F Financial Sector Induced Systemic Instability of Economy

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Financial Sector Induced Systemic Instability of Economy

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that  growth of financial sector represents a direct threat to the stability of the society. Positive feedback loops creates one financial crisis after another with the increasing magnitude leading up to a collapse of financial system like happened in 1927 and 2008.

News Casino Capitalism Recommended Links  Stability is destabilizing: The idea of Minsky moment Corruption of Regulators Quiet coup
Neoliberalism as a New Form of Corporatism Principal-agent problem Numbers racket Criminal negligence in financial regulation Corruption of FED Invisible Hand Hypothesis
The “Too Big To Fail” Problem In Goldman Sachs we trust Citi - The bank that couldn’t shoot straight JPMorgan AIG collapse Lehman
Free Markets Newspeak as Opium for regulators Derivatives Lobby Corrupts Congress Lobbying and the Financial Crisis Control Fraud
(crisis of corporate governance)
Stock Market with buybacks as a Ponzi scheme Derivatives
Small government smoke screen Financial Bonuses as Money Laundering Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Corporatism   Financial obesity
Webliography of heterodox economists HFT Aleynikov vs. Goldman Sachs Casino Capitalism Dictionary Financial Humor Etc
  "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

The Cost of Capitalism: Understanding Market Mayhem and Stabilizing our Economic Future, by Robert Barbera

The flaw with Capitalism is that it creates its own positive feedback loop, snowballing to the point where the accumulation of wealth and power hurts people — eventually even those at the top of the food chain. ”

Uncle Billy Cunctator
In comment to Economic Donkeys

 
  Banks are a clear case of market failure and their employees at the senior level have basically become the biggest bank robbers of all time. As for basing pay on current revenues and not profits over extended periods of time, then that is a clear case of market failure --  
  The banksters have been able to sell the “talent” myth to justify their outsized pay because they are the only ones able to deliver the type of GDP growth the U.S. economy needs in the short term, even if that kills the U.S. economy in the long term. You’ll be gone, I’ll be gone.  
  Unfortunately, many countries go broke pursuing war, if not financially, then morally (are the two different? – this post suggests otherwise).

I occurs to me that the U.S. is also in that flock; interventions justified by grand cause built on fallacy, the alpha and omega of failure. Is the financial apparatchik (or Nomenklatura, a term I like which, as many from the Soviet era, succinctly describes aspects of our situation today) fated also to the trash heap, despite the best efforts of the Man of the hour, Ben Bernanke?

 

Introduction

While I believe in usefulness of capital markets, it is clear that they are double edge sword and that banks "in a long run" tend to behave like sociopathic individuals. Mr. Capone may have something to say about danger of banks :-).That means that growth of financial sector represents a direct threat to the stability of the society (Keynesianism and the Great Recession )

Without adult supervision, as it were, a financial sector that was already inherently unstable went wild. When the subprime assets were found to be toxic since they were based on mortgages on which borrowers had defaulted, highly indebted or leveraged banks that had bought these now valueless securities had little equity to repay their creditors or depositors who now came after them. This quickly led to their bankruptcy, as in the case of Lehman Brothers, or to their being bailed out by government, as was the case with most of the biggest banks. The finance sector froze up, resulting in a recession—a big one—in the real economy.

Neoliberal revolution, or, as Simon Johnson called it after "quite coup" (Atlantic), brought political power to the financial oligarchy deposed after the New Deal. Deregulation naturally followed, with especially big role played by corrupt Clinton administration.  Positive feedback loops creates one financial crisis after another with the increasing magnitude. "Saving and loans" crisis followed by dot-com crisis of  2000, which in turn followed by the collapse of financial system in 2008, which looks somewhat similar to what happened in 1927.  No prominent financial honcho, who was instrumental in creating "subprime crisis" was jailed.  Most remained filthy rich.

Unless the society puts severe limits on their actions like was done during New Deal,  financial firms successfully subvert the regulation mechanisms and take the society hostage.  But periodic purges with relocation of the most active promoters of "freedom for banks" (aka free market fundamentalism) under the smoke screen of "free market" promotion does not solve the problem of positive feedback loops that banks create by mere existence. That's difficult to do while neoliberal ideology and related neoclassical economy dominates the society thinking (via brainwashing), with universities playing especially negative role -- most of economics departments are captured by neoliberals who censor any heretics. So year after year brainwashing students enter the society without understanding real dangers that neoliberalism brought for them.  Including lack of meaningful employment opportunities.

Of course, most of high level officers of leading finance institutions which caused the crisis of 2008-2009 as a psychological type are as close to  gangsters as one can get. But there is something in their actions that does not depend on individual traits (although many of them definitely can be classified as psychopaths), and is more related to their social position.  This situation is somewhat similar to Bolsheviks coup d'état of 1917 which resulted in capturing Russia by this ideological sect.  And in this sense quite coupe of 1980 is also irreversible in the same sense as Bolsheviks revolution was irreversible:  the "occupation" of the country by a fanatical sect lasts until the population rejects the ideology with its (now apparent) utopian claims.

Bolshevism which lasted 75 years, spend in such zombie state the last two decades (if we assume 1991 as the year of death of Bolshevism, its ideology was dead much earlier -- the grave flaws in it were visible from late 60th, if not after the WWII).  But only  when their ideology was destroyed both by inability to raise the standard of living of the population and by the growing neoliberal ideology as an alternative (and a new, more powerful then Marxism high-demand cult) Bolsheviks started to lose the grip on their power in the country. As a result Bolsheviks lost the power only in 1991, or more correctly switched camps and privatized the country. If not inaptness of their last General Secretary, they probably could last more. In any case after the ideology collapsed, the USSR disintegrated (or more correctly turn by national elites, each of which wanted their peace of the pie).

The sad truth is that the mere growth of financial sector creates additional positive feedback loops and increases structural instability within both the financial sector itself and the society at large. Dynamic systems with strong positive feedback loops not compensated by negative feedback loops are unstable. As a result banks and other financial institution periodically generate a deep, devastating crisis. This is the meaning of famous Hyman Minsky phrase "stability is destabilizing".

In other words, financial apparatchiks (or Financial Nomenklatura, a term from the Soviet era, which succinctly describes aspects of our situation today) drive the country off the cliff because they do not have any countervailing forces, by the strength of their political influence and unsaturable greed. Although the following analogy in weaker then analogy with dynamic systems with positive feedback loops, outsized financial sector can be viewed in  biological terms as cancer.

Cancer, known medically as a malignant neoplasm, is a broad group of diseases involving unregulated cell growth. In cancer, cells divide and grow uncontrollably, forming malignant tumors, and invading nearby parts of the body. The cancer may also spread to more distant parts of the body through the lymphatic system or bloodstream. Not all tumors are cancerous; benign tumors do not invade neighboring tissues and do not spread throughout the body. There are over 200 different known cancers that affect humans.[1]

Like certain types of cancer they depend of weakening "tumor suppressor genes"  (via "Quiet coup" mechanism of acquiring dominant political power) which allow then to engage in uncontrolled growth, destroying healthy cells (and first of all local manufacturing).   

The other suspicion is the unchecked financialization always goes too far and the last N percent of financial activity absorbs much more resources (especially intellectual resources) and creates more potential instability than its additional efficiency-benefits (often zero or negative) can justify. It is hard to imagine that a Hedge Fund Operator of the Year does anything that is even remotely socially useful to justify his enormous (and lightly taxed) compensation. It is pure wealth redistribution up based on political domination of financial oligarchy.  Significant vulnerabilities  within the shadow banking system and derivatives are plain vanilla socially destructive. Yet they persist due to inevitable political power grab by financial oligarchy  (Quiet coup).

Again, I would like to stress that this problem of the oversized financial sector which produces one devastating crisis after another   is closely related to the problem of a positive feedback loops. And the society in which banks are given free hand inevitably degrades into "socialism for banks"  or "casino capitalism" -- a type of neoliberalism with huge inequality and huge criminality of top banking officers.  

Whether we can do without private banks is unclear, but there is sound evidence that unlike growth of manufacturing, private financial sector growth is dangerous for the society health and perverts society goals.  Like cult groups the financial world does a terrific job of "shunning" the principled individuals and suppressing dissent (by capturing and cultivating neoliberal stooges in all major university departments and press),  so self-destructing tendencies after they arise can't be stopped within the framework of neoliberalism. In a way financial firm is like sociopath inevitable produces its  trail of victims (and sociopaths might be useful in battles exactly due to the qualities such as ability to remain cool in dangerous situation, that make them dangerous in the normal course of events).

This tendency of society with unregulated or lightly regulated financial sector toward self-destruction was first formulated as "Minsky instability hypothesis" -- and outstanding intellectual achievement of American economic Hyman Minsky (September 23, 1919 – October 24, 1996). Who BTW was pretty much underappreciated (if not suppressed) during his lifetime because his views were different from  orthodox (and false) neoclassic economic theory which dominates US universities, Like flat Earth theory was enforce by Catholic church before, it is fiercely enforced by an army of well paid neoliberal economics, those Jesuits of modern era. Who prosecute heretics who question flat Earth theory even more efficiently then their medieval counterparts; the only difference is that they do not burn the literally, only figuratively ;-)

Minsky financial instability hypothesis

Former Washington University in St. Louis economics professor Hyman P. Minsky had predicted the Great Recession decades before it happened.  Hyman Minsky was a real student of the Great Depression, while Bernanke who widely is viewed as a scholar who studied the Great Depression, in reality was a charlatan, who just tried to explain the Great Depression from the positions of neo-classical economy. That's a big difference.

Minsky instability hypothesis ("stability is destabilizing" under capitalism) that emerged from his analysis of the Great Depression was based on intellectual heritage of three great thinkers in economics (my presentation is partially based on an outstanding lecture by Steve Keen Lecture 6 on Minsky, Financial Instability, the Great Depression & the Global Financial Crisis). We can talk about three source of influence, there authors writing of which touched the same subject from similar positions and were the base of Hyman Minsky great advance in understanding of mechanics of development of financial crisis under capitalism and the critical role of financial system in it (neoclassical economics ignores the existence of financial system in its analysis): 

  1. Karl Marx influence
  2. Irving Fisher influence
  3. Joseph Schumpeter influence

Karl Marx influence

Minsky didn't follow the conventional version of Marxism  . And it was dangerous for him to do so due to McCarthysm. Even mentioning of Marx might lead to strakism fromthe academy those years.  McCarthy and his followers in academy did not understand the difference between Marx great analysis of capitalism and his utopian vision of the future. Impliedly this witch hunt helped to establish hegemony of neoclassical economy in economic departments in the USA.

While Minsky did not cited Marx in his writings and did use Marx's Labor Theory of Value his thinking was definitely influenced by Marx’s critique of  finance. We now know that he read and admired the Capital. And that not accidental due to the fact that his parents were Mensheviks -- a suppressed after Bolshevik revolution more moderate wing of Russian Social Democratic Party that rejected the idea of launching the socialist revolution in Russia --  in their opinion Russia needed first to became a capitalist country and get rid of remnants of feudalism. They escaped from Soviet Russia when Mensheviks started to be prosecuted by Bolsheviks.

And probably the main influence on Minsky was not Marx's discussion  of finance in Volume I of Capital with a "commodity" model of money, but critical remarks scattered in   Volumes II & III (which were not edited by Marx by compiled posthumously by Engels), where he was really critical of big banks as well as Marx's earlier works (Grundrisse, Theories of Surplus Value) where Marx was scathing about finance:

"A high rate of interest can also indicate, as it did in 1857, that the country is undermined by the roving cavaliers of credit who can afford to pay a high interest because they pay it out of other people's pocket* (whereby, however, they help to determine the rate of interest  for all) and meanwhile they live in grand style on anticipated profits. 

Irving Fisher influence

The second source on which Minsky based his insights was Irving Fisher. Irving Fisher’s reputation destroyed by wrong predictions on stock market prices. In aftermath, developed theory to explain the crash and published it in his book  "The Debt Deflation Theory of Great Depressions". His main points are:

According to Fisher two key disequilibrium forces that push economic into the next economic crisis are debt and subsequent deflation

Joseph Schumpeter influence

Joseph Schumpeter was Joseph Schumpeter has more positive view of capitalism than the other two. He authored the theory of creative destruction as a path by which capitalism achieves higher and higher productivity. He capitalism as necessarily unstable, but for him this was a positive feature -- instability of capitalism the source of its creativity. His view of capitalism was highly dynamic and somewhat resembles the view of Marx (who also thought that capitalism destroys all previous order and create a new one):

Unlike Marx, who thought that the periodic crisis of overproduction  is the source of instability (as well as  gradual absolute impoverishment of workers), Minsky assumed that the key source of that instability of capitalist system is connected with the cycles of business borrowing and fractional bank lending, when "good times" lead to excessive borrowing leading to high leverage and overproduction and thus to eventual debt crisis (The Alternative To Neoliberalism ):

Minsky on capitalism:

The idea of Minsky moment is related to the fact that the fractional reserve banking periodically causes credit collapse when the leveraged credit expansion goes into reverse. And mainstream economists do not want to talk about the fact that increasing confidence breeds increased leverage. So financial stability breeds instability and subsequent financial crisis. All actions to guarantee a market rise, ultimately guarantee it's destruction because greed will always take advantage of a "sure thing" and push it beyond reasonable boundaries.  In other words, marker players are no rational and assume that it would be foolish not to maximize leverage in a market which is going up. So the fractional reserve banking mechanisms ultimately and ironically lead to over lending and guarantee the subsequent crisis and the market's destruction. Stability breed instability.

That means that fractional reserve banking based economic system with private players (aka capitalism) is inherently unstable. And first of all because  fractional reserve banking is debt based. In order to have growth it must create debt. Eventually the pyramid of debt crushes and crisis hit. When the credit expansion fuels asset price bubbles, the dangers for the financial sector and the real economy are substantial because this way the credit boom bubble is inflated which eventually burst. The damage done to the economy by the bursting of credit boom bubbles is significant and long lasting.

Blissex said...

«When credit growth fuels asset price bubbles, the dangers for the financial sector and the real economy are much more substantial.»

So M Minsky 50 years ago and M Pettis 15 years ago (in his "The volatility machine") had it right? Who could have imagined! :-)

«In the past decades, central banks typically have taken a hands-off approach to asset price bubbles and credit booms.»

If only! They have been feeding credit-based asset price bubbles by at the same time weakening regulations to push up allowed capital-leverage ratios, and boosting the quantity of credit as high as possible, but specifically most for leveraged speculation on assets, by allowing vast-overvaluations on those assets.

Central banks have worked hard in most Anglo-American countries to redistribute income and wealth from "inflationary" worker incomes to "non-inflationary" rentier incomes via hyper-subsidizing with endless cheap credit the excesses of financial speculation in driving up asset prices.

