on, but then
soured
on him, finding his mustache unprofessional. His choice of Bolton to lead the National Security Council reinforces
several trends: right now, this administration is all about making Trump's opponents uncomfortable and angry. Internal
coherence and policy effectiveness are not a primary or even secondary consideration. And anyone would be a fool to imagine
that, because Bolton pleases Trump today, he will continue to do so tomorrow.
Yes, Bolton has taken strong stances against the policies of Russian President Vladimir Putin (though he has also been
quoted
praising Russian "democracy" as recently as 2013). That's nothing new: Defense Secretary Jim Mattis, incoming
Secretary of State Mike Pompeo, and outgoing National Security Adviser H.R. McMaster have called for greater pushback on
Russia as well. But there's every reason to think that, rather than a well-oiled war machine, what we'll get from Bolton's
National Security Council is scheming and discord – which could be even more dangerous.
President Trump was said to complain that Tillerson disagreed with him and McMaster talked too much. Bolton seems likely
to combine both of those traits in one pugnacious, mustachioed package.
Their disagreements are real – Bolton has
famously pooh-poohed the kind of summit diplomacy with North Korea that Trump is now committed to. While Trump famously backed
away from his support for the 2002 invasion of Iraq, courting the GOP isolationist base, Bolton continues to argue that the
invasion worked, and seldom hears of a war he would not participate in. Trump
attempted
to block transgender people from serving in the military, but Bolton has declined to take part in the right's
LGBT-bashing, famously hiring gay staff and
calling for
the end of Don't Ask, Don't Tell.
That's all substance. What really seems likely to take Bolton down is his style, which is legendary – and not in a good way.
His colleagues from the George W. Bush administration responded to Trump's
announcement
with
comments like
"the obvious question is whether John Bolton has the temperament and the judgment for the job" – not exactly
a ringing endorsement. One former co-worker
described
Bolton as a "kiss up, kick down kind of guy," and he was notorious in past administrations for conniving and
sneaking around officials who disagreed with him, both traits that Trump seems likely to enjoy until he doesn't. This is a
man who can't refrain from
telling Tucker Carlson
that his analysis is "simpleminded" – while he's a guest on Carlson's show. Turns out it's not true
that he threw a stapler at a contractor – it was a
tape dispenser.
When Bolton was caught attempting to cook intelligence to suggest that Cuba had a biological weapons
program, he bullied the analyst who had dared push back, calling him a "
midlevel
munchkin
." How long until Trump tires of the drama – or of being eclipsed?
Bolton may find that in this job, he's the midlevel munchkin. Remember, the national security adviser is supposed to be
the coordinator, conciliator, and honest broker among Cabinet officials, managing a process by which all get a fair say and
the president makes well-informed decisions. Outgoing National Security Adviser H.R. McMaster reportedly lost favor with
Defense Secretary Mattis and Chief of Staff John Kelly for failing to defer to them, and for being
too emotional
.
Love Bolton or hate him, no one imagines he will be a self-effacing figure, and no one hires him to run a no-drama process.
It's also hard to imagine that many of the high-quality professionals McMaster brought into the National Security Council
staff will choose to stay. McMaster repeatedly had to fight for his team within the Trump administration, but Bolton seems
unlikely to follow that pattern, or to inspire the kind of loyalty that drew well-regarded policy wonks to work for McMaster,
regardless their views of Trump.
So even if you like the policies Bolton espouses, it's hard to imagine a smooth process implementing them. That seems likely
to leave us with Muslim ban-level incompetence, extreme bellicosity, and several very loud, competing voices – with
Twitter feeds
– on the most sensitive issues of war and weapons of mass destruction.
A modern fellow of genus Homo protests his innocence. "I don't work because I worked much
harder before", says he. "I labored for ten years at a crap job earning $30,000 per year and
that earned me the right to live in miserable conditions in which the loss of my job would
have made me destitute in weeks. But, I was not content to labor as my fellows. I got a
second job at $20,000 per year and I was so thrifty that I spent not a penny of it but banked
it all so that at the end of my time I had $300,000, a princely sum. I invested it wisely at
10% and now I can live for the rest of my life, if modestly, off the proceeds of only my own
sweat, my own thriftiness, and my own discipline. And, if there was any luck to it - in my
not facing misfortune or ill health or any other calamity - that was the product of my own
luck too. I owe nothing to anyone. What I have is due to myself alone, and those who have
much more than I, it seems to me that they must have arrived at it the same as I, perhaps
over generations. What is this social power you speak of when it is only individual labor and
individual property that stems from it? It seems to me that you merely envy that which you
are too lazy to earn for yourself."
"My dear independent fellow" says we, "let us understand the simple arithmetic of your
claims. If your story is as you say and we ignore all else that you report, still at the end
of ten years, we see only $200,000. And, if you continue to live at this admittedly low
level, nevertheless, you will have run through your entire accumulated proceeds in only 6
years and eight months. More than this, by your accounting, it would take one and a third
lifetimes to create a single lifetime without labor, and this at the exceedingly low
standards and exceptionally favorable circumstances that you assume. How then are we to
explain those who live without labor for generations, and this at a thousand or ten thousand
times times the level that you report? How many generations of 'thrift' and 'hard work' would
this require? What you claim is impossible for you and beyond impossibility for those who
live above you. Where is this magic of 'individual labor and individual property' that you
speak of?"
"But you forget interest", protests our friend. "My money makes money, and simply by the
act of having some which is not consumed in day to day living, that which I save is
augmented. It is this which grants me my independence."
"We forget as much as your money 'makes'," answers we, "which is nothing at all. Set your
money on the table and leave it there for as long as you like. Nothing happens to it. It
remains the same. It is only by setting it in motion as capital that anything whatever is
'made' and that 'making' is the product of labor, the same as your own. Your interest
comes from the command of the labor of others, just as your own was once commanded and
after 6 years and eight months not a speck of 'hard work', 'thrift', 'good luck' or 'wisdom'
is left. Neither is there any trace of 'independence' or 'personal property' You now live by
the labor of others... by the transformation of your pitiful 'savings' into Capital, no
matter how small the sum. It is your ability to command the labor of others as a social
power that gives you your ability and that you have a poor man's caricature of that
process changes nothing other than to lay fraudulent your claims to the right. You might as
well claim innate superiority or the right of the sword as did the slave master or the
god-given hierarchy of obligations of the lord or even the phases of the moon, if you like.
You eat without working because you have maneuvered yourself into a position in which others
work to feed you. You are the opposite of what you claim."
"You're just trying to make me feel bad.", says our friend.
"We don't give a shit how you feel", says we. "It is modest enough what you do... just as
you claim. It is your willingness to ignore what is closer to your face than your nose that
we tire of. "
Our friend orders another beer and pretends to watch the hockey game though he would be
hard pressed to name two players on either team.
Capital is therefore not only personal; it is a social power.
"... China, Russia, et. al. realized that the debt-saturated U.S. was propped up by the fact that the U.S. "dollar" was the reserve banking and trading currency of the entire world and that the "Petrodollar" was one of the main pillars of it, and that this system was the main source of U.S. influence and power around the world and allowed the U.S. and friends to impose financial sanctions on other countries. They also saw that the U.S. was not using gold or silver as a type of support or backup for the financial system. Therefore, they developed their own computer servers to route orders between banks and financial companies that will operate outside of the SWIFT system dominated by the U.S. It is now operational and is called CIPS (Cross-Border Interbank Payment System)-- ..."
In addition to the common desire of some (or many) human beings to exercise authority over
other groups of people, I think Xi Jinping and his supporters want to complete the large and
complex economic and financial projects they have started. It is not just the road and
railroad and other infrastructure projects tied to the regional trading structure China has
been working on, but a financial structure independent of the existing banking and financial
system that was put together by the U.S. and Britain.
It is my opinion that China, Russia, Iran, and probably additional countries decided to
make a move after the brazen 2003 invasion of Iraq by the U.S. and others, and the massive
financial fraud partly exposed in the U.S. and Britain in 2008 and afterwards, which fraud
was not stopped and the perpetrators were bailed out and none were prosecuted.
China, Russia, et. al. realized that the debt-saturated U.S. was propped up by the
fact that the U.S. "dollar" was the reserve banking and trading currency of the entire world
and that the "Petrodollar" was one of the main pillars of it, and that this system was the
main source of U.S. influence and power around the world and allowed the U.S. and friends to
impose financial sanctions on other countries. They also saw that the U.S. was not using gold
or silver as a type of support or backup for the financial system. Therefore, they developed
their own computer servers to route orders between banks and financial companies that will
operate outside of the SWIFT system dominated by the U.S. It is now operational and is called
CIPS (Cross-Border Interbank Payment System)--
In addition, they are moving to break the Petrodollar. In the early 1970's, the U.S. made
a non-treaty deal with Saudi Arabia that if they got the rest of OPEC to sell oil and gas to
the whole world only in U.S. dollars and would plough some of the money back into U.S.
government debt and into the stock market casino, the U.S. would protect the Saudi ruling
family so it could run the entire country as its private business. This forced the whole
world to get U.S. dollars in order to buy oil and gas, which further put the dollar in as
banking reserves around the world, which further pushed the dollar into being used to settle
much of the trade between countries.
However, now some contracts are being made to buy and sell oil and gas not in the U.S.
dollar, but in other currencies, especially the Chinese renminbi (a/k/a yuan). Also, both
China and Russia have been buying large amounts of gold for several years. To get around some
of the U.S. sanctions prior to the Joint Comprehensive Plan of Action (JCPOA), Iran sold oil
and gas in exchange for gold. Since gold is not a government created and ordered "fiat"
money, it cannot be choked off by the SWIFT system or controlled through numbers on computer
hard drives in banks.
Russia also remembers what happened after the collapse of the Soviet Union when the U.S.
financial "experts" [sic] went there to set up a "wonderful" market-based economy, but what
happened of course was the creation of a system to loot Mother Russia and establish a new
oligarchy tied in with the U.S., Britain, and Israel.
In the early 1990's when the Soviet Union pulled out of eastern Europe, the U.S. had a
chance to help the world be a safer and more peaceful place. The methods of medical diagnosis
and surgical technology developed in the U.S. could have been the basis of a new foreign
policy that would have voluntarily opened doors across the world.
But it was not to be. The desire of some to be king of the world pushed the chance of
improvement aside. Nevertheless, today even autocratic governments see that having financial
and governmental options can be a beneficial thing.
And to our immediate south, a movement has been going on for a while in Mexico to
establish a money based on silver, promoted by Hugo Salinas Price and others--
For obvious reasons, I am not optimistic about Mexico, the deterioration of which has been
a sad thing to see. It needs a new and real revolution.
Xi's move is not a unilateral thing. He had to have the support of the ruling committees
in China. Keep your eye on the financial structure, gold, and silver.
I've been waiting to see what happens with the SDR (Special Drawing Right). The IMF
(International Monetary Fund) added it to the SDR basket in October 2016 after a lot of foot
dragging by the US. The AIIB (Asian Infrastructure Investment Bank) was setup largely as a
Chinese alternative to the US dominated IMF and World Bank because they were not being given
an appropriate "place at the table" in the IMF, which was founded as part of the Bretton
Woods Agreement at the end of WWII.
I see the global monetary reset currently underway as the slowly moving, but
unstoppable, glacier that is forcing all other events.
"... So, you and I don't agree on a lot of issues but I think we share the same concern about this story, and that is that American journalists are being manipulated for whatever reason by the intelligence community in the United States, and I'm wondering why after years of having this happen to American journalists, they are allowing this to happen again. ..."
"... Well, that's the thing I would refrain that a little bit. I don't actually think so much that journalists are the victims in the sense of that formulation that they're being manipulated. I think at best what you can say for them is they are willingly and eagerly being manipulated. ..."
"... Because what you see is over and over they publish really inflammatory stories that turn out to be totally false and what happens in those cases? Nothing. They get enormous benefits when they publish recklessly. They get applause on social media from their peers, they get zillions of re-tweets, huge amounts of traffic, they end up on TV. They get applauded across the spectrum because people are so giddy and eager to hear more about this Russia and Trump story. ..."
Tucker
Carlson interviews Green Greenwald of The Intercept about journalists "willingly" being
taken advantage of by the intelligence community on stories about Russia to reap the benefits,
even when they know what they are publishing is "totally false."
From Tuesday's broadcast of Tucker Carlson Tonight on the FOX News Channel:
TUCKER CARLSON: So, Glenn, just to get to the facts of this story, it is conclusively shown
that the story about the 21 voting systems being hacked is untrue, correct?
GLENN GREENWALD, JOURNALIST: It's false in two ways, one is that several of the states
included in the list, such as Wisconsin, California, and Texas, said that the websites that
the Homeland Security Department cited had nothing to do with voting systems, they are
entirely unrelated.
And it's false in a second way, which is a lot of the stories, in fact, most of them said
that Russia tried to hack into the voting systems when in fact even Homeland Security, it can
only show that what they did was scan those computer systems, which is basically casing
something to say for vulnerabilities and made no attempts to actually hack into them. So, it
was false on various levels.
CARLSON: So, you and I don't agree on a lot of issues but I think we share the same
concern about this story, and that is that American journalists are being manipulated for
whatever reason by the intelligence community in the United States, and I'm wondering why
after years of having this happen to American journalists, they are allowing this to happen
again.
GREENWALD: Well, that's the thing I would refrain that a little bit. I don't actually
think so much that journalists are the victims in the sense of that formulation that they're
being manipulated. I think at best what you can say for them is they are willingly and
eagerly being manipulated.
(LAUGHTER)
Because what you see is over and over they publish really inflammatory stories that turn
out to be totally false and what happens in those cases? Nothing. They get enormous benefits
when they publish recklessly. They get applause on social media from their peers, they get
zillions of re-tweets, huge amounts of traffic, they end up on TV. They get applauded across the spectrum
because people are so giddy and eager to hear more about this Russia and Trump story.
And when their stories get completely debunked, it just kind of, everybody agrees to
ignore it and everyone moves on and they pay no price. At the same time, they are feeling and
pleasing their sources by publishing these sources that their sources want them to publish.
And so, there is huge amounts of career benefits and reputational benefits and very little
cost when they publish stories that end up being debunked because the narrative they are
serving is a popular one, at least within their peer circles.
CARLSON: Gosh! That is so dishonest. I mean, I think all of us and journalism have gotten
things wrong, I certainly have. If you feel bad about it, I mean, you really do and there's a
consequence. Do you really think there's that level of dishonesty in the American press?
GREENWALD: I think what it is more than dishonesty is a really warped incentive scheme
bolstered by this very severe groupthink that social media is fostering in ways that we don't
yet fully understand.
CARLSON: Yes.
GREENWALD: Most journalists these days are in Congressional Committees or at zoning board
meetings or using -- they're sitting on Twitter talking to one another and this produces this
extreme groupthink where these orthodoxies arise in deviating from them or questioning them
or challenging, believe me, results in all kinds of recrimination and scorn. And embracing
them produces this sort of in group mentality where you are rewarded, and I think a lot of it
is about that kind of behavior.
CARLSON: That is really deep. I mean, you live in a foreign country, I'm not on social
media, so maybe we have a little bit of distance from this, where do you think the story is
going? What's the next incarnation of it?
GREENWALD: Well, the odd part about it, and about the inpatients that journalists have in
trying to just jump to the finish line is that there are numerous investigations underway in
the city, including by credible investigators, including Senator Burr and Warner and the
Senate Intelligence Committee, which most people seem to trust and certainly Robert Mueller
who is armed with subpoena power, and everyone is really eager to lavish with praise.
So, we are going to find out presumably one way or the other soon enough. I guess that one
thing that is so odd to me Tucker, is that, this has been going on now for a year, this
accusation that the Trump administration or the Trump campaign colluded with the Russians to
hack the DNC and John Podesta's email and we know that there are huge numbers of people
inside the government who are willing to leak, even at the expense of committing crimes in
order to undermine Trump and yet, there has been no leaks so far showing any evidence of that
kind of collusion leading one to wonder why that is.
So, I hope that everybody is willing to wait until the actual investigation reveals
finally the real answers. But it doesn't seem that will be the case.
CARLSON: Bravery is when you disagree in public with your peers. And by that definition,
you are a very brave man. Glenn Greenwald, thanks for joining us tonight. I appreciate
it.
At the core of Trumpism is the rejection of neoliberalism
Pat Buchanan does not understand neoliberalism well and mixes apples with oranges, but the key idea expressed here stands: " Consider
this crazed ideology of free trade globalism with its roots in the scribblings of 19th-century idiot savants, not one of whom ever built
a great nation. Adhering religiously to free trade dogma, we have run up $12 trillion in trade deficits since Bush I. Our cities have
been gutted by the loss of plants and factories. Workers' wages have stagnated. The economic independence Hamilton sought and Republican
presidents from Lincoln to McKinley achieved is history."
Notable quotes:
"... Patrick J. Buchanan is the author of a new book, "Nixon's White House Wars: The Battles That Made and Broke a President and Divided America Forever." ..."
"I walk through this world with greater courage and hope when I find myself in a relation of friendship and intimacy with this
great man, whose fame has gone out not only over all Russia, but the world. We regard Marshal Stalin's life as most precious to the
hopes and hearts of all of us."
Returning home, Churchill assured a skeptical Parliament, "I know of no Government which stands to its obligations, even in its
own despite, more solidly than the Russian Soviet Government."
George W. Bush, with the U.S. establishment united behind him, invaded Iraq with the goal of creating a Vermont in the Middle
East that would be a beacon of democracy to the Arab and Islamic world.
Ex-Director of the NSA Gen. William Odom correctly called the U.S. invasion the greatest strategic blunder in American history.
But Bush, un-chastened, went on to preach a crusade for democracy with the goal of "ending tyranny in our world."
... ... ...
After our victory in the Cold War, we not only plunged into the Middle East to remake it in our image, we issued war guarantees
to every ex-member state of the Warsaw Pact, and threatened Russia with war if she ever intervened again in the Baltic Republics.
No Cold War president would have dreamed of issuing such an in-your-face challenge to a great nuclear power like Russia. If Putin's
Russia does not become the pacifist nation it has never been, these guarantees will one day be called. And America will either back
down -- or face a nuclear confrontation. Why would we risk something like this?
Consider this crazed ideology of free trade globalism with its roots in the scribblings of 19th-century idiot savants, not one
of whom ever built a great nation. Adhering religiously to free trade dogma, we have run up $12 trillion in trade deficits since
Bush I. Our cities have been gutted by the loss of plants and factories. Workers' wages have stagnated. The economic independence
Hamilton sought and Republican presidents from Lincoln to McKinley achieved is history.
But the greatest risk we are taking, based on utopianism, is the annual importation of well over a million legal and illegal immigrants,
many from the failed states of the Third World, in the belief we can create a united, peaceful and harmonious land of 400 million,
composed of every race, religion, ethnicity, tribe, creed, culture and language on earth.
Where is the historic evidence for the success of this experiment, the failure of which could mean the end of America as one nation
and one people?
Patrick J. Buchanan is the author of a new book, "Nixon's White House Wars: The Battles That Made and Broke a President and
Divided America Forever."
Pat Buchanan does not understand neoliberalism well and mixes apples with oranges, but the key idea expressed here stands:
" Consider this crazed ideology of free trade globalism with its roots in the scribblings of 19th-century idiot savants,
not one of whom ever built a great nation. Adhering religiously to free trade dogma, we have run up $12 trillion in trade deficits
since Bush I. Our cities have been gutted by the loss of plants and factories. Workers' wages have stagnated. The economic
independence Hamilton sought and Republican presidents from Lincoln to McKinley achieved is history."
The truth is that now Trump does not represent "Trumpism" -- the movement that he created which includes the following:
– rejection of neoliberal globalization;
– rejection of unrestricted immigration;
– fight against suppression of wages by multinationals via cheap imported labor;
– fight against the elimination of meaningful, well-paying jobs via outsourcing and offshoring of manufacturing;
– rejection of wars for enlargement and sustaining of neoliberal empire, especially NATO role as global policemen and wars for
Washington client Israel in the Middle East;
– détente with Russia;
– more pragmatic relations with Israel and suppression of Israeli agents of influence;
– revision of relations with China and addressing the problem of trade deficit.
– rejection of total surveillance on all citizens;
– the cut of military expenses to one third or less of the current level and concentrating on revival on national infrastructure,
education, and science.
– abandonment of maintenance of the "sole superpower" status and global neoliberal empire for more practical and less costly "semi-isolationist"
foreign policy; closing of unnecessary foreign military bases and cutting aid to the current clients.
Of course, the notion of "Trumpism" is fuzzy and different people might include some additional issues and disagree with some
listed here, but the core probably remains.
Of course, Trump is under relentless attack (coup d'état or, more precisely, a color revolution) of neoliberal fifth column,
which includes Clinton gang, fifth column elements within his administration (Rosenstein, etc) as well from remnants of Obama
administration (Brennan, Comey, Clapper) and associated elements within corresponding intelligence agencies. He probably was forced
into some compromises just to survive. He also has members of the neoliberal fifth column within his family (Ivanka and Kushner).
So the movement now is in deep need of a new leader.
That's a good summary of what the public voted for and didn't get.
And whether Trump has sold out, or was blackmailed or was a cynical manipulative liar for the beginning is really irrelevant.
The fact is that he is not doing it – so he is just blocking the way.
At some point the US public are going to have to forget about their "representatives" (Trump and Congress and the rest of
them) and get out onto the street to make themselves heard. The population of the US is 323 million people and if just 1/2
of 1% (1,6 million) of them decided to visit Congress directly the US administration might get the message.
pyrrhus, March 3, 2018 at 2:15 am GMT
@anon
Finally, Pat understands that the American [Neoliberal] Empire and habit of intervention all over the world is a disaster.
"... What kind of a moron would believe the Steele dossier on Trump and Russia? Lots of Democrat and hollywood elite morons and lots of morons at MSNBC and CNN. It's so transparently partisan, outrageous and full of fictitious claims, the dossier reads like a parody of a badly written spy novel. ..."
"... It is funny to watch how they are divided (republicans and democrats) on domestic issues but they are as one on aggressive and militaristic foreign policies. Bomb, invade, bomb... rinse and repeat. No objection from either side. ..."
"... Watch Jerome Corsi and James Kalstrom great video's about all the felony crimes Barry's DNC/DOJ/FBI were involved in including the dossier. ..."
"... to deflect the Seth Rich /WikiLeaks affair...and the Keystone Kops have been tripping all over as well as tripping up themselves ever since trying to "make it happen"...and if it was not for almost the "entire" mainstream media 'covering' for them many more people would actually realize that they are the biggest 'comedy' in town... ..."
What kind of a moron would believe the Steele dossier on Trump and Russia? Lots of Democrat
and hollywood elite morons and lots of morons at MSNBC and CNN. It's so transparently partisan, outrageous and full of fictitious claims, the dossier reads
like a parody of a badly written spy novel.
Amazingly, the dossier is what the FBI used to justify spying on American citizens.
Tucker Carlson easily debunks the many claims that Democrats in Congress repeatedly cited as
reason to stop the normal functioning of government, so that millions of tax payer dollars can
be spent trying to figure out if Trump has been a Russian spy for the last 10 years.
It is funny to watch how they are divided (republicans and democrats) on domestic issues
but they are as one on aggressive and militaristic foreign policies. Bomb, invade, bomb...
rinse and repeat. No objection from either side.
No need to convince me Tucker...have been calling them morons with regards to "Putin did
it" since the ex "moron in chief"...who by the way is now a certified fifth columnist with
the blessing of the treasonous mainstream media...insinuated as much after the "loser"
lost....to deflect the Seth Rich /WikiLeaks affair...and the Keystone Kops have been tripping
all over as well as tripping up themselves ever since trying to "make it happen"...and if it
was not for almost the "entire" mainstream media 'covering' for them many more people would
actually realize that they are the biggest 'comedy' in town...
Sunday, January 21, 2018Blockchain: what it is, what it does, and why you
probably don't need one
Dilbert - by Scott Adams
Interest in blockchain is at a fever pitch lately. This is in large part due to
the eye-popping price dynamics of Bitcoin --the original bad-boy cryptocurrency--which
everyone knows is powered by blockchain ...whatever that is. But no matter. Given that
even big players like Goldman Sachs are getting into the act (check out their super slick
presentation here: Blockchain--The New Technology of
Trust ) maybe it's time to figure out what all the fuss is about. What follows is based on
my slide deck which I recently presented at the Olin School of Business at a Blockchain
Panel (I will link up to video as soon as it becomes available)
Things are a little confusing out there I think in part because not enough care is taken in
defining terms before assessing pros and cons. And when terms are defined, they sometimes
include desired outcomes as a part of their definition. For example, blockchain
is often described as consisting of (among other things) an immutable ledger. This is
like defining a titanic to be an unsinkable ship.
So what do people mean when they bandy about the term blockchain ? I recently had a
chance to learn about the project from a corporate perspective as represented by Ed Corno of
IBM (see IBM Blockchain ), the
other member of the panel I mentioned above. From Ed's slide deck we have the following
definition:
Blockchain: a shared, replicated, permissioned ledger with consensus, provenance,
immutability and finality.
Well, if this is what blockchain is, then maybe I want one too! The issue I
have with this definition (apart from the fact that it confounds descriptive elements with
desired outcomes) is that it glosses over what I consider to be an important defining
characteristic of blockchain: the consensus mechanism. Loosely speaking, there are two
ways to achieve consensus. One is reputation-based (trust) and the other is
game-based (trustless).
I'm not 100% sure, but I believe the corporate versions of blockchain are likely to stick to
the standard model of reputation-based accounting. In this case, the efficiency gains of
"blockchain" boil down to the gains associated with making databases more synchronized across
trading partners, more cryptographically secure, more visible, more complete, etc. In short,
there is nothing revolutionary or radical going on here -- it's just the usual advancement of
the technology and methods associated with the on-going problem of database management.
Labeling the endeavor blockchain is alright, I guess. It certainly makes for good
marketing!
On the other hand, game-based blockchains--like the one that power Bitcoin--are, in my view,
potentially more revolutionary. But before I explain why I think this, I want to step back a
bit and describe my bird's eye view of what's happening in this space.
A Database of Individual Action Histories
The type of information that concerns us here is not what one might label "knowledge," say,
as in the recipe for a nuclear bomb. The information in question relates more to a set of
events that have happened in the past, in particular, events relating to individual actions.
Consider, for example, "David washed your car two days ago." This type of information is
intrinsically useless in the sense that it is not usable in any productive manner. In addition
to work histories like this, the same is true of customer service histories, delivery/receipt
histories, credit histories, or any performance-related history. And yet, people value such
information. It forms the bedrock of reputation and perhaps even of identity. As such, it is
frequently used as a form of currency.
Why is intrinsically useless history of this form valued? A monetary theorist may tell you
it's because of a lack of commitment or a lack of trust (see Evil is the Root of All
Money ). If people could be relied upon to make good on their promises a priori ,
their track records would largely be irrelevant from an economic perspective. A good reputation
is a form of capital. It is valued because it persuades creditors ( believers ) that more reputable agencies are
more likely to make good on their promises. We keep our money in a bank not because we think
bankers are angels, but because we believe the long-term franchise value of banking exceeds the
short-run benefit a bank would derive from appropriating our funds. (Well, that's the theory,
at least. Admittedly, it doesn't work perfectly.)
Note something important here. Because histories are just information, they can be created
"out of thin air." And, indeed, this is the fundamental source of the problem: people have an
incentive to fabricate or counterfeit individual histories (their own and perhaps those of
others) for a personal gain that comes at the expense of the community. No society can thrive,
let alone survive, if its members have to worry excessively about others taking credit for
their own personal contributions to the broader community. I'm writing this blog post in part
(well, perhaps mainly) because I'm hoping to get credit for it.
Since humans (like bankers) are not angels, what is wanted is an honest and immutable
database of histories (defined over a set of actions that are relevant for the community in
question). Its purpose is to eliminate false claims of sociable behavior (acts which are
tantamount to counterfeiting currency). Imagine too eliminating the frustration of discordant
records. How much time is wasted in trying to settle "he said/she said" claims inside and
outside of law courts? The ultimate goal, of course, is to promote fair and efficient outcomes.
We may not want something like this creepy Santa Claus technology , but
something similar defined over a restricted domain for a given application would be nice.