Not very hands-off at all.

Steve Keen is probably the most well know researcher who tried to creates model of capitalist economy based on Minsky work (  http://www.debtdeflation.com/blogs/manifesto/ )

John Kay in his January 5 2010 FT column very aptly explained the systemic instability of financial sector hypothesis: 

The credit crunch of 2007-08 was the third phase of a larger and longer financial crisis. The first phase was the emerging market defaults of the 1990s. The second was the new economy boom and bust at the turn of the century. The third was the collapse of markets for structured debt products, which had grown so rapidly in the five years up to 2007.

The manifestation of the problem in each phase was different – first emerging markets, then stock markets, then debt. But the mechanics were essentially the same. Financial institutions identified a genuine economic change – the assimilation of some poor countries into the global economy, the opportunities offered to business by new information technology, and the development of opportunities to manage risk and maturity mismatch more effectively through markets. Competition to sell products led to wild exaggeration of the pace and scope of these trends. The resulting herd enthusiasm led to mispricing – particularly in asset markets, which yielded large, and largely illusory, profits, of which a substantial fraction was paid to employees.

Eventually, at the end of each phase, reality impinged. The activities that once seemed so profitable – funding the financial systems of emerging economies, promoting start-up internet businesses, trading in structured debt products – turned out, in fact, to have been a source of losses. Lenders had to make write-offs, most of the new economy stocks proved valueless and many structured products became unmarketable. Governments, and particularly the US government, reacted on each occasion by pumping money into the financial system in the hope of staving off wider collapse, with some degree of success. At the end of each phase, regulators and financial institutions declared that lessons had been learnt. While measures were implemented which, if they had been introduced five years earlier, might have prevented the most recent crisis from taking the particular form it did, these responses addressed the particular problem that had just occurred, rather than the underlying generic problems of skewed incentives and dysfunctional institutional structures.

The public support of markets provided on each occasion the fuel needed to stoke the next crisis. Each boom and bust is larger than the last. Since the alleviating action is also larger, the pattern is one of cycles of increasing amplitude.

I do not know what the epicenter of the next crisis will be, except that it is unlikely to involve structured debt products. I do know that unless human nature changes or there is fundamental change in the structure of the financial services industry – equally improbable – there will be another manifestation once again based on naive extrapolation and collective magical thinking. The recent crisis taxed to the full – the word tax is used deliberately – the resources of world governments and their citizens. Even if there is will to respond to the next crisis, the capacity to do so may not be there.

The citizens of that most placid of countries, Iceland, now backed by their president, have found a characteristically polite and restrained way of disputing an obligation to stump up large sums of cash to pay for the arrogance and greed of other people. They are right. We should listen to them before the same message is conveyed in much more violent form, in another place and at another time. But it seems unlikely that we will.

We made a mistake in the closing decades of the 20th century. We removed restrictions that had imposed functional separation on financial institutions. This led to businesses riddled with conflicts of interest and culture, controlled by warring groups of their own senior employees. The scale of resources such businesses commanded enabled them to wield influence to create a – for them – virtuous circle of growing economic and political power. That mistake will not be easily remedied, and that is why I view the new decade with great apprehension. In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

While Hyman Minsky was the first clearly formulate the financial instability hypothesis, Keynes also understood this dynamic pretty well. He postulated that a world with a large financial sector and an excessive emphasis on the production of investment products creates instability both in terms of output and prices. In other words it automatically tends to generate credit and asset bubbles.  The key driver is the fact that financial professionals generally risk other people’s money and due to this fact have asymmetrical incentives:

This asymmetry is not a new observation of this systemic problem. Andrew Jackson noted it in much more polemic way long ago:

“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.”

This asymmetrical incentives ensure that the financial system is structurally biased toward taking on more risk than what should be taken. In other words it naturally tend to slide to the casino model, the with omnipresent reckless gambling as the primary and the most profitable mode of operation while an opportunities last.  The only way to counter this is to throw sand into the wheels of financial mechanism:  enforce strict regulations, limit money supplies and periodically jail too enthusiastic bankers. The latter is as important or even more important as the other two because bankers tend to abuse "limited liability" status like no other sector.

Asset inflation over the past 10 years and the subsequent catastrophe incurred is a way classic behavior of dynamic system with strong positive feedback loop.  Such behavior does not depends of personalities of bankers or policymakers, but is an immanent property of this class of dynamic systems. And the main driving force here was deregulation. So its important that new regulation has safety feature which make removal of it more complicated and requiring bigger majority like is the case with constitutional issues.

Another fact was the fact that due to perverted incentives, accounting in the banks was fraudulent from the very beginning and it was fraudulent on purpose.  Essentially accounting in banks automatically become as bad as law enforcement permits. This is a classic case of control fraud and from prevention standpoint is make sense to establish huge penalties for auditors, which might hurt healthy institutions but help to ensure that the most fraudulent institution lose these bank charter before affecting the whole system.  With the anti-regulatory zeal of Bush II administration the level of auditing became too superficial, almost non-existent. I remember perverted dances with Sarbanes–Oxley when it was clear from the very beginning that the real goal is not to strengthen accounting but to earn fees and to create as much profitable red tape as possible, in perfect Soviet bureaucracy style.

Deregulation also increases systemic risk by influencing the real goals of financial organizations. At some point of deregulation process the goal of higher remuneration for the top brass becomes self-sustainable trend  and replaces all other goals of the financial organization. This is the essence of  Martin Taylor’s, the former chief executive of Barclays,  article FT.com - Innumerate bankers were ripe for a reckoning in the Financial Times (Dec 15, 2009), which is worth reading in its entirety:

City people have always been paid well relative to others, but megabonuses are quite new. From my own experience, in the mid-1990s no more than four or five employees of Barclays’ then investment bank were paid more than £1m, and no one got near £2m. Around the turn of the millennium across the market things began to take off, and accelerated rapidly – after a pause in 2001-03 – so that exceptionally high remuneration, not just individually, but in total, was paid out between 2004 and 2007.

Observers of financial services saw unbelievable prosperity and apparently immense value added. Yet two years later the whole industry was bankrupt. A simple reason underlies this: any industry that pays out in cash colossal accounting profits that are largely imaginary will go bust quickly. Not only has the industry – and by extension societies that depend on it – been spending money that is no longer there, it has been giving away money that it only imagined it had in the first place. Worse, it seems to want to do it all again.

What were the sources of this imaginary wealth?

In the last two of these the bank was not receiving any income, merely “booking revenues”. How could they pay this non-existent wealth out in cash to their employees? Because they had no measure of cash flow to tell them they were idiots, and because everyone else was doing it. Paying out 50 per cent of revenues to staff had become the rule, even when the “revenues” did not actually consist of money.

In the next phase instability is amplified by the way governments and central banks respond to crises caused by credit bubble: the state has powerful means to end a recession, but the policies it uses give rise to the next phase of instability, the next bubble…. When money is virtually free – or, at least, at 0.5 per cent – traders feel stupid if they don’t leverage up to the hilt. Thus previous bubble and crash become a dress rehearsal for the next.

Resulting self-sustaining "boom-bust" cycle is very close how electronic systems with positive feedback loop behave and   cannot be explained by neo-classical macroeconomic models. Like with electronic devices the financial institution in this mode are unable to provide the services that are needed.

As Minsky noted long ago (sited from Stephen Mihm  Why capitalism fails Boston Globe):

Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

...our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky’s vision might have been dark, but he was not a fatalist; he believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. But with a growing number of economists eager to declare the recession over, and the crisis itself apparently behind us, these policies may prove as discomforting as the theories that prompted them in the first place. Indeed, as economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

And he understood the roots of the current credit bubble much better that neoclassical economists like Bernanke: 
As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what [Minsky] called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further.

As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Minsky’s financial instability hypothesis suggests that when optimism is high and ample funds are available for investment, investors tend to migrate from the safe hedge end of the Minsky spectrum to the risky speculative and Ponzi end. Indeed, in the current crisis, investors tried to raise returns by increasing leverage and switching to financing via short-term—sometimes overnight— borrowing (Too late to learn?):

In the church of Friedman, inflation was the ol' devil tempting the good folk; the 1980s seemed to prove that, let loose, it would cause untold havoc on the populace. But, as Barbera notes:

The last five major global cyclical events were the early 1990s recession - largely occasioned by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there a significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbable heights and then collapsed. From 1945 to 1985, there was no recession caused by the instability of investment prompted by financial speculation - and since 1985 there has been no recession that has not been caused by these factors.
Thus, meet the devil in Minsky's paradise - "an investment boom and an associated asset market [that] ran to improbable heights and then collapsed".

According the Barbera, "Minsky's financial instability hypothesis depends critically on what amounts to a sociological insight. People change their minds about taking risks. They don't make a one-time rational judgment about debt use and stock market exposure and stick to it. Instead, they change their minds over time. And history is quite clear about how they change their minds. The longer the good times endure, the more people begin to see wisdom in risky strategies."

Current economy state can be called following Paul McCulley a "stable disequilibrium" very similar to a state  a sand pile.  All this pile of  stocks, debt instruments, derivatives, credit default swaps and God know corresponds to a  pile of sand that is on the verse of losing stability. Each financial player works hard to maximize their own personal outcome but the "invisible hand" effect in adding sand to the pile that is increasing systemic instability. According to Minsky, the longer such situation continues the more likely and violent an "avalanche".

The late Hunt Taylor wrote, in 2006:

"Let us start with what we know. First, these markets look nothing like anything I've ever encountered before. Their stunning complexity, the staggering number of tradable instruments and their interconnectedness, the light-speed at which information moves, the degree to which the movement of one instrument triggers nonlinear reactions along chains of related derivatives, and the requisite level of mathematics necessary to price them speak to the reality that we are now sailing in uncharted waters.

"... I've had 30-plus years of learning experiences in markets, all of which tell me that technology and telecommunications will not do away with human greed and ignorance. I think we will drive the car faster and faster until something bad happens. And I think it will come, like a comet, from that part of the night sky where we least expect it."

This is a gold age for bankers as Simon Johnson wrote in New Republic (The Next Financial Crisis ):

Banking was once a dangerous profession. In Britain, for instance, bankers faced “unlimited liability”--that is, if you ran a bank, and the bank couldn’t repay depositors or other creditors, those people had the right to confiscate all your personal assets and income until you repaid. It wasn’t until the second half of the nineteenth century that Britain established limited liability for bank owners. From that point on, British bankers no longer assumed much financial risk themselves.

In the United States, there was great experimentation with banking during the 1800s, but those involved in the enterprise typically made a substantial commitment of their own capital. For example, there was a well-established tradition of “double liability,” in which stockholders were responsible for twice the original value of their shares in a bank. This encouraged stockholders to carefully monitor bank executives and employees. And, in turn, it placed a lot of pressure on those who managed banks. If they fared poorly, they typically faced personal and professional ruin. The idea that a bank executive would retain wealth and social status in the event of a self-induced calamity would have struck everyone--including bank executives themselves--as ludicrous.

Enter, in the early part of the twentieth century, the Federal Reserve. The Fed was founded in 1913, but discussion about whether to create a central bank had swirled for years. “No one can carefully study the experience of the other great commercial nations,” argued Republican Senator Nelson Aldrich in an influential 1909 speech, “without being convinced that disastrous results of recurring financial crises have been successfully prevented by a proper organization of capital and by the adoption of wise methods of banking and of currency”--in other words, a central bank. In November 1910, Aldrich and a small group of top financiers met on an isolated island off the coast of Georgia. There, they hammered out a draft plan to create a strong central bank that would be owned by banks themselves.

What these bankers essentially wanted was a bailout mechanism for the aftermath of speculative crashes -- something more durable than J.P. Morgan, who saved the day in the Panic of 1907 but couldn’t be counted on to live forever. While they sought informal government backing and substantial government financial support for their new venture, the bankers also wanted it to remain free of government interference, oversight, or control.

Another destabilizing fact is so called myth of invisible hand which is closely related to the myth about market self-regulation. The misunderstood argument of Adam Smith [1776], the founder of modern economics, that free markets led to efficient outcomes, “as if by an invisible hand” has played a central role in these debates: it suggested that we could, by and large, rely on markets without government intervention. About "invisible hand" deification, see The Invisible Hand, Trumped by Darwin - NYTimes.com.

The concept of Minsky moment

The moment in the financial system when the quantity of debt turns into quality and produces yet another financial crisis is called Minsky moment. In other words the “Minsky moment” is the time when an unsustainable financial boom turns into uncontrollable collapse of financial markets (aka financial crash). The existence of Minsky moments is one of the most important counterargument against financial market self-regulation.  It also expose free market fundamentalists such as "former Maestro" Greenspan as charlatans. Greenspan actually implicitly admitted that he is and that it was he, who was the "machinist"  who helped to bring the USA economic train off the rails in 2008 via deregulation  and dismantling the New Deal installed safeguards. 

Here how it is explained by Stephen Mihm in Boston Globe in 2009 in the after math of 2008 financial crisis:

“Minsky” was shorthand for Hyman Minsky, an American macroeconomist who died over a decade ago.  He predicted almost exactly the kind of meltdown that recently hammered the global economy. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

Minsky believed it was possible to craft policies that could blunt the collateral damage caused by financial crises. As economists re-embrace Minsky’s prophetic insights, it is far from clear that they’re ready to reckon with the full implications of what he saw.

Minsky theory was not well received due to powerful orthodoxy, born in the years after World War II, known as the neoclassical synthesis. The older belief in a self-regulating, self-stabilizing free market had selectively absorbed a few insights from John Maynard Keynes, the great economist of the 1930s who wrote extensively of the ways that capitalism might fail to maintain full employment. Most economists still believed that free-market capitalism was a fundamentally stable basis for an economy, though thanks to Keynes, some now acknowledged that government might under certain circumstances play a role in keeping the economy - and employment - on an even keel.

Economists like Paul Samuelson became the public face of the new establishment; he and others at a handful of top universities became deeply influential in Washington. In theory, Minsky could have been an academic star in this new establishment: Like Samuelson, he earned his doctorate in economics at Harvard University, where he studied with legendary Austrian economist Joseph Schumpeter, as well as future Nobel laureate Wassily Leontief.

But Minsky was cut from different cloth than many of the other big names. The descendent of immigrants from Minsk, in modern-day Belarus, Minsky was a red-diaper baby, the son of Menshevik socialists. While most economists spent the 1950s and 1960s toiling over mathematical models, Minsky pursued research on poverty, hardly the hottest subfield of economics. With long, wild, white hair, Minsky was closer to the counterculture than to mainstream economics. He was, recalls the economist L. Randall Wray, a former student, a “character.”