Organizing History
Let e(t) denote a set of events, or actions (relevant to the community in question),
performed by an individual at date t = 1,2,3,... An individual history at date t is denoted
Aggregating over individual events, we can let E(t) denote the set of individual actions at
date t, and let H(t-1) denote the communal history, that is, the set of individual histories of
people belonging to the community in question:
Observe that E(t) can be thought of as a "block" of information (relating to a set of
actions taken by members of the community at date t). If this is so, then H(t-1) consists of
time-stamped blocks of information connected in sequence to form a chain of blocks. In this
sense, any database consisting of a complete history of (community-relevant) events can be
thought of as a "blockchain."
Note that there are other ways of organizing history. For example, consider a cash-based
economy where people are anonymous and let e(t) denote acquisitions of cash (if positive) or
expenditures of cash (if negative). Then an individual's cash balances at the beginning of date
t is given by h(t-1) = e(t-1) + e(t-2) + ... + e(0). This is the sense in which "
money is memory ." Measuring a person's worth by how much money they have serves as a crude
summary statistic of the net contributions they've made to society in the past (assuming they
did not steal or counterfeit the money, of course). Another way to organize history is to
specify h(t-1) = { e(t-1) }. This is the "what have you done for me lately?" model of
remembering favors. The possibilities are endless. But an essential component of
blockchain is that it contains a complete history of all community-relevant events. (We
could perhaps generalize to truncated histories if data storage is a problem.)
Database Management Systems (DBMS) and the Read/Write Privilege
Alright then, suppose that a given community (consisting of people, different divisions
within a firm, different firms in a supply chain, etc.) wants to manage a chained-block of
histories H(t-1) over time. How is this to be done?
Along with a specification of what is to constitute the relevant information to be contained
in the database, any DBMS will have to specify parameters restricting:
1. The Read Privilege (who, what, and how);
2. The Write Privilege (who, what, and how).
That is, who gets to gets to read and write history? Is the database to be completely open,
like a public library? Or will some information be held in locked vaults, accessible only with
permission? And if by permission, how is this to be granted? By a trusted person, by algorithm,
or some other manner? Even more important is the question of who gets to write history. As I
explained earlier, the possibility for manipulation along this dimension is immense. How to
guard against to attempts to fabricate history?
Historically, in "small" communities (think traditional hunter-gatherer societies) this was
accomplished more or less automatically. There are no strangers in a small, isolated village
and communal monitoring is relatively easy. Brave deeds and foul acts alike, unobserved by some
or even most, rapidly become common knowledge. This is true even of the small communities we
belong to today (at work, in clubs, families, friends, etc.). Kocherlakota (1996) labels H(t-1) in
this scenario "societal memory." I like to think of it as a virtual database of individual
histories living in a distributed ledger of brains talking to each other in a P2P fashion,
with additions to, and maintenance of, the shared history determined through a consensus
mechanism. In this primitive DBMS, read and write privileges are largely open, the latter being
subject to consensus. It all sounds so.. . blockchainy.
While the primitive "blockchain" described above works well enough for small societies, it
doesn't scale very well. Today, the traditional local networks of human brains have been
augmented (and to some extent replaced) by a local and global networks of computers capable of
communicating over the Internet. Achieving rapid consensus in a large heterogeneous community
characterized by a vast flows of information is a rather daunting task.
The "solution" to this problem has largely taken the form of proprietary databases with
highly restricted read privileges managed by trusted entities who are delegated the write
privilege. The double-spend problem for digital money, for example, is solved by delegating the
record-keeping task to a bank, located within a banking system, performing debit/credit
operations on a set of proprietary ledgers connected to a central hub (a clearing agency)
typically managed by a central bank.
The Problem and the Blockchain Solution
Depending on your perspective, the system that has evolved to date is either (if you are
born before 1980) a great improvement over how things operated when we were young, or (if you
are born post 1980) a hopelessly tangled hodgepodge of networks that have trouble communicating
with each other and are intolerably vulnerable to data breaches (see figure below, courtesy Ed
Corno of IBM).
The solution to this present state of affairs is presented as blockchain (defined
earlier) which Ed depicts in the following way, Well sure, this looks like
a more organized way to keep the books and clear up communication channels, though the details
concerning how consensus is achieved in this system remain a little hazy to me. As I mentioned
earlier, I'm guessing that it'll be based on some reputation-based mechanism. But if this is
the case, then why can't we depict the solution in the following way?
That is, gather all the agents and agencies interacting with each other, forming them into a
more organized community, but keep it based on the traditional client-server (or hub-and-spoke)
model. In the center, we have the set of trusted "historians" (bankers, accountants, auditors,
database managers, etc.) who are granted the write-privilege. Communications between members
may be intermediated either by historians or take place in a P2P manner with the historians
listening in. The database can consist of the chain-blocked sets of information (blockchain)
H(t-1) described above. The parameters governing the read-privilege can be determined
beforehand by the needs of the community. The database could be made completely open--which is
equivalent to rendering it shared. And, of course, multiple copies of the database can be made
as often as is deemed necessary.
The point I'm making is, if we're ultimately going to depend on reputation-based consensus
mechanisms, then we need no new innovation (like blockchain) to organize a database. While I'm
no expert in the field of database management, it seems to me that standard protocols, for
example, in the form of SQL Server 2017 , can
accommodate what is needed technologically and operationally (if anyone disagrees with me on
this matter, please comment below).
Extending the Write Privilege: Game-Based Consensus
As explained above, extending the read-privilege is not a problem technologically. We are
all free to publish our diaries online, creating a shared-distributed ledger of our innermost
thoughts. Extending the write-privilege to unknown or untrusted parties, however, is an
entirely different matter. Of course, this depends in part on the nature of the information to
be stored. Wikipedia seems to work tolerably well. But its hard to use Wikipedia as currency.
This is not the case with personal action histories. You don't want other people writing your
diary!
Well, fine, so you don't trust "the Man." What then? One alternative is to game the
write privilege. The idea is to replace the trusted historian with a set of delegates drawn
from the community (a set potentially consisting of the entire community). Next, have these
delegates play a validation/consensus game designed in such a way that the equilibrium
(say, Nash or some
other solution
concept ) strategy profile chosen by each delegate at every date t = 1,2,3,... entails: (1)
No tampering with recorded history H(t-1); and (2) Only true blocks E(t) are validated and
appended to the ledger H(t-1).
What we have done here is replace one type of faith for another. Instead of having faith in
mechanisms that rely on personal reputations, we must now trust that the mechanism governing
non-cooperative play in the validation/consensus game will deliver a unique equilibrium outcome
with the desired properties. I think this is in part what people mean when I hear them say
"trust the math."
Well, trusting the math is one thing. Trusting in the outcome of a non-cooperative game is
quite another matter. The relevant field in economics is called mechanism design . I'm not going to get
into details here, but suffice it to say, it's not so straightforward designing mechanisms with
sure-fire good properties. Ironically, mechanisms like Bitcoin will have to build up
trust the old-fashioned way--through positive user experience (much the same way most of us
trust our vehicles to function, even if we have little idea how an internal combustion engine
works).
Of course, the same holds true for games based on reputational mechanisms. The difference
is, I think, that non-cooperative consensus games are intrinsically more costly to operate than
their reputational counterparts. The proof-of-work game played by Bitcoin
miners, for example, is made intentionally costly (to prevent DDoS attacks ) even though
validating the relevant transaction information is virtually costless if left in the hands of a
trusted validator. And if a lack of transparency is the problem for trusted systems, this
conceptually separate issue can be dealt with by extending the read-privilege communally.
Having said this, I think that depending on the circumstances and the application, the cost
associated with a game-based consensus mechanism may be worth incurring. I think we have to
remain agnostic on this matter for now and see how future developments unfold.
Blockchain: Powering DAOs
If Blockchain (with non-cooperative consensus) has a comparative advantage, where might it
be? To me, the clear application is in supporting Decentralized Autonomous
Organizations (DAOs). A DAO is basically a set of rules written as a computer program.
Because it possesses no central authority or node, it can offer tailor-made "legal" systems
unencumbered by prevailing laws and regulations, at least, insofar as transactions are limited
to virtual fulfillments (e.g., debit/credit operations on a ledger).
Bitcoin is an example of a DAO, though the intermediaries that are associated with Bitcoin
obviously are not. Ethereum is a platform that permits the construction of more sophisticated
DAOs via the use of smart contracts . The comparative advantages
of DAOs are that they permit: (1) a higher degree of anonymity; (2) permissionless access and
use; and (3) commitment to contractual terms (smart contracts).
It's not immediately clear to me what value these comparative advantages have for registered
businesses. There may be a role for legally compliant smart contracts (a tricky business for
international transactions). But perhaps the potential is much more than I can presently
imagine. Time will tell.
Will be interesting to see US shale production in response to increasing frac hits,
increasing costs, mounting debt wall. These are all legitimate issues which IEA seems to
overlook when issuing rosy predictions. Three Stooges thought they could repair a hole in a
pair of pants by cutting it out .same logic as IEA.
Yeah, it's those items and more. The biggest they overlook is declines from production. The
past two years, they have concentrated in sweet spots, to keep their chins above water. In
doing so, they have miraculously brought production back up to 2015 highs, and not much more,
although the EIA is reporting imaginary oil. Underneath all that production, wells are
declining at a rapid rate. The biggest rates are what they drilled last year. Those wells
will produce less than half of what they produced last year. So, how many wells would need to
be completed to increase production over a million barrels in 2018? More than current
capacity, that's for sure.
Although tight oil output has increased at an annual rate of close to 1000 kb/d over the
past 12 months (Dec 2016 to Nov 2017), I doubt that rate of increase will continue, probably
about half that unless oil prices rise more than I expect (and I expect we might get to $85/b
by Jan 2019).
I'd say it's a crap shoot as to whether it goes up, or down with about the same number of
completions in 2018 as 2017. Ok, let's say we have more completions, I still can't say it
will go up 500k barrels. While people place statistics on depletion rates, I haven't seen a
well, yet, that can comprehend statistics. As a matter of fact, they defy statistics.
There are 180k producing wells in Texas. There were about 5400 completions in 2017. That's
about 3% of total producing wells.
"... Major oil producing countries, Saudi Arabia chief among them, are using technology to stave off production declines. These YouTube videos are a perfect example of the extreme lengths being employed to continue production: ..."
"... When the decline kicks in, these technologies will ensure that the cliff will be steeper. While I believe we are living at the absolute peak of world production and that decline will kick in soon, I'm not so concerned about specific predictions. It will happen soon enough and when it does the impact will be severe. ..."
"... I think of this problem in personal terms -- my son was born in 2000. He will live to see a world of diminishing oil production (as well as sea level rise, resource conflicts, and many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today? I have lived through the peak period. I cannot envision what comes after. I can only hope that my son finds a way through it. ..."
"... "Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today?" ..."
"... Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I find interesting but useless to speculate about. ..."
"... I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al., were failing to materialize. ..."
Ron is absolutely right about the creaming issue. Major oil producing countries, Saudi Arabia
chief among them, are using technology to stave off production declines. These YouTube videos
are a perfect example of the extreme lengths being employed to continue production:
These videos underscore how uniquely valuable oil is as an energy source and how no other
substitute will ever come close to matching its utility.
When the decline kicks in, these technologies will ensure that the cliff will be
steeper. While I believe we are living at the absolute peak of world production and that
decline will kick in soon, I'm not so concerned about specific predictions. It will happen
soon enough and when it does the impact will be severe.
I think of this problem in personal terms -- my son was born in 2000. He will live to see
a world of diminishing oil production (as well as sea level rise, resource conflicts, and
many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production
will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a
drastically different place than it is today? I have lived through the peak period. I cannot
envision what comes after. I can only hope that my son finds a way through it.
"Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline?
Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place
than it is today?"
Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward
today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I
find interesting but useless to speculate about.
I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who
jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al.,
were failing to materialize.
This doesn't mean I think oil is infinite or anything. I do think our capacity to predict
doom is much more circumscribed than our abilities to avoid it.
Interesting BOEM report attached – their prediction of GOM oil and gas production from
2018-2027.
They predict oil production will increase from 1.65-1.67 mmbopd in the 2017-2019 window to
1.74-1.77 mmbopd in the 2023-2027 time frame. They include future production from current
reserves, contingent resources and undiscovered resources. Contingent resources are mainly
field expansion projects, new fault blocks, new reservoirs, and resources from discoveries
that have not been put on production.
They have initial production from undiscovered resources occurring already in 2019 –
suggesting that a few discoveries will be made and be on line by the end of 2019. Seems
rather ambitious even for subsea tiebacks.
Given the lack of GOM exploration success in the last few years, my biggest challenge to
these predictions are their estimates of production coming from new discoveries. They show
about 1 BBO of production comes from currently undiscovered resources in this 10 year window.
SLG – hope you are well and had a good holidays. Here is my updated effort at the same
thing. I've added some new discoveries, but not as big or developed as fast BOEM show. I've
included all qualified fields as named entries except a few discovered in 2016 and 2017, and
for a lot I've had to make guesses for reserves based on the expected development size
(numbers in brackets show nameplate capacity). I might be able to improve things a bit when
BOEM reserve numbers for end of 2016 come out, but it's still not going to look much like
their estimates. It's noticeable that there's a lot of activity in short term, small tie
backs now – but these only add about 5 to 10 kbpd and immediately start to decline. So
like you I don't know where they are getting such high contingent resource production
additions from unless it is all on existing developments – I guess if a lot of fields
get to grow like Mars-Ursa has and Atlantis might this year then there'd be enough, but that
seems unlikely to me, especially at the rate they show it.
Thanks George, and same to you for the new year.
I've made a stab at comparing numerous production profiles for the 2018-2027 window –
your's from above, my midcase and downside estimates from a little over a year ago, and
BOEM's estimates – both their total estimate, and their total estimate minus any new
resources/discoveries.
I plan to expand on this in a future post – including revised EUR estimate ranges.
They are all models with something worthwhile to add to the discussion, which is not what I
would say about the EIA projections. They just add have some kind of growth rate, with no
basis in actual numbers, and make it look fancy by adding a hurricane effect – and yet
this is the number usually quoted in the MSM. I think their predictions a couple of years ago
had an exit rate for this year of 2.2 mmbpd – miles off, and when they do try to
provide bottom up justification they look ridiculously ill informed.
Maybe they have a higher oil price forecast? Or they don't bother to see if what gets put on
line is worth developing? I know this is hard, but try preparing a forecast with prices
increasing 3% per year above inflation for 30 years, and you will get a higher forecast.
So. The US economy is just fine. The
post-recession 2010 Dodd-Frank legislation has cured all. Banks have lots of cash. Congress is
your friend and that certain-to-pass Tax Cut and Jobs bill will finally allow you, your family
and America to MAGA.
Really?!
... ... ...
Oh, those evil banks! The shadowy corporatist denizens of New York, London, and Brussels,
all guilty of a staggering set of every-expanding frauds couched in the beneficent language of
greedy short-term materialistic gain. Financial "crimes of the decade," like the Savings and
Loan meltdown, the Enron Collapse, and the Great Recession are nowadays reported almost
monthly. With metered US justice amounting only to a monetary fine for the offending criminal
bank – usually a small fraction of the money it previously stole, hypothecated, leveraged
or manipulated – and with criminal prosecution no longer a possibility, these criminals
continue to shovel trillions – not billions – into off-shore, non-tax paying
accounts of the already uber-rich. There is never enough.
Just in time for Christmas, Americans received the "Tax Cut and Jobs Bill 2017" that, of
course, contains not one word about jobs, but sounds so good to the ignorant who are still
transfixed on the false mantra of MAGA.
LIBOR, FOREX, COMEX, which used high-speed program securities trading combined with insider
manipulation, were the first serious examples of recent bank frauds. Since the Great Recession
magically became the Great Recovery, Wachovia and HSBC banks plead guilty to laundering money
for Mexican drug cartels, dictators, and terrorists. Wells Fargo and Bank of America were also
guilty of defrauding 10's of thousands of homeowners of their properties during the
"robo-signing" scandal; that was a scandal until Wells and BA paid the
mortdita and all returned to business as usual. Example: In July 2017 it was revealed
that more than 800,000 customers who had taken out car loans with Wells Fargo were charged for
auto insurance they did not need. Barely a month later, Wells was forced to disclose that the
number of bogus accounts that had been created was actually 3.5 million, a nearly 70 percent
increase over the bank's initial estimate. Why not? When the predictable result will be a small
percentage fine and keep the rest. Now that's MAGA!
If the individual retail – Mom and Pop – investor actually had a choice of where
to put their cash money, then no one with better than a fifth-grade education would put a penny
into the major stock markets. However, the goal of the many banking manipulations have had one
goal: eliminate financial investment choices to one – stocks.
One choice, Gold and silver, the previous historical champion alternative in preserving
one's wealth, was deliberately eliminated from short-term, private investment. The banks,
issued and sold massive amounts of worthless certificate gold and derivative gold (not
bullion), and the same in silver, at a current ratio of 272 paper instruments to one measly
ounce of real physical gold. All this has been leveraged against real precious metals, and next
used to influence the price of gold-down- by selling huge tranches of these ostensibly
worthless gold contracts (1 contract=100 paper ounces) within seconds when the spot price of
gold begins to rise. The banks have done this so often that gold has not risen to levels it
would likely reach without this manipulation. This has driven massive liquidity that would have
gone to precious metals towards stocks. This is likely evidenced by the advent of the meteoric
rise in the price of BitCoin, one that-like gold- escapes the bank's control and a
super-inflated stock market.
Similarly, thanks to the economic trickery that has been three rounds of Quantitative
Easing, the other two conventional options; the bond market and personal bank savings accounts,
have been manipulated to also produce a very low rate of return, driving these cash funds to
stocks. It is this entire package of criminality – providing no other place for liquidity
to go – that has performed as the plot to push a surging world stock market to obscene
levels that have no basis in factually-based accounting or economic methods or
history.
Banks Are Ready for the Next Crash – You're Not!
The banks know the next crash is coming. Like 2007, they have set in motion the next
great(est) recession. Predator banks know that most people, thanks to the aforementioned
financial control, media omission and an inferior education system, are "stupid,"
especially regarding the nuances of financial fraud. As the majority of Americans and Europeans
live in the illusion that their financial institutions will protect their savings, they miss
their bank's greedy preparations for the next stock market crash slithering through the halls
of their Parliament or Congress. This already completed legislation states in plain English,
and the language of endemic corruption, that your bank intends to steal your money directly
from your savings account. And your government will let them do this to you.
30,000 pages make up the Dodd-Frank post-recession legislation, authored by the banks in the
aftermath of the Great Recession. The Dodd-Frank legislation was touted as eliminating the
massive bail-outs the US gave virtually every ill-defined too big to fail worldwide bank and US
corporation in 2008-9. In reality, Dodd-Frank was as much a fraud against Americans as LIBOR or
COMEX manipulation, et al .
Title II of the media-acclaimed 2010 Dodd-Frank Wall Street Reform and Consumer Protection
Act provides the Federal Deposit Insurance Corporation (FDIC) with new powers and methods to
again guarantee – first and foremost – the massively leveraged derivatives trade
once this massive leverage plummets as it did with AIG in 2007-09. However, that collapse was
singular. The next will include all banking sectors.
The bank's paid-for politicians made sure a post-crash congress did not regulate derivatives
via Dodd-Frank, and thereby encouraged a further increase in this financial casino betting,
despite it being the root cause of the original problem. Thanks to Dodd-Frank and its
predecessor, the 2005 Bankruptcy Act, Congress made sure these new fraudulent bets on stock
market manipulation would surely be paid. But, not to worry; there would be no more "Bail
Outs." Next time, these banks would use their depositors' savings, including yours. Meet:
the "Bail-In."
Really?!
All Americans recall the massive "Bail-Outs" of 2007-9 and how their corporately
controlled Federal Reserve Bank and an equally controlled US Congress threw several trillions
of US taxpayer dollars at US banks, dozens of foreign banks, and any corporation with enough
political pull to be defined as "Too Big To Fail" (TBTF). In the aftermath a year later, the
banks understood that Americans and European citizens had lost enthusiasm for any future
government Bail-Out, most preferring instead that any institution suffering
self-inflicted financial duress should enjoy the fruits of their crimes next time, via the
reality of formal bankruptcy proceedings.
The will or financial safety of the public is, of course, no concern to criminal
corporations, and so easily circumvented via congress and the president. So, the banksters have
redefined their criminality using two newly defined methods, both rebranded to be far more
palatable to the public.
Currently, "Too Big to Fail," (TBTF) has a very fraudulent and elitist connotation
just like, "Bail-Out." To millions across the world who have lost their homes, pension
funds, retirement plans, and dreams, this decade-old moniker for financial oppression and fraud
has now been conveniently re-branded. The bailed-out TBTF banks now have a far more magnificent
definition: TBTFs are now, "Globally Active, Systemically Important, Financial
Institutions" (G-SIFI).
This sounds so much better.
But, "Bail-Out"? No No. Would you not prefer a "Bail-In"? Not if you know
the details. "Bail-Outs," may have also lost their flavour but in the new world of the
G-SIFI, the next one is actually just a "Bail-In," away.
Yes, Bail-Ins, the new "systemically" correct term for publicly guaranteed bank
fraud are already named as such in new national policies and laws, appearing in multiple
countries. These finance laws, such as Dodd-Frank and its pending UK and European Union
version, make upcoming Bail-Ins legal. These Bail-Ins allow failing G-SIFI banks to legally
convert the funds of "unsecured creditors" (that's you) into bank capital (that's
them). This includes "secured" creditors, like state and local government funds.
Really?!
With this in mind, I entered the main branch of Wells Fargo. The two checks in hand. On the
way in I was greeted warmly, one after the other, by three more fresh-faced and eager proteges,
all smartly uniformed to match the Wells décor, and who proffered, "Good morning,
Sir!," again, and again and again. Certainly, these little fish were not in possession of
authority enough to cash my mammoth checks, so I asked for bigger game, the Branch Manager.
Thus, I explained my plight to a very lovely lass who predicted she "would be glad to
help me."
"Cheryl," patiently explained that I had come to the right place and she would be
glad to cash both checks. Regarding my previous polite banking experience, she admitted that it
was indeed bank policy to have limits on the availability of cash for withdrawals and that
different branches had different limits. This was the main branch so my request here was
meritorious. Further, she admitted that whatever daily cash coming into the branches in the
form of deposits was not available for withdrawal, but was sent from the main branch for daily
accounting at a central point common to all area Wells bank branches. Only a prescribed amount
of cash was provided with each bank for daily customer cash withdrawals.
Really?!
"A couple of times your current request," was her cautious response to my question about her
branch's limits on check cashing. Not to be put-off, I asked about a hypothetical US$25,000
check. She admitted this would be beyond her branches authority. "But," she smiled,
"Today, you've come to the right place."
The financial law firm Davis Polk estimates the final length of Dodd-Frank, the single
longest bill ever passed by the US government, is over 30,000 pages. Before passage, the six
largest banks in the US spent $29.4 million lobbying Congress in 2010 and flooded Capitol Hill
with about 3,000 lobbyists prior to Obama predictably signing its final unread version. No US
congressman or senator had read it. But, the bank's congressional minions were told to vote for
it. And dutifully they did.
The major cause of the upcoming financial meltdown, as with the pre-2008 conditions, is
globally systemic gambling against national economies, called derivatives. Derivatives are sold
as a kind of betting insurance for managing fraudulent banking profits and risk. So, why fix
systemic banking fraud when the final result allowed these same banks to make even more money
in the aftermath of the national and personal financial destruction they originated in the
first recession?
Instead, thanks to Dodd-Frank, derivatives suddenly have "super-priority" status in
any bankruptcy. The Bank for International Settlements quoted global OTC derivatives at $632
trillion as of December 2012. Naked Capitalism states that $230 trillion in worthless
derivatives are on the books of US banks alone. Applied to Dodd-Frank this means that all these
bad bank bets on derivatives will be paid-off first before you may have your savings
cash. If there's actually any cash left once you get to the teller's counter.
Normally in a capital liquidation or bankruptcy proceeding, secured creditors such as a
bank's personal depositors are paid off first because these are hard assets, not investments,
and thus normally have a mandated priority. Under these new "Bail-In" Dodd-Frank
mandates, your government has re-prioritized your bank's exposure and your cash deposit.
Derivatives and other similar banking high-risk ventures are now more highly protected than
bank depositor's savings. In the 2013 example of Cyprus, Germany and the ECB also made
depositors inferior to other bank holdings leaving depositors with, after many months, a small
fraction of their deposits.
And then came Greece.
Selling the lie while using the language of Dodd-Frank, we are told by media whores that
banks will not be given taxpayer bailouts next time. True. The preamble to the Dodd-Frank Act
claims "to protect the American taxpayer by ending bailouts." But how, then, to Bail-In the
G-SIFIs without another taxpayer Bail-Out? No problem.
Enter the FDIC and another new banking term, "cross-border bank resolution." As the
sole US agency required to pay back depositors who lose savings up to $250,000, FDIC is armed
with a paltry US$25 billion war chest to pay depositors. Under Dodd-Frank, the FDIC will be the
mechanism to replace deposits lost or squandered by bank fraud. The public, however, has an
estimated total US cash deposits of US$7.36 trillion so, once the banks steal your savings,
FDIC will be just a little bit short of funds. How to fix this mathematical shortfall? With, of
course, more of your money via emergency taxes or a massive new round of Quantitative Easing
(QE). Either way, by the time this happens your money is long gone. And it gets worse.
Really?!
Say, "Goodbye" to your Savings- Two Greedy Methods
It's [FDIC] already indicated that they will confiscate [savings] funds .
-- US congressman Ron Paul
On December 10, 2012, a joint strategy paper was drafted by the Bank of England (BOE) in
conjunction with the Federal Deposit Insurance Corporation (FDIC) titled, "Resolving
Globally Active, Systemically Important, Financial Institutions." Here the plot to steal
depositor savings is clearly laid out.
The report's "Executive Summary" states:
the authorities in the United States (US) and the United Kingdom (UK) have been working
together to develop resolution strategies These strategies have been designed to enable
[financial institutions] to be resolved without threatening financial stability and without
putting public funds at risk.
Sounds good until you read the fine print; i.e., whose risk are they actually
protecting?
While claiming to protect taxpayers, Title II of Dodd-Frank gives the FDIC an enforcement
arm, the Orderly Liquidation Authority (OLA) which is similar to its British counterpart the
Prudent Regulation Authority (PRA). Both now have the authority to punish the personal
depositors of failing banking institutions by arbitrarily making their savings deposits
subordinate – actually tertiary – to bank claims for the replacement value of their
derivatives. Before Dodd-Frank savings deposits were legally senior and primary to these same
claims in a routine bankruptcy.
With the US banks holding only $7 trillion in personal cash savings deposits compared to
$230 trillion is US derivative obligations, FDIC's $25 billion will not be enough. The creators
of Dodd-Frank knew this before it was signed. As John Butler points out in an April 4, 2012,
article in Financial Sense :
Do you see the sleight-of-hand at work here? Under the guise of protecting taxpayers,
depositors are to be arbitrary, subordinated when in fact they are legally senior to those
claims Remember, its stated purpose [Dodd-Frank] is to solve the problem namely the existence
of insolvent TBTF institutions that were "highly leveraged with numerous and dispersed
financial operations, extensive off-balance-sheet activities, and opaque financial
statements.
Oh, but bank depositors can rest easy in the knowledge that replacing their savings will not
come out of their pockets via another bank Bail-Out. Thanks to Dodd-Frank, the first line of
defence will allow Congress to instead replace personal savings with a government paid for $7
trillion bail-in to FDIC to "replace" these savings.
But, that's the good choice.
Worse, Dodd-Frank gives new powers to FDIC and its OLA that allow an even more powerful and
draconian resolution: any deposited funds in a bank, from $1 to $250,000 (the FDIC limit), and
everything above, can instead be converted to bank stock! FDIC has provisions so this can be
done, via OLA, quite literally overnight.
Really?!
An FDIC report released in 2012 ago reads:
An efficient path for returning the sound operations of the G-SIFI to the private sector
would be provided by exchanging or converting a sufficient amount of the unsecured debt from
the original creditors of the failed company [meaning the depositor's cash] into equity [or
stock].