So while his colleagues from graduate school went on to win Nobel prizes and rise to the top of academia, Minsky languished. He drifted from Brown to Berkeley and eventually to Washington University. Indeed, many economists weren’t even aware of his work. One assessment of Minsky published in 1997 simply noted that his “work has not had a major influence in the macroeconomic discussions of the last thirty years.”

Yet he was busy. In addition to poverty, Minsky began to delve into the field of finance, which despite its seeming importance had no place in the theories formulated by Samuelson and others. He also began to ask a simple, if disturbing question: “Can ‘it’ happen again?” - where “it” was, like Harry Potter’s nemesis Voldemort, the thing that could not be named: the Great Depression.

In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call “bastard Keynesianism.”

Instead, Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers - what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment - what was later dubbed the “Minsky moment” - would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

From the 1960s onward, Minsky elaborated on this hypothesis. At the time he believed that this shift was already underway: postwar stability, financial innovation, and the receding memory of the Great Depression were gradually setting the stage for a crisis of epic proportions. Most of what he had to say fell on deaf ears. The 1960s were an era of solid growth, and although the economic stagnation of the 1970s was a blow to mainstream neo-Keynesian economics, it did not send policymakers scurrying to Minsky. Instead, a new free market fundamentalism took root: government was the problem, not the solution.

Moreover, the new dogma coincided with a remarkable era of stability. The period from the late 1980s onward has been dubbed the “Great Moderation,” a time of shallow recessions and great resilience among most major industrial economies. Things had never been more stable. The likelihood that “it” could happen again now seemed laughable.

Yet throughout this period, the financial system - not the economy, but finance as an industry - was growing by leaps and bounds. Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers’ and companies’ growing dependence on debt, and the growing use of leverage within the financial system.

By the end of the 20th century, the financial system that Minsky had warned about had materialized, complete with speculative borrowers, Ponzi borrowers, and precious few of the conservative borrowers who were the bedrock of a truly stable economy. Over decades, we really had forgotten the meaning of risk. When storied financial firms started to fall, sending shockwaves through the “real” economy, his predictions started to look a lot like a road map.

“This wasn’t a Minsky moment,” explains Randall Wray. “It was a Minsky half-century.”

Minsky is now all the rage. A year ago, an influential Financial Times columnist confided to readers that rereading Minsky’s 1986 “masterpiece” - “Stabilizing an Unstable Economy” - “helped clear my mind on this crisis.” Others joined the chorus. Earlier this year, two economic heavyweights - Paul Krugman and Brad DeLong - both tipped their hats to him in public forums. Indeed, the Nobel Prize-winning Krugman titled one of the Robbins lectures at the London School of Economics “The Night They Re-read Minsky.”

Today most economists, it’s safe to say, are probably reading Minsky for the first time, trying to fit his unconventional insights into the theoretical scaffolding of their profession. If Minsky were alive today, he would no doubt applaud this belated acknowledgment, even if it has come at a terrible cost. As he once wryly observed, “There is nothing wrong with macroeconomics that another depression [won’t] cure.”

But does Minsky’s work offer us any practical help? If capitalism is inherently self-destructive and unstable - never mind that it produces inequality and unemployment, as Keynes had observed - now what?

After spending his life warning of the perils of the complacency that comes with stability - and having it fall on deaf ears - Minsky was understandably pessimistic about the ability to short-circuit the tragic cycle of boom and bust. But he did believe that much could be done to ameliorate the damage.

To prevent the Minsky moment from becoming a national calamity, part of his solution (which was shared with other economists) was to have the Federal Reserve - what he liked to call the “Big Bank” - step into the breach and act as a lender of last resort to firms under siege. By throwing lines of liquidity to foundering firms, the Federal Reserve could break the cycle and stabilize the financial system. It failed to do so during the Great Depression, when it stood by and let a banking crisis spiral out of control. This time, under the leadership of Ben Bernanke - like Minsky, a scholar of the Depression - it took a very different approach, becoming a lender of last resort to everything from hedge funds to investment banks to money market funds.

Minsky’s other solution, however, was considerably more radical and less palatable politically. The preferred mainstream tactic for pulling the economy out of a crisis was - and is - based on the Keynesian notion of “priming the pump” by sending money that will employ lots of high-skilled, unionized labor - by building a new high-speed train line, for example.

Minsky, however, argued for a “bubble-up” approach, sending money to the poor and unskilled first. The government - or what he liked to call “Big Government” - should become the “employer of last resort,” he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else’s wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

While economists may be acknowledging some of Minsky’s points on financial instability, it’s safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians. For his part, Wray thinks that the critics are apt to misunderstand Minsky. “He saw these ideas as perfectly consistent with capitalism,” says Wray. “They would make capitalism better.”

But not perfect. Indeed, if there’s anything to be drawn from Minsky’s collected work, it’s that perfection, like stability and equilibrium, are mirages. Minsky did not share his profession’s quaint belief that everything could be reduced to a tidy model, or a pat theory. His was a kind of existential economics: capitalism, like life itself, is difficult, even tragic. “There is no simple answer to the problems of our capitalism,” wrote Minsky. “There is no solution that can be transformed into a catchy phrase and carried on banners.”

It’s a sentiment that may limit the extent to which Minsky becomes part of any new orthodoxy. But that’s probably how he would have preferred it, believes liberal economist James Galbraith. “I think he would resist being domesticated,” says Galbraith. “He spent his career in professional isolation.”

Stephen Mihm is a history professor at the University of Georgia and author of “A Nation of Counterfeiters” (Harvard, 2007). © Copyright 2009 Globe Newspaper Company.

 

Some important albeit random (and overlapping) points about instability of financial system

The first thing to understand is that attempt to weaken positive feedback looks via regulation, approach that can be called  “regulation as a Swiss knife” does not work without law enforcement and criminal liability for bankers, as there is an obvious problem of corruption of regulators. In this sense the mechanism of purges might be the only one that realistically can work.

In other words it’s unclear who and how can prevents the capture of regulators as financial sector by definition has means to undermine any such efforts. One way this influence work is via lobbing for appointment of pro-financial sector people in key positions. If such "finance-sector-selected" Fed chairman does not like part of Fed mandate related to regulation it can simply ignore it as long as he is sure that he will be reappointed. That happened with Greenspan.  After such process started it became irreversible and only after a significant, dramatic shock to the system any meaningful changes can be instituted and as soon as the lessons are forgotten work on undermining them resumes.

In essence, the Fed is a political organization and Fed Chairman is as close to a real vice-president of the USA as one can get.  As such Fed Chairman serves the elite which rules that country, whether you call them financial oligarchy or some other name. Actually Fed Chairman is the most powerful unelected official in the USA. If you compare this position to the role of the Chairman of the Politburo  in the USSR you’ll might find some interesting similarities.

In other words it is impossible to prevent appointment of another Greenspan by another Reagan without changes in political power balance.  And the transition to banana republic that follows such appointment is irreversible even if the next administration water boards former Fed Chairman to help him to write his memoirs.  That means that you need to far-reaching reform of political system to be able to regulate financial industry and you need to understand that the measures adopted need vigilant protection as soon as the current crisis is a distant history.

Additional reading

Several other source of financial instability were pointed out by others:

There are some outstanding lectures and presentation on YouTube on this topic. Among them:

See an expended list at Webliography of heterodox economists

Dr. Nikolai Bezroukov


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[In casino capitalism] financial institutions make a living screwing over their customers so their biggest concern is how to avoid losing lawsuits when they get sued

Why Wall Street Ignores Real Risk
And Why History Will Repeat Itself

[Jan 16, 2018] Interview with Jamie Galbraith by Dan Crawford

Some banks blew out the mortgage market, [and] they blew out technology investment two decades ago. What are they doing now? They are financing energy investments, and they are financing consumer debt. This is an almost brainless approach.
Jan 15, 2018 | angrybearblog.com
Via Marketwatch Jamie Galbraith states his thoughts on a how the current US economy functions. Here are a few snippets:

University of Texas economist Galbraith, the son of the famous Harvard economist John Kenneth Galbraith, believes mainstream economists and the Federal Reserve are too wedded to old ideas to see what is really going on in the economy. Specifically, Galbraith is worried that the consumer is the only game in town -- and that can't last.

Galbraith used his latest book "The End of Normal" to lay out his case that the 2007-08 financial crisis wasn't just a brief interruption in the life of an otherwise healthy economy but instead the latest crisis for an economy that lost its footing back in the 1980s.

At the American Economic Association meeting in Philadelphia, MarketWatch asked Galbraith to share his views on the economic landscape.

(On inflation and labor) There is no Phillips Curve, and there hasn't been for decades. The supply of labor is not a constraint. If you wish to pay people higher wages, you could lure people back out of retirement. Net immigration has basically stopped. If you needed more workers, it would start up again. So we don't have a real labor-force constraint. We are not going to get inflationary pressure from the labor markets. It has been 40 years. Economists are slow learners, and central bankers are a slow-learning subset. They should recognize that things did change in the 1980s.

(Losing ground in global trade) I think that is clearly the case in the wider world. The Chinese have engaged in an extraordinary exercise in engineering in recent years domestically, building 12,000 miles of high-speed rail. They now have vast engineering capacity, and they are applying it to their periphery -- a One Belt One Road network that will orient commerce across Eurasia and into Africa as well that is in the interest of furthering Chinese development. This is on a scale which dwarfs anything that is being conceived of in the United States. (Dan here This statement is before the sh**hole storm)

(On infrastucture)Trump came in with the idea that we should be investing heavily in infrastructure. He got no traction from the Republican Congress. Why is that? Because the immediate beneficiaries of an infrastructure program are people who live in cities, people who live in the expensive coastal areas of the country -- and these people don't vote Republican. So a political obstacle that prevented the one sensible or necessary element of Trump's political framework from getting any traction at all.

(Role of banks) You have to have a situation where banks, which are publicly chartered institutions, serve a public purpose with some common objectives. Some banks blew out the mortgage market, [and] they blew out technology investment two decades ago. What are they doing now? They are financing energy investments, and they are financing consumer debt. This is an almost brainless approach.

[Jan 07, 2018] Neoliberal MSM want to control the narrative

"Controlling the narrative" is politically correct term for censorship.
Notable quotes:
"... I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened. ..."
"... "controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was). ..."
"... In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods. ..."
Jan 30, 2017 | economistsview.typepad.com
libezkova -> Fred C. Dobbs... January 29, 2017 at 08:31 AM , 2017 at 08:31 AM
Neoliberal MSM want to control the narrative.

That's why "alternative facts" should be called an "alternative narrative".

https://opinionator.blogs.nytimes.com/2014/06/09/controlling-the-narrative/?_r=0

== quote ==

Maybe this is the same kind of clinical detachment doctors have to cultivate, a way of distancing oneself from the subject, protecting yourself against a crippling empathy. I won't say that writers or artists are more sensitive than other people, but it may be that they're less able to handle their own emotions.

It may be that art, like drugs, is a way of dulling or controlling pain. Eloquently articulating a feeling is one way to avoid actually experiencing it.

Words are only symbols, noises or marks on paper, and turning the messy, ugly stuff of life into language renders it inert and manageable for the author, even as it intensifies it for the reader.

It's a nerdy, sensitive kid's way of turning suffering into something safely abstract, an object of contemplation.

I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened.

libezkova -> libezkova... , January 29, 2017 at 09:24 AM
"controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was).

In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods.

They want to invoke your emotions in the necessary direction and those emotions serve as a powerful filter, a firewall which will prevents you from seeing any alternative facts which taken as whole form an "alternative narrative".

It also creates certain taboo, such as "don't publish anything from RT", or you automatically become "Putin's stooge." But some incoherent blabbing of a crazy neocon in Boston Globe is OK.

This is an old and a very dirty game, a variation of method used for centuries by high demand cults:

"Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece.

Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood.

But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship

Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

– Hermann Goering (as told to Gustav Gilbert during the Nuremberg trials)

You need to be able to decipher this "suggested" set of emotions and detach it from the set of facts provided by neoliberal MSM. It might help to view things "Sine ira et studio" ( https://en.wikipedia.org/wiki/Sine_ira_et_studio )

That helps to destroy the official neoliberal narrative.

Here skepticism (whether natural or acquired) can be of great help in fighting groupthink pushed by neoliberal MSM.

We are all guilty of this one sidedness, but I think that we need to put some efforts to move in direction of higher level of skepticism toward our own views and probably provide at least links to alternative views.

[Jan 06, 2018] Crash or no crash musings

It will be 10 years since 2008 crash this year.
Jan 04, 2018 | turcopolier.typepad.com
Reply 04 January 2018 at 02:41 PM

Farmer Don , 04 January 2018 at 02:41 PM

Where will the economy be at the end of 2018
I HAVE NO CLUE!

too many variables for me:

Reasons for crash:
Personal debt rising starting to cause problems. Credit card debt up/Car loan defaults up
US debt rising.
US balance of trade continuing
Fed says it will quit increasing QE & may raise interest rates.
China and bricks completing parallel monetary trade and movement systems to stop US financial monopoly. Ie chinese SWIFT replacement system, Chinese credit cards, Russian increasing gold holdings compared to US$
Rents and housing most expensive compared to wages ever.
US health care costs rising


Reasons for good times
Central banks printing money and buying stocks.
Tax laws brings money back to US (more stock buybacks)
US debt ceiling seems to be an illusion
Trump great spokesman for business
Trump may use new tools to fight recession (helicopter money etc.)
Trump says he likes cheap US$
Momentum of stock markets
Trump has started no new wars. Military $$ stay mostly inside the USA
Trump gets huge infrastructure bill passed

Wild cards
Crypto currencies?
Interest rates?
Job outsourcing or coming back to USA?
Economic Black Swan from outside USA

Richardstevenhack , 04 January 2018 at 02:41 PM
I tend to agree that the economy is due for a crash to the limited degree I read economics news and opinion (I used to be much more interested but after forty years of waiting for the "Big Depression" which hasn't come, I've become tired.) But hoping it will happen in the next year is clearly speculative.

Bottom line is Democrats have no plan for 2018 - and therefore are likely to lose big again.

kao_hsien_chih said in reply to tv... , 04 January 2018 at 04:23 PM
Of all the components of the tax bill (many of which are problematic--but that's mostly b/c it's a tax bill, not necessarily for ideological reasons), I thought putting a lot of tax onus on wealthy bicoastals was a stroke of genius. Having said that, things are looking in a lot of mixed directions: many people are uneasy for all sorts of reasons about Trump, but the bottom line (esp on economic matters) does not look too bad, to say the least.

In many ways, actually, the overall situation looks like Bill Clinton 2.0: people had all sorts of issues with WJC--Democrats were uneasy with him and Republicans absolutely hated him. But things were looking OK or better in general and voters weren't going to punish him for nothing that was particularly off track. I see the Democrats trying some of the same tricks. Maybe even all the way to impeachment. Unless things come apart at the seams very visibly, none of them will stick on DJT.