Additionally, per April 24, 2012 IMF report, conversion of bank debt to stock is an
essential element of Bail-Ins included in Dodd-Frank.
The contribution of new capital will come from debt conversion and/or issuance of new
equity, with an elimination or significant dilution of the pre-bail in shareholders. Some
measures might be necessary to reduce the risk of a 'death spiral' in share prices.
Really?!
For affected depositors to retrieve the value of what was formerly the depositor's account
balance, the stock must next be sold. When Lehman Brothers failed, unsecured creditors
(depositors are now unsecured creditors) got eight cents on the dollar.
This type of conversion of deposits into equity already had another test-run during the
bankruptcy reorganization of Bankia and four other Spanish banks in 2013. The conditions of a
July 2012 Memorandum of Understanding resulted in over 1 million small depositors becoming
stockholders in Bankia when they were sold without their permission -- "preferences"
(preferred stock) in exchange for their missing deposits. Following the conversion, the
preferences were converted into common stock originally valued at EU 2.0 per share, then
further devalued to EU 0.1 after the March restructuring of Bankia.
Canada has also stated they are planning a similar "Bail-In" program. The Canadian
government released a document titled the Economic Action Plan 2013 which says, "the Government
proposes to implement a "Bail-In" regime for systemically important banks."
However, don't be getting cute by hiding your cash, precious metals, or passport in a bank
safe deposit box. There are no longer safe either. Dodd-Frank took care of that, too.
Under Dodd-Frank the FDIC, using the auspices of Dept. of Homeland Security (DHS) can
legally, without a warrant, enter the bank vault, have the manager secretly open any and/or all
safe deposit boxes and inventory, or seize the contents. Further, if the manager is honest
enough to inform the depositor of the illegal incursion he is subject to criminal charges and
termination from bank employ. Independent reports reveal that all of America's safe deposit
boxes have already been invaded and inventoried for future confiscation.
This already happened in Greece. Depositors who removed their jewellery or precious metals
were met at the bank's door by security, a metal detector and confiscation.
Really?!
The power of the now remaining G-SIFI banks and FDIC was further evident when, cash finally
in hand, I headed to my bank, JP Morgan Chase, right next door to Wells Fargo. The manager
confirmed that the cash withdrawal policy at Chase was in keeping with that at Wells; very
little cash available on demand. I posed a slight untruth and inquired as to what I should do
about my upcoming need for $50,000 in hard cash. No, her bank would not do that on demand, but
arrangements could be made to have the cash transferred to her bank. That would only take
"about two days." Of course, I would need to fill out a few forms.
What a Difference a Congress Makes!
With the American and UK public again on the hook by law for the anticipated loss of the
banks a distressed depositor might think the plot to defraud them now complete. Au
Contraire .
In its rush to transfer further wealth upwards to off-shore bank accounts, US president
Trump and his recently re-aligned republican bootlickers have left no stone unturned. First,
Trump issued a memorandum that sets in motion his plan to scale back the provisions of
Dodd-Frank and repeal the Fiduciary Rule.
It should be noted that the only voice of economic reason at the White House, Former Fed
Chairman, Paul Volker, divorced himself from this growing scandal of basic mathematics very
publicly. As head of Obama's recession inspired, President's Economic Recovery Advisory Board,
Volker ran into the headwinds of fiscal insanity for too long, resigning in January of 2011 in
disgust. His departure thus coincided with the renewal of the litany of criminal financial
manipulation already discussed here. And now
The House approved legislation on February 2, 2017, to erase a number of core financial
regulations put in place by the 2010 Dodd-Frank Act, as Republicans moved a step closer to
delivering on their promises to eliminate rules that they claim have strangled small businesses
and stagnated the economy. Said Trump:
I have so many people, friends of mine, with nice businesses, they can't borrow money,
because the banks just won't let them borrow because of the rules and regulations and
Dodd-Frank.
Poor banks!
Never mind, of course, that these poor banks are holding derivative exposure thirty-five
times the total cash deposits of US savers nor that their ill-gotten riches – such as the
UBS, Wells Fargo, Bank of America, RBS multi-billion dollar frauds – were taken
off-calendar in Federal court for approximately 15% of the total crime. The banks kept the
rest.
And they want more?!
"We expect to be cutting a lot out of Dodd-Frank," Trump said further defining the
mantra of MAGA. This will likely see the deterioration of the newly created Financial Stability
Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB) since these
agencies curb further excessive risk-taking and the existence of too-big-to-fail institutions
on Wall Street.
Well, depositors, your extreme caution is required. The wording of these new, bank-inspired
sets of legislation is silently waiting to be used by many nations to prioritize banks before
their citizen's. When the time comes, the race to the bank will be a short-lived event
indeed.
With this in mind, I stepped into the bright sunshine outside the walls of JP Morgan/Chase
bank, all but $100.00 of my day's take stuffed deep- and securely- in my pocket, its final
outcome no one's business but my own.
However, for almost everyone else? Well when YOUR bank fails, don't walk, run!
YOU do not want to be second in line.
Really!
Brett Redmayne-Titley is an Independent Journalist, Photographer/ World Citizen. He is a
former columnist: PRESS TV/IRAN; writer and contributor to: Earth First! Journal; Zero Hedge;
Veterans Today; Activist Post; Off-Guardian; Western Journalism; Intellihub; UK Progressive;
Fars News Agency; Russia Insider; Mint Press News; State of the Nation; News of Globe;
Blacklisted News; Before It's News; Common Dreams; Shift Frequency; etc
Yes, it is unreal: either at the Texas RRC they had really HUGE problems in the past months collecting data, or the EIA used only
model estimates without any form of revision.
The correcting factors of the Texas RRC have not changed much and they showed they usual variability, so that I cannot explain
why there is such a big divergence between corrected RRC data and EIA. They only problem that I can think of (on the part of the
RRC) is that the hurricane completely disrupted their work: does anyone know whether the offices and data servers of the Texas
RRC were damaged during the hurricane? Thanks for the information.
I had a very interesting discussion on Twitter: operators in Texas confirmed me that the RRC offices were not affected by the
hurricane and data reporting proceeded normally. At this point the only (legal) reason left to explain the divergence is that
the EIA has started including NGL into their numbers:
"... Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally. Less than seven billion barrels of oil equivalent has been discovered YTD. "We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, Senior Analyst at Rystad Energy. "The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio* in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012." According to Rystad's analysis, 2006 was the last year when reserve replacement ratio reached 100%; largely thanks to the giant onshore gas field Galkynysh in Turkmenistan. Not only did the total volume of discovered resources decrease – so did the resources per discovered field. An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012. "Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed", says Passos. ..."
"... We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for shale wells does not always lead to similar improvements in ultimate recovery. ..."
"... But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially a loser. ..."
"... The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market. ..."
"... Last but not least, we need to develop a culture of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our consuming behavior." ..."
"... At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more. ..."
ALL-TIME LOW FOR DISCOVERED RESOURCES IN 2017: AROUND 7 BILLION BARRELS OF OIL EQUIVALENT WAS DISCOVERED
Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally.
Less than seven billion barrels of oil equivalent has been discovered YTD.
"We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, Senior Analyst at Rystad Energy. "The discovered
volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement
ratio* in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012."
According to Rystad's analysis, 2006 was the last year when reserve replacement ratio reached 100%; largely thanks to the giant
onshore gas field Galkynysh in Turkmenistan.
Not only did the total volume of discovered resources decrease – so did the resources per discovered field.
An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012.
"Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that
over 1 billion boe discovered during 2017 might never be developed", says Passos.
I think every drilled high impact wildcat well identified by Rystad at the end of 2016 has now turned out dry, with a couple
postponed for lack of finance.
It would be great if they gave the gas/liquids split all rolled up. Does it look to your eyes like a roughly 50/50 gas/liquids
split in 2017, as it does to mine? (Talking about Rystad chart.)
2017 looks likes another very disappointing year for conventional discoveries. I wonder how unconventional resource adds have
been over the last few years. I suspect that is how many of our big oil friends are achieving their annual resource add goals.
The EIA reserves are going to be interesting: even before the price crash the extension numbers, which is where all the LTO growth
came from rather than discoveries, were starting to fall and reserve changes looked like they might be going negative, which I'd
guess is due to decreases in URR estimates; e.g. below for Bakken.
Yes reserves decreased in 2015, probably due (in part) to a fall in oil prices from $59/b in Dec 2014 to $37/b in Dec 2015,
the price in Dec 2016 was $52/b, using spot prices from the EIA, so perhaps reserves increased a bit in 2016, it will be interesting
to see the 2016 estimate.
I think they have to use averages for determining economic recovery not spot prices – I can't remember now if it's six month or
annual (or other – I think maybe six months to March and September when they reevaluate) – 2016 would be bout the same or a bit
lower depending on the time frame.
Initially, SEC rules required a single-day, fiscal-year-end spot price to determine a company's oil and gas reserves and
economic production capability. The SEC Final Rule changes this requirement to a 12-month average of the first-of-the-month prices.
Using this I get
2014, 101
2015, 54
2016, 42
So 2016 reserves should decrease further if prices affect reserves.
EMPIRICAL EVIDENCE FOR COLLAPSING PRODUCTION RATES IN EAGLE FORD
We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for
shale wells does not always lead to similar improvements in ultimate recovery.
Cabot announced they are selling up in the EF and concentrating on gas (15,000 bpd), maybe more likr them to come.
I have had to work hard over the years to explain to management that oil completions have to be optimized, and that seeking the
highest peak rate wasn't likely to be the best answer. This of course happens because high level oil company managers are good
at sales and PowerPoint, but have opportunities for improvement in key areas.
This confirms the suspicion of many that the high peak rates on newer wells (often with longer laterals and more frack stages
and proppant, in short more expensive wells) don't boost cumulative output much. In the case of the Eagle Ford, wells in Karnes
county (the core of the play) only increased output by about 40 kb over the older wells with less expensive completion methods.
Looking at Bakken data, it is clear that this is the case as well, with about a 10%to 15 % increase in cumulative output over
the first 24 months and then similar output to older wells thereafter.
Many observers assume that a higher peak production from a well leads to higher cumulative output of the same proportion. That
is if the peak goes from 400 kbo/d for a well projected to have an EUR of 200 kbo to a peak of 800 kbo/d for a newer well, it
is often assumed that the new well will have cumulative output of 400 kbo. This is incorrect, in fact the newer well is more likely
to have an output of 240 kbo an increase of only 20% rather than the 100% often assumed.
However, Rystad Energy argues that there is some evidence that suggests those higher initial production (IP) rates do not
necessarily translate into larger gains in the total volume of oil and gas that is ultimately recovered. A sample of wells in
the Eagle Ford showed steadily higher IPs in recent years, but they also exhibited steeper and steeper decline rates.
It seems a bit unlikely that Canada is going to continue increasing production as shown above over the next 6 to 8 years (after
2018 ramp ups are complete). There are no major greenfiled developments currently under construction and these take at least 5
years from FEED to production, there are continuing redundancies in the oil patch as some of the large, recent developments move
from development to operations, and there is no spare pipeline (or rail) capacity such that the oil is at about $10 to $15 discount
which is likely to increase as Fort Hill's ramps up through next year (and new pipeline permitting and construction is likely
to take even longer than the actual oil sands project).
With Iran and Iraq – they may have oil in the ground, but they need huge,new surface production facilites to process it and
supply water/gas for injection – those too take about 5 years to construct, assuming they can find some outside funding.
"OPEC has already demonstrated it can produce more, before they cut back in Jan 2017"
Yes OPEC may have some capacity to increase production. But many OPEC countries are in decline and Saudi Arabia does not have
any Khurais or Manifa like fields left to develop. If I ruled Saudi Arabia then I wouldn´t produce more than 10 mb/d even if there
were shortages. Better to stay on the platau a little bit longer. Iraq is the country with the biggest possibilities for increases.
But they will do so when they are able to, not because of shortages. The other countries you mentioned have mainly expensive oil
like tar sands in Canada, arctic in Russia and ultra deepwater in Brazil. Sure we can see increases there but it takes a long
time to develop.
"I don't think oil producers were struggling at $100/b, they were overproducing so prices dropped."
For the World Debt to GDP has increased from 226% in 2012 to 243% in 2Q2017, for advanced economies over the same period debt
to GDP went from 272% to 275% and for emerging economies over the same period 145% to 190%.
The story is better access to credit for emerging economies from 2012 to 2017.
A major recession is not very likely.
The IMF forecasts real GDP growth of 3.75% for the World from 2018 to 2022.
Oil prices at over $100/b were no problem for the World economy from 2011-2014, real GDP grew at 3.5% per year. No reason $100/b
oil would cause a recession.
The $160/b (2017$) will only be about 3.3% of World GDP in 2026, assuming medium UN population growth scenario and real per
capita GDP growth at 1.5%/year and 84 Mb/d C+C output in 2026.
There was another big drop in US crude stocks by the twip – down 6.5 mmbbls with gasoline and diesel up 2 mmbbls combined.
The crude level is fast approaching the middle of the 5 year average – how far does it have to undershoot before panic sets in?
US SPR drawdown this year is about 21.5 million barrels, this is usually not included when calculating the 5y average. Planned
annual sales are similar for the next couple of years (
https://www.eia.gov/todayinenergy/detail.php?id=29692
note that the figure shows fiscal year).
The story being told is that oil markets should be in balance next year or slight surplus if LTO maintains its pace. KSA low
production during end of 2017 and the problems in Venezuela should result in continued stock drawdowns or only a small build during
the spring (forties supports this too). Next summer driving season can be interesting, assuming the economy remains healthy. 2019
will be _very_ interesting since it will be revealed how much of the OPEC cuts were made voluntary.
As inventories are still way above historical averages, it is important to bear in mind that substantial infrastructure in form
of tanks and pipelines have been constructed over the last few years. This increased the necessary working inventory to keep the
system functioning. So, the critical inventory level might be much higher than in previous years.
They need a minimum amount of empty capacity to allow for blending and movement, not a minimum amount of stored volume to keep
it working. The storage is to cover for upsets and to allow people to make money from arbitrage.
It was propably close to the point where it was low enough to cause problems at that time. Why? Because from a commercial point
of view, it´s just stupid to have more storage than you need. It´s cost money to store it and it´s better to sell it and get the
money instead of just having it in storage. Also there is the SPR from where you can get oil if there is supply problems. So really
no need to have large amounts of oil in storage.
Yes that was how I interpreted your original comment. At least for US commercial crude stocks for the current week we are currently
about 95 million barrels above the 2012 and 2013 average for the same week of the year, so perhaps another few years before any
panic if stocks continue to decrease by 50 Mb per year as they did from 2016 to 2017. I chose 2012 and 2013 because oil prices
were relatively high in 2012 and 2013 ($88/b and $98/b in Dec 2012 and Dec 2013 for WTI).
On rereading your original comment, I think when it gets near the lower edge of the 5 year average, panics sets in, it may
take a few years.
"You can just say it is an industry in decline and there are better places to put one's money in." yes you can say "the industry
is in decline" but then you would be wrong, not usual for you or many on the board. In this case however, the statement is not
only wrong but delusional. Both production and demand are at record highs for oil natural gas and natural gas liquids. Of course
why let facts get in the way of your political views, to quote a old line; fat, drunk and stupid in no way to go through life,
son
"Both production and demand are at record highs for oil natural gas and natural gas liquids. "
But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked
if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P
et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially
a loser.
Now, high yield bonds might be a different story. But in the wake of all the bankruptcies for the past five years was 100%
of all bonds paid? They might have been, not sure.
Oil companies themselves have changed the way they are investing. So I take that as a sign they, too, think their best times are
behind them.
In terms of financial management, there are industries that have done better and are likely to do better than gas and oil.
It's simply not a growth industry anymore.
I think oil prices have an effect on investment, especially outside the LTO focused companies. For the LTO players they seem
to focus on output growth regardless of profits, not a great long term business model.
Regarding the gap, a third of the consumption growth over the last decade was from China. If Chinese consumption plateaus, as
it very well might, then consumption growth from here will be less and the gap smaller. But putting in an assumption to change
an established trend would just add another point of failure. This piece isn't so much a model as a creation story, trying to
figure out why past expectations weren't met and where the known unkowns might come from. A big one of these is what the Permian
might end up doing. I think that is why industry is paying up to get into the Permian. If you are not in the Permian you don't
have a future. And shareholders will pay any amount of money for you to keep your job.
The piece was prompted by Ovi's observation that Non-OPEC less the big three has been in decline since 2004 – very encouraging.
There are some systems in which a price rise does not result in an increase in production simply because the resource is clapped
out. The gold market last decade for example. The gold price rose at an average of about 17% per annum year after year but gold
production fell. That is not supposed to happen. Now some mines are digging up rock with just over one part in a million of gold
in it and that pays for turning that rock into mud.
There was a July report for China imports that extrapolated to another 6.6% consumption growth year for them. No evidence of slow
down. Ditto India.
Reminder to folks because it is a tad obscure. India's consumption growth is 8% but it's concentrated in an unusual way. LPG.
They run motors on LPG, mostly motorbikes.
Vehicle miles driven. The increase is relentless as is US population growth. In the big smash of 2008/2009 there was a flattening
of the increase but not really any sort of collapse. There was in oil price, but there was no need for it since consumption did
not decline more than 5%. A quick look at historical consumption not just miles driven shows essentially the same tiniest of down
ticks during that timeframe.
So I would say we need a new theory as to why price declines during recession. Doesn't appear to be less driving to work.
Consumption of oil would seem to decline a little bit right across the board during a recession, especially a big one. Construction
machinery runs less, people travel less, buy fewer new things. It doesn't take very much by way of falling consumption to reduce
the price of oil. The price of oil is highly inelastic, in the short term, and it's like milk.
The price of milk has to fall a long way before you can find uses for more than the usual amount.
People buy as much milk as they want for their kids, and maybe a little to cook with. NO MORE, even if the price goes down
a lot. They don't have any use for it. So .. if it's coming to market, it has to sell cheaper in order for people to FIND uses
for it. You can feed milk to the cat, and even to the pigs, if it's cheap enough. Farmers have been feeding excess milk to pigs
just about forever, lol. I did so myself when we had more than we could use otherwise when I was a kid.
So . if the price of gasoline falls, maybe you take the ski boat to the lake one extra weekend , which can easily result in
burning a couple of hundred gallons, round trip, as opposed to spending the weekend golfing at a cheap nearby course.
Or you drive the old car that's a gas hog more, because it saves putting miles on a newer car. When the price of gasoline bottomed
out, I drove my old four by four truck a lot more than I would have otherwise, because I knew I would be retiring it before long,
and wanted to get as many miles out of it as I could, saving wear and tear on the car .. which I'm planning on keeping indefinitely.
It broke down yesterday, and while it's not quite dead, I 'm thinking it's time to euthanize it, lol.
I'm also running my big yellow machines a lot more than usual, because when diesel is down close to two bucks, as opposed to
four bucks or so, this saves me a hundred bucks a day, or more, if I stay with it, and I've got some pretty big long term projects
such as a new lake, which I work on at odd times, whenever circumstances permit.
IF I were hiring out, which I don't , I would be able to offer a neighbor a hundred bucks or more off for a days work, with
diesel at two, as opposed to four bucks. That would result in neighbors with cash, and thrifty Scots habits, spending some of
their savings, doing long planned work sooner, or maybe going for a new small project.
Overall though construction falls off during a recession.
Most of the increase in total miles happens as the result of people driving new cars, and by and large, new cars and light
trucks are far more fuel efficient than old ones.
And people who are broke spend as much on gasoline as they can afford, period. They MUST spend to get to work. If a tank at
twenty bucks will get them to Grandma's house and back in their old clunker, they go. A tank a forty bucks often means calling
rather than visiting.
It is pretty much a given that Permian oil needs export market. This is from PAA conference call.
" PAA comments: If you look at the amount of 45-plus gravity. It's about 300,000 barrels a day now, growing to 1 million plus.
So, a lot of those volumes are coming, and that's really the crux of the benefit of a Cactus pipeline being able to take that
directly to the water because I think we are going to see a lot of pushback from refiners. We are already starting to see it as
far as the lightning of the general stream going up to Cushing.
The refiners don't want any lighter. So, it's an integral part of the strategy and a piece of everything we've been building."
Delaware basin produces 56% oil that is greater than API gravity 50 plus according to Woodmac.
Every week I see announcements to export US oil. Here are some.
"OPINION-
Don't be taken in by the surge in oil prices
But oil prices have continued to be volatile. They went down from $114 per barrel in June 2014 to $26 per barrel in early 2016
and moved gradually upward to touch $64 per barrel in late November 2017. On the other hand, economic forecasts expect oil prices
to continue to rise to a range of between $70 to $80 by the end of the first quarter of 2018. Futurists in the field base their
expectations on the following indicators:
1) The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market.
2) The continuation of efforts to reduce oil surplus in the market 3) The agreement among OPEC members and some non-members to
continue their programs of production reduction up to the end of 2018. 8. Last but not least, we need to develop a culture
of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our
consuming behavior."
Interesting development for natgas: Iroquois zone 2 spot prices just shot up to over 32 USD per mcf. This is nearly 1000% up from
last month. As much depends now on the future weather, it shows how volatile the US gas market can be – despite massive efforts
towards more supply.
As the industry has completely shifted the supply from the South to the Northeast, hurricanes are no more a threat to supply,
yet freeze offs become now a major issue. Previously just the supply of the Rockies has been hampered by freeze offs. As this
concerned just 10% of US total production, this has never been an issue for gas supply. However, as currently 70% of supply comes
from the Northeast and the Rockies, freeze off could lead to serious supply disruptions, if the freeze continues.
Not freeze offs, simply lack of pipeline capacity in the face of unprecedented demand. When the receipt figures from the various
transfer points are published, they should show 100% capacity utilization.
At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity
is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more.
The supply is there in the pipelines, Mr. Leopold, there just isn't enough of them to satisfy demand during this cold spell.
I was expecting your reply. Thanks for your opinion.
Nevertheless, there has been huge infrastructure spending over the last years. The pipelines should be already in place.
However, freeze offs are not an issue just yet. If the gas wells freeze off later in the week (temperatures are going to zero
down until Cincinnati) , the shortage of supply may be really a concern. There is just one week left and we know it.
This is one of the structural weaknesses of Shale gas:you probably do not have it when you need it the most.
The pipelines that have been completed greatly favor delivery west to southwest from the Appalachian Basin.
The Atlantic Sunrise is being built that will deliver into the NYC area via a hookup with Transco, I believe.
Deliveries to the north, that is New York State and New England have been virtually nil.
Yes, the storage aspects of all gas products is a challenge, and – as you mentioned – the coming cold days will highlight the
vulnerabilities of the situation, sadly, at great expense to many.
So, is there a big wall of US shale oil coming from Texas that will dash my "happy times" of
$55-65 WTI?
So thankful to get up to this level after 36 months of headaches about the oil price.
Seems the only thing that could screw it up is US shale, which apparently is set to explode
in 2018.
I saw someone touting Halcon stock today on SA. Making a big deal about having little
debt. Too bad they flushed about $3 billion of debt when they went BK. I'm sure Mr Wilson
(CEO) is, "still getting his" so to speak.
My brother is griping about why he hasn't been able to draw a salary for the last three
years, heck all the shalie management has! Have to remind him we aren't in the shale fantasy
land. He knows, he's just blowing like I'm prone to do.
If I don't post anymore this year, happy New Year everyone!! Things are looking up, just
hope the shale industry doesn't torch it again!
IN my view you will be sleeping well in the next year. Shale increases mostly the supply
of condensate and light distillates, which does little to cover the worldwide shortage of
middle distillates. So, the price of 'real' oil will very likely increase over the next
future whereas the prices of light distillates (propane, butane, pentane , LPG, NGPL
composite .. ) are very likely depressed. Light distillates can substitute middle distillates
to some degree, yet the potential is limited. So, in that sense I wish you a happy and
successful New Year.
There is no question, Shale is a disaster for investors. Nevertheless, it is a blessing for
Wall Street as high oil and gas production ensures dollar stability and a growing bond
bubble. The only question is when will investors will wake up. As it is perfectly OK for
small companies to sacrifice themselves and burn the cash of investors through, big companies
are less willing to do so. Who is next? XOM, Statoil , APA ?
The ratio of commodities / S&P500 is at a record low, S&P_GSCI / S&P_500
The S&P GSCI currently comprises 24 commodities from all commodity sectors – energy
products, industrial metals, agricultural products, livestock products and precious
metals.
Bloomberg chart on Twitter: https://pbs.twimg.com/media/DSCfWj6W4AA7xyW.jpg
Discoveries of new reserves this year were the fewest on record and replaced just 11
percent of what was produced, according to a Dec. 21 report by consultant Rystad Energy.
While shale wells are creating a glut now, without more investment in bigger, conventional
supply, the world may see output deficits as soon as 2019, according to Canadian producer
Suncor Energy Inc.
Are we not now near enough to 2019 to say that there just isn't time to bring major new
conventional projects on-line before mid to late 2019? The only offshore projects that could
be approved and developed earlier than that would be single well tie backs using the
wildcat/appraisal well as a producer, probably no more than 5 to 10 kbpd and in immediate
(and likely rapid) decline, and would be dependent on there being spare processing capacity
on a nearby hub (i.e. production the new production would be mitigating decline not adding
output).
But the issue isn't lack of discoveries this year, as the headline implies, it's the lack of
recent FIDs which might be in part because of the drop off in discoveries in 2012 to 2015
(for all oil, but particularly easily developed oil), coupled with high debt loads, and
prices that aren't high enough (or at least not yet for long enough) to allow development of
what resources there are available to the IOCs. As prices rise and IOCs become more confident
and are able to pay dividends as well as fund longer term developments then the really low
discoveries in 2015 to 2017 might give them far fewer options than people expect (noteworthy
is that any discoveries in that period that have been attractive, like Liza, have been
immediately fast-tracked, so there really isn't much of a backlog of attractive projects at
all).
I was basing my comment on what the article said. Many of the companies are aware that
discoveries have been low and not many projects will be coming online soon.
Mexico may be heading for a period of accelerated decline (above 10%). Their two onshore
regions and the southern marine region are falling at 15 to 20%, and the largest producing
region (Northern Marine, which includes KMZ and Cantarell) looks like it may be starting to
accelerate. The non KMZ nd Cantarell fields had been the only ones increasing, but look to
now be in decline or at least on plateau, and by PEMEX forecast KMZ should be off plateau in
the next couple of months or so. Mexico has now stopped exporting light oil (which mostly
comes from the three smaller regions, with KMZ and Cantarell producing heavy and medium
heavy) and will presumably be looking for increasing imports of it, which is probably good
for the Texas LTO producers. Operating rigs have recently been declining fast.
Do you have any information on how the ramp up of production is going for the Western
isles project following first oil on 15th November. On a side it looks like the Weald basin myth is starting to unravel.
Not yet -first numbers for December start-up should be in March, it's a question of limiting
their losses at current prices I think. All the wells were predrilled so ramp up should be
fast but I wouldn't be surprised if they get pretty low reliability in the first 6 to 12
months given all the construction problems they had. Also interesting that Catcher started up
on time, against most expectations. Wonder if Clair Ridge will make it this year – do
you know if there are big tax benefits from depreciation for starting within a given calendar
year in the UK (or might be financial yar end is more important)?
This shows how fast the SW marine region fields are now falling (a lot of small fields were
added 2007 to 2015 and are now in steep decline).
There seems no reason this and the two land regions shouldn't continue to fall at current
rates (they may even accelerate given how the rig count has dropped), and if KMZ follows the
predicted PEMEX curve Mexico could drop around 350 kbpd this year, possibly the same in 2019
in decline (but with 60 kbpd additions due from Abkatun), but maybe approaching as low as
1000 kbpd by mid 2020, which is probably the earliest ENI will be able to get their shallow
water field on line if they fast track it.
CALGARY -- Imperial Oil says its much-delayed $16.1-billion project to build a natural
gas pipeline across the Northwest Territories from the coast of the Beaufort Sea to northern
Alberta has finally been cancelled.
Originally the plan was to increase Majnoon to over 1 mmbpd. That has now been downgraded
to 400 kbpd (from current 220). Shell and Petronas have pulled out and a "government panel"
will oversee the development. I'd bet on continued decline rather than any increase, and
potential for significant reservoir damage along the way.