Jack , 04 January 2018 at 04:23 PM
Sir

The stock market and financial asset prices in general drive perceptions of the strength of the economy. As long as financial assets prices remain in melt-up mode it will benefit the incumbents. While the Fed and the other major central banks are slowly reducing liquidity by either reducing the rate of growth of their balance sheet or reducing it outright as in the case of the Fed, there's no knowing when speculation peaks. The one thing that bulls should watch is the flattening of the yield curve.

turcopolier , 04 January 2018 at 05:35 PM
Jack

All that is true but as a supply sider I am inclined to think that this is nothing like a bubble. pl

turcopolier , 04 January 2018 at 05:37 PM
Greco

Bannon is an ego mad hubris driven freak. pl

Patrick Armstrong -> Greco... , 04 January 2018 at 05:39 PM
http://www.breitbart.com/radio/2018/01/04/bannon-praises-trump-potus-is-a-great-man-i-support-him-day-in-and-day-out/
To which all I can say is ???
and maybe !!!
Jack -> turcopolier ... , 04 January 2018 at 05:39 PM
Sir

Alan Greenspan famously quipped that a bubble can only be recognized after it bursts.

As you note reducing regulatory burdens and reducing taxes stimulates the economy. So we can expect improved economic performance.

Financial asset prices however, don't necessarily need an improving economy. What it needs is the perception that asset prices will increase prospectively. We have seen asset prices rise substantially after the GFC even with the weakest economic recovery since WW II. A partial explanation is the growth in liquidity by expansion of central bank balance sheets and the perception that central banks can always reflate asset prices.

The major central banks now are either contracting their balance sheet or reducing the growth rate. Increased economic activity also puts pressure on interest rates and businesses use more capital for economic activity than financial engineering. These factors will apply brakes on financial speculation. When psychology changes the smart money will start reducing exposure. What we don't know is when psychology changes and when asset prices correct.

VietnamVet , 04 January 2018 at 07:20 PM
Colonel,

Your ability to see through and clarify the opaque is amazing. If the economy stays the course and if Deplorables' lives get better; yes, Donald Trump will have seven more years in the White House. The bottom of the half full glass for Donald Trump is that he must avoid a war with Iran or North Korea, a cabal of globalists led by the richest man in the world, Jeff Bezos (owner of the Washington Post), is out to get him and his Secretary of State described him as a moron.

Keith Harbaugh , 04 January 2018 at 07:28 PM
I wish you were right but believe you are wrong.
Reasons:
1. The disastrous GOP showing in the November 2017 Virginia election.
Not only did the GOP lose all the state-wide contests,
but shockingly their control of the lower house of the VA legislature (the House of Delegates)
was cut from 66-34 to 51-49 (with some ongoing uncertainty due to recounts, etc.).
https://en.wikipedia.org/wiki/Virginia_House_of_Delegates_election,_2017
No one expected/predicted that, and it surely indicates a general dissatisfaction with the GOP brand.

2. This poll:
http://thehill.com/homenews/house/364722-poll-democrats-lead-gop-by-15-points-in-generic-2018-ballot
and similar polls.

r whitman said in reply to turcopolier ... , 04 January 2018 at 07:32 PM
so is Trump.
Matt , 04 January 2018 at 07:58 PM
https://www.epi.org/productivity-pay-gap/

George HW Bush was correct when he described Reagan's Supply-side Trickle-Down economic policy as - "Voodoo Economics"

Practically all of the gains in the economy for the last 40 years have gone to the top. It's one of the reasons why Trump was able to appeal to the suffering working-class, much like Bernie Sanders did, to win the Presidency. Unfortunately for them, they got suckered by the flim-flam con-man in the WH.

An unnecessary tax give-away to the already individually wealthy and rich corporations will do nothing to raise wages of working people, especially when the meager "tax-cut" for them expires and they are left holding the debt bag along with Republican Party calls to cut Social Security and Medicare.

Republicans don't give a shit about anything except their donor class.

TV -> turcopolier ... , 04 January 2018 at 08:00 PM
And a drinker.
I don't know him, but take a good look:
Puffy face, veins in the nose, disheveled overall look.
blue peacock said in reply to turcopolier ... , 04 January 2018 at 08:23 PM
Col. Lang

The economy can continue to improve and do even better with the recent actions of Trump & the GOP in Congress. The stock market however need not continue to rise at the rate it has over the past years.

You are correct that we don't see public participation in a frenzy as we have at the tail end of other speculative cycles. Crypto-currencies are the only asset class with that type of frenzied activity and price acceleration. We do see however price distortions - like Euro-area junk bonds yielding less than US Treasury bonds - but that can continue for some time.

Lemur , 04 January 2018 at 09:29 PM
the left is starting to burn out under the constant anticipation 'once X happens, Gronald Grumph will be gone.'

there's also a systemic tension mounting between the thin line of WASPs and Jews holding off, excuse me, 'representing' the coalition of the ascendant. If those factions of the party base gain control, they'll drive the Dems off the cliff (through alienating the whites the Dems still require to win elections). The agitprop the Dems are pushing through their sympathizers in the media regime are only serving to undermine them long term.

Ed S. , 04 January 2018 at 11:42 PM
Colonel,

I too am perplexed by the expectations of the Democratic Party in the 2018 elections. Wasn't it a mere 18 months ago that we were hearing not only of an overwhelming Presidential victory but also a likely takeover of the Senate and the remote possibility of the House as well?

A few contributing thoughts:

1) You can't beat something with nothing. The Democratic Party believes that the populace so loathes DJT that they will turn out to vote them into power to do -- well I'm not exactly sure WHAT they propose to do. The expectation of the "wave" is solely that they are not DJT. Maybe they take the Senate. But even in the best of circumstances, it's a close race.

2) Gerrymandered House districts. Several years ago I looked up the margin of victory in every Congressional race. Any race with less than a 5 percent spread between candidates was "competitive" (IOW one candidate received 48 percent and the other received 52 percent for a 4 percent spread). Roughly 40 races were "competitive". Most districts are OVERWHELMINGLY drawn to favor one party or the other -- to the degree that one party will receive 65,75, or even 80 percent of the vote. Loathing DJT doesn't change that math

3) Impeachment/25th amendment/etc. Not. Gonna. Happen. The popular media has been at Russia!! Russia!! Russia!! for 14 months but there is NO evidence of any collusion or interference.

4) The economy isn't going to crash anytime soon. The tax bill is HUGELY stimulative. Growth is accelerating. The stock market is at all time highs (maybe only matters to 20 percent -- but they are all voters). If anything, the economy may be STRONGER in 8 months, not weaker. To me, it feels like 1996, not 1999. See, for example, Jeremy Grantham ( https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/viewpoints---bracing-yourself-for-a-possible-near-term-melt-up.pdf?sfvrsn=4.

5) Marginal voters matter and there has to be something to get them to go out of the house on Election Day. "We're not Trump" isn't going to do it. Yes, I've said it twice because as far as I can tell, it's the only Democratic issue.

6) Democratic bench strength. There isn't any. They need to have appealing candidates and are taking the Jones victory in Alabama to be a sign of an impending sweep. But Jones ran against an amazingly unappealing candidate and barely squeaked out a victory. There are NO "young" Democrats in the places that matter for them to take the House.

My apologies for the long comment, Colonel. I think your absolutely right and simply wanted to add a few personal thoughts

elev8 said in reply to turcopolier ... , 05 January 2018 at 03:58 AM
That is something I really disagree with. But if the bubble bursts during the first half of this year or next year, it may still not damage Trump. It's also not clear to me that any damage to Trump would automatically translate into political benefit for the Democrats to the degree they seem to hope for. There is historical precedent for a president not being lethally wounded by a massive stock market downturn on his watch. It's from pretty far back in the past, though (Kennedy).
TonyL , 05 January 2018 at 09:33 AM
Colonel,

It is a bubble. The market is way overvalued (up there in stratosphere so to speak). Now is the time to start rebalancing your portfolio more often.

turcopolier , 05 January 2018 at 09:37 AM
TonyL

Thanks. Our portfolio is well balanced and managed by Burke and Herbert Bank and Trust. nevertheless, I do not think the markets represent a bubble. pl

David E. Solomon said in reply to Matt... , 05 January 2018 at 09:45 AM
Matt,

Amen to everything you said, but I might add that the Democrats (as well) "DON'T GIVE A SHIT ABOUT ANYTHING EXCEPT THEIR DONOR CLASS".

THAT IS ESSENTIALLY WHY THE VARIOUS INCOME STRATA IN THIS COUNTRY ARE AT EACH OTHER'S THROATS.

Huckleberry , 05 January 2018 at 10:14 AM
The J-left is trying to meme a "blue wave" into existence.

White women will be the key to this effort, so watch for a lot of 2nd wave feminism culture war stuff.

Trump, unfortunately, will likely react poorly to this, taking every piece of bait laid out for him.

But so long as he adheres to an Immigration and Infrastructure campaign, this ought to be pretty straightforward.

The Dems may indeed take the House but their chances of taking the Senate are very low this cycle.

Joe Manchin will almost certainly be vaporized in West Virginia and there are many red state Democrats who are going to have to go against the party's coastal owners when it comes to immigration.

rjj , 05 January 2018 at 10:25 AM
DES @ #26: "VARIOUS INCOME STRATA IN THIS COUNTRY ... AT EACH OTHER'S THROATS."

sounds like received opinion -- CorpsMedia's version of How-Things-Are - possibly reinforced by a personal view from within some department. Everybody else is busy holding the world together and keeping things going locally - at the moment here in the East by the neighborly clearing of snow.

outthere said in reply to turcopolier ... , 05 January 2018 at 11:01 AM
I wish you and other investors no ill, so please don't misunderstand what I am saying here.
What did you think was happening in 2008?
Were you confident then as you are now?
As for supply side economics, again I recommend reading David Stockman, he is the grandfather of that concept.
And he NOT optimistic today.
Here's a taste of Stockman's latest:

https://www.zerohedge.com/news/2017-11-26/thanksgiving-2017-david-stockman-explains-why-there-no-peace-earth

http://thehill.com/opinion/finance/365905-moynihan-was-right-the-gop-tax-giveaway-will-lead-to-safety-net-cuts

Personally I own no stocks or bonds at all, but that is a personal decision, I make no recommendations.

outthere , 05 January 2018 at 11:08 AM
more and better about Stockman
David Stockman Takes Aim at the 'Washington War Party'
Longtime contrarian continues to be a fly in the establishment's ointment.
http://www.theamericanconservative.com/articles/david-stockman-takes-aim-at-the-washington-war-party/

best of all his 2013 book,
The Great Deformation: The Corruption of Capitalism in America, a scathing indictment of the twin scourges of crony capitalism and massive governmental debt.

on WaPo and McCain and Trump in Syria:
http://original.antiwar.com/david_stockman/2017/07/30/tweet-shaking-war-party/

outthere , 05 January 2018 at 11:24 AM
just published today

quote
How did the war on Vietnam, the First Gulf War to save the Emir of Kuwait's oil wealth, the futile 17-year occupation of Afghanistan, the destruction of Iraq, the double-cross of Khadafy after he gave up his nukes, the obliteration of much of civil society and economic life in Syria, the US-supplied Saudi genocide in Yemen and the Washington sponsored coup and civil war on Russia's doorstep in Ukraine, to name just a few instances of Washington's putative "world leadership", have anything to do with preserving "order" on the planet?

And exactly how did the "benefits" of these serial instigations of mayhem outweigh the "burdens" to America's taxpayers – to say nothing of the terminal costs to the dead and maimed citizens in their millions who had the misfortune to be domiciled in these traumatized lands?

Likewise, have the refugees who have been flushed out of Syria, Libya, Yemen, Iraq and elsewhere in the middle east by Washington's wars done anything for the peace and stability of Europe, where Washington's victims have desperately fled in their millions?
. . .
So when candidate Trump said the Iraq invasion was a stupid mistake, that Hillary's war on Khadafy was misbegotten, that he would like to cooperate with Putin on pacifying Syria and that NATO was obsolete, he was actually calling into question the fundamental predicates of the American Imperium.

And that gets us to the Russian threat bogeyman, the War Party's risible demonization of Vladimir Putin and the cocked-up narrative about the Kremlin's meddling in the 2016 election.
. . .
At the end of the day, we are supposed to believe that a country with a puny $1.3 trillion GDP, which is just 7% of the US' $19.5 trillion GDP, and which consists largely of aged hydrocarbon provinces, endless wheat fields, modest industrial capacities and a stagnant Vodka-favoring workforce, is actually a threat to America's security.

And we are also supposed to fear the military capacity of a country that has no blue water Navy to speak of and no conventional airlift and air-attack capacity which could remotely threaten the New Jersey shores, and that spends less in a full year than the Pentagon consumes every 35 days.
endquote

http://original.antiwar.com/David_Stockman/2018/01/04/war-partys-desperate-assault-america-first/

Valissa said in reply to Ed S.... , 05 January 2018 at 11:37 AM
Great comment Ed! (#22)

To your item 6 I add the following.

The next generation of Democratic leaders is, um, nonexistent https://www.washingtonpost.com/news/the-fix/wp/2016/11/16/the-next-generation-of-democratic-leaders-is-um-nonexistent/

Retirements shine spotlight on GOP term limits for chairs http://thehill.com/homenews/house/359044-retirements-shines-spotlight-on-gop-term-limits-for-chairs
The surprise retirements of several veteran Republicans are reigniting a debate about the GOP's self-imposed term limits for committee chairs. Some argue that term limits create a brain drain in Congress, with the most experienced committee leaders more inclined to head for the exits once they're done holding a gavel. But while many Republicans acknowledge the potential downsides to limiting chairmanships, they maintain that it's far better than the alternative facing their Democratic colleagues: frustration about not being able to rise in the ranks.

"You can certainly make the argument about keeping people around longer, about the value of institutional knowledge," Rep. Tom Cole (R-Okla.), chairman of a House Appropriations subcommittee, told The Hill. "But the reality is, for most of our members, they're willing to run those kinds of risks in order to have the potential for upward mobility."

The term-limit policy, put in place by former Speaker Newt Gingrich (R-Ga.) in 1994, was designed to keep the party from growing stale by regularly injecting new blood and fresh ideas into the mix. The term limits have offered an opportunity for younger members to climb the leadership ladder far more quickly than if the rules weren't in place. Lawmakers can get a waiver from the rules, though they are rarely granted. The thinking is that if a chairman can't achieve major policy goals within six years, then it's time to let someone else give it a try.