Similarly for Nasirya oil field – intend is to increase from 90 kbpd to 200, using a
local oil company that also sounds like it has a lot of government input.
To me none of this ever declining brownfield development with IOCs pulling out, and
promises of more exploration "coming" is compatible with the claims for their discovered
resources (developed or not), or any chance of a quick ramp up if oil prices start to inflate
rapidly after 2018.
So far, the experiences about freeze off Shale wells are limited. Will glycol also work for
Shale wells when there is much water involved? I think nobody knows yet how big the impact of
the cold will be on Shale wells. However, it looks like shorts are getting hyper-nervous.
Oil and Gas Producers Find Frac Hits in Shale Wells a Major Challenge In North America's most active shale fields, the drilling and hydraulic fracturing of new
wells is directly placing older adjacent wells at risk of suffering a premature decline in
oil and gas production.
The underlying issue has been coined as a "frac hit." And though they have long been a
known side effect of hydraulic fracturing, frac hits have never mattered or occurred as much
as they have recently, according to several shale experts who say the main culprit is infill
drilling.
"It is a very common occurrence -- almost to the point where it is a routinely expected
part of the operations," said Bob Barree, an industry consultant and president of
Colorado-based petroleum engineering firm Barree & Associates.
He added that frac hits are also an expensive problem that involve costly downtime to
prepare for, remediation efforts after the fact, and lost productivity in the older wells on
a pad site.
A frac hit is typically described as an interwell communication event where an offset
well, often termed a parent well in this setting, is affected by the pumping of a hydraulic
fracturing treatment in a new well, called the child well. As the name suggests, frac hits
can be a violent affair as they are known to be strong enough to damage production tubing,
casing, and even wellheads https://www.spe.org/en/jpt/jpt-article-detail/?art=2819
FWIW The first SPE paper referenced discusses mediating the negative nature of frac hits.
It discusses the refrakking of a six well pad drilled in 2010 in the middle Bakken and three
forks, North Fork Field, McKenzie. The six wells have a cumulative oil production to date of
3.6mmboe and 7.7bcf.
Since I am not in the field, much of the paper went over my head, I merely skimmed through
it, however it appears that well communication was observed for horizontal and vertical
spacing of 1000 feet.
"... With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people. ..."
"... They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats. ..."
"... The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot. ..."
"... Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43). ..."
"... This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer. ..."
"... The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth ! ..."
"... Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades. ..."
"... "Wow – is there ever negative!" ..."
"... You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'. ..."
"... My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece ..."
"... "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor." ..."
"... Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\ ..."
"... It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's! ..."
"... E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop. ..."
"... The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.) ..."
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated
sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array
of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing
globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into
question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the
public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities
we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible
opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008,
despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is
no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis
and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting
freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire.
A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership
is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species
of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise
to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA.
They chatter
about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace
problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics
-- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth
on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of
an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish
a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting
down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called
cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of
not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry
anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads
and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming
human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual
despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the
kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about
ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting!
In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny
is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor
pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that
unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right
of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the
graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy,
where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of
one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down
to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this
scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally
"people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed"
and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is
to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the
social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual
boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and
administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear
puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair
over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring
about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today,
there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress
on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the
Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of
ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why
a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely
Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent
rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with
a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively
nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors
and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified
oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized
ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the
university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain
to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically,
this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births,
drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their
homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood
how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing
him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of
stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life
is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of
the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud
that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine
and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering
public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism
-- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just
a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some
years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the
post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings
and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations
don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves
in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of
worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore,
including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them
around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking,
Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at
Kunstler.com .
I think I need to go listen to an old-fashioned Christmas song now.
The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence
in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan
of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about
our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's
biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that
comes after, won't be the miniature sunrise of a nuclear conflagration.
An excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this
strange death spiral?
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We
are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies
and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.
"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another."
Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants
from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American,
influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made
by the working and middle classes in the previous 3 decades.
Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats
to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis
actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage
underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the
standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion
of real estate speculation with borrowed money. Speculation with borrowed money never ends well.
I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard
of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the
same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness
will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to
say that there aren't other issues, but until we return to God, there's not much hope for improvement.
Hmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia,
or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped
equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights.
Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry,
anyone?
You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated
now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial
divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt
"shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation,
not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued
while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and
contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take
a second look at familiar ideas. I won't be back.
I disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.
The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream
of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative
-- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are
two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that
he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either
of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is
why, logically, he published it here. National Review would never have accepted this piece. QED.
This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers
from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware
of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols
engenders this tension, this angst.
Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has
been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the
problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself
as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy
or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call
to arms.
"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor."
And to whom do we hand
the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately,
under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia
and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the
USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity,
which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further
greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake
wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial,
and even legal).
"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case
for progress on the steps of the Lincoln Memorial in 1963."
Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would
give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around
older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's,
much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much
better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute
ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard
telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant
-- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore
pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan
isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero
on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé
runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners
-- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to
get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one
moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality,
what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100
years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time
to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the
industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into
a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance
but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market.
In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you
run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because
it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place
at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government,
just a different piece of legislation.
Kunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that
demonstrate it didn't have to be this way.
E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany
has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution
of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to
maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was.
Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites.
(E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care
system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme
of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects
the actual wealth of the middle class is left over.
Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people
AND the government. The truth is that many parties were to blame.
One of the things I love about this rag is that almost all of the comments are included.
You may be sure that similar commenting privilege doesn't exist most anywhere else.
Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.
I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more
towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.
If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.
Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad
doesn't represent usual fare at TAC. So do come back.
Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous
serving of Weltschmerz is just what the season calls for.
America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton
hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.
Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances.
Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising
from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even
capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling
the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?
I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced
everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both
liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount
of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond
anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three
years to go.
Mr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying
so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.
The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives,
from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national
dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.
Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and
obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar
and roll of rhetoric that was thrilling to be immersed in. Good work!
aah, same old Kunstler, slightly retailored for the Trump years.
for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about
it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices
at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give
a tired horse a rest.
Kunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic,
at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one
of which could be the geyser that brings on catastrophic failure.
However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common
culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies
the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of
the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass
murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality
much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with
fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a
'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better
take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made
in China).
Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act
Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians
and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist).
To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is
the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied
to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the
game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards
until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and
shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches
around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied
about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption
binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into
the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers
who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who
handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue,
but you get the picture.
"The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from
their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster
fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."
Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
"... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
"... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
"... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
"... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams,
server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything
worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these
people could save a business in times of disaster.
Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT
groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does
work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and
know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free
ticket for people to turn a blind eye.
Specialization
You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with
a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in
learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is
run by people who specialize in those elements. Everything is taken care of.
Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows
administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to
do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about
new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.
If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get.
Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they
indicate specialization or compensation for lack of experience.
Resource Competition
Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no."
As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups.
Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team
is.
The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's
worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may
get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management
or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate
the efforts of another group and just implement something themselves. On and on, the arguments continue.
Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what
happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting
in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT
groups.
With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most
groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers
to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to
various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their
own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction.
Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing
groups, a viable option.
Blamestorming
The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality.
Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time,
so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone
else to blame when things get delayed makes it all too easy to simply stop working for a while.
More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system
outage.
Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and
they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which
means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran
through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose
the problem. The server team doesn't even know how the application runs.
See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate
themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care
of all the other pieces.
I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge
and also get to know other people, which should lessen the propensity to view them as outsiders
Stagnation that is gripping several of the world's largest economies should be viewed as a secular, long term phenomenon, not
something transient. It is connected with the neoliberalism entering a new phase of its development, when New Deal was already
devoured, 90% or so of population standard of living slides and thus there are no direct mechanisms to increase consumer demand.
Notable quotes:
"... Stagnation is gripping several of the world's largest economies and many view this as secular, not transient. ..."
"... Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics. ..."
"... For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. ..."
"... In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare. ..."
"... Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed. ..."
"... How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? ..."
"... It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income. ..."
"... It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession. ..."
"... I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand. ..."
"... The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. ..."
"... In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine. ..."
This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore
potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and
this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure
investment.
Selected Skeptical Comments
Sandwichman -> anne:
Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing
-- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you
can get out of me.
This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt
yourselves!"
Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place.
Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.
Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers
collectively have. This is the spectre that haunts all economics.
Dan Kervick:
Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:
1. Ineffective economic organization, both inside corporate firms and outside of them.
a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles
of short-term value extraction for their absurdly over-incentivized key stakeholders.
b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global
level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains".
There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future
looks like, risk trumps confidence everywhere and nobody knows what to invest in.
2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and
demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything,
the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no
reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.
3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities.For many
of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them
stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this
can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened
self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind
back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.
4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who
despite their constant kvetching at one another all share in common the view that progress is self-organizing.
On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and
prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that
their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.
On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire
not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.
In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself
if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of
the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything
will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high
fructose cotton candy or the collected works of Shakespeare.
5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of
social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This
will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization
that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded
21st century planet.
George H. Blackford:
Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress
their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment
was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.
There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the
concentration of income has created stagnation for lack of investment opportunities.
How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed
system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort
of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going
to be left holding the bag when this system collapses again?
It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the
absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources
in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few
in the absence of the ability of those at the bottom to expand their debt relative to income.
We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with
a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great
Depression.
And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic
system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five
years after 1940.
It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power
out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the
concentration of income that led to the bubble economy we have today that has led us into the Great Recession.
What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe
comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern
age, namely, the trade deficit and the concentration of income.
I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing
of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth
reflecting persistently weak private demand.
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level
is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.
The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology
and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the
USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most
cults adherents became more fanatical believers after the prophecy did not materialized.
The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But
while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature
of the US economy, not a transitory state.
"Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially
drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client
state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the
USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign
that gambit is abandoned.
In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that
they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to
solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last
move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état
in Ukraine.
Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession
from the USSR by threatening to unleash the nuclear war.
"... During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of most ordinary people. ..."
"... They pursued them as a matter of faith in the market and its processes, despite the apparent warning signs of their imminent failure. ..."
"... as within many custom or belief systems, what economics enshrines is a social order. One where a dominant minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status. ..."
"... idea of economics as an exploitative mechanism is echoed in the cover picture of the book, Bosch's The Conjurer ..."
"... Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological crisis which the pursuit of economic growth has spawned. ..."
Brian Davey's new book, Credo: Economic Beliefs in a World in Crisis, is an analysis of economic theory as if it were a system
of religious belief.
It's a timely book. The simplistic, perhaps 'supernatural' assumptions which underpin key parts of economic theory demand far
more attention. It's a debate we've failed to have as a society.
... ... ...
During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that
the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of
most ordinary people.
And without understanding those terms, irrespective of our gut feeling that there was something wrong, how could we challenge
the political lobby those theories had put into power? In the end it took the
financial crash of 2007/8 to demonstrate
that those in charge of this system didn't understand the complexity and risk of those practices either.
They pursued them as a matter of faith in the market and its processes, despite the
apparent
warning signs of their imminent failure. Those outside 'orthodox' economics could already see where the economy
was heading in the longer-term.
Question is, did economists learn anything from that failure? Or,
through austerity, have they once again committed us to their dogmatic belief system, unchanged by that experience?
... ... ...
However, through simple hubris or optimism bias, the political
class has been convinced that 'fracking' is a solution to our economic woes
- even though there is a paucity of verifiable evidence to demonstrate those claims, and
it has already lost billions of investors money.
Economics is a reflection of power
Ultimately though, as within many custom or belief systems, what economics enshrines is a social order. One where a dominant
minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status.
This idea of economics as an exploitative mechanism
is echoed in the cover picture of the book, Bosch's
The Conjurer - where a magician distracts
the public with a sleight of hand trick so that they can be more easily robbed by his associate.
Again, in a world where we're hitting the limits to human material growth, political models of well-being based upon wealth and
consumption are damaging to human society in the long-term. The evidence that we're heading for a longer-term failure is there, as
was the case with the warning signs before the 2007 crash. The problem is that those in positions of power
do not wish to see it.
... ... ...
Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory
is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological
crisis which the pursuit of economic growth has spawned.
Contrary to the economic hubris of many world leaders, set alongside the reality of ecological limits humanity is not 'too big
to fail'.
"... An interview by Gordon T. Long of the Financial Repression Authority. Originally published at his website ..."
"... One of the most important distinctions that investors have to understand is the difference between secular and cyclical trends Let us begin with definitions from the Encarta® World English Dictionary: ..."
"... Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period of time ..."
"... Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions of an event or phenomenon that occurs regularly ..."
"... Secular stagnation is when the predators of finance have eaten too many sheeple. ..."
"... Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to have happened yet consistently. ..."
"... Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal, which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt with Nike gear. ..."
"... . . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit . It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system and raise the cost of living and doing business . ..."
GORDON LONG: Thank you for joining us. I'm Gordon Long with the Financial Repression Authority. It's my pleasure to have with
me today Dr. Michael Hudson Professor Hudson's very well known in terms of the FIRE economy to-I think, to a lot of our listeners,
or at least he's recognized by many as fostering that concept. A well known author, he has published many, many books. Welcome, Professor
Hudson.
MICHAEL HUDSON: Yes.
LONG: Let's just jump into the subject. I mentioned the FIRE economy cause I know that I have always heard it coming from yourself-or,
indirectly, not directly, from yourself. Could you explain to our listeners what's meant by that terminology?
HUDSON: Well it's more than just people getting fired. FIRE is an acronym for Finance, Insurance and Real Estate. Basically that
sector is about assets, not production and consumption. And most people think of the economy as being producers making goods and
services and paying labor to produce them – and then, labour is going to buy these goods and services. But this production and consumption
economy is surrounded by the asset economy: the web of Finance, Insurance, and Real Estate of who owns assets, and who owes the debts,
and to whom.
LONG: How would you differentiate it (or would you) with what's often referred to as financialization, or the financialization
of our economy? Are they one and the same?
HUDSON: Pretty much. The Finance, Insurance, and Real Estate sector is dominated by finance. 70 to 80% of bank loans in North
America and Europe are mortgage loans against real estate. So instead of a landowner class owning property clean and clear, as they
did in the 19 th century, now you have a democratization of real estate. 2/3 or more of the population owns their own
home. But the only way to buy a home, or commercial real estate, is on credit. So the loan-to-value ratio goes up steadily. Banks
lend more and more money to the real estate sector. A home or piece of real estate, or a stock or bond, is worth whatever banks are
willing to lend against it
As banks loosen their credit terms, as they lower their interest rates, take lower down payments, and lower amortization rates
– by making interest-only loans – they are going to lend more and more against property. So real estate is bid up on credit. All
this rise in price is debt leverage. So a financialized economy is a debt-leveraged economy, whether it's real estate or insurance,
or buying an education, or just living. And debt leveraging means that a larger proportion of assets are represented by debt. So
debt equity ratios rise. But financialization also means that more and more of people's income and corporate and government tax revenue
is paid to creditors. There's a flow of revenue from the production-and-consumption economy to the financial sector.
LONG: I don't know if you know Richard Duncan. He was with the IMF, etc, and lives in Thailand. He argues right now that capitalism
is no longer functioning, and really what he refers to what we have now is "creditism." Because in capitalism we have savings that
are reinvested into productive assets that create productivity, which leads to a higher level of living. We're not doing that. We
have no savings and investments. Credit is high in the financial sector, but it's not being applied to productive assets. Is he valid
in that thinking?
HUDSON: Not as in your statement. It's confused.
LONG: Okay.
HUDSON: There's an enormous amount of savings. Gross savings. The savings we have that are mounting up are just about as large
as they've ever been – about, 18-19% of the US economy. They're counterpart is debt. Most savings are lent out to borrowers se debt.
Basically, you have savers at the top of the pyramid, the 1% lending out their savings to the 99%. The overall net savings may be
zero, and that's what your stupid person from the IMF meant. But gross savings are much higher. Now, the person, Mr. Duncan, obviously-I
don't know what to say when I hear this nonsense. Every economy is a credit economy.
Let's start in Ancient Mesopotamia. The group that I organized out of Harvard has done a 20-study of the origins of economic structuring
in the Bronze Age, even the Neolithic, and the Bronze Age economy – 3200 BC going back to about 1200 BC. Suppose you're a Babylonian
in the time of Hammurabi, about 1750 BC, and you're a cultivator. How do you buy things during the year? Well, if you go to the bar,
to an ale woman, what she'd do is write down the debt that you owe. It was to be paid on the threshing floor. The debts were basically
paid basically once a year when the income was there, on the threshing floor when the harvest was in. If the palace or the temples
would advance animals or inputs or other public services, this would be as a debt. It was all paid in grain, which was monetized
for paying debts to the palace, temples and other creditors.
The IMF has this Austrian theory that pretends that money began as barter and that capitalism basically operates on barter. This
always is a disinformation campaign. Nobody believed this in times past, and it is a very modern theory that basically is used to
say, "Oh, debt is bad." What they really mean is that public debt is bad. The government shouldn't create money, the government shouldn't
run budget deficits but should leave the economy to rely on the banks. So the banks should run and indebt the economy.
You're dealing with a public relations mythology that's used as a means of deception for most people. You can usually ignore just
about everything the IMF says. If you understand money you're not going to be hired by the IMF. The precondition for being hired
by the IMF is not to understand finance. If you do understand finance, you're fired and blacklisted. That's why they impose
austerity programs that they call "stabilization programs" that actually are destabilization programs almost wherever they're imposed.
LONG: Is this a lack of understanding and adherence to the wrong philosophy, or how did we get into this trap?
HUDSON: We have an actively erroneous view, not just a lack of understanding. This is not by accident. When you have an error
repeated year after year after year, decade after decade after decade, it's not really insanity doing the same thing thinking it'll
be different. It's sanity. It's doing the same thing thinking the result will be the same again and again and again. The result
will indeed be austerity programs, making budget deficits even worse, driving governments further into debt, further into reliance
on the IMF. So then the IMF turns them to the knuckle breakers of the World Bank and says, "Oh, now you have to pay your debts by
privatization". It's the success. The successful error of monetarism is to force countries to have such self-defeating policies that
they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and
transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane.
It's part of the program, not a bug.
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources
and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into
a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual
cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the
1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources,
so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing
the 99%.
LONG: Well I think most people, without understanding economics, would instinctively tell you they think that's what's happening
right now, in some way.
HUDSON: Right. As long as you can avoid studying economics you know what's happened. Once you take an economics course you step
into brainwashing. It's an Orwellian world.
LONG: I think you said it perfectly well there. Exactly. It gets you locked into the wrong way of thinking as opposed to just
basic common sense. Your book is Killing the Host . What was the essence of its message? Was it describing exactly what we're
talking about here?
HUDSON: Finance has taken over the industrial economy, so that instead of finance becoming what it was expected to be in the 19
th century, instead of the banks evolving from usurious organizations that leant to governments, mainly to wage war, finance
was going to be industrialized. They were going to mobilize savings and recycle it to finance the means of production, starting with
heavy industry. This was actually happening in Germany in the late 19 th century. You had the big banks working with government
and industry in a triangular process. But that's not what's happening now. After WW1 and especially after WW2, finance reverted to
its pre-industrial form. Instead of allying themselves with industry, as banks were expected to do, banks allied themselves with
real estate and monopolies, realizing that they can make more money off real estate.
The bank spokesman David Ricardo argued against the landed interest in 1817, against land rent. Now the banks are all in favor
of supporting land rent, knowing that today, when people buy and sell property, they need credit and pay interest for it. The banks
are going to get all the rent. So you have the banks merge with real estate against industry, against the economy as a whole. The
result is that they're part of the overhead process, not part of the production process.
LONG: There's a sense that there's a crisis lying ahead in the next year, two years, or three years. The mainstream economy's
so disconnected from Wall Street economy. What's your view on that?
HUDSON: It's not disconnected at all. The Wall Street economy has taken over the economy and is draining it. Under what economics
students are taught as Say's Law, the economy's workers are supposed to use their income to buy what they produce. That's why Henry
Ford paid them $5 a day, so that they could afford to buy the automobiles they were producing.
LONG: Exactly.
HUDSON: But Wall Street is interjecting itself into the economy, so that instead of the circular flow between producers and consumers,
you have more and more of the flow diverted to pay interest, insurance and rent. In other words, to pay the FIRE sector. It all ends
up with the financial sector, most of which is owned by the 1%. So, their way of formulating it is to distract attention from today's
debt quandary by saying it's just a cycle, or it's "secular stagnation." That removes the element of agency – active politicking
by the financial interests and Wall Street lobbyists to obtain all the growth of income and wealth for themselves. That's what happened
in America and Canada since the late 1970s.
LONG: What does an investor do today, or somebody who's looking for retirement, trying to save for the future, and they see some
of these things occurring. What should they be thinking about? Or how should they be protecting themselves?
HUDSON: What all the billionaires and the heavy investors do is simply try to preserve their wealth. They're not trying to make
money, they're not trying to speculate. If you're an investor, you're not going to outsmart Wall Street billionaires, because the
markets are basically fixed. It's the George Soros principle. If you have so much money, billions of dollars, you can break the Bank
of England. You don't follow the market, you don't anticipate it, you actually make the market and push it up, like the Plunge Protection
Team is doing with the stock market these days. You have to be able to control the prices. Insiders make money, but small investors
are not going to make money.
Since you're in Canada, I remember the beginning of the 1960s. I used to look at the Treasury Bulletin and Federal Reserve
Bulletin figures on foreign investment in the US stock market. We all used to laugh at Canada especially. The Canadians don't
buy stocks until they're up to the very top, and then they lose all the money by holding these stocks on the downturn. Finally, when
the market's all the way at the bottom, Canadians decide to begin selling because they finally can see a trend. So they miss the
upswing until they decide to buy at the top once again. It's hilarious to look at how Canada has performed in the US bond market,
and they did the same in the silver market. I remember when silver was going up to $50. The Canadians said, "Yes, we can see the
trend now!" and they began to buy it. They lost their shirts. So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
LONG: Absolutely on that one. What are you currently writing? What is your current focus now?
HUDSON: Well, I just finished a book. You mentioned Killing the Host . My next book will be out in about three months:
J is for Junk Economics . It began as a dictionary of terms, so I can provide people with a vocabulary. As we got in the argument
at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary
taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms.
If you look at the television reports on the market, they say that any loss in the stock market isn't a loss, it's "profit taking".
And when they talk about money. the stock market rises – "Oh that's good news." But it's awful news for the short sellers it wipes
out. Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening. For instance, "secular
stagnation" means it's all a cycle. Even the idea of "business cycles": Nobody in the 19 th century used the word "business
cycle". They spoke about "crashes". They knew that things go up slowly and then they plunge very quickly. It was a crash. It's not
the sine curve that you have in Josef Schumpeter's book on Business Cycles . It's a ratchet effect: slow up, quick down. A
cycle is something that is automatic, and if it's a cycle and you have leading and lagging indicators as the National Bureau of Economic
Research has. Then you'd think "Oh, okay, everything that goes up will come down, and everything that goes down will come up, just
wait your turn." And that means governments should be passive.
Well, that is the opposite of everything that's said in classical economics and the Progressive Era, when they realized that economies
don't recover by themselves. You need a-the government to step in, you need something "exogenous," as economist say. You need something
from outside the system to revive it. The covert idea of this business cycle analysis is to leave out the role of government. If
you look at neoliberal and Austrian theory, there's no role for government spending, and no role of public investment. The whole
argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19 th
century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten.
He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit. It's to lower the cost
of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive.
But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions. Obviously
these financialized charges are factored into the price system and raise the cost of living and doing business.
LONG: Well, Michael, we're-I thank you for the time, and we're up against our hard line. I know we didn't have as much time as
we always like, so we have to break. Any overall comments you'd like to leave with our listeners who might be interested this school
of economics?
HUDSON: Regarding the downturn we're in, we're going into a debt deflation. The key of understanding the economy is to look at
debt. The economy has to spend more and more money on debt service. The reason the economy is not recovering isn't simply because
this is a normal cycle. And It's not because labour is paid too much. It's because people are diverting more and more of their income
to paying their debts, so they can't afford to buy goods. Markets are shrinking – and if markets are shrinking, then real estate
rents are shrinking, profits are shrinking. Instead of using their earnings to reinvest and hire more labour to increase production,
companies are using their earnings for stock buybacks and dividend payouts to raise the share price so that the managers can take
their revenue in the form of bonuses and stocks and live in the short run. They're leaving their companies as bankrupt shells, which
is pretty much what hedge funds do when they take over companies.
So the financialization of companies is the reverse of everything Adam Smith, John Stuart Mill, and everyone you think of as a
classical economist was saying. Banks wrap themselves in a cloak of classical economics by dropping history of economic thought from
the curriculum, which is pretty much what's happened. And Canada-I know since you're from Canada, my experience there was that the
banks have a huge lobbying power over government. In 1979, I wrote for the IRPP Institute there on Canada In the New Monetary
Order . At that time the provinces of Canada were borrowing money from Switzerland and Germany because they could borrow it at
much lower interest rates. I said that this was going to be a disaster, and one that was completely unnecessary. If Canadian provinces
borrow in Francs or any other foreign currency, this money goes into the central bank, which then creates Canadian dollars to spend.
Why not have the central bank simply create these dollars without having Swiss francs, without having German marks? It's unnecessary
to have an intermediary. But the more thuggish banks, like the Bank of Nova Scotia, said, "Oh, that way's the road to serfdom." It's
not. Following the banks and the Austrian School of the banks' philosophy, that's the road to serfdom. That's the road
to debt serfdom. It should not be taken now. It lets universities and the government be run by neoliberals. They're a travesty of
what real economics is all about.
LONG: Michael, thank you very much. I learned a lot, appreciate it; certainly appreciate how important it is for us to use the
right words on the right subject when we're talking about economics. Absolutely agree with you. Talk to you again?
Interesting, but after insulting Duncan, Hudson says the banks stopped partnering with industry and went into real estate,
which sounded like what Duncan said.
I mention this because for a non- expert like myself it is sometimes difficult to tell when an expert is disagreeing with someone
for good reasons or just going off half- cocked. I followed what Hudson said about the evils of the IMF, but didn't see where
Duncan had defended any of that, unless it was implicit in saying that capitalism used to function better.
"As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the
words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen
– is basically a set of euphemisms ."Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are
happening."
May consider it's about recognizing and deciphering the "doublespeak", "newspeak", "fedspeak", "greenspeak" etc, whether willing
or unwitting using words for understanding and clarifying as opposed to misleading and confusing dialectic as opposed to sophistry.
What I objected to was the characterization of today's situation as "financialization." I explained that financialization is
the FIRST stage - when finance WORKS. We are now in the BREAKDOWN of financialization - toward the "barter" stage.
Treating "finance" as an end stage rather than as a beginning stage overlooks the dynamics of breakdown. It is debt deflation.
First profits fall, and as that occurs, rents on commercial property decline. This is already widespread here in New York, from
Manhattan (8th St. near NYU is half empty) to Queens (Austin St. in Forest Hills.).
I wrote an article you might be interested in reading. It outlines a tax policy which would help prevent what you are discussing
in your article. The abuse of credit to receive rents and long term capital gains.
Thank you for another eye-opening exposition. My political economy education was negative (counting a year of Monetarism and
Austrian Economics around 1980), so I appreciate your interviews as correctives.
From your interview answer to the question about what we, the 99+% should do,I gathered only that we should not try to beat
the market. Anything more than that?
From my understanding, post Plaza banking lost most of its traditional market to the shadow sector, as a result, expanded off
into C/RE and increasingly to Financialization of everything sundry.
Disheveled Marsupial interesting to note Mr. Hudson's statement about barter, risk factors – ?????
One of the most important distinctions that investors have to understand is the difference between secular and cyclical
trends Let us begin with definitions from the Encarta® World English Dictionary:
Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period
of time
Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions
of an event or phenomenon that occurs regularly
Secular stagnation is a condition of negligible or no economic growth in a market-based economy . When
per capita income stays at relatively high levels, the percentage of savings is likely to start exceeding the percentage of longer-term
investments in, for example, infrastructure and education, that are necessary to sustain future economic growth. The absence of
such investments (and consequently of the economic growth) leads to declining levels of per capita income (and consequently of
per capita savings). With the reduced percentage savings rate converging with the reduced investment rate, economic growth comes
to a standstill – ie, it stagnates. In a free economy, consumers anticipating secular stagnation, might transfer their savings
to more attractive-looking foreign countries. This would lead to a devaluation of their domestic currency, which would potentially
boost their exports, assuming that the country did have goods or services that could be exported.
Persistent low growth, especially in Europe, has been attributed by some to secular stagnation initiated by stronger European
economies, such as Germany, in the past few years.
Words. What they mean depends on who's talking.
Secular stagnation is when the predators of finance have eaten too many sheeple.
Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking.
Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many
markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to
have happened yet consistently.
Perhaps he meant to say that markets are going to shrink as the debt deflation becomes more evident?
Yes, I think we are into turnip country now. Figure 1 in
this
prior article looks clear enough – even if you don't like the analysis that went with it. Wealth inequality still climbs but
income inequality has plateaued since Clinton I. Whatever the reasons for that, the 1% should be concerned – where is the ROI?
Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal,
which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot
be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the
same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites
nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to
be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting
over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt
with Nike gear.
Labor has no problem with multiwhatever presidents, geneticists, psychologists, or economists, trying to hunt down and replace
labor, in or out of turn, but none are going to be any more successful than the others. Trump is being employed to bypass the
middle class and cut a deal. There is no deal. Labor is always going to pay males to work and their wives to raise children. Obviously,
the majority will vote for a competing economy, and it is welcome to do so, but if debt works so well, why is the majority voting
to kidnap our kids with public healthcare and education policies.
I'm not sure I heard an answer to the question of what people, who might be trying to save for the future or plan for retirement,
can do? Is the point that there isn't anything? Because I'm definitely between rocks and hard places
Yeah, he basically said there is no good savings plan. Big-money interests have rigged the rules and are now manipulating the
market (this used to be the definition of what was NOT allowed). Thus, they use computer algorithms to squeeze small amounts out
of the market millions of times. This means that the "investments" are nothing of the sort. You don't "invest" in something for
milliseconds. He said that the 1% are mostly just trying to hold on to what they have. Very few trust the rigged markets.
Low rent & cheap energy are key to the arts & innovations. My model has to work for airports, starts at the fuel farm as the
CIA & MI6 Front Page Avjet did. Well before that was Air America. I wonder if now American Airlines itself is a Front.
All of America is a Front far as I can about tell. Hadn't heard that Manhattan rents were coming down. Come in from out of
town, how you going to know? Not supposed to I guess.
I got that textbook and I liked that guy John Commons. He says capitalism is great, but it always leads to Socialism because
of unbridled greed.
The frenzy to find another stable cash currency showing in Bit Coin and the discussion of Future Tax Credits while the Euro
is controlled by the rent takers demands change on both sides of the Atlantic.
We got shot dead protesting the war, and civil rights backlash is the gift that keeps giving to the Southerners looking up
every day in every courthouse town, County seat is all about spreading fear and desperation.
How to change it all without violence is going to be really tricky.
. . . So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
When one reads the financial press in Canada, every dollar extracted by the lords of finance is a glorious taking by brilliant
people at the top of the financial food chain from the stupid little people at the bottom, but when it counts, there was silence,
in cooperation with Canada's one percent.
The story starts about five years ago, with smart meters. Everyone knows what they are, a method by which electrical power
use can be priced depending on the time of day, and day of the week.
To make this tasty, Ontario's local utilities at first kept the price the same for all the time, and then after all the meters
were installed, came the changes, phased in over time. Prices were increased substantially, but there was an out. If you changed
your living arrangements to live like a nocturnal rodent and washed your clothes in the middle of the night, had supper later
in the evening or waited for weekend power rates you could still get low power rates, from the three tier price structure.
The local utilities bought the power from the government of Ontario power generation utility, renamed to Hydro One, and this
is where Michael Hudson's talk becomes relevant.
The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to
privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like
you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's
part of the program, not a bug .
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural
resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads
us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs
in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically,
financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises,
land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the
top of the pyramid, impoverishing the 99% .
Eighteen months ago, there was an election in Ontario, and the press was on radio silence during the whole time leading up
to the election about the plans to "privatize" Hydro One. I cannot recall one instance of any mention that the new Premier, Kathleen
Wynne was planning on selling Hydro One to "investors".
Where did this come from? Did the little people rise up and say to the politicians "you should privatize Hydro One" for whatever
reason? No. This push came from the 1% and Hydro One was sold so fast it made my head spin, and is now trading on the Toronto
Stock exchange.
At first I though the premier was an economic ignoramus, because Hydro One was generating income for the province and there
was no other power supplier, so one couldn't even fire them if they raised their prices too high.
One of the arguments put forward by the 1% to privatize Hydro One was a classic divide and conquer strategy. They argued that
too many people at Hydro One were making too much money, and by privatizing, the employees wages would be beat down, and the resultant
savings would be passed on to customers.
Back to Michael Hudson
. . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools
in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school,
was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit
. It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing
business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments,
stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system
and raise the cost of living and doing business .
Power prices have increased yet again in Ontario since privatization, and Canada's 1% are "making a killing" on it. There has
been another change as well. Instead of a three tier price structure, there are now two, really expensive and super expensive.
There is no longer a price break to living like a nocturnal rodent. The 1% took that for themselves.
I am so tired of seeing that old lie about Old Henry and the $5 a day. I realize it was just a tossed off reference to something
most people believe for the purpose of describing a discarded policy, but the fact is very, very few of Old Henry's employees
ever got that pay. See, there were strings attached.
Old Henry hired a lot of spies, too. He sent them around to the neighborhoods where his workers lived (it was convenient having
them all in Detroit). If the neighbors saw your kid bringing a bucket of beer home from the corner tavern for the family, you
didn't get the $5.
If your lawn wasn't mowed to their satisfaction, you didn't get the $5. If you were thought not to bathe as often as they liked,
you didn't get the $5. If you didn't go to a church on Sundays, you didn't get the $5. If you were an immigrant and not taking
English classes at night school, you didn't get the $5. There were quite a lot of strings attached. The whole story was a public
relations stunt, and Old Henry never intended to live up to it; he hated his workers.
"... Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy, whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities. Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane. ..."
"... In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish that. ..."
"... At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying. All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw, volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program. ..."
Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks
building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances
to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does
for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population
or the next generation.
It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification
of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times
exposing the company itself to disruption threats from up-and-comers.
Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions . Economics is no exception.
Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment
beforehand.
Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It
honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as
them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices,
yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all
the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy,
possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns.
There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and
2007, amongst others.
Intriguingly, the other way round is accepted and even theorized. Manipulating bond and stock prices, directly or indirectly,
is mainstream policy theory today. From Ben Bernanke's 'portfolio balance channel theory', to the relentless pursuit of the 'wealth
effect' via financial repression under Janet Yellen and Haruhiko Kuroda, to Mario Draghi tackling the fragmentation of credit markets
across the EU via direct asset purchases, the practice has become commonplace. To some, like us, the 'wealth effect' may be proving
to be more of an 'inequality effect' than much, leading to populism and constantly threatening regime change, but that is beyond
the scope of this note today.
What we want to focus on instead is the direct impact that monetary interventionism like Quantitative Easing ('QE') and Negative
or Zero Interest Rate Policies ('NIRP' or 'ZIRP') have on the structure of the market itself, how they help create a one-sided investment
community, oftentimes long-only, fully invested when not levered up, relying on record-highs for bonds and stocks to perpetuate themselves
endlessly - despite a striking disconnect from fundamentals, life-dependent on the lowest levels of volatility ever seen in history
. The market structure morphed under the eyes of policymakers over the last few years, to become a pressure cooker at risk of blowing-up,
with a small but steadily growing probability as times goes by and the bubble inflates. The
positive feedback loops between monetary flooding and the private investment
community are culpable for transforming an ever present market risk into a systemic risk, and for masking as peaceful what is instead
an unstable equilibrium and
market fragility.
Positive Feedback Loops create divergence from general equilibrium, and Systemic Risks
Positive feedback loops , in finance like in biology, chemistry, cybernetics, breed system instability, as they orchestrate a
further divergence from equilibrium . An unstable equilibrium is defined as one where a small disturbance is sufficient to trigger
a large adjustment.
QE and NIRP have two predominant effects on markets: (i) relentless up-trend in stocks and bonds (the 'Trend Factor') , dominated
by the buy-the-dip mentality, which encapsulates the 'moral hazard' of investors knowing Central Banks are prompt to come to their
rescue (otherwise known as 'Bernanke/Yellen/Kuroda/Draghi put'), and (ii) the relentless down-trend in volatility the 'Volatility
Factor').
Two Factors Explain All: Trend and Volatility
The most fashionable investment strategies these days are directly impacted by either one or both of these drivers. Such strategies
make the bulk of the overall market, after leverage or turnover is taken into account : we will refer to them in the following as
'passive' or 'quasi-passive' . The trend impacts the long-only community, crowning it as a sure winner, making the case for low-
cost passive investing. The low volatility permeates everything else, making the case for full- investment and leverage.
The vast majority of investors these days are not independent from the QE environment they operate within : ETFs and index funds,
Risk Parity funds and Target Volatility vehicles, Low Volatility / Short Volatility vehicles, trend-chasing algos, Machine Learning-inspired
funds, behavioral Alternative Risk Premia funds. They are the poster children of the QE world. We estimate combined assets under
management of in excess of $8trn across the spectrum. They form a broad category of 'passive' or 'quasi-passive' investors, as are
being mechanically driven by two main factors: trend and volatility.
Source: Fasanara Presentations | Market Fragility
- How to Position for Twin Bubbles Bust, 16 th October 2017. The slide is described in details in this
video recording.
Extraordinary monetary policies have feedback loops with the asset management industry as a whole, reinforcing the effects on
markets of such policies in a vicious – or virtuous - cycle . QE and NIRP help a large number of investment strategies to flourish,
validating their success and supporting their asset gathering in the process, and are in return helped in boosting bond and stock
markets by their flows joining the already monumental public flows.
Private flows so reach singularity with public flows, and the whole market economy morphs into a one big common bet on ever-rising
prices, in shallow volatility. Here is the story of how $15trn of money printing by major Central Banks in the last ten years, of
which $3.7trn in 2017 alone, is joined by total assets of $8trn managed into buying the same safe and risk assets across, with leverage,
indiscriminately.
How Market Risk became Systemic Risk
Let's give a cursory look at the main players involved (a recent presentation we did is recorded
here) . As markets trend higher, no matter what happens (ever against the
shocked disbeliefs of Brexit, Trump, an Italian failed referendum and nuclear threats in North Korea), investors understand the outperformance
that comes from pricing risks out of their portfolios entirely and going long-only and fully-invested. Whoever under-weighs positions
in an attempt to be prudent ends up underperforming its benchmarks and is then penalized with redemptions. Passive investors who
are long-only and fully invested are the winners, as they are designed to be bold and insensitive to risks. As Central Banks policies
reduce the level of interest rates to zero or whereabouts, fees become ever more relevant, making the case for passive investing
most compelling. The rise of ETF and passive index funds is then inevitable.
According to JP Morgan, in the last 10 years, $2trn left active managers in equities and $2trn entered passive managers (pag.39
here) . We may be excused for thinking they are the
same $ 2trn of underlying investors progressively pricing risk provisions out of books, de facto , while chasing outperformance and
lower fees.
To be sure, ETFs are a great financial innovation, helping reducing costs in an expensive industry and giving entry to markets
previously un-accessible to most investors. Yet, what matters here is their impact on systemic risks, via positive feedback loops.
In circular reference, beyond Central Banks flows, markets are helped rise by such classes of valuations-insensitive passive investors,
which are then rewarded with further inflows, with which they can then buy more. The more expensive valuations get, the more they
disconnect from fundamentals, the more divergence from equilibrium occurs, the larger fat-tail risks become.
In ever-rising markets, 'buy-and-hold' strategies may only possibly be outsmarted by 'buy-the-dip' strategies. Whatever the outcome
of risk events, be ready to buy the dip quickly and blindly. As more investors design themselves up to do so, the dips are shallower
over time, leading to an S&P500 that never lost 3% in 2017, an historical milestone. Machine learning is another beautiful market
innovation, but what is there to learn from the time series of the last several years, if not that buy- the-dip works, irrespective
of what caused the dip. Big Data is yet another great concept, shaping the future of us all. Yet, most data ever generated in humankind
dates back three years only, in and by itself a striking limitation. The quality of the deduction cannot exceed the quality of the
time series upon which the data science was applied. If the time series is untrustworthy, as is heavily influenced by monumental
public flows ($300bn per months), what trust can we put on any model output originating from it? What pattern recognition can we
really be hopeful of getting, in the first place? May some of it just be a commercial disguise for going long, selling volatility
and leveraging up in various shapes or forms? What is hype and what is real? A short and compromised data series makes it hard, if
not possible, to really know. Once public flows abate and price discovery is let free again, then and only then will we be in a position
to know the difference.
Low volatility does what trending markets alone cannot. A state of low volatility presents the appearance of
stuporous, innocuous, narcotized markets, thus
enticing new swathes of unfitting investors in, mostly retail-type 'weak hands'. Weak hands are investors who are brought to like
investments by certain characteristics which are uncommon to the specific investment itself, such as featuring a low volatility.
It is in this form that we see bond-like investors looking at the stock market for yield pick-up purposes, magnetized by levels of
realized volatility similar to what fixed income used to provide with during the Great Moderation. It is in this form that Tech companies
out of the US have started filling the coffers of not just Growth ETF, where they should rightfully reside, but also Momentum ETF,
and even, incredibly, Low-Volatility ETF.
Low volatility is also a dominant input for Risk Parity funds and Target Volatility vehicles . The lower the volatility, the higher
the leverage allowed in such players, mechanically. All of which are long-only players, joining public flows, again helping the market
rise to record levels in the process, in circular reference. Rewarded by new inflows, the buying spree gathers momentum, in a virtuous
circle. Valuations are no real input in the process, volatility is what matters the most. Volatility is not risk, except for them
it is.
It goes further than that. It is not only the level of volatility that count, but its direction too . As volatility implodes,
relentlessly, into historical lows never seen before in history, a plethora of investment strategies is launched to capitalize on
just that, directly: Short Volatility vehicles . They are the best performing strategy of the last decade, by and large. The problem
here is that, due to construction, as volatility got to single-digit territory, relatively small spikes are now enough to trigger
wipe-out events on several of these instruments. Our analysis shows that if equity volatility doubles up from current levels (while
still being half of what it was as recently as in August 2015), certain Short Vol ETFs may stand to lose up to 75% or more. Moreover,
short positions on long-vol ETFs can lose up to 250% of capital. For some, 'termination events' are built into contracts for sudden
losses of this magnitude, meaning that the notes would be prematurely withdrawn. It is one thing to expect a spike in volatility
to cause losses, it is quite another to know that a minor move is all it takes to trigger a default event.
On such spikes in volatility, Morgan Stanley Quant Derivatives Strategy desk warns further that market makers may be forced to
rebalance their exposure non-linearly on a spike in volatility. A drop in the S&P 500 of 5% in one day may trigger approximately
$ 400mn of Vega notional of rebalancing (pag.48 here)
. We estimate that half a trillion dollars of additional selling on S&P stocks may occur following a correction of between 5% and
10%. That is a lot of selling, pre-set in markets, waiting to strike. Unless you expect the market to not have another 5% sell-off,
ever again.
What do ETFs, Risk Parity and Target Vol vehicles, Low Vol / Short Vol vehicles, trend-chasing algos, Machine Learning, behavioral
Alternative Risk Premia, factor investing have in common? Except, of course, being the 'winners take all' of QE-driven markets. They
all share one or more of the following risk factors: long-only, fully invested when not leveraged-up, short volatility, short correlation,
short gamma Thanks to QE and NIRP, the whole market is becoming one single big position.
The 'Trend Factor' and the 'Volatility Factor' are over-whelming, making it inevitable for a high- beta, long-bias, short-vol
proxy to disseminate across. Almost inescapably so, given the time series the asset management industry has to deal with, and derive
its signals from.
Several classes of investors may move to sell in lock-steps if and when markets turn. The boost to asset prices and the zero-volatility
environment created the conditions for systemic risks in the form of an over-compensation to the downside. Record-low volatility
breeds market fragility, it precedes system instability.
Flows Matter, Both Ways!
We will know soon if the fragility of markets is that bad. The undoing of loose monetary policies (NIRP, ZIRP) will create a liquidity
withdrawal of over $1 trillion in 2018 alone (pag.61-62
here) . The reaction of the passive and quasi-passive communities will determine the speed of the adjustment in the pricing for
both safe and risk assets, and how quickly risk provisions will re- enter portfolios. Such liquidity withdrawal will represent the
first real crash-test for markets in 10 years.
As public spending on Wall Street abates, the risk is evident of seeing the whole market turning with it. The shocks of Trump
and Brexit did not manage to derail markets for long, as public flows were overwhelming. Flows is what mattered, above all elusive,
over-fitting economic narratives justifying price action at the margin. Flows may matter again now as they fade
Systemic Risk is Not Just About Banks: Look at Funds
The role of trending markets is known when it comes to systemic risks: a not sufficient but necessary condition. Most trends do
not necessarily lead to systemic risks, but hardly systemic risks ever build up without a prolonged period of uptrend beforehand.
Prolonged uptrends in any asset class hold the potential to instill the perception that such asset class will grow forever, irrespective
of the fundamentals, and may thus lead to excessive risk taking, excess leverage, the formation of a bubble and, ultimately, systemic
risks. The mind goes to the asset class of real estate, its undeterred uptrend into 2006/2007, its perception of perpetuity ("we
have never had a decline in house prices on a nationwide basis''
Ben Bernanke) , the credit bubble built on banks hazardous activities on subprime mortgages as a result, and the systemic risks
which emanated, with damages spanning well beyond the borders of real estate.
The role of volatility is also well-researched, especially low volatility. Hayman Minsky, in his "
Financial Instability
Hypothesis '' in 1977, analyses the behavioral changes induced by a reduction of volatility, postulating that economic agents
observing a low risk are induced to increase risk taking, which may in turn lead to a crisis: "stability is destabilizing". In a
recent study, Jon Danielsson, Director
of the Systemic Risk Centre at the LSE, finds unambiguous support for the 'low volatility channel', insofar as prolonged periods
of low volatility have a strong predictive power over the incidence of a banking crisis, owing to excess lending and excess leverage
. The economic impact is the highest if the economy stays in the low volatility environment for five years : a 1% decrease in volatility
below its trend translates in a 1.01% increase in the probability of a crisis. He also finds that, counter-intuitively, high volatility
has little predictive power : very interesting, when the whole finance world at large is based on retrospective VAR metrics, and
equivocates high volatility for high risk.
Both a persistent trend and prolonged low-volatility can lead banks to take excessive risks. But what about their impact on the
asset management industry?
Thinking at the hard economic impact of the Great Depression (1929-1932) and the Great Recession (2007-2009), and the eminent
role played by banks in both, it comes as little surprise that the banking sector captures all the attention. However, what remains
to be looked into, and perhaps more worrying in today's environment, is the role of prolonged periods of uptrend and low-vol on the
asset management industry
In 2014, the Financial Stability Board (FSB), an international body that makes recommendations to G20 nations on financial risks,
published a consultation paper asking whether fund managers might need to be designated as " global systemically important financial
institution " or G-SIFI, a step that would involve greater regulation and oversight. It did not result in much, as the industry lobbied
in protest, emphasizing the difference between the levered balance sheet of a bank and the business of funds.
The reason for asking the question is evident: (i) sheer size , as the AM industry ballooned in the last few years, to now represent
over [15trnXX] for just the top 5 US players!, (ii) funds have partially substituted banks in certain market-making activities, as
banks dialed back their participation in response to tighter regulation and (iii) , funds can indeed do damage: think of LTCM in
1998, the fatal bailout of two Real Estate funds by Bear Stearns in 2007, the money market funds 'breaking the buck' in 2008 amongst
others.
But it is not just sheer size that matters for asset managers. What may worry more is the positive feedback loops discussed above
and the resulting concentration of bets in one single global pot , life-dependent on infinite momentum/trend and ever-falling volatility.
Positive feedback loops are the link for the sheer size of the AM industry to become systemically relevant. Today more than ever,
they morph market risks in systemic risks.
Volatility will not forever be low, the trend will not forever go: how bad a damage when it stops? As macro prudential policy
is not the art of "whether or not it will happen" but of "what happens if", it is hard not to see this as a blind spot for policymakers
nowadays.
I have never seen it this bad, the numbers are all moutof wack!
It seems many of us are drawn to a good illusion and this proves true for most people in their daily life as well. In some
ways, it could be said that our culture has become obsessed with avoiding what is real.
We must remember that politicians and those in power tend to throw people under the bus rather than rise up and take responsibility
for the problems they create. The article below looks at how we have grown to believe things are fine.
The real estate boom features all the unknowns in today's thinking, which is why they are global.
This simple equation is unknown.
Disposable income = wages – (taxes + the cost of living)
You can immediately see how high housing costs have to be covered by wages; business pays the high housing costs for expensive
housing adding to costs and reducing profits. The real estate boom raises costs to business and makes your nation uncompetitive
in a globalised world.
The unproductive lending involved that leads to financial crises.
The economy gets loaded up with unproductive lending as future spending power has been taken to inflate the value of the nation's
housing stock. Housing is more expensive and the future has been impoverished.
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015.
He wouldn't know, that's financial intermediation theory.
Bank lending creates money, which pours into the economy fuelling the boom; it is this money creation that makes the housing
boom feel so good in the general economy. It feels like there is lots of money about because there is.
The housing bust feels so bad because the opposite takes place, and money gets sucked out of the economy as the repayments
overtake new lending. It feels like there isn't much money about because there isn't.
They were known unknowns, the people that knew weren't the policymakers to whom these things were unknown.
The global economy told policymakers there was something seriously wrong in 2008, but they ignored it, I didn't.
They had pushed Greece into debt deflation by cutting Government spending with austerity.
It wasn't just the IMF, the Troika all went along with this fatally flawed policy, this means the ECB and EU Commission also
didn't know what they were doing.
Richard Koo had watched as Western "experts" told Japan to cut Government spending and seen the fall in GDP as the economy
went downhill. The only way to get things going again was to increase Government spending and he has had decades to work out what
was going on.
The Troika's bad economics has been wreaking havoc across the Club-Med.
Another superficially correct analysis of "Positive Feedback Loops create divergence from general equilibrium, and Systemic
Risks." The vicious feedback loops which have the most leverage are all aspects of the funding of the political processes, which
have resulted in runaway systems of legalized lies, backed by legalized violence, the most important of which are the ways that
the powers of public governments enforce frauds by private banks, the big corporations that have grown up around those big banks.
About exponentially advancing technologies have enabled enforced frauds to become about exponentially more fraudulent. The
underlying drivers were the ways that the combined money/murder systems developed, whose social successfulness became more and
more based on maximizing maliciousness. From a superficial point of view, those results may appear to be due to incompetence,
however, from a deeper point of view those results make sense as due to the excessively successful applications of the methods
of organized crime through the political processes, due to the vicious feedback loops of the funding of those political processes.
The only connections between human laws and natural laws are the abilities to back up lies with violence. Natural selection
pressures have driven Globalized Neolithic Civilization to develop the most dishonest artificial selection systems possible, while
the continuation of the various vicious feedback loops that made and maintained those developments are driving about exponentially
increasing dishonesty. Although the laws of nature are not going to stop working, and the laws of nature underpinned the runaway
development of excessively successful vicious feedback loops of organized crime, on larger and larger scales, to result in Globalized
Neolithic Civilization, the overall results are that Civilization is becoming about exponentially more psychotic. Since Civilization
necessarily operates according to the principles and methods of organized crime, while those who became the biggest and best organized
forms of organized crime, namely, banker dominated governments, also necessarily became most dishonest about themselves, and yet,
their bullshit social stories continue to dominate the public schools, and mainstream mass media, as well as the publicly significant
controlled "opposition" groups.
Political economy is INSIDE human ecology, and therefore, the greatest systematic risks are to be found in the tragic trajectory
of human ecologies which are almost totally buried under maximized maliciousness. "Public debates" about the human death control
systems are based on previously having being as deceitful and treacherous as possible regarding those topics. The most extreme
forms of that manifest as the ways that money is measurement backed by murder. Of course, that the debt controls are backed by
the death controls are issues which are generally not publicly admitted nor addressed.
Global Neolithic Civilization has become almost totally based on being able to enforce frauds, in ways which have become about
exponentially more fraudulent, as the vicious feedback loops which enable that to happen automatically reinforce themselves to
get worse, faster. The almost total triumph of enforced frauds has resulted in social "realities" which are becoming exponentially
more insane, since the social successfulness of enforced frauds requires the most people do not understand that, because they
have been conditioned to not want to understand that. Rather, almost everyone takes for granted deliberately ignoring and misunderstanding
the laws of nature in the most absurdly backward ways possible, because of the long history of successful warfare based on deceits
and treacheries becoming the more recent history of successful finance based on enforcing frauds, despite that tragic trajectory
of vicious feedback loops resulting in about exponentially increasing overall fraudulence.
Various superficially correct analyses, such as the one in the article above, are typical of the content on Zero Hedge , which
does not come remotely close to recognizing the degree to which the dominate natural languages and philosophy of science have
undergone series of compromises with the biggest bullies' bullshit-based world views, which became the banksters' bullshit about
economics. Although it is theoretically possible for human beings to better understand themselves and Civilization, it continues
to become more and more politically impossible to do so, due to the ever increasing vicious feedback loops of enforced frauds
achieving symbolic robberies ...
Although the laws of nature are never going to stop working, it is barely possible to exaggerate the degree to which Civilization
overall is becoming about exponentially more psychotic, due to the social "realities" based on successfully enforcing frauds becoming
more and more out of touch with the surrounding, relatively objective, physical and biological facts. The various superficially
correct analyses presented on Zero Hedge regarding that kind of runaway collective psychosis, driven by the vicious feedback loops
of the funding of all aspects of the funding of the political processes, tend to always grossly understate the seriousness of
that situation, especially including the crucial issues of how to operate the human murder systems after the development of weapons
of mass destruction, which is unavoidable due to the rapid development of globalized electronic monkey money frauds, backed by
the threat of force from apes with atomic weapons.
Those who believe that possessing precious metals, or cryptocurrencies, etc., are viable solutions to those problems are not
remotely close to being in the right order of magnitude. Although there is no doubt that exponentially more "money" is being made
out of nothing as debts, in order to "pay" for strip-mining the natural resources of a still relatively fresh planet, and so,
there is no doubt that the exponentially decreasing value of that "money" is driving the accumulation of apparent anomalies, such
as outlined in the article above, the actually crucial issues continue to be the ways that money is measurement backed by murder,
as the most abstract ways that private property are claims backed by coercions. Stop-gap individual responses to the runaway fraudulence,
such as faith in possessing precious metals or cryptocurrencies, make some relative sense in terms of the public "money" supplies
becoming exponentially more fraudulent, but otherwise dismally fail to be in the ball park of the significant issues driven by
prodigious progress in physical sciences, WITHOUT any genuine progress in political sciences, other than to continue to be able
to better enforce bigger frauds, through the elaborations of oxymoronic scientific dictatorships, which adamantly refuse to become
more genuinely scientific about themselves.
Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves
as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy,
whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization
through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities.
Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated
governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames
of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane.
That Civilization has been driven by natural selection pressures to manifest runaway psychoses is not going to stop the laws
of nature from continuing to work through that Civilization. However, that will nevertheless drive the currently dominate artificial
selection systems to become increasingly psychotic, in ways whereby their vicious feedback loops are less and less able to be
sanely responded to ... Although some human beings have better and better understood some general energy systems, e.g., electric
and atomic energy, etc., since warfare was the oldest and best developed forms of social science and engineering, whose successfulness
was based on being able to maximize maliciousness, and since those then enabled successful finance to become based on runaway
enforced frauds, human beings living within Globalized Neolithic Civilization are so hidebound by adapting to living inside those
vicious feedback loops based on being able to enforce frauds that those human beings are mostly unwilling and unable to better
understand themselves as also manifestations of general energy systems.