Discontent has been brewing among rank-and-file Democrats, who have been unable to crack the leadership ranks and feel shut out of important decisionmaking. The frustration in the caucus, and concern about the future of the party, has only grown since last year's Election Day drubbing. "If you don't have term limits, people stay forever. That's what you're seeing on the Democratic side," Mackowiak said. "They don't give the young and up-and-coming members that same leadership opportunities. There's nowhere to go." There have been some past efforts by Democrats to impose term limits on committee leaders, but powerful groups like the Congressional Black Caucus (CBC) have remained opposed to the idea, arguing that seniority is the best way to ensure that their members can move up in the ranks.
--------------

Looking at the deep structural problems the Dems have, it is clear they have some major reorganizing to do if they want to start winning elections. The Republicans actually have a 50 state plan. They appear to know how to strategize better than their opponents. That's why they have so many governorships and majorities in so many state congresses.

Can't find the article just now, but another problem the Dems have is that the leadership refuses to listen to the red state democrats as to how to win more elections in red states. The arrogance combined with the ineffectiveness of thy Dem leadership never cease to amaze me.

Howard Dean was right (though maybe not the right person for the job) but the party refused to listen to him. Just look at the people who have headed the Democratic party in recent years. In addition, the base has been rendered impotent by the top down authoritarian propagandist fashion by which the Democrat party runs itself now. [Note: I refuse to call them the Democratic party anymore because they aren't.] After all, the Dems are just as much of the plutocratic oligarchy as the Repubs are.

I wish I dared tell my friends (all liberal Dems) that if they took even 50% of the time & energy now spent on hating Trump and put that into improving their party or into volunteering for a cause they care about and can have some impact on, then they might be able to make the world a tiny bit better of a place. One friend did this on her own. She lives in Florida and decided to take up some local Dem issues like getting ex-felons the right to vote. She goes out in grass roots fashion and gets signatures, etc., despite having a 50+ hour a week job.

turcopolier , 05 January 2018 at 11:37 AM
outthere

I am happy that you mean no ill will to me for being an investor. I have always been that while trying to emulate Robert Edward Lee who always required his wealthy wife to live on his army pay and still save money. We rode out the the great wall street disaster with steadfast hearts and would do so again. Do you have a treasure chest full of Golden Grickels buried somewhere? BTW Qathafy had no nuclear weapons program. What he had was a quiescent chemical weapons program with his two plants shut down and a warehouse or two full of still crated equipment that would have been useful in a nuke weapons program if the Libyans had known what to do with it. GWB Bush and his clowns built the image of that up, used him as an example of how well things could go if you surrendered to the US and then the US betrayed him. I loathed Qathafy. pl

[Jan 05, 2018] Trump the Eradicator, by Eric Margolis - The Unz Review

Jan 05, 2018 | www.unz.com

Trump's campaign to return manufacturing to America and repatriate profits held overseas makes good business sense. The ravaging of America's once mighty industrial base to boost corporate profits was a crime against the nation by unscrupulous Wall Street bankers and short-sighted, greedy CEO's.

The basis of industrial power is the ability to make products people use. Shockingly, US manufacturing has shrunk to only 14% of GDP. Today, America's primary business has become finance, the largely non-productive act of paper-passing that only benefits a tiny big city parasitic elite.

Trump_vs_deep_state is a natural reaction to the self-destruction of America's industrial base. But the president's mania to wreck international trade agreements and impose tariff barriers will result in diminishing America's economic and political influence around the globe.

Access to America's markets is in certain ways a more powerful political tool than deployment of US forces around the globe. Lessening access to the US markets will inevitably have negative repercussions on US exports.

Trump has been on a rampage to undo almost every positive initiative undertaken by the Obama administration, even though many earned the US applause and respect around the civilized world. The president has made trade agreements a prime target. He has targeted trade pacts involving Mexico, Canada, the EU, Japan, China and a host of other nations by claiming they are unfair to American workers. However, a degree of wage unfairness is the price Washington must pay for bringing lower-cost nations into America's economic orbit.

This month, the Trump administration threatened new restrictions against 120 US trade partners who may now face much higher tariffs on their exports to the US.

Trump is in a hurry because he fears he may not be re-elected. He is trying to eradicate all vestiges of the Obama presidency with the ruthlessness and ferocity of Stalinist officials eradicating every trace of liquidated commissars, even from official photos. America now faces its own era of purges as an uneasy world watches.

[Jan 02, 2018] Who Is the Real Enemy by Philip Giraldi

Highly recommended!
Money quote: "And even given that, I would have to qualify the nature of the threats. Russia and China are best described as adversaries or competitors rather than enemies as they have compelling interests to avoid war, even if Washington is doing its best to turn them hostile. Neither has anything to gain and much to lose by escalating a minor conflict into something that might well start World War 3. Indeed, both have strong incentives to avoid doing so, which makes the actual threat that they represent more speculative than real. And, on the plus side, both can be extremely useful in dealing with international issues where Washington has little or no leverage, to include resolving the North Korea problem and Syria, so the US has considerable benefits to be gained by cultivating their cooperation."
Notable quotes:
"... And even given that, I would have to qualify the nature of the threats. Russia and China are best described as adversaries or competitors rather than enemies as they have compelling interests to avoid war, even if Washington is doing its best to turn them hostile. Neither has anything to gain and much to lose by escalating a minor conflict into something that might well start World War 3. Indeed, both have strong incentives to avoid doing so, which makes the actual threat that they represent more speculative than real. And, on the plus side, both can be extremely useful in dealing with international issues where Washington has little or no leverage, to include resolving the North Korea problem and Syria, so the US has considerable benefits to be gained by cultivating their cooperation. ..."
"... Cohen-Watnick is thirty years old and has little relevant experience for the position he holds, senior director for intelligence on the National Security Council. But his inexperience counts for little as he is good friend of son-in-law Jared Kushner. He has told the New York Times ..."
"... Both Cohen-Watnick and Harvey share the neoconservative belief that the Iranians and their proxies in Syria and Iraq need to be confronted by force, an opportunity described by Foreign Policy ..."
"... What danger to the U.S. or its actual treaty allies an Iranian influenced land corridor would constitute remains a mystery but there is no shortage of Iran haters in the White House. Former senior CIA analyst Paul Pillar sees "unrelenting hostility from the Trump administration" towards Iran and notes "cherry-picking" of the intelligence to make a case for war, similar to what occurred with Iraq in 2002-3. And even though Secretary of Defense James Mattis and National Security Advisor H.R. McMaster have pushed back against the impulsive Cohen-Watnick and Harvey, their objections are tactical as they do not wish to make U.S. forces in the region vulnerable to attacks coming from a new direction. Otherwise they too consider Iran as America's number one active enemy and believe that war is inevitable. Donald Trump has unfortunately also jumped directly into the argument on the side of Saudi Arabia and Israel, both of which would like to see Washington go to war with Tehran on their behalf. ..."
"... You forgot the third significant potential threat from a friendly nation, i.e. Israel. Israel will sabotage any effort to normallize relations with Russia or even Iran. They will resort to false flag operations to start a war with Iran. ..."
"... The problem with this White House, as well as the previous ones, is that none of the so-called experts really understand the Middle East. The US is not interested in having friendly relations with all nations. All her efforts are towards one goal, the world domination. Even if President Trump wanted to normalize relations with Russia, the MSM, the democrats, as well as, his republican opponents will not let him. ..."
"... That is why the constan drumbeat of Russia's meddling in the 2016 election despite the fact that no proof has been given so far. Similarly, the "Iran has nuclear weapons" narrative is constantly repeated, the reports by IAEA and the 17 Intelligence Agencies to the contrary not withstanding. ..."
"... The elevation of Muhammad bin Salman to the Crown Prince position will only make the Middle East situation worse. Israel will be able to manipulate him much more easily than the old guard. ..."
"... The titanic elephant in the room -- that US foreign policy is not governed by "rationality" but by "special interests" seems .missing ..."
"... Trump has no control of most government functions, particularly foreign affairs. The Deep State takes care of that for him. The Deep State has been calling the shots for decades and all Presidents who weren't assassinated have complied. Democracies never work and ours quit long ago. ..."
"... I fully agree that attacking Iran would be yet another disaster but I don't understand why Saudi Arabia is portrayed as an 'enemy', the 'real' one, no less, in alt-media circles like this. I mean let's be honest with ourselves. KSA is the definition of a vassal state. Has been so since the state established established relations with the USA in the 1940s and the status was confirmed during the 1960s under King Faisal. Oil for security. Why pretend that they have any operational clearance from the US? ..."
"... The BIGGEST threat to the USA is from within, as we are nothing more than an occupied colony of Apartheid Israel, paying that bastard state tributes each year in the form of free money and weapons, political backing at the UN, and never tire of fighting her wars of conquest. ..."
"... The also have a choke-hold on Congress, which is always eager to wag their tail and hope their Yid Overlord gives them a treat and not a dressing-down in the Jew MSM, which is a career killer. ..."
"... Israel's current "agreements" and its "kowtowing" to Saudi Arabia speaks VOLUMES. Once again, Israel is about to get others to do their "dirty work" for them. ..."
"... There's no alternative to Saudi royal family rule of the peninsula. Who's there to replace them? Any other group, assuming there might be one somewhere waiting in the wings, would probably be anti-American and not as compliant as the Saudis. They've spent gigantic sums in the endless billions buying military equipment from the US, weapons they can't even fully use, as a way of making themselves indispensable customers. Many other billions of petrodollars find their way westward into our financial systems. They collaborate with the US in various schemes throughout the Muslim world using their intelligence services and money in furtherance of US goals. ..."
"... Mattis still seems stuck with his Iran obsession. Shame I thought he had the intellectual curiosity to adapt. Trump has good instincts, I hope Tillerson comes to the fore, and Bannon stays influential. ..."
"... Iran is US enemy #1 not only because it is against that country smaller than New Jersey with less people (Israel) but also because Iran has been a model for other countries to follow because of its intransigence to US oppression and attacks, financial political and cyber. As the world becomes multi-polar, Iran's repeated wise reactions to the world hegemon have been an inspiration to China and others to go their own way. The US can't stand that. ..."
"... Contrary to the popular view, Wahabism is necessary to keep the local population under control. Particularly the minority Shia population who live along the eastern coast, an area, which incidentally also has the all the oil reserves. USA fully understands this. Which is why they not only tolerated Wahabism, but strongly promoted it during Afghan jihad. The operation was by and large very successful btw. It was only during the '90s when religion became the new ideology for the resistance against the empire across the Muslim world. Zero surprise there because the preceding ideology, radical left wing politics was completely defeated. Iran became the first country in this pattern. The Iranian left was decimated by the Shah, another vassal. So the religious right became the new resistance. ..."
"... And as far as the KSA is considered, Wahabi preachers aren't allowed to attack the USA anyway. If any individual preacher so much as makes a squeak, he will be bent over a barrel. There won't be any "coming down very hard on Saudi Arabia" because USA already owns that country. ..."
"... The British Empire 'made' the House of Saud. Thinking it wise to use Wahhabism to control Shia Islam is like thinking it wise to use blacks to control the criminal tendencies of Mexicans. ..."
Jul 11, 2017 | www.unz.com

It is one of the great ironies that the United States, a land mass protected by two broad oceans while also benefitting from the world's largest economy and most powerful military, persists in viewing itself as a potential victim, vulnerable and surrounded by enemies. In reality, there are only two significant potential threats to the U.S. The first consists of the only two non-friendly countries – Russia and China – that have nuclear weapons and delivery systems that could hit the North American continent and the second is the somewhat more amorphous danger represented by international terrorism.

And even given that, I would have to qualify the nature of the threats. Russia and China are best described as adversaries or competitors rather than enemies as they have compelling interests to avoid war, even if Washington is doing its best to turn them hostile. Neither has anything to gain and much to lose by escalating a minor conflict into something that might well start World War 3. Indeed, both have strong incentives to avoid doing so, which makes the actual threat that they represent more speculative than real. And, on the plus side, both can be extremely useful in dealing with international issues where Washington has little or no leverage, to include resolving the North Korea problem and Syria, so the US has considerable benefits to be gained by cultivating their cooperation.

Also, I would characterize international terrorism as a faux threat at a national level, though one that has been exaggerated through the media and fearmongering to such an extent that it appears much more dangerous than it actually is. It has been observed that more Americans are killed by falling furniture than by terrorists in a year but terrorism has a particularly potency due to its unpredictability and the fear that it creates. Due to that fear, American governments and businesses at all levels have been willing to spend a trillion dollars per annum to defeat what might rationally be regarded as a relatively minor problem.

So if the United States were serious about dealing with or deflecting the actual threats against the American people it could first of all reduce its defense expenditures to make them commensurate with the actual threat before concentrating on three things. First, would be to establish a solid modus vivendi with Russia and China to avoid conflicts of interest that could develop into actual tit-for-tat escalation. That would require an acceptance by Washington of the fact that both Moscow and Beijing have regional spheres of influence that are defined by their interests. You don't have to like the governance of either country, but their national interests have to be appreciated and respected just as the United States has legitimate interests within its own hemisphere that must be respected by Russia and China.

Second, Washington must, unfortunately, continue to spend on the Missile Defense Agency, which supports anti-missile defenses if the search for a modus vivendi for some reason fails. Mutual assured destruction is not a desirable strategic doctrine but being able to intercept incoming missiles while also having some capability to strike back if attacked is a realistic deterrent given the proliferation of nations that have both ballistic missiles and nukes.

Third and finally, there would be a coordinated program aimed at international terrorism based equally on where the terror comes from and on physically preventing the terrorist attacks from taking place. This is the element in national defense that is least clear cut. Dealing with Russia and China involves working with mature regimes that have established diplomatic and military channels. Dealing with terrorist non-state players is completely different as there are generally speaking no such channels.

It should in theory be pretty simple to match threats and interests with actions since there are only a handful that really matter, but apparently it is not so in practice. What is Washington doing? First of all, the White House is deliberately turning its back on restoring a good working relationship with Russia by insisting that Crimea be returned to Kiev, by blaming Moscow for the continued unrest in Donbas, and by attacking Syrian military targets in spite of the fact that Russia is an ally of the legitimate government in Damascus and the United States is an interloper in the conflict. Meanwhile congress and the media are poisoning the waters through their dogged pursuit of Russiagate for political reasons even though nearly a year of investigation has produced no actual evidence of malfeasance on the part of U.S. officials and precious little in terms of Moscow's alleged interference.

Playing tough to the international audience has unfortunately become part of the American Exceptionalism DNA. Upon his arrival in Warsaw last week, Donald Trump doubled down on the Russia-bashing, calling on Moscow to "cease its destabilizing activities in Ukraine and elsewhere and its support for hostile regimes including Syria and Iran." He then recommended that Russia should "join the community of responsible nations in our fight against common enemies and in defense of civilization itself."