As the report, embedded in the article, begins by quoting Leonardo da Vinci:
"Learn how to see. Realize that everything connects to everything else."
In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based
on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent
anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore
increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific
revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations
of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms
of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish
that.
At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying.
All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw,
volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the
money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program.
"... Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy to absorb a great deal more rapid economic growth. ..."
"... But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the reasonable thing to do ..."
"... So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly, for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and that there were responsible people on one side of the debate, and irresponsible people on the other. ..."
"... The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative and managerial work and the upper, leisure, class live a life of luxury and leisure. ..."
"... The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.) We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work. ..."
"... Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital) ..."
"... Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the bottom live a life of bare subsistence. ..."
"... "The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction" ..."
"... "We came, we saw, he died" rinse and repeat for 5,000 years. ..."
"... By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce. ..."
"... They knew that if wealth concentrated too much there would not be enough demand. ..."
"... Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned. ..."
"... Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. ..."
"... Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready for MMT? ..."
"... To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control." ..."
"... Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low growth – because there is not much growth left. ..."
PERIES: James, the Council of Economic Advisors, they put out economic forecasts each year. And there has been some wildly
optimistic ones. For example, if you look at the 2010 predictions for 2012 and 2013 they have not quite been attained. And one would
say it was done in the interest of trying to make the administration that they were serving more impressive. But what accounts for
this particular attack on Friedman's projection and other fellow economists?
GALBRAITH: This was a classic case of professional bad manners and rank-pulling. What we had here were four former chairs
of the president's Council of Economic Advisors, and two from President Obama, two from President Clinton, who decided to use their
big names and their titles in order to launch an attack on a professor of economics at the University of Massachusetts who had written
a paper evaluating the Sanders economic program.
It's likely that the four bigwigs thought that Professor Friedman was a Bernie Sanders supporter. In fact, as of that time he
was a Hillary Clinton supporter and a modest donor to her campaign. What he had done was simply to write his evaluation of the economic
effects of the ambitious Sanders reform program. The four former council chairs announced that on the basis of their deep commitment
to rigor and objectivity, they had discovered that this forecast was unrealistic. And what I pointed out was that that claim was
based on no evidence and no analysis whatsoever. And when you pressed down on it you found that it was simply based on the obvious
fact that we haven't seen the kinds of growth rates that Professor Friedman's analysis suggested the Sanders program would produce.
And for a very simple reason: the Sanders program is bigger. It's more ambitious than anything we've seen in recent years, so it's
not surprising that when you put it through a model it generates a higher growth rate.
So that was the basic underlying facts, and these guys, two men and two women, announced that they, that it was a disreputable
study, but failed to present any analysis that suggested they'd actually even read the paper before they denounced it. And that's
what I pointed out in my counter letter, in a number of articles that have appeared since.
PERIES: James, so in your letter, how do you counter them? What methods did you use to come to your conclusions?
GALBRAITH: Well, I, no need to say anything beyond the fact that I had looked in their letter for the rigor that they were
so proud of, for the objectivity and the analysis that they were so proud of, and I'd found that they had not done any. They had
not made any such claim, not done any such work.
So that began to provoke a discussion. It's fair to say ultimately, without apologizing for effectively launching an ad hominem
attack on an independent academic researcher, one of the former chairs, Christina Romer of President Obama's council, and her husband
David Romer, a fellow economist, did produce a paper in which they spelled out their differences with the, with the Friedman paper.
But that, again, raised another set of interesting issues which we've continued to discuss at various, various outlets of the press.
PERIES: Now, James Friedman's claim that the growth rate from Sanders' plan to be around 5.3 percent. And some economists,
including Dean Baker at the Center for Economic Policy and Research, have claimed that this is unrealistic. What do you make of that?
GALBRAITH: Well, the question is whether it is an effect, let's say, a reasonable projection, of putting the Sanders program
into an economic model. And the answer to that question, yes, Professor Friedman did a reasonable job. He spelled out what the underlying
assumptions that he was using were. He spelled out the basic rules of thumb that macroeconomists had used for decades to assess the
effects of an economic program. In this case, an expansionary economic program. And he ran them through his model and reported the
results, a perfectly reasonable thing to do.
Now, one can be skeptical. And I am, and Dean Baker is, lots of people are skeptical that the world would work out quite that
way, because lots of things, in fact, happen which are not accounted for in a model. And we've talked, we've basically put together
a list of things that you think might be problematic. But the exercise here was not to put everything into paper that might happen
in the world. The exercise was to take the kind of bare bones that economists use to assess and to compare the consequences of alternative
programs, and to ask what kind of results do you get out? And that's what, again, what Jerry Friedman did. It was a reasonable exercise,
he came up with a reasonable answer, and he reported it.
PERIES: Now, Friedman seems to think that the rate of full employment in 1999 is attainable. However, many labor economists
seem to think that the larger share of the elderly currently in society compared to 1999 explains some of the lack of labor participation,
which creates a lower full employment ceiling that's contradicting Friedman's report. Your thoughts on that?
GALBRAITH: Well, I think it is a fact that the population is getting older. But as, I think, any economist would tell you,
that when you offer jobs in the labor market, the first thing that happens is the people who are looking for work take those jobs.
The second thing that happens is that people who might look for work when jobs were available start coming back into the labor market.
And if that is not enough to fill the vacancies that you have, it's perfectly open to employers to raise their wages so as to bring
more people in, or to increase the pace at which they innovate and substitute technology for labor so that they don't need the work.
So there's no real crisis involved in the situation if it turns out five years from now we're at 3.5 percent unemployment, and
they were beginning to run short of labor. That's not a reason to, at this stage, say no, we're not going to engage in the exercise
and run a more expansionary, vigorous reform program, a vigorous infrastructure project, a major reform of healthcare, a tuition-free
public education program. All of those things, which were part of what Friedman put into his paper, should be done anyway. The fact
that the labor market forecast might prove to have some different, the labor market might have different characteristics in five
years' time is from our present point of view just a, it's an academic or a theoretical proposition, purely.
PERIES: And Friedman's paper, he looks at a ten-year forecast. Did you feel that when you looked at the specifics of that,
including college, universal healthcare, infrastructure spending and of course, expanding Social Security and so on, that those categories
and his predictions or projections, rather, made sense to you?
GALBRAITH:Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set
of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written
a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy
to absorb a great deal more rapid economic growth.
But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman
was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the
reasonable thing to do.
On the contrary, and on the other side, when Christina and David Romer did put out their forecast, their own criticism of the
Friedman paper, they concluded by asserting that if this program were tried, inflation would soar. So they there were making an allegation
for which, again, they had no evidence and no plausible model, that in the world in which we presently live would produce that result.
So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the
Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly,
for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result
politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey
the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and
that there were responsible people on one side of the debate, and irresponsible people on the other.
And that was, again, something that–an impression that could be conveyed through the mass media, but would not withstand scrutiny,
and didn't withstand scrutiny, once a few of us stood up and started saying, okay, where's your evidence, on what are you basing
this argument? And revealed the point, which the Romers implicitly conceded, and I give them credit for that, that in order to criticize
a fellow economist you need to do some work.
The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that
was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is
essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work
and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure.
The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory
of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was
written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.)
We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy
has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.
Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital)
Today this is done through the parasitic, rentier trickle up of Capitalism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
All this was much easier to see in Capitalism's earlier days.
Malthus and Ricardo never saw those at the bottom rising out of a bare subsistence living. This was the way it had always been
and always would be, the benefits of the system only accrue to those at the top.
It was very obvious to Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The
Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from
the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every
savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."
Like most classical economists he differentiated between "earned" and "unearned" wealth and noted how the wealthy maintained
themselves in idleness and luxury via "unearned", rentier income from their land and capital.
We can no longer see the difference between the productive side of the economy and the unproductive, parasitic, rentier side.
This is probably why inequality is rising so fast, the mechanisms by which the system looks after those at the top are now hidden
from us.
In the 19th Century things were still very obvious.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
Immense wealth at the top with nothing trickling down, just like today.
This is what Capitalism maximized for profit looks like. Labour costs are reduced to the absolute minimum to maximise profit.
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and
child labour. The function of the system is still laid bare. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure. The majority only got a larger slice of the
pie through organised Labour movements.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to
purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce. They knew that if wealth concentrated too much there would not be enough demand.
In the 1950s, when Capitalism had healthy competition, it was essential that the Capitalist system could demonstrate that it was
better than the competition. The US was able to demonstrate the superior lifestyle it offered to its average citizens.
Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor
and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the
bottom live a life of bare subsistence.
When you realise the true nature of Capitalism, you know why some kind of redistribution is necessary and strong progressive
taxation is the only way a consumer society can ever be kept functioning.
A good quote from John Kenneth Galbraith's book "The Affluent Society", which in turn comes from Marx.
"The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate
survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction"
Marx made some mistakes but he got quite a lot right.
Perhaps, Western civilization had already cultivated and concentrated psychopathic personality traits in its elite before Capitalism
ever begun. Early European history is an endless procession of wars at home and abroad as the elite took their wealth by force
and the masses were kept in check by force whenever necessary.
No peaceful group could ever survive this relentless onslaught of millennia. This psychopathic elite then took their warlike
ways to every corner of the earth. The wealthy elite from this era then became the wealthy elite of the next Capitalist era. Even
today their bloodlust cannot be sated as they look to control a global empire.
Certainly countless hundreds of peaceful, responsible, inclusive, open, empathetic indigenous societies have been co-opted/overthrown
by the western model.
Yes, but it's not just the western model that overthrows peaceful societies. The empires of China, the Japanese monarchies,
the empires of India (together with a cringeworthy caste system), the human sacrificing Aztecs, Mayas, and Incas, all prove that
tyranny is not a western invention.
When a local population becomes too large to be supported by simple egalitarian hunting and gathering, something else is required.
That something is agriculture, and almost inevitably, the organization, specialization, and partial urbanization required by large
scale agricultural society leads to exploitation and tyranny. This is seen in the earliest societies for which we have a written
record, Sumer and Egypt.
Thanks for the explanations of Veblen and Galbraith, which I find enduring basics over more than 100 years of speculation,
real investment, and the best way to keep consumer society healthy.
My unschooled, simple, way to measure the health of an economy is in the Velocity of Money in the real economy of useful products
and services. It appears to be very far below where it was when we did our best, and lower than when we first started measuring
it near the beginning of the Great Depression.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required
to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce.
They knew that if wealth concentrated too much there would not be enough demand.
Of course the Capitalists could never find it in themselves to raise wages and it took the New Deal and Keynesian thinking
to usher in the consumer society.
Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic
philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending
by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the
pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending
and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom
have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in
the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned.
A Monetarily Sovereign government does not need to reduce debt. In the U.S. (which is Monetarily Sovereign) federal so-called
"debt" is actually the total of deposits in T-security accounts at the Federal Reserve Bank. In short, "debt" is bank deposits.
Why anyone would want to reduce the size of deposits at the world's safest bank is a mystery to me - other than the misleading
use of the word "debt."
While all bank accounts are, in fact, debt of banks, most banks boast about the size of their depositors' accounts.
Contrary to popular myth, federal debt (i.e. deposits at the FRB) does not lead to inflation. America's "debt" has grown more
than 9,000% in the past 75 years, and the Fed is struggling to create inflation.
Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have
used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. It
would possibly have given his program more gravitas – first amongst elites, and then more generally. At least it would have had
a chance of changing the broader discussion. Whether you agree with it or not, right now the general MSM reporting on the Sanders
plan is that it doesn't add up.
This is speculative, but since Prof. Kelton is actually the economist for the Minority (the Democrats) of the Senate Banking
committee, there may be reasons of protocol that Sanders isn't using her policy ideas at the moment.
Another possibility is that trying to introduce a new economic paradigm while running for the nomination may be a bridge too
far. If Sanders tried to explain to people that taxes don't fund federal spending, etc., heads would explode.
I'm also not sure how one would use Prof. Kelton's ideas without bringing in a whole bunch of MMT concepts. Maybe if Sanders
wins the nomination he can begin to bring some of these ideas into the conversation.
He won't use her ideas simple because the American voter in not yet amenable to the facts of
Monetary Sovereignty .
Try explaining even to your best friend that:
1. Unlike state and local taxes, Federal taxes do not fund federal spending.
2. Even if FICA were eliminated, Social Security and Medicare benefits dramatically could (and should) be increased. There are
no federal "trust funds."
3. Federal deficits are necessary for economic growth
4. Federal "debt" is nothing more than deposits in T-security accounts at the Federal Reserve Bank.
5. America never has had, and is absolutely in no danger of, hyper-inflation.
Perhaps, if Bernie wins the election, he will be freer to educate the masses, as well as the economics community, but meanwhile
he has to claim the popular myth that federal spending has to be "paid for" by taxes.
Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready
for MMT? I think it's politically OK to use MMT informed policies–"deficits don't matter"–as the Republicans have, but not
OK to openly acknowledge doing so. MMT runs head on into bedrock beliefs like the protestant moral virtues of thrift and fiscal
responsibility. People cling to this stuff as tightly as they cling to their religion and guns.
MMT is a volatile, explosive doctrine. Tell an ordinary off-the-street taxpayer that Federal taxes don't fund Federal expenditures,
that Federal taxes destroy the money they collect and so keep inflation at desired levels, and ready yourself to answer this:
"If I'm just paying taxes so the money can be burned, why should I pay taxes? What good does paying taxes for that do me,
or people like me?"
And be prepared not to have your answer heard, comprehended, or accepted, after it is given.
It could lead directly and quickly to the end of a system of tax collection based on voluntary compliance. It could ignite
a revolution.
MMT is an unpopular doctrine. Whether it is the true theory, or a truer theory than others, of the state of the world–is not
the point.
She can't. She's his staffer (on the Senate Budget Committee) so she is now allowed to work on the campaign. It would be a
big ethics violation and would produce a scandal. Staffers cannot work on any of their bosses campaigns, including re-elections.
Remember, they are government employees, not on Sanders' personal payroll.
My old party has worked hard to try discredit James Galbraith. I was faced with some ridicule from a Bush era international
negotiator for trying to read "The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too" in
an airport waiting area.
To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining
the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth
in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control."
I don't oppose them (at that level) expressing their well thought out views, even using the "persuasive" techniques described
in the document at http://www.informationclearinghouse.info/article4443.htm
but I do fault them for trying to prevent people from freely exploring far more comprehensive information and views.
We left the party ancestors had founded and stayed loyal to for 5 generations, though, because of the lower level dirty tricksters
("opposition researchers") that wanted us to corrupt the processes as one fund raiser told me, "We have to fight dirtier than
Democrats."
Galbraith is a voice that must be listened to, just as there may be many others that we should be able to listen to (as I assume
we could have under the old "Fairness Doctrine" before the corporate take over of almost all fully accessible media).
stg Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low
growth – because there is not much growth left. So maybe we are headed for a no growth world in which stability and sustainability
dictate enterprise which is used to maintain a steady state – so that sounds more socialist than capitalist out of necessity.
I believe this is our future too. And I think I understand Varoufakis' and Galbraith's "modest proposal" in a clearer light because
growth must be used going forward not willy-nilly, but to achieve our ends. And also too – a while back the link that effectively
said we had it backwards when we assume that capitalism supports socialism – because capitalism in reality lives off and is only
possible under sufficient socialism. And it seems the 4 presidential advisors are more out to lunch than their letter showed.
Can't respond to all the nonsense. I just read Wolfer's piece and it seems to miss the point (as with the Romers), as noted
in the following 2 articles. I especially recommend the 2nd one from John Cassidy in the New Yorker.
as usual, i hear a lot "they" failed conservatism, never, Conservatism is just the age old avenue to "scam" the other. Bush
"failed" at conservatism, i.e., it was Bush's fault not the ideology of Conservatism. on and on, this self repeated/reinforced
"idea" that we have just not "found" the correct "application" of the ideal/reality that is Conservatism.
it does get old, too. all the people killed due to Conservatism and its' perpetrators. Greed, in other words, and the age old
scam with "new and improved" tactics. These people have no concept of what "society" is, why we are all interrelated. to scam
one is to scam us all. and these people are definitely not Christian in the "Jesus Christ" i've always heard about. Whatsoever
you do unto the poor, you do unto me!
i just suppose psychopaths use any avenue for their "crimes." as i've heard, too, any great fortune is usually the result of
a great crime.
The paper is two years old. Looks how his prediction fared. Stagnation is still with us
althouth low oil prices lifted all the boats. But this period is coming to the end.
Notable quotes:
"... The financial crisis that erupted in 2008 challenged the foundations of orthodox economic theory and policy. At its outset, orthodox economists were stunned into silence as evidenced by their inability to answer the Queen of England's simple question (November 5th, 2008) to the faculty of the London School of Economics as to why no one foresaw the crisis. ..."
"... Six years later, orthodoxy has fought back and largely succeeded in blocking change of thought and policy. The result has been economic stagnation ..."
"... Perspective # 3 is the progressive position which is rooted in Keynesian economics and can be labeled the "destruction of shared prosperity hypothesis" ..."
"... It is identified with the New Deal wing of the Democratic Party and the labor movement, but it has no standing within major economics departments owing to their suppression of alternatives to economic orthodoxy. ..."
"... However, financial excess is just an element of the crisis and the full explanation is far deeper than just financial market regulatory failure According to the Keynesian destruction of shared prosperity hypothesis, the deep cause is generalized economic policy failure rooted in the flawed neoliberal economic paradigm that was adopted in the late 1970s and early 1980s. ..."
"... globalization reconfigured global production by transferring manufacturing from the U.S. and Europe to emerging market economies. This new global division of labor was then supported by having U.S. consumers serve as the global economy's buyer of first and last resort, which explains the U.S. trade deficit and the global imbalances problem. ..."
"... This new global division of labor inevitably created large trade deficits that also contributed to weakening the aggregate demand (AD)generation process by causing a hemorrhage of spending on imports (Palley, 2015) ..."
"... Finance does this through three channels. First, financial markets have captured control of corporations via enforcement of the shareholder value maximization paradigm of corporate governance. Consequently, corporations now serve financial market interests along with the interests of top management. Second, financial markets in combination with corporations lobby politically for the neoliberal policy mix. ..."
"... Third, financial innovation has facilitated and promoted financial market control of corporations via hostile take-overs, leveraged buyouts and reverse capital distributions. Financial innovation has therefore been key for enforcing Wall Street's construction of the shareholder value maximization paradigm. ..."
"... The second vital role of finance is the support of AD. The neoliberal model gradually undermined the income and demand generation process, creating a growing structural demand gap. The role of finance was to fill that gap. Thus, within the U.S., deregulation, financial innovation, speculation, and mortgage lending fraud enabled finance to fill the demand gap by lending to consumers and by spurring asset price inflation ..."
"... this AD generation role of finance was an unintended consequence and not part of a grand plan. Neoliberal economists and policymakers did not realize they were creating a demand gap, but their laissez-faire economic ideology triggered financial market developments that coincidentally filled the demand gap. ..."
"... the financial process they unleashed was inevitably unstable and was always destined to hit the wall. There are limits to borrowing and limits to asset price inflation and all Ponzi schemes eventually fall apart. ..."
"... the long duration of financial excess made the collapse far deeper when it eventually happened. It has also made escaping the after-effects of the financial crisis far more difficult as the economy is now burdened by debts and destroyed credit worthiness. That has deepened the proclivity to economic stagnation. ..."
"... The neoliberal labor market flexibility agenda explicitly attacks unions and works to shift income to wealthier households. ..."
"... That model inevitably produces stagnation because it produces a structural demand shortage via (i) its impact on income distribution, and (ii) via its design of globalization which generates massive trade deficits, wage competition and off-shoring of jobs and investment. In terms of the three-way contest between the government failure hypothesis, the market failure hypothesis and the destruction of shared prosperity hypothesis, the economic policy debate during the Great Recession was cast as exclusively between government failure and market failure. ..."
"... This attitude to fiscal policy reflects the dominance within the Democratic Party of "Rubinomics", the Wall Street view associated with former Treasury Secretary Robert Rubin, that government spending and budget deficits raise real interest rates and thereby lower growth. According to that view, the US needs long-term fiscal austerity to offset Social Security and Medicare Side-by-side with the attempt to reflate the economy, the Obama administration also pushed for major overhaul and tightening of financial sector regulation via the Dodd- Frank Act (2010). ..."
"... The Obama administration's softcore neoliberalism would have likely generated stagnation by itself, but the prospect has been further strengthened by Republicans. ..."
"... The Obama administration was to provide fiscal stimulus to jump start the economy; the Fed would use QE to blow air back into the asset price bubble; the Dodd-Frank Act (2010) would stabilize financial markets; and globalization would be deepened by further NAFTA-styled international agreements. This is a near-identical model to that which failed so disastrously. Consequently, stagnation is the logical prognosis. ..."
"... Consequently, the economy is destined to repeat the patterns of the 1990s and 2000s. However, the US economy has also experienced almost twenty more years of neoliberalism which has left its economic body in worse health than the 1990s. That means the likelihood of delivering another bubble-based boom is low and stagnation tendencies will likely reassert themselves after a shorter and weaker period of expansion ..."
This paper examines the major competing interpretations of the economic crisis in the US and
explains the rebound of neoliberal orthodoxy. It shows how US policymakers acted to stabilize
and save the economy, but failed to change the underlying neoliberal economic policy model.
That failure explains the emergence of stagnation, which is likely to endure
Current economic
conditions in the US smack of the mid-1990s. The 1990s expansion proved unsustainable and so
will the current modest expansion. However, this time it is unlikely to be followed by
financial crisis because of the balance sheet cleaning that took place during the last
crisis
Revised 1: This paper has been prepared for inclusion in Gallas, Herr, Hoffer and Scherrer
(eds.), Combatting Inequality: The Global North and South , Rouledge, forthcoming in
2015.
The crisis and the resilience of neoliberal economic orthodoxy
The financial crisis that erupted in 2008 challenged the foundations of orthodox economic
theory and policy. At its outset, orthodox economists were stunned into silence as evidenced by
their inability to answer the Queen of England's simple question (November 5th, 2008) to the
faculty of the London School of Economics as to why no one foresaw the crisis.
Six years later,
orthodoxy has fought back and largely succeeded in blocking change of thought and policy. The
result has been economic stagnation
This paper examines the major competing interpretations of
the economic crisis in the US and explains the rebound of neoliberal orthodoxy. It shows how US
policymakers acted to stabilize and save the economy, but failed to change the underlying
neoliberal economic policy model.
That failure explains the emergence of stagnation in the US
economy and stagnation is likely to endure.
Current economic conditions in the US smack of the
mid-1990s. The 1990s expansion proved unsustainable and so will the current modest expansion.
However, this time it is unlikely to be followed by financial crisis because of the balance
sheet cleaning that took place during the last crisis.
Competing explanations of the
crisis
The Great Recession, which began in December 2007 and includes the financial crisis of 2008,
is the deepest economic downturn in the US since the World War II. The depth of the downturn is
captured in Table 1 which shows the decline in GDP and the peak unemployment rate. The
recession has the longest duration and the decline in GDP is the largest. The peak unemployment
rate was slightly below the peak rate of the recession of 1981-82. However, this ignores the
fact that the labor force participation rate fell in the Great Recession (i.e. people left the
labor force and were not counted as unemployed) whereas it increased in the recession of
1981-82 (i.e. people entered the labor force and were counted as unemployed).
Table 1. Alternative measures of the depth of US recessions.
... ... ...
Table 2 provides data on the percent change in private sector employment from business cycle
peak to trough. The 7.6 percent loss of private sector jobs in the Great Recession dwarfs other
recessions, providing another measure of its depth and confirming it extreme nature. 2 Over the
course of the 1981-82 labor force participation rose from 63.8 percent to 64.2 percent, thereby
likely increasing the unemployment rate. In contrast, over the course of the Great Recession
the labor force participation rate fell from 66.0 percent to 65.7 percent, thereby likely
decreasing the unemployment. The decrease in the labor force participation rate was even
sharper for prime age (25 – 54 years old) workers, indicating that the decrease in the
overall participation rate was not due to demographic factors such as an aging population.
Instead, it was due to lack of job opportunities, which supports the claim that labor force
exit lowered the unemployment rate. Table 2. U.S. private employment cycles, peak to trough.
Source: Bureau of labor statistics and author's calculations.
... ... ...
Broadly speaking there exist three competing perspectives on the crisis (Palley, 2012).
Perspective # 1 is the hardcore neoliberal position which can be labeled the
"government failure hypothesis" . In the U.S. it is identified with the Republican
Party and with the economics departments of Stanford University, the University of Chicago,
and the University of Minnesota.
The hardcore neoliberal government failure argument is that
the crisis is rooted in the U.S. housing bubble and its bust. The claim is that the bubble
was due to excessively prolonged loose monetary policy and politically motivated government
intervention in the housing market aimed at increasing ownership. With regard to monetary
policy, the Federal Reserve pushed interest rates too low for too long following the
recession of 2001.
With regard to the housing market, government intervention via the
Community Reinvestment Act and Fannie Mae and Freddie Mac, drove up house prices and
encouraged homeownership beyond peoples' means.
Perspective # 2 is the softcore neoliberal position, which can be labeled the "market
failure hypothesis" . It is identified with the Obama administration, the Walls Street
and Silicon Valley wing of the Democratic Party, and economics departments such as those at
MIT, Yale and Princeton. In Europe it is identified with "Third Way" politics.
The softcore
neoliberal market failure argument is that the crisis is due to inadequate financial sector
regulation. First, regulators allowed excessive risk-taking by banks. Second, regulators
allowed perverse incentive pay structures within banks that encouraged management to engage
in "loan pushing" rather than "sound lending." Third, regulators pushed both deregulation and
self-regulation too far. Together, these failures contributed to financial misallocation,
including misallocation of foreign saving provided through the trade deficit, that led to
financial crisis. The crisis in turn deepened an ordinary recession, transforming it into the
Great Recession which could have become the second Great Depression absent the extraordinary
policy interventions of 2008-09
Perspective # 3 is the progressive position which is rooted in Keynesian economics and
can be labeled the "destruction of shared prosperity hypothesis".
It is identified
with the New Deal wing of the Democratic Party and the labor movement, but it has no
standing within major economics departments owing to their suppression of alternatives to
economic orthodoxy. The Keynesian "destruction of shared prosperity" argument is that
the crisis is rooted in the neoliberal economic paradigm that has guided economic policy for
the past thirty years. An important feature of the argument is that, though the U.S. is the
epicenter of the crisis, all countries are implicated as they all participated in the
adoption of a systemically flawed policy paradigm. That paradigm infected finance via
inadequate regulation, enabling financial excess that led to the financial crisis of 2008.
However, financial excess is just an element of the crisis and the full explanation is far
deeper than just financial market regulatory failure According to the Keynesian destruction
of shared prosperity hypothesis, the deep cause is generalized economic policy failure rooted
in the flawed neoliberal economic paradigm that was adopted in the late 1970s and early
1980s.
For the period 1945 - 1975 the U.S. economy was characterized by a "virtuous circle"
Keynesian growth model built on full employment and wage growth tied to productivity growth.
This model is illustrated in Figure 1 and its logic was as follows. Productivity growth drove
wage growth, which in turn fuelled demand growth and created full employment. That provided an
incentive for investment, which drove further productivity growth and supported higher wages.
This model held in the U.S. and, subject to local modifications, it also held throughout the
global economy - in Western Europe, Canada, Japan, Mexico, Brazil and Argentina.
Figure 1. The 1945 – 75 virtuous circle Keynesian growth model. Wage growth Demand
growth Full employment Productivity growth Investment
After 1980 the virtuous circle Keynesian
growth model was replaced by a neoliberal growth model. The reasons for the change are a
complex mix of economic, political and sociological reasons that are beyond the scope of the
current paper. The key changes wrought by the new model were:
Abandonment of the commitment
to full employment and the adoption of commitment to very low inflation;
Severing of the
link between wages and productivity growth.