The comments in Warsaw were unnecessary, even if the Poles wanted to hear them, and were both highly insulting and ignorant. It was not a good start for Donald's second overseas trip, even though the speech has otherwise been interpreted as a welcome defense of Western civilization and European values. Trump also followed up with a two hour plus discussion with President Vladimir Putin in which the two apparently agreed to differ on the alleged Russian hacking of the American election. The Trump-Putin meeting indicated that restoring some kind of working relationship with Russia is still possible, as it is in everyone's interest to do so.

Fighting terrorism is quite another matter and the United States approach is the reverse of what a rational player would be seeking to accomplish. The U.S. is rightly assisting in the bid to eradicate ISIS in Syria and Iraq but it is simultaneously attacking the most effective fighters against that group, namely the Syrian government armed forces and the Shiite militias being provided by Iran and Hezbollah. Indeed, it is becoming increasingly clear that at least some in the Trump Administration are seeking to use the Syrian engagement as a stepping stone to war with Iran.

As was the case in the months preceding the ill-fated invasion of Iraq in 2003, all buttons are being pushed to vilify Iran. Recent reports suggest that two individuals in the White House in particular have been pressuring the Trump administration's generals to escalate U.S. involvement in Syria to bring about a war with Tehran sooner rather than later. They are Ezra Cohen-Watnick and Derek Harvey, reported to be holdovers from the team brought into the White House by the virulently anti-Iranian former National Security Adviser Michael Flynn.

Cohen-Watnick is thirty years old and has little relevant experience for the position he holds, senior director for intelligence on the National Security Council. But his inexperience counts for little as he is good friend of son-in-law Jared Kushner. He has told the New York Times that "wants to use American spies to help oust the Iranian government," a comment that reflects complete ignorance, both regarding Iran and also concerning spy agency capabilities. His partner in crime Harvey, a former military officer who advised General David Petraeus when he was in Iraq, is the NSC advisor on the Middle East.

Both Cohen-Watnick and Harvey share the neoconservative belief that the Iranians and their proxies in Syria and Iraq need to be confronted by force, an opportunity described by Foreign Policy magazine as having developed into "a pivotal moment that will determine whether Iran or the United States exerts influence over Iraq and Syria." Other neocon promoters of conflict with Iran have described their horror at a possible Shiite "bridge" or "land corridor" through the Arab heartland, running from Iran itself through Iraq and Syria and connecting on the Mediterranean with Hezbollah in Lebanon.

What danger to the U.S. or its actual treaty allies an Iranian influenced land corridor would constitute remains a mystery but there is no shortage of Iran haters in the White House. Former senior CIA analyst Paul Pillar sees "unrelenting hostility from the Trump administration" towards Iran and notes "cherry-picking" of the intelligence to make a case for war, similar to what occurred with Iraq in 2002-3. And even though Secretary of Defense James Mattis and National Security Advisor H.R. McMaster have pushed back against the impulsive Cohen-Watnick and Harvey, their objections are tactical as they do not wish to make U.S. forces in the region vulnerable to attacks coming from a new direction. Otherwise they too consider Iran as America's number one active enemy and believe that war is inevitable. Donald Trump has unfortunately also jumped directly into the argument on the side of Saudi Arabia and Israel, both of which would like to see Washington go to war with Tehran on their behalf.

The problem with the Trump analysis is that he has his friends and enemies confused. He is actually supporting Saudi Arabia, the source of most of the terrorism that has convulsed Western Europe and the United States while also killing hundreds of thousands of fellow Muslims. Random terrorism to kill as many "infidels and heretics" as possible to create fear is a Sunni Muslim phenomenon, supported financially and doctrinally by the Saudis. To be sure, Iran has used terror tactics to eliminate opponents and select targets overseas, to include several multiple-victim bombings, but it has never engaged in anything like the recent series of attacks in France and Britain. So the United States is moving seemingly inexorably towards war with a country that itself constitutes no actual terrorist threat, unless it is attacked, in support of a country that very much is part of the threat and also on behalf of Israel, which for its part would prefer to see Americans die in a war against Iran rather that sacrificing its own sons and daughters.

Realizing who the real enemy actually is and addressing the actual terrorism problem would not only involve coming down very hard on Saudi Arabia rather than Iran, it would also require some serious thinking in the White House about the extent to which America's armed interventions all over Asia and Africa have made many people hate us enough to strap on a suicide vest and have a go. Saudi financing and Washington's propensity to go to war and thereby create a deep well of hatred just might be the principal causative elements in the rise of global terrorism. Do I think that Donald Trump's White House has the courage to take such a step and change direction? Unfortunately, no.

Jake, July 11, 2017 at 4:12 am GMT

The title of the article tells it all.

Saudi Arabia is THE worst nation in the Middle East.

Why does the US follow along blindly? Well, it is a WASP thing. We are the new Brit Empire. By the height of the Victorian era, virtually all English Elites were philoSemitic. Roughly half of the UK WASP Elite philoSemitism was pro-Jewish and half was pro-Arabic/Islamic. And by the time of WW1, the English Elite pro-Arabic/Islamic faction came to adore the house of Saud. So, our foreign policy is merely WASP culture continuing to ruin most of the rest of the world, including all the whites ruled by WASP Elites.

Priss Factor, Website , July 11, 2017 at 4:41 am GMT
US foreign policy is simple. Zionist Emperor goes thumbs up or thumbs down on whatever nation based on his own interests. That's about it.

Priss Factor, July 11, 2017 at 4:49 am GMT

In reality, there are only two significant potential threats to the U.S. The first consists of the only two non-friendly countries – Russia and China – that have nuclear weapons and delivery systems that could hit the North American continent and the second is the somewhat more amorphous danger represented by international terrorism.

No, the only threats are the following three:

Too many Meso-Americans invading from the border. These people have totally changed the SW and may drastically alter parts of US as well. This is an invasion. Meso-Americans are lackluster, but Too Many translates into real power, especially in elections.

The other threat is Hindu-Indian. Indians are just itching to unload 100s of millions of their kind to Anglo nations. Unlike Chinese population that is plummeting, Indian population is still growing.

The other threat, biggest of all, is the Negro. It's not Russian missiles or Chinese troops that turned Detroit into a hellhole. It is Negroes. And look at Baltimore, New Orleans, Selma, Memphis, Oakland, St. Louis, South Side Chicago, etc.

Afromic Bomb is more hellish than atomic bomb. Compare Detroit and Hiroshima.

Also, even though nukes are deadly, they will likely never be used. They are for defensive purposes only. The real missiles that will destroy the West is the Afro penis. US has nukes to destroy the world, but they haven't been used even during peak of cold war. But millions of Negro puds have impregnanted and colonized white wombs to kill white-babies-that-could-have-been and replaced them with mulatto Negro kids who will turn out like Colin Kapernick.

http://stuffblackpeopledontlike.blogspot.com/2017/07/pattern-recognition-great-sin-than.html

The real missile gap is the threat posed by negro dong on white dong. The negro dong is so potent that even Japanese women are going Negroid and having kids with Negro men and raising these kids as 'Japanese' to beat up real Japanese. So, if Japan with few blacks is turning like this, imagine the threat posed by Negroes on whites in the West.

Look at YouTube of street life and club life in Paris and London. Negro missiles are conquering the white race and spreading the savage genes.

Look how Polish women welcomed the Negro missile cuz they are infected with jungle fever. ACOWW will be the real undoing of the West.

Replies: @Z-man

Besides what Priss Factor said above the following is to be reinforced with every real American man, woman and child.

Israel , which for its part would prefer to see Americans die in a war against Iran rather that sacrificing its own sons and daughters.
Israel, the REAL enemy! , @K India is looking to unload hindus to U.S? Quite the opposite. India is 'losing' its best brains to the U.S so its trying to attract them back to their country. For eg: The chief- architect of IBM's Watson is a Hindu Indian and so is the head of IBM's neuro-morphic computing. These people are advancing western technology.... civilian and also defense (IBM is collaborating with the American defense organization DARPA) instead of helping India achieve technological competence. And most of other super intelligent Indians also India is losing them to the west.

(i dont hate the west for doing that. Any country in amercia's place would have done the same. It is india's job to keep its best brains working for it and not for others. And india is trying its best to do that albeit unsuccessfully.)

Wally, July 11, 2017 at 5:02 am GMT

The US govt. does what "that shitty little country" tells them to do.

The True Cost of Parasite Israel. Forced US taxpayers money to Israel goes far beyond the official numbers. http://www.theamericanconservative.com/articles/the-true-cost-of-israel/

How to Bring Down the Elephant in the Room: http://www.unz.com/tsaker/how-to-bring-down-the-elephant-in-the-room/

RobinG, July 11, 2017 at 5:49 am GMT

100 Words #UNRIG adds AMERICA FIRST, NOT ISRAEL to Agenda. ."A.I.P.A.C.. you're outta business!"

Due to slanderous attacks by a Mossad internet psy-op, Steele now prioritizes Israeli malign influence on US. Also, check out Cynthia McKinney's twitter.

#UNRIG – Robert David Steele Weekly Update

@Durruti Nice action approach to cure ills of society.

Enclosing copy of flier we have distributed - with a similar approach at a cure.

*Flier distributed is adjusted & a bit more attractive (1 sheet - both sides).

The key is to Restore the Republic, which was definitively destroyed on November 22, 1963.

Feel free to contact.

Use this, or send me a note by way of a response.

For THE RESTORATION OF THE REPUBLIC

"We hold these truths to be self-evident: that all men are created equal governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it and to institute new government, laying its foundation on such principles "

The above is a portion of the Declaration of Independence, written by Thomas Jefferson.

We submit the following facts to the citizens of the United States.

The government of the United States has been a Totalitarian Oligarchy since the military financial aristocracy destroyed the Democratic Republic on November 22, 1963 , when they assassinated the last democratically elected president, John Fitzgerald Kennedy , and overthrew his government. All following governments have been unconstitutional frauds. Attempts by Robert Kennedy and Martin Luther King to restore the Republic were interrupted by their murder.

A subsequent 12 year colonial war against Vietnam , conducted by the murderers of Kennedy, left 2 million dead in a wake of napalm and burning villages.

In 1965, the U.S. government orchestrated the slaughter of 1 million unarmed Indonesian civilians.

In the decade that followed the CIA murdered 100,000 Native Americans in Guatemala .

In the 1970s, the Oligarchy began the destruction and looting of America's middle class, by encouraging the export of industry and jobs to parts of the world where workers were paid bare subsistence wages. The 2008, Bailout of the Nation's Oligarchs cost American taxpayers $13trillion. The long decline of the local economy has led to the political decline of our hard working citizens, as well as the decay of cities, towns, and infrastructure, such as education.

The impoverishment of America's middle class has undermined the nation's financial stability. Without a productive foundation, the government has accumulated a huge debt in excess of $19trillion. This debt will have to be paid, or suffered by future generations. Concurrently, the top 1% of the nation's population has benefited enormously from the discomfiture of the rest. The interest rate has been reduced to 0, thereby slowly robbing millions of depositors of their savings, as their savings cannot stay even with the inflation rate.

The government spends the declining national wealth on bloody and never ending military adventures, and is or has recently conducted unconstitutional wars against 9 nations. The Oligarchs maintain 700 military bases in 131 countries; they spend as much on military weapons of terror as the rest of the nations of the world combined. Tellingly, more than half the government budget is spent on the military and 16 associated secret agencies.

The nightmare of a powerful centralized government crushing the rights of the people, so feared by the Founders of the United States, has become a reality. The government of Obama/Biden, as with previous administrations such as Bush/Cheney, and whoever is chosen in November 2016, operates a Gulag of dozens of concentration camps, where prisoners are denied trials, and routinely tortured. The Patriot Act and The National Defense Authorizations Act , enacted by both Democratic and Republican factions of the oligarchy, serve to establish a legal cover for their terror.

The nation's media is controlled, and, with the school systems, serve to brainwash the population; the people are intimidated and treated with contempt.

The United States is No longer Sovereign

The United States is no longer a sovereign nation. Its government, The Executive, and Congress, is bought, utterly owned and controlled by foreign and domestic wealthy Oligarchs, such as the Rothschilds, Rockefellers, and Duponts , to name only a few of the best known.

The 2016 Electoral Circus will anoint new actors to occupy the same Unconstitutional Government, with its controlling International Oligarchs. Clinton, Trump, whomever, are willing accomplices for imperialist international murder, and destruction of nations, including ours.

For Love of Country

The Restoration of the Republic will be a Revolutionary Act, that will cancel all previous debts owed to that unconstitutional regime and its business supporters. All debts, including Student Debts, will be canceled. Our citizens will begin, anew, with a clean slate.

As American Founder , Thomas Jefferson wrote, in a letter to James Madison:

"I set out on this ground, which I suppose to be self evident, 'that the earth belongs in usufruct to the living':"

"Then I say the earth belongs to each of these generations, during it's course, fully, and in their own right. The 2d. Generation receives it clear of the debts and incumberances of the 1st. The 3d of the 2d. and so on. For if the 1st. Could charge it with a debt, then the earth would belong to the dead and not the living generation."

Our Citizens must restore the centrality of the constitution, establishing a less powerful government which will ensure President Franklin Roosevelt's Four Freedoms , freedom of speech and expression, freedom to worship God in ones own way, freedom from want "which means economic understandings which will secure to every nation a healthy peace time life for its inhabitants " and freedom from fear "which means a world-wide reduction of armaments "

Once restored: The Constitution will become, once again, the law of the land and of a free people. We will establish a government, hold elections, begin to direct traffic, arrest criminal politicians of the tyrannical oligarchy, and, in short, repair the damage of the previous totalitarian governments.

For the Democratic Republic!
Sons and Daughters of Liberty
florent.defeu@yahoo.com

MEexpert, July 11, 2017 at 5:50 am GMT

In reality, there are only two significant potential threats to the U.S. The first consists of the only two non-friendly countries – Russia and China – that have nuclear weapons and delivery systems that could hit the North American continent and the second is the somewhat more amorphous danger represented by international terrorism.

You forgot the third significant potential threat from a friendly nation, i.e. Israel. Israel will sabotage any effort to normallize relations with Russia or even Iran. They will resort to false flag operations to start a war with Iran.

The problem with this White House, as well as the previous ones, is that none of the so-called experts really understand the Middle East. The US is not interested in having friendly relations with all nations. All her efforts are towards one goal, the world domination. Even if President Trump wanted to normalize relations with Russia, the MSM, the democrats, as well as, his republican opponents will not let him.

That is why the constan drumbeat of Russia's meddling in the 2016 election despite the fact that no proof has been given so far. Similarly, the "Iran has nuclear weapons" narrative is constantly repeated, the reports by IAEA and the 17 Intelligence Agencies to the contrary not withstanding.