Together, these changes created a new economic
dynamic. Before 1980, wages were the engine of U.S. demand growth. After 1980, debt and asset
price inflation became the engine The new economic model was rooted in neoliberal economic
thought. Its principal effects were to weaken the position of workers; strengthen the position
of corporations; and unleash financial markets to serve the interests of financial and business
elites.
As illustrated in figure 2, the new model can be described as a neoliberal policy box
that fences workers in and pressures them from all sides. On the left hand side, the corporate
model of globalization put workers in international competition via global production networks
that are supported by free trade agreements and capital mobility.
On the right hand side, the
"small" government agenda attacked the legitimacy of government and pushed persistently for
deregulation regardless of dangers. From below, the labor market flexibility agenda attacked
unions and labor market supports such as the minimum wage, unemployment benefits, employment
protections, and employee rights. From above, policymakers abandoned the commitment of full
employment, a development that was reflected in the rise of inflation targeting and the move
toward independent central banks influenced by financial interests.
Figure 2. The neoliberal
policy box. Globalization WORKERS Abandonment of full employment Small Government Labor Market
Flexibility
Corporate globalization is an especially key feature. Not only did it exert
downward inward pressures on economies via import competition and the threat of job
off-shoring, it also provided the architecture binding economies together. Thus, globalization
reconfigured global production by transferring manufacturing from the U.S. and Europe to
emerging market economies. This new global division of labor was then supported by having U.S.
consumers serve as the global economy's buyer of first and last resort, which explains the U.S.
trade deficit and the global imbalances problem.
This new global division of labor inevitably
created large trade deficits that also contributed to weakening the aggregate demand
(AD)generation process by causing a hemorrhage of spending on imports (Palley, 2015)
An
important feature of the Keynesian hypothesis is that the neoliberal policy box was implemented
on a global basis, in both the North and the South. As in the U.S., there was also a structural
break in policy regime in both Europe and Latin America. In Latin America , the International
Monetary Fund and World Bank played an important role as they used the economic distress
created by the 1980s debt crisis to push neoliberal policy
They did so by making financial
assistance conditional on adopting such policies. This global diffusion multiplied the impact
of the turn to neoliberal economic policy and it explains why the Washington Consensus enforced
by the International Monetary Fund and World Bank has been so significant. It also explains why
stagnation has taken on a global dimension.
III The role of finance in the neoliberal
model
Owing to the extraordinarily deep and damaging nature of the financial crisis of 2008,
financial market excess has been a dominant focus of explanations of the Great Recession.
Within the neoliberal government failure hypothesis the excess is attributed to ill-advised
government intervention and Federal Reserve interest rate policy. Within the neoliberal market
failure hypothesis it is attributed to ill-advised deregulation and failure to modernize
regulation.
According to the Keynesian destruction of shared prosperity hypothesis neither of
those interpretations grasps the true significance of finance. The government failure
hypothesis is empirically unsupportable (Palley, 2012a, chapter 6), while the market failure
hypothesis has some truth but also misses the true role of finance That role is illustrated in
Figure 3 which shows that finance performed two roles in the neoliberal model. The first was to
structurally support the neoliberal policy box. The second was to support the AD generation
process. These dual roles are central to the process of increasing financial domination of the
economy which has been termed financialization (Epstein, 2004, p.3; Krippner, 2004, 2005;
Palley, 2013). Figure 3. The role of finance in the neoliberal model. The role of finance:
"financialization" Supporting the neoliberal policy box Aggregate demand generation Corporate
behavior Economic policy Financial innovation The policy box shown in Figure 2 has four sides.
A true box has six sides and a four sided structure would be prone to structural weakness.
Metaphorically speaking, one role of finance is to provide support on two sides of the
neoliberal policy box, as illustrated in Figure 4.
Finance does this through three channels.
First, financial markets have captured control of corporations via enforcement of the
shareholder value maximization paradigm of corporate governance. Consequently, corporations now
serve financial market interests along with the interests of top management. Second, financial
markets in combination with corporations lobby politically for the neoliberal policy mix.
The
combination of changed corporate behavior and economic policy produces an economic matrix that
puts wages under continuous pressure and raises income inequality.
Third, financial innovation
has facilitated and promoted financial market control of corporations via hostile take-overs,
leveraged buyouts and reverse capital distributions. Financial innovation has therefore been
key for enforcing Wall Street's construction of the shareholder value maximization paradigm.
Figure 4. Lifting the lid on the neoliberal policy box. The neoliberal box Corporations
Financial markets
The second vital role of finance is the support of AD. The neoliberal model
gradually undermined the income and demand generation process, creating a growing structural
demand gap. The role of finance was to fill that gap. Thus, within the U.S., deregulation,
financial innovation, speculation, and mortgage lending fraud enabled finance to fill the
demand gap by lending to consumers and by spurring asset price inflation
Financialization
assisted with this process by changing credit market practices and introducing new credit
instruments that made credit more easily and widely available to corporations and households.
U.S. consumers in turn filled the global demand gap, along with help from U.S. and European
corporations who were shifting manufacturing facilities and investment to the emerging market
economies.
Three things should be emphasized.
First, this AD generation role of finance was an
unintended consequence and not part of a grand plan. Neoliberal economists and policymakers did
not realize they were creating a demand gap, but their laissez-faire economic ideology
triggered financial market developments that coincidentally filled the demand gap.
Second, the
financial process they unleashed was inevitably unstable and was always destined to hit the
wall. There are limits to borrowing and limits to asset price inflation and all Ponzi schemes
eventually fall apart. The problem is it is impossible to predict when they will fail. All that
can be known with confidence is that it will eventually fail.
Third, the process went on far
longer than anyone expected, which explains why critics of neoliberalism sounded like Cassandras (Palley, 1998, Chapter 12). However,
the long duration of financial excess made the
collapse far deeper when it eventually happened. It has also made escaping the after-effects of
the financial crisis far more difficult as the economy is now burdened by debts and destroyed
credit worthiness. That has deepened the proclivity to economic stagnation.
IV
Evidence
Evidence regarding the economic effects of the neoliberal model is plentiful and clear
Figure 5 shows productivity and average hourly compensation of non-supervisory workers (that is
non-managerial employees who are about 80 percent of the workforce). The link with productivity
growth was severed almost 40 years ago and hourly compensation has been essentially stagnant
since then.
Figure 5.
... ... ...
Table
3 shows data on the distribution of income growth by business cycle expansion across the
wealthiest top 10 percent and bottom 90 percent of households. Over the past sixty years there
has been a persistent decline in the share of income gains going to the bottom 90 percent of
households ranked by wealth. However, in the period 1948 – 1979 the decline was gradual.
After 1980 there is a massive structural break and the share of income gains going to the
bottom 90 percent collapses. Before 1980, on average the bottom 90 percent received 66 percent
of business cycle expansion income gains. After 1980, on average they receive just 8 percent.
Table 3. Distribution of income growth by business cycle expansion across the wealthiest top 10
percent and bottom 90 percent of households. Source: Tcherneva (2014), published in The New
York Times , September 26, 2014. '49- '53 '54- '57 '59- '60 '61- '69 '70- '73 '75- '79
'82- '90 '91- '00 '01- '07 '09- '12 Average Pre-1908 Average Post-1980 Top 10% 20% 28 32 33
43 45 80 73 98 116 34% 92% Bottom 90% 80% 72 68 67 57 55 20 27 2 -16 66% 8%
Figure 6
shows the share of total pre-tax income of the top one percent of households ranked by wealth.
From the mid-1930s, with the implementation of the New Deal social contract, that share fell
from a high of 23.94 percent in 1928 to a low of 8.95 percent in 1978. Thereafter it has
steadily risen, reaching 23.5 percent in 2007 which marked the beginning of the Great
Recession. It then fell during the Great Recession owing to a recession-induced fall in
profits, but has since recovered most of that decline as income distribution has worsened again
during the economic recovery. In effect, during the neoliberal era the US economy has retraced
its steps, reversing the improvements achieved by the New Deal and post-World War II
prosperity, so that the top one percent's share of pre-tax income has returned to pre-Great
Depression levels.
Figure 6. US pre-tax income share of top 1 percent. Source:
http://inequality.org/income-inequality/. Original source: Thomas Piketty and Emanuel Saez
(2003), updated at http://emlab.edu/users/saez.
As argued in Palley (2012a, p. 150-151) there
is close relationship between union membership density (i.e. percent of employed workers that
are unionized) and income distribution. This is clearly shown in Figure 7 which shows union
density and the share of pre-tax income going to the top ten percent of wealthiest households.
The neoliberal labor market flexibility agenda explicitly attacks unions and works to shift
income to wealthier households.
Share of income going to the top 10 percent 2013: 47.0% Union
membership density 11.2% 0% 10% 20% 30% 40% 50% 60% 1917 1923 1929 1935 1941 1947 1953 1959
1965 1971 1977 1983 1989 1995 2001 2007 2013 Source: Data on union density follows the
composite series found in Historical Statistics of the United States; updated to 2013 from
unionstats.com. Income inequality (share of income to top 10%) from Piketty and Saez,
"Income
Inequality in the United States, 1913-1998, Quarterly Journal of Economics , 118(1),
2003, 1-39. Updated Figure 7. Union membership and the share of income going to the top ten
percent of wealthiest households, 1917 – 2013. Source: Mishel, Gould and Bivens (2015).
Table 4 provides data on the evolution of the U.S. goods and services trade balance as a share
of GDP by business cycle peak. Comparison across peaks controls for the effect of the business
cycle. The data show through to the late 1970s U.S. trade was roughly in balance, but after
1980 it swung to massive deficit and the deficits increased each business cycle. These deficits
were the inevitable product of the neoliberal model of globalization (Palley, 2015) and they
undermined the AD generation process in accordance with the Keynesian hypothesis.
Table 4. The
U.S. goods & services trade deficit/surplus by business cycle peaks, 1960 – 2007.
Sources: Economic Report of the President, 2009 and author's calculations. Business cycle
peak year Trade balance ($ millions) GDP ($ billions) Trade balance/ GDP (%) 1960 3,508
526.4 0.7 1969 91 984.6 0.0 1973 1,900 1,382.7 0.1 1980 -25,500 2,789.5
-0.9 1981 -28,023 3,128.4 -0.9 1990 -111,037 5,803.1 -1.9 2001 -429,519
10,128.0 -4.2 2007 -819,373 13,807.5 -5.9
Finally, Figure 8 shows total domestic debt
relative to GDP and growth. This Figure is highly supportive of the Keynesian interpretation of
the role of finance. During the neoliberal era real GDP growth has actually slowed but debt
growth has exploded. The reason is the neoliberal model did nothing to increase growth, but it
needed faster debt growth to fill the demand gap created by the model's worsening of income
distribution and creation of large trade deficits. Debt growth supported debt-financed consumer
spending and it supported asset price inflation that enabled borrowing which filled the demand
gap caused by the neoliberal model. Figure 8. Total domestic debt and growth (1952-2007).
Source: Grantham, 2010.
V The debate about the causes of the crisis: why it matters
The importance of the debate about the causes of the crisis is that each perspective
recommends its own different policy response. For hardcore neoliberal government failure
proponents the recommended policy response is to double-down on the policies described by the
neoliberal policy box and further deregulate markets; to deepen central bank independence and
the commitment to low inflation via strict rules based monetary policy; and to further shrink
government and impose fiscal austerity to deal with increased government debt produced by the
crisis For softcore neoliberal market failure proponents the recommended policy response is to
tighten financial regulation but continue with all other aspects of the existing neoliberal
policy paradigm. That means continued support for corporate globalization, socalled labor
market flexibility, low inflation targeting, and fiscal austerity in the long term.
Additionally, there is need for temporary large-scale fiscal and monetary stimulus to combat
the deep recession caused by the financial crisis.
However, once the economy has recovered,
policy should continue with the neoliberal model For proponents of the destruction of shared
prosperity hypothesis the policy response is fundamentally different. The fundamental need is
to overthrow the neoliberal paradigm and replace it with a "structural Keynesian" paradigm.
That involves repacking the policy box as illustrated in Figure 9.
The critical step is to take
workers out of the box and put corporations and financial markets in so that they are made to
serve a broader public interest. The key elements are to replace corporate globalization with
managed globalization that blocks race to the bottom trade dynamics and stabilizes global
financial markets; restore a commitment to full employment; replace the neoliberal
anti-government agenda with a social democratic government agenda; and replace the neoliberal
labor market flexibility with a solidarity based labor market agenda.
The goals are restoration
of full employment and restoration of a solid link between wage and productivity growth.
Figure
9. The structural Keynesian box Corporations & Managed Financial Markets Globalization Full
Employment Social Democratic Government Solidarity Labor Markets
Lastly, since the neoliberal
model was adopted as part of a new global economic order, there is also need to recalibrate the
global economy. This is where the issue of "global rebalancing" enters and emerging market
economies need to shift away from export-led growth strategies to domestic demand-led
strategies. That poses huge challenges for many emerging market economies because they have
configured their growth strategies around export-led growth whereby they sell to U.S.
consumers.
VI From crisis to stagnation: the failure to change
Massive policy interventions, unequalled in the post-war era, stopped the Great Recession
from spiraling into a second Great Depression. The domestic economic interventions included the
2008 Troubled Asset Relief Program (TARP) that bailed out the financial sector via government
purchases of assets and equity from financial institutions; the 2009 American Recovery and
Reinvestment Act (ARRA) that provided approximately $800 billion of fiscal stimulus, consisting
of approximately $550 billion of government spending and $250 billion of tax cuts; the Federal
Reserve lowering its interest target to near-zero (0 - 0.25 percent); and the Federal Reserve
engaging in quantitative easing (QE) transactions that involve it purchasing government and
private sector securities. At the international level, in 2008 the Federal Reserve established
a temporary $620 billion foreign exchange (FX) swap facility with foreign central banks.
That
facility provided the global economy with dollar balances, thereby preventing a dollar
liquidity shortage from triggering a wave of global default on short-term dollar loans that the
financial system was unwilling to roll-over because of panic.3
Additionally, there was
unprecedented globally coordinated fiscal stimulus arranged via the G-20 mechanism. 3
The FX
swaps with foreign central banks have been criticized as being a bail-out for foreign
economies. In fact, they saved the US financial system which would have been pulled down by
financial collapse outside
Despite their scale, these interventions did not stop the recession
from being the deepest since 1945, and nor did they stop the onset of stagnation. Table 5 shows
how GDP growth has failed to recover since the end of the Great Recession, averaging just 2.1
percent for the five year period from 2010 – 2014. Furthermore, that period includes the
rebound year of 2010 when the economy rebounded from its massive slump owing to the
extraordinary fiscal and monetary stimulus measures that were put in place
Table 5. U.S. GDP
growth. Source: Statistical Annex of the European Union, Autumn 2014 and author's calculations.
The growth rate for 2014 is that estimated in October 2014.
Table 6 shows employment creation in the five years after the end of recessions, which provides
another window on stagnation. The job creation numbers show that the neoliberal model was
already slowing in the 1990s with the first episode of "jobless the US.
Many foreign banks
operating in the US had acquired US assets financed with short-term dollar borrowings. When the
US money market froze in 2008 they could not roll-over these loans in accordance with normal
practice. That threatened massive default by these banks within the US financial system, which
would have pulled down the entire global financial system.
The Federal Reserve could not lend
directly to these foreign banks and their governing central banks lacked adequate dollar
liquidity to fill the financing gap. The solution was to lend dollars to foreign central banks,
which then made dollar loans to foreign banks in need of dollar roll-over short-term financing.
recovery".
It actually ground to stagnation in the 2001 – 2007 period, but this was
masked by the house price bubble and the false prosperity it created. Stagnation has persisted
after the Great Recession, but the economic distress caused by the recession has finally
triggered awareness of stagnation among elites economists. In a sense, the Great Recession
called out the obvious, just as did the little boy in the Hans Anderson story about the
emperor's new suit
Table 6. U.S. private sector employment creation in the five year period
after the end of recessions for six business cycles with extended expansions. Source: Bureau of
labor statistics and author's calculations. * = January 1980 the beginning of the next
recession Recession end date Employment at recession end date (millions) Employment five years
later (millions) Percent growth in employment Feb 1961 45.0 52.2 16.0% Mar 1975 61.9 74.6*
20.5% Nov 1982 72.8 86.1 18.3% March 1991 90.1 99.5 10.4% Nov 2001 109.8 115.0 4.7% June 2009
108.4 117.1 8.0% The persistence of stagnation after the Great Recession raises the question
"why"? The answer is policy has done nothing to change the structure of the underlying
neoliberal economic model.
That model inevitably produces stagnation because it produces a
structural demand shortage via (i) its impact on income distribution, and (ii) via its design
of globalization which generates massive trade deficits, wage competition and off-shoring of
jobs and investment. In terms of the three-way contest between the government failure
hypothesis, the market failure hypothesis and the destruction of shared prosperity hypothesis,
the economic policy debate during the Great Recession was cast as exclusively between
government failure and market failure.
With the Democrats controlling the Congress and
Presidency after the 2008 election, the market failure hypothesis won out and has framed policy
since then. According to the hypothesis, the financial crisis caused an exceptionally deep
recession that required exceptionally large monetary and fiscal stimulus to counter it and
restore normalcy. Additionally, the market failure hypothesis recommends restoring and
renovating financial regulation, but other than that the neoliberal paradigm is appropriate and
should be deepened In accordance with this thinking, the in-coming Obama administration
affirmed existing efforts to save the system and prevent a downward spiral by supporting the
Bush administration's TARP, the Federal Reserve's first round of QE (November/December 2008)
that provided market liquidity, and the Federal Reserve's FX swap agreement with foreign
central banks
Thereafter, the Obama administration worked to reflate the economy via passage of
the ARRA (2009) which provided significant fiscal stimulus. With the failure to deliver a
V-shaped recovery, candidate Obama became even more vocal about fiscal stimulus However,
reflecting its softcore neoliberal inclinations, the Obama administration then became much less
so when it took office. Thus, the winners of the internal debate about fiscal policy in the
first days of the Obama administration were those wanting more modest fiscal stimulus.4
Furthermore, its analytical frame was one of temporary stimulus with the 4 Since 2009 there has
been some evolution of policy positions characterized by a shift to stronger support for fiscal
stimulus. This has been especially marked in Larry Summers, who was the Obama administration's
goal of long-term fiscal consolidation, which is softcore neoliberal speak for fiscal austerity
Seen in the above light, after the passage of ARRA (2009), the fiscal policy divide between the
Obama administration and hardcore neoliberal Republicans was about the speed and conditions
under which fiscal austerity should be restored.
This attitude to fiscal policy reflects the
dominance within the Democratic Party of "Rubinomics", the Wall Street view associated with
former Treasury Secretary Robert Rubin, that government spending and budget deficits raise real
interest rates and thereby lower growth. According to that view, the US needs long-term fiscal
austerity to offset Social Security and Medicare Side-by-side with the attempt to reflate the
economy, the Obama administration also pushed for major overhaul and tightening of financial
sector regulation via the Dodd- Frank Act (2010).
That accorded with the market failure
hypothesis's claim about the economic crisis and Great Recession being caused by financial
excess permitted by the combination of excessive deregulation, lax regulation and failure to
modernize regulation Finally, and again in accordance with the logic of the market failure
hypothesis, the Obama administration has pushed ahead with doubling-down and further
entrenching the neoliberal policy box. This is most visible in its approach to globalization.
In 2010, free trade agreements modelled after NAFTA were signed with South Korea, Colombia and
Panama. The Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment
Partnership (TTIP), two mega-agreements negotiated in secrecy and apparently bearing chief
economic adviser when it took office. This shift has become a way of rewriting history by
erasing the memory of initial positions. That is also true of the IMF which in 2010-2011 was a
robust supporter of fiscal consolidation in Europe. similar hallmarks to prior trade
agreements, are also being pushed by the Obama administration
The Obama administration's softcore neoliberalism would have likely generated stagnation by itself, but the prospect has
been further strengthened by Republicans.
Thus, in accordance with their point of view,
Republicans have persistently pushed the government failure hypothesis by directing the policy
conversation to excessive regulation and easy monetary policy as the causes of the crisis.
Consequently, they have consistently opposed strengthened financial regulation and demands for
fiscal stimulus.
At the same time, they have joined with softcore neoliberal Democrats
regarding doubling-down on neoliberal box policies, particularly as regards trade and
globalization Paradoxically, the failure to change the overall economic model becomes most
visible by analyzing the policies of the Federal Reserve, which have changed the most
dramatically via the introduction of QE. The initial round of QE (QE1) was followed by QE2 in
November 2010 and QE3 in September 2012, with the Fed shifting from providing short-term
emergency liquidity to buying private sector financial assets.
The goal was to bid up prices of
longer term bonds and other securities, thereby lowering interest rates on longer-term
financing and encouraging investors to buy equities and other riskier financial assets. The
Fed's reasoning was lower long-term rates would stimulate the economy, and higher financial
asset prices would trigger a positive wealth effect on consumption spending. This makes clear
the architecture of policy.
The Obama administration was to provide fiscal stimulus to jump
start the economy; the Fed would use QE to blow air back into the asset price bubble; the
Dodd-Frank Act (2010) would stabilize financial markets; and globalization would be deepened by
further NAFTA-styled international agreements. This is a near-identical model to that which
failed so disastrously. Consequently, stagnation is the logical prognosis.
VII
Déjà vu all over again: back to the 1990s but with a weaker economy
The exclusion of the destruction of shared prosperity hypothesis, combined with the joint
triumph of the market failure and government failure hypotheses, means the underlying economic
model that produced the Great Recession remains essentially unchanged. That failure to change
explains stagnation. It also explains why current conditions smack of "déjà vu
all over again" with the US economy in 2014-15 appearing to have returned to conditions
reminiscent of the mid-1990s.
Just as the 1990s failed to deliver durable prosperity, so too
current optimistic conditions will prove unsustainable absent deeper change The
déjà vu similarities are evident
in the large US trade deficit that has started
to again deteriorate rapidly;
a return of the over-valued dollar problem that promises to
further increase the trade deficit and divert jobs and investment away from the US economy;
a
return to reliance on asset price inflation and house price increases to grow consumer demand
and construction;
a return of declining budget deficits owing to continued policy disposition
toward fiscal austerity; a return of the contradiction that has the Federal Reserve tighten
monetary policy when economic strength triggers rising prices and wages that bump against the
ceiling of the Fed's self-imposed 2 percent inflation target; and renewal of the push for
neoliberal trade agreements
All of these features mean both policy context and policy design
look a lot like the mid-1990s. The Obama administration saved the system but did not change it
Consequently, the economy is destined to repeat the patterns of the 1990s and 2000s. However,
the US economy has also experienced almost twenty more years of neoliberalism which has left
its economic body in worse health than the 1990s. That means the likelihood of delivering
another bubble-based boom is low and stagnation tendencies will likely reassert themselves
after a shorter and weaker period of expansion
This structurally weakened state of the US
economy is evident in the further worsening of income inequality that has occurred during the
Great Recession and subsequent slow recovery.
... ... ...
Thomas I. Palley, Senior Economic Policy Advisor, AFL-CIO Washington, D.C. [email protected]
"... Mirowski identifies three basic aspects of neoliberalism that the Left has failed to understand: the movement's intellectual history, the way it has transformed everyday life, and what constitutes opposition to it. Until we come to terms with them, Mirowski suggests, right-wing movements such as the Tea Party (a prominent player in the book) will continue to reign triumphant. ..."
"... Joining a long line of thinkers, most famously Karl Polanyi, Mirowski insists that a key error of the Left has been its failure to see that markets are always embedded in other social institutions. Neoliberals, by contrast, grasp this point with both hands -- and therefore seek to reshape all of the institutions of society, including and especially the state, to promote markets. Neoliberal ascendancy has meant not the retreat of the state so much as its remaking. ..."
"... he also recognizes that the neoliberals themselves have been canny about keeping the real nature of their project hidden through a variety of means. Neoliberal institutions tend to have what he calls a "Russian doll" structure, with the most central ones well hidden from public eyes. Mirowski coins an ironic expression, "the Neoliberal Thought Collective," for the innermost entities that formulate the movement's doctrine. The venerable Mont Pelerin Society is an NTC institution. Its ideas are frequently disseminated through venues which, formally at least, are unconnected to the center, such as academic economics departments. Thus, neoclassical economists spread the gospel of the free market while the grand project of remaking the state falls to others. ..."
"... At the same time as neoliberal commonsense trickles down from above, Mirowski argues that it also wells up from below, reinforced by our daily patterns of life. Social networking sites like Facebook encourage people to view themselves as perpetual cultural entrepreneurs, striving to offer a newer and better version of themselves to the world. Sites like LinkedIn prod their users to present themselves as a fungible basket of skills, adjustable to the needs of any employer, without any essential characteristics beyond a requisite subservience. Classical liberalism always assumes the coherent individual self as its basic unit. Neoliberalism, by contrast, sees people as little more than variable bundles of human capital, with no permanent interests or even attributes that cannot be remade through the market. For Mirowski, the proliferation of these forms of everyday neoliberalism constitute a "major reason the neoliberals have emerged from the crisis triumphant." ..."
"... Finally, Mirowski argues that the Left has too often been sucked in by neoliberalism's loyal opposition. Figures like Joseph Stiglitz or Paul Krugman, while critical of austerity and supportive of the welfare state, accept the fundamental neoclassical economic precepts at the heart of neoliberal policy. Mirowski argues that we must ditch this tradition in its entirety. Even attempts to render its assumptions more realistic -- as in the case of behavioral economics, for example, which takes account of the ways real people diverge from the hyperrationality of homo economicus -- provide little succor for those seeking to overturn the neoliberals. ..."
"... Mirowski's insistence on the centrality of the state to the neoliberal project helps correct the unfortunate tendency of many leftists over the past decade to assent to neoliberal nostrums about the obsolescence of the state. Indeed, Mirowski goes further than many other critics who have challenged the supposed retreat of the state under neoliberalism. ..."
"... Loďc Wacquant, for instance, has described the "centaur state" of neoliberalism, in which a humanist liberalism reigns for the upper classes, while the lower classes face the punitive state apparatus in all its bestiality. ..."
"... Mirowski shows us that the world of the rich under neoliberalism in no way corresponds to the laissez-faire of classical liberalism. The state does not so much leave the rich alone as actively work to reshape the world in their interests, helping to create markets for the derivatives and securities that made (and then destroyed) so many of the fortunes of the recent past. The neoliberal state is an eminently interventionist one, and those mistaking it for the austere nightwatchman of libertarian utopianism have little hope of combating it. ..."
"... Mirowski's concern to disabuse his readers of the notion that the wing of neoliberal doctrine disseminated by neoclassical economists could ever be reformed produces some of the best sections of the book. His portrait of an economics profession in haggard disarray in the aftermath of the crisis is both comic and tragic, as the amusement value of the buffoonery on display diminishes quickly when one realizes the prestige still accorded to these figures. Reading his comprehensive examination of the discipline's response to the crisis, one is reminded of Freud's famous broken kettle. The professional economists' account of their role in the crisis went something like (a) there was no bubble and (b) bubbles are impossible to predict but (c) we knew it was a bubble all along. ..."
"... Though Krugman and Stiglitz have attacked concepts like the efficient markets hypothesis (which holds that prices in a competitive financial market reflect all relevant economic information), Mirowski argues that their attempt to do so while retaining the basic theoretical architecture of neoclassicism has rendered them doubly ineffective. ..."
"... First, their adoption of the battery of assumptions that accompany most neoclassical theorizing -- about representative agents, treating information like any other commodity, and so on -- make it nearly impossible to conclusively rebut arguments like the efficient markets hypothesis. ..."
To understand how a body of thought became an era of capitalism requires more than intellectual
history.
"What is going to come after neoliberalism?" It was the question on many radicals' lips, present
writer included, after the financial crisis hit in 2008. Though few were so sanguine about our prospects
as to repeat the suicidal optimism of previous radical movements ("After Hitler, Our Turn!"), the
feeling of the day was that the era of unfettered marketization was coming to a close. A new period
of what was loosely referred to as Keynesianism would be the inevitable result of a crisis caused
by markets run amok.
Five years later, little has changed. What comes after neoliberalism? More neoliberalism, apparently.
The prospects for a revived Left capable of confronting it appear grim.
Enter Philip Mirowski's Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived
the Financial Meltdown . Mirowski maintains that the true nature of neoliberalism has gone
unrecognized by its would-be critics, allowing the doctrine to flourish even in conditions, such
as a massive financial crisis, that would seem to be inimical to its survival. Leftists keep busy
tilting at the windmill of deregulation as the giants of neoliberalism go on pillaging unmolested.
Mirowski identifies three basic aspects of neoliberalism that the Left has failed to understand:
the movement's intellectual history, the way it has transformed everyday life, and what constitutes
opposition to it. Until we come to terms with them, Mirowski suggests, right-wing movements such
as the Tea Party (a prominent player in the book) will continue to reign triumphant.
The book begins with the war of ideas -- a conflict in which, Mirowski argues, the Left has been
far too generous in taking neoliberals at their word, or at least their best-publicized word. We
have, in effect, been suckered by kindly old Milton Friedman telling us how much better off we'd
all be if the government simply left us "free to choose." But neoliberals have at times been forthright
about their appreciation for the uses of state power. Markets, after all, do not simply create themselves.
Joining a long line of thinkers, most famously Karl Polanyi, Mirowski insists that a key error
of the Left has been its failure to see that markets are always embedded in other social institutions.
Neoliberals, by contrast, grasp this point with both hands -- and therefore seek to reshape all of
the institutions of society, including and especially the state, to promote markets. Neoliberal ascendancy
has meant not the retreat of the state so much as its remaking.
If Mirowski is often acidic about the Left's failure to understand this point, he also recognizes
that the neoliberals themselves have been canny about keeping the real nature of their project hidden
through a variety of means. Neoliberal institutions tend to have what he calls a "Russian doll" structure,
with the most central ones well hidden from public eyes. Mirowski coins an ironic expression, "the
Neoliberal Thought Collective," for the innermost entities that formulate the movement's doctrine.
The venerable Mont Pelerin Society is an NTC institution. Its ideas are frequently disseminated through
venues which, formally at least, are unconnected to the center, such as academic economics departments.
Thus, neoclassical economists spread the gospel of the free market while the grand project of remaking
the state falls to others.
At the same time as neoliberal commonsense trickles down from above, Mirowski argues that
it also wells up from below, reinforced by our daily patterns of life. Social networking sites like
Facebook encourage people to view themselves as perpetual cultural entrepreneurs, striving to offer
a newer and better version of themselves to the world. Sites like LinkedIn prod their users to present
themselves as a fungible basket of skills, adjustable to the needs of any employer, without any essential
characteristics beyond a requisite subservience. Classical liberalism always assumes the coherent
individual self as its basic unit. Neoliberalism, by contrast, sees people as little more than variable
bundles of human capital, with no permanent interests or even attributes that cannot be remade through
the market. For Mirowski, the proliferation of these forms of everyday neoliberalism constitute a
"major reason the neoliberals have emerged from the crisis triumphant."
Finally, Mirowski argues that the Left has too often been sucked in by neoliberalism's loyal
opposition. Figures like Joseph Stiglitz or Paul Krugman, while critical of austerity and supportive
of the welfare state, accept the fundamental neoclassical economic precepts at the heart of neoliberal
policy. Mirowski argues that we must ditch this tradition in its entirety. Even attempts to render
its assumptions more realistic -- as in the case of behavioral economics, for example, which takes
account of the ways real people diverge from the hyperrationality of homo economicus -- provide
little succor for those seeking to overturn the neoliberals.
For Mirowski, these three failures of the Left go a long way toward explaining how neoliberals
have largely escaped blame for a crisis they created. The Left persistently goes after phantoms like
deregulation or smaller government, which neoliberals easily parry by pointing out that the regulatory
apparatus has never been bigger. At the same time, we ignore the deep roots of neoliberal ideology
in everyday life, deceiving ourselves as to the scale of the task in front of us.
Whatever criticisms of Mirowski's analysis are in order, much of it is compelling, particularly
in regard to the intellectual history of the NTC. Mirowski's insistence on the centrality of
the state to the neoliberal project helps correct the unfortunate tendency of many leftists over
the past decade to assent to neoliberal nostrums about the obsolescence of the state. Indeed, Mirowski
goes further than many other critics who have challenged the supposed retreat of the state under
neoliberalism.
Loďc Wacquant, for instance, has described the "centaur state" of neoliberalism, in which
a humanist liberalism reigns for the upper classes, while the lower classes face the punitive state
apparatus in all its bestiality. But Mirowski shows us that the world of the rich under
neoliberalism in no way corresponds to the laissez-faire of classical liberalism. The state does
not so much leave the rich alone as actively work to reshape the world in their interests, helping
to create markets for the derivatives and securities that made (and then destroyed) so many of the
fortunes of the recent past. The neoliberal state is an eminently interventionist one, and those
mistaking it for the austere nightwatchman of libertarian utopianism have little hope of combating
it.
It's here that we begin to see the strategic genius of neoliberal infrastructure, with its teams
of college economics professors teaching the wondrous efficacy of supply and demand on the one hand,
and the think tanks and policy shops engaged in the relentless pursuit of state power on the other.
The Left too often sees inconsistency where in fact there is a division of labor.
Mirowski's concern to disabuse his readers of the notion that the wing of neoliberal doctrine
disseminated by neoclassical economists could ever be reformed produces some of the best sections
of the book. His portrait of an economics profession in haggard disarray in the aftermath of the
crisis is both comic and tragic, as the amusement value of the buffoonery on display diminishes quickly
when one realizes the prestige still accorded to these figures. Reading his comprehensive examination
of the discipline's response to the crisis, one is reminded of Freud's famous broken kettle. The
professional economists' account of their role in the crisis went something like (a) there was no
bubble and (b) bubbles are impossible to predict but (c) we knew it was a bubble all along.
Incoherence notwithstanding, however, little in the discipline has changed in the wake of the
crisis. Mirowski thinks that this is at least in part a result of the impotence of the loyal opposition
-- those economists such as Joseph Stiglitz or Paul Krugman who attempt to oppose the more viciously
neoliberal articulations of economic theory from within the camp of neoclassical economics. Though
Krugman and Stiglitz have attacked concepts like the efficient markets hypothesis (which holds that
prices in a competitive financial market reflect all relevant economic information), Mirowski argues
that their attempt to do so while retaining the basic theoretical architecture of neoclassicism has
rendered them doubly ineffective.
First, their adoption of the battery of assumptions that accompany most neoclassical theorizing
-- about representative agents, treating information like any other commodity, and so on -- make
it nearly impossible to conclusively rebut arguments like the efficient markets hypothesis.
Instead, they end up tinkering with it, introducing a nuance here or a qualification there. This
tinkering causes their arguments to be more or less ignored in neoclassical pedagogy, as economists
more favorably inclined toward hard neoliberal arguments can easily ignore such revisions and hold
that the basic thrust of the theory is still correct. Stiglitz's and Krugman's arguments, while receiving
circulation through the popular press, utterly fail to transform the discipline.
Mirowski also heaps scorn on the suggestion, sometimes made in leftist circles, that the problem
at the heart of neoclassical economics is its assumption of a hyperrational homo economicus
, relentlessly comparing equilibrium states and maximizing utility. Though such a revision may
be appealing to a certain radical romanticism, Mirowski shows that a good deal of work going on under
the label of behavioral economics has performed just this revision, and has come up with results
that don't differ substantively from those of the mainstream. The main problem with neoclassicism
isn't its theory of the human agent but rather its the theory of the market -- which is precisely
what behavioral economics isn't interested in contesting.
In all, Mirowski's indictment of the state of economic theory and its imbrication with the neoliberal
project is devastating. Unfortunately, he proves much less successful in explaining why
things have turned out as they have. The book ascribes tremendous power to the Neoliberal Thought
Collective, which somehow manages to do everything from controlling the economics profession to reshaping
the state to forging a new sense of the human self. The reader is left wondering how the NTC came
to acquire such power. This leads to the book's central flaw: a lack of any theory of the structure
of modern capitalism. Indeed, the NTC seems to operate in something of a vacuum, without ever confronting
other institutions or groups, such as the state or popular movements, with interests and agendas
of their own.
To be fair, Mirowski does offer an explanation for the failure of popular movements to challenge
neoliberalism, largely through his account of "everyday" neoliberalism. At its strongest, the book
identifies important strategic failures, such as Occupy's embrace of "a mimicry of media technologies
as opposed to concerted political mobilization." However, Mirowski extends the argument well beyond
a specific failure of the Occupy movement to propose a general thesis that developments like Facebook
and reality TV have transmitted neoliberal ideology to people who have never read Friedman and Hayek.
In claiming that this embodied or embedded ideology plays an important role in the failure of the
Left, he places far more explanatory weight on the concept of everyday neoliberalism than it is capable
of bearing.
At the simplest level, it's just not clear that everyday neoliberalism constitutes the kind of
block to political action that Mirowski thinks it does. No doubt, many people reading this article
right now simultaneously have another browser tab open to monster.com or LinkedIn, where they are
striving to present themselves as a fungible basket of skills to any employer that will have them.
In this economy, everyone has to hustle, and that means using all available means. That many of these
same readers have probably also done things like organize against foreclosures should give pause
to any blurring of the distinction between using various media technologies and embracing the ideology
Mirowski sees embodied in them.
Indeed, the ubiquity of participation in such technologies by people who support, oppose, or are
apathetic about neoliberalism points to a larger phenomenon on which Mirowski is silent: the labor
market. Put bluntly, it is difficult to imagine anyone engaging in the painfully strained self-advertisement
facilitated by LinkedIn in a labor market with, say, 2-percent unemployment. In such a market, in
which employers were competing for comparatively scarce workers, there would be very little need
for those workers to go through the self-abasing ritual of converting themselves into fungible baskets
of skills. In our current situation, by contrast, where secure and remunerative employment is comparatively
scarce, it is no surprise that people turn to whatever technologies are available to attempt to sell
themselves. As Joan Robinson put it, the only thing worse than being exploited by capitalism is not
being exploited by it.
In evaluating the role of everyday neoliberalism, it is also helpful to move, for the moment,
beyond the perspective of the United States, where the NTC has clearly had great success, and adopt
that of countries where resistance is significantly more developed, such as Venezuela or South Africa.
Especially in the former, popular movements have been notably successful in combating neoliberal
efforts to take over the state and reshape the economy, and have instead pushed the country in the
opposite direction. Is it really plausible that a main reason for this difference is that everyday
neoliberalism is more intense in the United States? I doubt it. For one thing, the strength of Venezuela's
radical movements, in comparison with the US, clearly antedates the developments (social media,
Here Comes Honey Boo Boo , and so on) that Mirowski discusses.
Moreover, it is just as plausible that the entrepreneurial culture he describes is even more extensive
in the slums of the global South, where neoliberal devastation has forced many poor households to
rely on at least one family member engaging in semi-legal arbitrage in goods salvaged from garbage
or made at home. Surely such activities provide a firmer foundation for commercial subjectivity than
having a 401(k). That resistance has grown in such circumstances suggests that looking to malignant
subjectivities to explain popular passivity is an analytic dead-end.
If everyday neoliberalism doesn't explain the comparative weakness of the US left, what does?
This is, of course, the key question, and I can do no more than gesture at an answer here. But I
would suggest that the specific histories of the institutions of the American left, from the Communist
Party to Students for a Democratic Society to labor unions, and the histories of the situations they
confronted, provide us with a more solid foundation for understanding our current weakness than the
hegemony of neoliberal culture does. Moreover, with a theory of capitalism that emphasizes the way
the structure of the system makes it both necessary and very difficult for most people to organize
to advance their interests, it becomes very easy to explain the persistence of a low level of popular
mobilization against neoliberalism in the context of a weakened left.
If Mirowski's account doesn't give us a good basis for explaining why popular resistance has been
so lacking in the US, it nonetheless suggests why he is so concerned with explaining the supposed
dominance of neoliberal ideology among the general population. From the beginning, he raises the
specter of right-wing resurgence, whether in the form of Scott Walker surviving the recall campaign
in Wisconsin, the Tea Party mania of 2010, or the success of right-wing parties in Europe. However,
much of this seems overstated, especially from a contemporary perspective. The Tea Party has, for
all intents and purposes, disappeared from the front lines of American politics, and the Republican
Party, while capable of enacting all kinds of sadistic policies on the state level, has remained
in a state of disarray on the national level since the 2006 congressional elections.
More fundamentally, the argument that the voting public embraces neoliberalism doesn't square
well with recent research by political scientists like Larry Bartels and Martin Gilens emphasizing
the profound disconnect between the policy preferences of the poor and what transpires in Washington.
What appears to be happening is less the general populace's incorporation into neoliberalism than
their exclusion from any institutions that would allow them to change it. Importantly, this alternative
explanation does not rely on the Left conceit that rebellion lurks perpetually just below the placid
social surface, ready to explode into radical insurgency at any moment. It simply contends that the
political passivity of neoliberalism's victims reflects a real diminution of their political options.
Mirowski's failure to address these larger institutional and structural dynamics vitiates much
of the explanatory power of his book. On a purely descriptive level, the sections on the intellectual
history of neoliberalism and the non-crisis of neoclassical economics illuminate many of the hidden
corners of neoliberal ideology. However, if Mirowski is right to suggest that we need to understand
neoliberalism better to be successful in fighting it -- and he surely is -- then much more is needed
to explain neoliberal success and Left failure.
To understand how a body of thought became an era of capitalism requires more than intellectual
history. It demands an account of how capitalism actually works in the period in question, and how
the ideas of a small group of intellectuals came to be the policy preferences of the rich. Mirowski
has given us an excellent foundation for understanding the doctrine, but it will remain for others
to explain its actual development.
max Book is just anothe "Yascha about Russia" type, that Masha Gessen represents so vividly.
The problem with him is that time of neocon prominance is solidly in the past and now unpleasant
question about the cost from the US people of their reckless foreign policies get into some
newspapers and managines. They cost the USA tremedous anount of money (as in trillions) and those
money consititute a large portion of the national debt. Critiques so far were very weak and
partially suppressed voices, but defeat of neocon warmonger Hillary signify some break with
the past.
Notable quotes:
"... National Interest ..."
"... Carlson's record suggests that he has been in the camp skeptical of U.S. foreign-policy intervention for some time now and, indeed, that it predates Donald Trump's rise to power. (Carlson has commented publicly that he was humiliated by his own public support for the 2003 invasion of Iraq.) According to Carlson, "This is not about Trump. This is not about Trump. It's the one thing in American life that has nothing to do with Trump. My views on this are totally unrelated to my views on Donald Trump. This has been going since September 11, 2001. And it's a debate that we've never really had. And we need to have it." He adds, "I don't think the public has ever been for the ideas that undergird our policies." ..."
"... National Interest ..."
"... But the fight also seems to have a personal edge. Carlson says, "Max Boot is not impressive. . . . Max is a totally mediocre person." Carlson added that he felt guilty about not having, in his assessment, a superior guest to Boot on the show to defend hawkishness. "I wish I had had someone clear-thinking and smart on to represent their views. And there are a lot of them. I would love to have that debate," Carlson told me, periodically emphasizing that he is raring to go on this subject. ..."
"... New York Observer ..."
"... National Interest ..."
"... Weekly Standard ..."
"... Weekly Standard ..."
"... Though he eschews labels, Carlson sounds like a foreign-policy realist on steroids: "You can debate what's in [the United States'] interest. That's a subjective category. But what you can't debate is that ought to be the basic question, the first, second and third question. Does it represent our interest? . . . I don't think that enters into the calculations of a lot of the people who make these decisions." Carlson's interests extend beyond foreign policy, and he says "there's a massive realignment going on ideologically that everybody is missing. It's dramatic. And everyone is missing it. . . . Nobody is paying attention to it, " ..."
This week's primetime knife fights with Max Boot and Ralph Peters are emblematic of the
battle for the soul of the American Right.
To be sure, Carlson rejects the term
"neoconservatism,"
and implicitly, its corollary on the Democratic side, liberal internationalism. In 2016, "the reigning
Republican foreign-policy view, you can call it neoconservatism, or interventionism, or whatever you
want to call it" was rejected, he explained in a wide-ranging interview with the National Interest
Friday.
"But I don't like the term 'neoconservatism,'" he says, "because I don't even know what it means.
I think it describes the people rather than their ideas, which is what I'm interested in. And to
be perfectly honest . . . I have a lot of friends who have been described as neocons, people I really
love, sincerely. And they are offended by it. So I don't use it," Carlson said.
But Carlson's recent segments on foreign policy conducted with Lt. Col.
Ralph Peters and the prominent neoconservative journalist and author
Max Boot were acrimonious even by Carlsonian standards. In a discussion on Syria, Russia and
Iran, a visibly upset Boot accused Carlson of being "immoral" and taking foreign-policy positions
to curry favor with the White House, keep up his
ratings , and by proxy, benefit financially. Boot says that Carlson "basically parrots whatever
the pro-Trump line is that Fox viewers want to see. If Trump came out strongly against Putin tomorrow,
I imagine Tucker would echo this as faithfully as the pro-Russia arguments he echoes today." But
is this assessment fair?
Carlson's record suggests that he has been in the camp skeptical of U.S. foreign-policy intervention
for some time now and, indeed, that it predates Donald Trump's rise to power. (Carlson has commented
publicly that he was humiliated by his own public support for the 2003 invasion of Iraq.) According
to Carlson, "This is not about Trump. This is not about Trump. It's the one thing in American life
that has nothing to do with Trump. My views on this are totally unrelated to my views on Donald Trump.
This has been going since September 11, 2001. And it's a debate that we've never really had. And
we need to have it." He adds, "I don't think the public has ever been for the ideas that undergird
our policies."
Even if Carlson doesn't want to use the label neocon to describe some of those ideas, Boot is
not so bashful. In 2005, Boot wrote an essay called
"Neocons May Get
the Last Laugh." Carlson "has become a Trump acolyte in pursuit of ratings," says Boot, also
interviewed by the National Interest . "I bet if it were President Clinton accused of colluding
with the Russians, Tucker would be outraged and calling for impeachment if not execution. But since
it's Trump, then it's all a big joke to him," Boot says. Carlson vociferously dissents from such
assessments: "This is what dumb people do. They can't assess the merits of an argument. . . . I'm
not talking about Syria, and Russia, and Iran because of ratings. That's absurd. I can't imagine
those were anywhere near the most highly-rated segments that night. That's not why I wanted to do
it."
But Carlson insists, "I have been saying the same thing for fifteen years. Now I have a T.V. show
that people watch, so my views are better known. But it shouldn't be a surprise. I supported Trump
to the extent he articulated beliefs that I agree with. . . . And I don't support Trump to the extent
that his actions deviate from those beliefs," Carlson said. Boot on Fox said that Carlson is "too
smart" for this kind of argument. But Carlson has bucked the Trump line, notably on Trump's April
7 strikes in Syria. "When the Trump administration threw a bunch of cruise missiles into Syria for
no obvious reason, on the basis of a pretext that I
question . . . I questioned [the decision] immediately. On T.V. I was on the air when that happened.
I think, maybe seven minutes into my show. . . . I thought this was reckless."
But the fight also seems to have a personal edge. Carlson says, "Max Boot is not impressive. .
. . Max is a totally mediocre person." Carlson added that he felt guilty about not having, in his
assessment, a superior guest to Boot on the show to defend hawkishness. "I wish I had had someone
clear-thinking and smart on to represent their views. And there are a lot of them. I would love to
have that debate," Carlson told me, periodically emphasizing that he is raring to go on this subject.
Boot objects to what he sees as a cavalier attitude on the part of Carlson and others toward allegations
of Russian interference in the 2016 election, and also toward the deaths of citizens of other countries.
"You are laughing about the fact that Russia is interfering in our election process. That to me is
immoral," Boot told Carlson on his show. "This is the level of dumbness and McCarthyism in Washington
right now," says Carlson. "I think it has the virtue of making Max Boot feel like a good person.
Like he's on God's team, or something like that. But how does that serve the interest of the country?
It doesn't." Carlson says that Donald Trump, Jr.'s emails aren't nearly as important as who is going
to lead Syria, which he says Boot and others have no plan for successfully occupying. Boot, by contrast,
sees the U.S. administration as dangerously flirting with working with Russia, Iran and Syrian president
Bashar al-Assad. "For whatever reason, Trump is pro-Putin, no one knows why, and he's taken a good
chunk of the GOP along with him," Boot says.
On Fox last Wednesday, Boot reminded Carlson that he originally supported the 2003 Iraq decision.
"You supported the invasion of Iraq," Boot said, before repeating, "You supported the invasion of
Iraq." Carlson conceded that, but it seems the invasion was a bona fide turning point. It's most
important to parse whether Carlson has a long record of anti-interventionism, or if he's merely
sniffing the throne of the president (who, dubiously, may have opposed the 2003 invasion). "I
think it's a total nightmare and disaster, and I'm ashamed that I went against my own instincts in
supporting it," Carlson told the New York Observer in early 2004. "It's something I'll never
do again. Never. I got convinced by a friend of mine who's smarter than I am, and I shouldn't have
done that. . . . I'm enraged by it, actually." Carlson told the National Interest that he's
felt this way since seeing Iraq for himself in December 2003.
The evidence points heavily toward a sincere conversion on Carlson's part, or preexisting conviction
that was briefly overcome by the beat of the war drums. Carlson did work for the Weekly Standard
, perhaps the most prominent neoconservative magazine, in the 1990s and early 2000s. Carlson today
speaks respectfully of William Kristol, its founding editor, but has concluded that he is all wet.
On foreign policy, the people Carlson speaks most warmly about are genuine hard left-wingers: Glenn
Greenwald, a vociferous critic of both economic neoliberalism and neoconservatism; the anti-establishment
journalist Michael Tracey; Katrina vanden Heuvel, editor of the Nation ; and her husband,
Stephen Cohen, the Russia expert and critic of U.S. foreign policy.
"The only people in American public life who are raising these questions are on the traditional
left: not lifestyle liberals, not the Williamsburg (Brooklyn) group, not liberals in D.C., not Nancy
Pelosi." He calls the expertise of establishment sources on matters like Syria "more shallow than
I even imagined." On his MSNBC show, which was canceled for poor ratings, he cavorted with noninterventionist
stalwarts such as
Ron Paul , the 2008 and 2012 antiwar GOP candidate, and Patrick J. Buchanan. "No one is smarter
than Pat Buchanan," he said
last year of the man whose ideas many say laid the groundwork for Trump's political success.
Carlson has risen to the pinnacle of cable news, succeeding Bill O'Reilly. It wasn't always clear
an antiwar take would vault someone to such prominence. Jeb Bush, Marco Rubio or Mitt Romney could
be president (Boot has advised the latter two). But here he is, and it's likely no coincidence that
Carlson got a show after Trump's election, starting at the 7 p.m. slot, before swiftly moving to
the 9 p.m. slot to replace Trump antagonist Megyn Kelly, and just as quickly replacing O'Reilly at
the top slot, 8 p.m. Boot, on the other hand, declared in 2016 that the Republican Party was
dead , before it went on to hold Congress and most state houses, and of course take the presidency.
He's still at the Council on Foreign Relations and writes for the New York Times (this seems
to clearly annoy Carlson: "It tells you everything about the low standards of the American foreign-policy
establishment").
Boot wrote in 2003 in the Weekly Standard that the fall of Saddam Hussein's government
"may turn out to be one of those hinge moments in history" comparable to "events like the storming
of the Bastille or the fall of the Berlin Wall, after which everything is different." He continued,
"If the occupation goes well (admittedly a big if ), it may mark the moment when the powerful
antibiotic known as democracy was introduced into the diseased environment of the Middle East, and
began to transform the region for the better."
Though he eschews labels, Carlson sounds like a foreign-policy realist on steroids: "You can debate
what's in [the United States'] interest. That's a subjective category. But what you can't debate
is that ought to be the basic question, the first, second and third question. Does it represent our
interest? . . . I don't think that enters into the calculations of a lot of the people who make these
decisions." Carlson's interests extend beyond foreign policy, and he says "there's a massive realignment
going on ideologically that everybody is missing. It's dramatic. And everyone is missing it. . .
. Nobody is paying attention to it, "
Carlson seems intent on pressing the issue. The previous night, in his debate with Peters, the
retired lieutenant colonel said that Carlson sounded like Charles Lindbergh, who opposed U.S. intervention
against Nazi Germany before 1941. "This particular strain of Republican foreign policy has almost
no constituency. Nobody agrees with it. I mean there's not actually a large group of people outside
of New York, Washington or L.A. who think any of this is a good idea," Carlson says. "All I am is
an asker of obvious questions. And that's enough to reveal these people have no idea what they're
talking about. None."
Curt Mills is a foreign-affairs reporter at the National Interest . Follow him on Twitter:
@CurtMills .
"... Cohen's appearance on Carlson's show last night demonstrated again at what a blistering pace public opinion in the West about Putin and Russia is shifting, for the better. ..."
"... Cohen is always good, but last night he nailed it, calling the media's coverage of Hamburg 'pornography'. ..."
"... It was just a year ago, pre-Trump, that professor Cohen was banned from all the networks, from any major media outlet, and being relentlessly pilloried by the neocon media for being a naive fool for defending Putin and Russia. ..."
"... "The first thing you notice is just how much the press is rooting for this meeting between our president and the Russian President to fail. It's a kind of pornography. Just as there's no love in pornography, there's no American national interest in this bashing of Trump and Putin. ..."
"... Carlson tried to draw Cohen out about who exactly in Washington is so against Assad, and why, and Cohen deflected, demurring - 'I don't know - I'm not an expert'. Of course he knows, as does Carlson - it is an unholy alliance of Israel, Saudi Arabia and their neocon friends in Washington and the media who are pushing this criminal policy, who support ISIS, deliberately. But they can't say so, because, ... well, because. Ask Rupert Murdoch. ..."
Cohen's appearance on Carlson's show last night demonstrated again at what a blistering pace public opinion in the West about
Putin and Russia is shifting, for the better.
Cohen is always good, but last night he nailed it, calling the media's coverage of Hamburg 'pornography'.
Ahh, the power of the apt phrase.
It was just a year ago, pre-Trump, that professor Cohen was banned from all the networks, from any major media outlet, and
being relentlessly pilloried by the neocon media for being a naive fool for defending Putin and Russia.
Last night he was the featured guest on the most watched news show in the country, being cheered on by the host, who has him on
as a regular. And Cohen isn't remotely a conservative. He is a contributing editor at the arch-liberal Nation magazine, of which
his wife is the editor. It doesn't really get pinker than that.
Some choice quotes here, but the whole thing is worth a listen:
"The first thing you notice is just how much the press is rooting for this meeting between our president and the Russian
President to fail. It's a kind of pornography. Just as there's no love in pornography, there's no American national interest in
this bashing of Trump and Putin.
As a historian let me tell you the headline I would write instead:
"What we witnessed today in Hamburg was a potentially historic new detente. an anti-cold-war partnership begun by Trump and
Putin but meanwhile attempts to sabotage it escalate." I've seen a lot of summits between American and Russian presidents, ...
and I think what we saw today was potentially the most fateful meeting ... since the Cold War.
The reason is, is that the relationship with Russia is so dangerous and we have a president who might have been crippled or
cowed by these Russiagate attacks ... yet he was not. He was politically courageous. It went well. They got important things done.
I think maybe today we witnessed president Trump emerging as an American statesman."
Cohen goes on to say that the US should ally with Assad, Iran, and Russia to crush ISIS, with Carlson bobbing his head up and
down in emphatic agreement.
Carlson tried to draw Cohen out about who exactly in Washington is so against Assad, and why, and Cohen deflected, demurring
- 'I don't know - I'm not an expert'. Of course he knows, as does Carlson - it is an unholy alliance of Israel, Saudi Arabia and
their neocon friends in Washington and the media who are pushing this criminal policy, who support ISIS, deliberately. But they can't
say so, because, ... well, because. Ask Rupert Murdoch.
Things are getting better in the US media, but we aren't quite able to call a spade a spade in the land of the free and the home
of the brave.
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
Ph.D
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US sanctions
against Iran could give oil a boost to $100 amid dramatic shortfall in supplies
Oil surges to
4-year high as investors see no sign of production rise amid Iran sanctions