The elevation of Muhammad bin Salman to the Crown Prince position will only make the Middle East situation worse. Israel will be able to manipulate him much more easily than the old guard.

jilles dykstra, July 11, 2017 at 6:59 am GMT
The western world is dependent on oil, especially ME oil. Saudi Arabia was made the USA's main oil supplier at the end of 1944. The Saud dynasty depends on the USA. That the Saudis would sponsor terrorism, why would they ? And which terrorism is Muslim terrorism ?

Sept 11 not, Boston not, Madrid and London very questionably. We then are left with minor issues, the Paris shooting the biggest. That Saudi Arabia is waging war in Yemen certainly is with USA support. The Saudi army does what the USA wants them to do.

Ludwig Watzal > Website , July 11, 2017 at 7:01 am GMT
Mr. Giraldi, you forgot to mention Israel as one of America's biggest liabilities besides Saudi Arabia. But with such amateur dramatics in the White House and on the Security Council, the US is destined for war but only against the wrong enemy such as Iran. If the Saudis and the right-wing Netanyahu regime want to get after Iran they should do it alone. They surely will get a bloody nose. Americans have shed enough blood for these rascal regimes. President Trump should continue with his rapprochement towards Russia because both nation states have more in common than expected.
animalogic, July 11, 2017 at 7:32 am GMT
I'm a little disappointed in this article. Not that it's a bad article per se: perfectly rational, reasonable, academic even. But unfortunately, it's simply naive.

"Realizing who the real enemy actually is and addressing the actual terrorism problem would not only involve coming down very hard on Saudi Arabia rather than Iran, it would also require some serious thinking in the White House about the extent to which America's armed interventions all over Asia and Africa have made many people hate us enough to strap on a suicide vest and have a go."

Realize who the real enemy is ? Come down hard on the Saud's ? No -- really ?

The titanic elephant in the room -- that US foreign policy is not governed by "rationality" but by "special interests" seems .missing. Israel, the Saudi's themselves, the MIC & so on & so forth ARE the special interests who literally "realise" US Policy.

Paul, July 11, 2017 at 7:44 am GMT

Well, the real enemy of the people are the real terrorists behind the scenes. Those who planned the 9/11 false flag. Those who sent the Anthrax letters to resisting congress members. Those who pre-planned the wars of aggression in the whole middle east.

So any appeal to the "White House" is almost pointless since the White House is one element of the power structure captured by the war-criminal lunatics.

To change something people in the US should at first stop buying their war criminal lying mass media.

Then they should stop supporting ANY foreign intervention by the US and should stop believing any of the preposterous lies released by the media, the state dept., or any other neocon outlet.

Actually Trump was probably elected because he said he was anti-intervention and anti-media. But did it help?

The US needs mass resistance (demonstrations, strikes, boycotts, non-participation, sit-ins, grass-root information, or whatever) against their neocon/zionist/mafia/cia power groups or nothing will change.

We need demonstrations against NATO, against war, against false flag terrorism, against using terrorists as secret armies, against war propaganda!

B.t.w. Iran has always been one of the main goals. Think of it: Why did the US attack Afghanistan and Iraq? What have those two countries in common? (Hint: a look on the map helps to answer this question.)

Replies:

@Wizard of Oz

I am beginning to get interested in why some people are sure 9/11 was a false flag affair covered up by a lot of lies. So may I try my opening question on you. How much, if any of it, have you read of the official 9/11 commission report? ,

Realist, July 11, 2017 at 8:24 am GMT

"The White House is targeting Iran but should instead focus on Saudi Arabia"

Trump has no control of most government functions, particularly foreign affairs. The Deep State takes care of that for him. The Deep State has been calling the shots for decades and all Presidents who weren't assassinated have complied. Democracies never work and ours quit long ago.

Chad, July 11, 2017 at 8:28 am GMT
I fully agree that attacking Iran would be yet another disaster but I don't understand why Saudi Arabia is portrayed as an 'enemy', the 'real' one, no less, in alt-media circles like this. I mean let's be honest with ourselves. KSA is the definition of a vassal state. Has been so since the state established established relations with the USA in the 1940s and the status was confirmed during the 1960s under King Faisal. Oil for security. Why pretend that they have any operational clearance from the US?

Contrary to the popular view, Wahabism is necessary to keep the local population under control. Particularly the minority Shia population who live along the eastern coast, an area, which incidentally also has the all the oil reserves.

USA fully understands this. Which is why they not only tolerated Wahabism, but strongly promoted it during Afghan jihad. The operation was by and large very successful btw.

It was only during the '90s when religion became the new ideology for the resistance against the empire across the Muslim world. Zero surprise there because the preceding ideology, radical left wing politics was completely defeated. Iran became the first country in this pattern. The Iranian left was decimated by the Shah, another vassal. So the religious right became the new resistance.

And as far as the KSA is considered, Wahabi preachers aren't allowed to attack the USA anyway. If any individual preacher so much as makes a squeak, he will be bent over a barrel. There won't be any "coming down very hard on Saudi Arabia" because USA already owns that country.

So what's the answer? Well, props to Phillip as he understood – "it would also require some serious thinking in the White House about the extent to which America's armed interventions all over Asia and Africa have made many people hate us enough to strap on a suicide vest and have a go."

Bingo.

Replies:

@Jake

Your analysis starts too late. The US supports Wahhabism and the House of Saud because the pro-Arabic/Islamic English Elites of 1910 and 1920 and 1935 supported Wahhabism and the House of Saud.

The British Empire 'made' the House of Saud,

Thinking it wise to use Wahhabism to control Shia Islam is like thinking it wise to use blacks to control the criminal tendencies of Mexicans.

Anonymous, July 11, 2017 at 9:33 am GMT

@Priss Factor

US foreign policy is simple. Zionist Emperor goes thumbs up or thumbs down on whatever nation based on his own interests.

That's about it. That's most of unz.com summed up in a single sentence!

Johnny Smoggins, July 11, 2017 at 10:19 am GMT

The casus belli of America's hostility towards Iran is the 3000 year old grudge that the Jews have been holding against Persia.
Z-man, July 11, 2017 at 11:22 am GMT
@Priss Factor

In reality, there are only two significant potential threats to the U.S. The first consists of the only two non-friendly countries – Russia and China – that have nuclear weapons and delivery systems that could hit the North American continent and the second is the somewhat more amorphous danger represented by international terrorism.

No, the only threats are the following three:

Too many Meso-Americans invading from the border. These people have totally changed the SW and may drastically alter parts of US as well. This is an invasion. Meso-Americans are lackluster, but Too Many translates into real power, especially in elections.

The other threat is Hindu-Indian. Indians are just itching to unload 100s of millions of their kind to Anglo nations. Unlike Chinese population that is plummeting, Indian population is still growing.

The other threat, biggest of all, is the Negro. It's not Russian missiles or Chinese troops that turned Detroit into a hellhole. It is Negroes. And look at Baltimore, New Orleans, Selma, Memphis, Oakland, St. Louis, South Side Chicago, etc.

Afromic Bomb is more hellish than atomic bomb. Compare Detroit and Hiroshima.

Also, even though nukes are deadly, they will likely never be used. They are for defensive purposes only. The real missiles that will destroy the West is the Afro penis. US has nukes to destroy the world, but they haven't been used even during peak of cold war. But millions of Negro puds have impregnanted and colonized white wombs to kill white-babies-that-could-have-been and replaced them with mulatto Negro kids who will turn out like Colin Kapernick.

http://stuffblackpeopledontlike.blogspot.com/2017/07/pattern-recognition-great-sin-than.html

The real missile gap is the threat posed by negro dong on white dong. The negro dong is so potent that even Japanese women are going Negroid and having kids with Negro men and raising these kids as 'Japanese' to beat up real Japanese. So, if Japan with few blacks is turning like this, imagine the threat posed by Negroes on whites in the West.

Look at youtube of street life and club life in Paris and London. Negro missiles are conquering the white race and spreading the savage genes.

Look how Polish women welcomed the Negro missile cuz they are infected with jungle fever. ACOWW will be the real undoing of the West.

https://www.youtube.com/watch?v=8yB69UkJGwk

Besides what Priss Factor said above the following is to be reinforced with every real American man, woman and child.

Israel , which for its part would prefer to see Americans die in a war against Iran rather that sacrificing its own sons and daughters.

Israel, the REAL enemy!

eah, July 11, 2017 at 11:26 am GMT
The WH should focus on the USA.
Replies: @Sowhat And what grudge is that? The only two I can find are connected. The deposing of our puppets, the Assads and the nationalization of their natural resources. I have the impression that it removes around future hegemon and the rich gas reserves off their coast and the decades long desire to run a pipeline west to the Mediterranean.

Greg Bacon > Website , July 11, 2017 at 11:41 am GMT

The BIGGEST threat to the USA is from within, as we are nothing more than an occupied colony of Apartheid Israel, paying that bastard state tributes each year in the form of free money and weapons, political backing at the UN, and never tire of fighting her wars of conquest.

You won't see Israeli troops in the streets, since their confederates control the economy thru their control of the FED and US Treasury and most of those TBTF banks, which we always bail out, no matter the cost.

The also have a choke-hold on Congress, which is always eager to wag their tail and hope their Yid Overlord gives them a treat and not a dressing-down in the Jew MSM, which is a career killer.

The WH is also Israeli territory, especially now with a Jew NYC slumlord now Trump's top adviser and his fashion model faux Jew daughter egging Daddy on to kill more Arab babies, since she can't stand the sight of dead babies

Wizard of Oz, July 11, 2017 at 11:50 am GMT

@Paul Well, the real enemy of the people are the real terrorists behind the scenes. Those who planned the 9/11 false flag. Those who sent the Anthrax letters to resisting congress members. Those who pre-planned the wars of aggression in the whole middle east.

So any appeal to the "White House" is almost pointless since the White House is one element of the power structure captured by the war-criminal lunatics.

To change something people in the US should at first stop buying their war criminal lying mass media.

Then they should stop supporting ANY foreign intervention by the US and should stop believing any of the preposterous lies released by the media, the state dept., or any other neocon outlet.

Actually Trump was probably elected because he said he was anti-intervention and anti-media. But did it help?

The US needs mass resistance (demonstrations, strikes, boycotts, non-participation, sit-ins, grass-root information, or whatever) against their neocon/zionist/mafia/cia power groups or nothing will change.

We need demonstrations against NATO, against war, against false flag terrorism, against using terrorists as secret armies, against war propaganda!

B.t.w. Iran has always been one of the main goals. Think of it: Why did the US attack Afghanistan and Iraq? What have those two countries in common? (Hint: a look on the map helps to answer this question.) I am beginning to get interested in why some people are sure 9/11 was a false flag affair covered up by a lot of lies. So may I try my opening question on you. How much, if any of it, have you read of the official 9/11 commission report?

Replies:

@Sowhat

https://forbiddenknowledgetv.net/former-nist-employee-speaks-out-on-wtc-investigation/

@NoseytheDuke

A better question: Have YOU read The Commission: The Uncensored History of the 9/11 Investigation by Phillip Shenon?

Sowhat, July 11, 2017 at 12:13 pm GMT

@eah The WH should focus on the USA. And what grudge is that? The only two I can find are connected. The deposing of our puppets, the Assads and the nationalization of their natural resources. I have the impression that it removes around future hegemon and the rich gas reserves off their coast and the decades long desire to run a pipeline west to the Mediterranean.
anarchyst, July 11, 2017 at 12:24 pm GMT
Israel's current "agreements" and its "kowtowing" to Saudi Arabia speaks VOLUMES. Once again, Israel is about to get others to do their "dirty work" for them.

The point that everybody seems to miss is the fact that Judaism and Islam are inextricably linked. In fact, one could safely argue that Islam is an arabicized form of Judaism.

1. Both Judaism and Islam promote their own forms of supremacy, relegating non-adherents as "lesser human beings", or in Judaism's take "no better than livestock, albeit with souls, to be used for the advantage of the jew".

2. Both systems proscribe lesser (or no) punishment for those of each respective "tribe" who transgress against "outsiders" -- goyim or infidels. Both systems proscribe much harsher punishments against "outsiders" who transgress against those of each respective "tribe".

3. When it comes to "equality under law", Israel is no better than Saudi Arabia, as a jew who has a disagreement with an "outsider" will always have the advantage of a judicial system which almost always rules for the jew.

4. Both Judaism and Islam have taken it upon themselves to be arbiters of what the rest of the world should follow, demanding that "outsiders" conform to what THEY believe, thinking that they know what is best (for the rest of us). Just look at the demands moslems (who are guests in western Europe) make of local non-moslem populations.

Read the jewish Talmud and islamic Koran you will find virtually identical passages that demonize and marginalize those of us who are "goyim" or "infidels".
A pox on both their houses

Replies:

@ThreeCranes

Now before I say what I'm going to say I want to say that Israel has the right to define and defend her interests just as China, Russia and USA do, as Geraldi says above. No nation or people can be denied this (without force).

Having said that, I am grateful to you, anarchyst, for having pointed out the familial similarities between Islam and Judaism. In addition to what you say there is the fact that the Jewish genome is virtually identical to that of the Palestinians--except for that of Ashkenazi Jews who are more than half European.

As far as I can see, Ashkenazi Jews have an existential choice. They can identify with their European half whereby they acknowledge that the Greeks and not Moses made the greatest contributions to humanity (and more particularly, their humanity) or they can go with their atavistic Semitic side and regress to barbarism. Science, Logic, Math, History, Architecture, Drama and Music or blowing up Buddhas and shrouding your women. Take your pick.

Of course, this is sorta unfair in as much as they were kicked out of Europe and now dwell in the ME where if they try to act like Europeans they will be persecuted by their neighbors as apostates. The Jews do indeed have a tough row to hoe. , @bjondo Jews/Judaism bring death, destruction, misery.

Muslims/Islam (minus Western creation of "Muslim"terrorists) brought golden ages to many areas.

Christianity and Islam elevate the human spirit. Judaism degrades.

bjondo, July 11, 2017 at 12:31 pm GMT

SA is the tail wagged by US. US is the tail wagged by internal Jew. Israel/Jewry the enemy of all.

Terrorism is Israeli weapon to take down Sunnis and Shias.

US is Israel's go-to donkey.

Sauds gone tomorrow if wished. And they may be with Arabia broken into pieces. Yinon still active.

Agent76, July 11, 2017 at 12:54 pm GMT
June 7, 2017 We Have Met the Evil Empire and It Is Us

Life in America was pure injustice, the lash and the iron boot, despite the version of history we have been given by the Ford and Rockefeller Foundations who "re-invented" America and its history through taking control of public education in the late 1940s. You see, the multi-generational ignorance we bask in today is not unplanned. The threat represented by advances in communications and other technology was recognized and dealt with, utterly quashed at birth.

http://www.veteranstoday.com/2017/06/07/we-have-met-the-evil-empire-and-it-is-us/

ThreeCranes, July 11, 2017 at 1:41 pm GMT
@anarchyst Israel's current "agreements" and its "kowtowing" to Saudi Arabia speaks VOLUMES. Once again, Israel is about to get others to do their "dirty work" for them.
The point that everybody seems to miss is the fact that Judaism and Islam are inextricably linked. In fact, one could safely argue that Islam is an arabicized form of Judaism.

1. Both Judaism and Islam promote their own forms of supremacy, relegating non-adherents as "lesser human beings", or in Judaism's take "no better than livestock, albeit with souls, to be used for the advantage of the jew".

2. Both systems proscribe lesser (or no) punishment for those of each respective "tribe" who transgress against "outsiders"--goyim or infidels. Both systems proscribe much harsher punishments against "outsiders" who transgress against those of each respective "tribe".

3. When it comes to "equality under law", Israel is no better than Saudi Arabia, as a jew who has a disagreement with an "outsider" will always have the advantage of a judicial system which almost always rules for the jew.

4. Both Judaism and Islam have taken it upon themselves to be arbiters of what the rest of the world should follow, demanding that "outsiders" conform to what THEY believe, thinking that they know what is best (for the rest of us). Just look at the demands moslems (who are guests in western Europe) make of local non-moslem populations.

Read the jewish Talmud and islamic Koran...you will find virtually identical passages that demonize and marginalize those of us who are "goyim" or "infidels".
A pox on both their houses... Now before I say what I'm going to say I want to say that Israel has the right to define and defend her interests just as China, Russia and USA do, as Geraldi says above. No nation or people can be denied this (without force).

Having said that, I am grateful to you, anarchyst, for having pointed out the familial similarities between Islam and Judaism. In addition to what you say there is the fact that the Jewish genome is virtually identical to that of the Palestinians–except for that of Ashkenazi Jews who are more than half European.

As far as I can see, Ashkenazi Jews have an existential choice. They can identify with their European half whereby they acknowledge that the Greeks and not Moses made the greatest contributions to humanity (and more particularly, their humanity) or they can go with their atavistic Semitic side and regress to barbarism. Science, Logic, Math, History, Architecture, Drama and Music or blowing up Buddhas and shrouding your women. Take your pick.

Of course, this is sorta unfair in as much as they were kicked out of Europe and now dwell in the ME where if they try to act like Europeans they will be persecuted by their neighbors as apostates. The Jews do indeed have a tough row to hoe.

Sowhat, July 11, 2017 at 1:49 pm GMT
@Wizard of Oz I am beginning to get interested in why some people are sure 9/11 was a false flag affair covered up by a lot of lies. So may I try my opening question on you. How much, if any of it, have you read of the official 9/11 commission report? https://forbiddenknowledgetv.net/former-nist-employee-speaks-out-on-wtc-investigation/
virgile, July 11, 2017 at 1:55 pm GMT
Trump is torn between Israel's permanent need to weaken its powerful neighbors (Iraq, Iran) and the necessity to protect the USA from terrorists attacks.

Iran is an hypothetical threat to Israel, Saudi Arabia has proven to be a threat to the world.

SolontoCroesus, July 11, 2017 at 2:07 pm GMT
Saudi Arabian Manal al-Sharif is the latest (((MSM))) media darling; she wrote a book about being imprisoned for driving in Saudi Arabia. She is attempting to expand a movement to strike down the Saudi ban on women driving. https://www.nytimes.com/2017/06/09/opinion/sunday/saudi-arabia-women-driving-ban.html

At the same time, (((MSM))) gleefully focuses on Iranian women who are wearing white hijab in protest of restrictions on women's attire in Iran. http://nytlive.nytimes.com/womenintheworld/2017/05/24/why-women-and-some-men-in-iran-are-wearing-white-headscarves-on-wednesdays/

I think these women ought to get together.

In Iran, women drive.

In Tehran and other Iranian cities including Iran's holiest, that is, most conservative cities like Mashad. there are taxi companies owned and run by women.

http://www.huffingtonpost.com/turnstyle/iranian-women-take-the-wh_b_879041.html

Tehran traffic makes NYC look like Mayberry RFD; many Iranians use small motorcycles to commute and take care of daily chores. It's not at all uncommon to see an Iranian woman in full chador driving a motorcycle with a child and parcels in tow.

Iranian women could offer to teach the women of Saudi Arabia to drive.

What could Saudi women teach Iranian women?

NoseytheDuke, July 11, 2017 at 2:08 pm GMT

@Wizard of Oz I am beginning to get interested in why some people are sure 9/11 was a false flag affair covered up by a lot of lies. So may I try my opening question on you. How much, if any of it, have you read of the official 9/11 commission report? A better question: Have YOU read The Commission: The Uncensored History of the 9/11 Investigation by Phillip Shenon?

siberiancat, July 11, 2017 at 2:08 pm GMT

Why is is so difficult to avoid this ugly term 'regime'? Does it really add anything to the discourse?
anonymous, July 11, 2017 at 2:33 pm GMT
There's no alternative to Saudi royal family rule of the peninsula. Who's there to replace them? Any other group, assuming there might be one somewhere waiting in the wings, would probably be anti-American and not as compliant as the Saudis. They've spent gigantic sums in the endless billions buying military equipment from the US, weapons they can't even fully use, as a way of making themselves indispensable customers. Many other billions of petrodollars find their way westward into our financial systems. They collaborate with the US in various schemes throughout the Muslim world using their intelligence services and money in furtherance of US goals.

They live the royal life thanks to being able to use the money from their nation's resource wealth as their own personal kitty, living in palaces, buying obscene amounts of jewelry and other luxury goods, and so on. They'll never give that up and being a close ally of the US affords them protection which of course they pay for. They may be seen as an enemy by the average person but not at the elite level with whom they all consort and roll around in the money with.

LondonBob, July 11, 2017 at 2:39 pm GMT
http://mihsislander.org/2017/06/full-transcript-james-mattis-interview/

Mattis still seems stuck with his Iran obsession. Shame I thought he had the intellectual curiosity to adapt. Trump has good instincts, I hope Tillerson comes to the fore, and Bannon stays influential.

Don Bacon, July 11, 2017 at 3:02 pm GMT
Iran is US enemy #1 not only because it is against that country smaller than New Jersey with less people (Israel) but also because Iran has been a model for other countries to follow because of its intransigence to US oppression and attacks, financial political and cyber. As the world becomes multi-polar, Iran's repeated wise reactions to the world hegemon have been an inspiration to China and others to go their own way. The US can't stand that.
Corvinus, July 11, 2017 at 3:28 pm GMT
@Paul Well, the real enemy of the people are the real terrorists behind the scenes. Those who planned the 9/11 false flag. Those who sent the Anthrax letters to resisting congress members. Those who pre-planned the wars of aggression in the whole middle east.

So any appeal to the "White House" is almost pointless since the White House is one element of the power structure captured by the war-criminal lunatics.

To change something people in the US should at first stop buying their war criminal lying mass media.

Then they should stop supporting ANY foreign intervention by the US and should stop believing any of the preposterous lies released by the media, the state dept., or any other neocon outlet.

Actually Trump was probably elected because he said he was anti-intervention and anti-media. But did it help?

The US needs mass resistance (demonstrations, strikes, boycotts, non-participation, sit-ins, grass-root information, or whatever) against their neocon/zionist/mafia/cia power groups or nothing will change.

We need demonstrations against NATO, against war, against false flag terrorism, against using terrorists as secret armies, against war propaganda!

B.t.w. Iran has always been one of the main goals. Think of it: Why did the US attack Afghanistan and Iraq? What have those two countries in common? (Hint: a look on the map helps to answer this question.) "Well, the real enemy of the people are the real terrorists behind the scenes. Those who planned the 9/11 false flag."

Adjust tin foil hat accordingly.


Father O'Hara, July 11, 2017 at 3:59 pm GMT
@Jake The title of the article tells it all.

Saudi Arabia is THE worst nation in the Middle East.

Why does the US follow along blindly? Well, it is a WASP thing. We are the new Brit Empire. By the height of the Victorian era, virtually all English Elites were philoSemitic. Roughly half of the UK WASP Elite philoSemitism was pro-Jewish and half was pro-Arabic/Islamic.

And by the time of WW1, the English Elite pro-Arabic/Islamic faction came to adore the house of Saud.

So, our foreign policy is merely WASP culture continuing to ruin most of the rest of the world, including all the whites ruled by WASP Elites. SECOND worst,my friend.

Jake, July 11, 2017 at 4:23 pm GMT
@Chad I fully agree that attacking Iran would be yet another disaster but I don't understand why Saudi Arabia is portrayed as an 'enemy', the 'real' one, no less, in alt-media circles like this.

I mean let's be honest with ourselves. KSA is the definition of a vassal state. Has been so since the state established established relations with the USA in the 1940s and the status was confirmed during the 1960s under King Faisal. Oil for security.

Why pretend that they have any operational clearance from the US?

Contrary to the popular view, Wahabism is necessary to keep the local population under control. Particularly the minority Shia population who live along the eastern coast, an area, which incidentally also has the all the oil reserves. USA fully understands this. Which is why they not only tolerated Wahabism, but strongly promoted it during Afghan jihad. The operation was by and large very successful btw. It was only during the '90s when religion became the new ideology for the resistance against the empire across the Muslim world. Zero surprise there because the preceding ideology, radical left wing politics was completely defeated. Iran became the first country in this pattern. The Iranian left was decimated by the Shah, another vassal. So the religious right became the new resistance.

And as far as the KSA is considered, Wahabi preachers aren't allowed to attack the USA anyway. If any individual preacher so much as makes a squeak, he will be bent over a barrel. There won't be any "coming down very hard on Saudi Arabia" because USA already owns that country.

So what's the answer? Well, props to Phillip as he understood - "it would also require some serious thinking in the White House about the extent to which America's armed interventions all over Asia and Africa have made many people hate us enough to strap on a suicide vest and have a go."

Bingo. Your analysis starts too late. The US supports Wahhabism and the House of Saud because the pro-Arabic/Islamic English Elites of 1910 and 1920 and 1935 supported Wahhabism and the House of Saud.

The British Empire 'made' the House of Saud. Thinking it wise to use Wahhabism to control Shia Islam is like thinking it wise to use blacks to control the criminal tendencies of Mexicans.

Durruti, July 11, 2017 at 4:25 pm GMT

1,000 Words @RobinG #UNRIG adds AMERICA FIRST, NOT ISRAEL to Agenda.
..................."A.I.P.A.C.. you're outta business!"

Due to slanderous attacks by a Mossad internet psy-op, Steele now prioritizes Israeli malign influence on US. Also, check out Cynthia McKinney's twitter.

https://www.youtube.com/watch?v=zxcnaNND4XM

#UNRIG - Robert David Steele Weekly Update Nice action approach to cure ills of society.

Enclosing copy of flier we have distributed – with a similar approach at a cure.

*Flier distributed is adjusted & a bit more attractive (1 sheet – both sides).

The key is to Restore the Republic, which was definitively destroyed on November 22, 1963.

Feel free to contact.

Use this, or send me a note by way of a response.

For THE RESTORATION OF THE REPUBLIC

"We hold these truths to be self-evident: that all men are created equal governments are instituted among men, deriving their just powers from the consent of the governed; that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it and to institute new government, laying its foundation on such principles "

The above is a portion of the Declaration of Independence, written by Thomas Jefferson.

We submit the following facts to the citizens of the United States.

The government of the United States has been a Totalitarian Oligarchy since the military financial aristocracy destroyed the Democratic Republic on November 22, 1963 , when they assassinated the last democratically elected president, John Fitzgerald Kennedy , and overthrew his government. All following governments have been unconstitutional frauds. Attempts by Robert Kennedy and Martin Luther King to restore the Republic were interrupted by their murder.

A subsequent 12 year colonial war against Vietnam , conducted by the murderers of Kennedy, left 2 million dead in a wake of napalm and burning villages.

In 1965, the U.S. government orchestrated the slaughter of 1 million unarmed Indonesian civilians.

In the decade that followed the CIA murdered 100,000 Native Americans in Guatemala .

In the 1970s, the Oligarchy began the destruction and looting of America's middle class, by encouraging the export of industry and jobs to parts of the world where workers were paid bare subsistence wages. The 2008, Bailout of the Nation's Oligarchs cost American taxpayers $13trillion. The long decline of the local economy has led to the political decline of our hard working citizens, as well as the decay of cities, towns, and infrastructure, such as education.

The impoverishment of America's middle class has undermined the nation's financial stability. Without a productive foundation, the government has accumulated a huge debt in excess of $19trillion. This debt will have to be paid, or suffered by future generations. Concurrently, the top 1% of the nation's population has benefited enormously from the discomfiture of the rest. The interest rate has been reduced to 0, thereby slowly robbing millions of depositors of their savings, as their savings cannot stay even with the inflation rate.

The government spends the declining national wealth on bloody and never ending military adventures, and is or has recently conducted unconstitutional wars against 9 nations. The Oligarchs maintain 700 military bases in 131 countries; they spend as much on military weapons of terror as the rest of the nations of the world combined. Tellingly, more than half the government budget is spent on the military and 16 associated secret agencies.

The nightmare of a powerful centralized government crushing the rights of the people, so feared by the Founders of the United States, has become a reality. The government of Obama/Biden, as with previous administrations such as Bush/Cheney, and whoever is chosen in November 2016, operates a Gulag of dozens of concentration camps, where prisoners are denied trials, and routinely tortured. The Patriot Act and The National Defense Authorizations Act , enacted by both Democratic and Republican factions of the oligarchy, serve to establish a legal cover for their terror.

The nation's media is controlled, and, with the school systems, serve to brainwash the population; the people are intimidated and treated with contempt.

The United States is No longer Sovereign

The United States is no longer a sovereign nation. Its government, The Executive, and Congress, is bought, utterly owned and controlled by foreign and domestic wealthy Oligarchs, such as the Rothschilds, Rockefellers, and Duponts , to name only a few of the best known.

The 2016 Electoral Circus will anoint new actors to occupy the same Unconstitutional Government, with its controlling International Oligarchs. Clinton, Trump, whomever, are willing accomplices for imperialist international murder, and destruction of nations, including ours.

For Love of Country

The Restoration of the Republic will be a Revolutionary Act, that will cancel all previous debts owed to that unconstitutional regime and its business supporters. All debts, including Student Debts, will be canceled. Our citizens will begin, anew, with a clean slate.

As American Founder , Thomas Jefferson wrote, in a letter to James Madison:

"I set out on this ground, which I suppose to be self evident, 'that the earth belongs in usufruct to the living':"

"Then I say the earth belongs to each of these generations, during it's course, fully, and in their own right. The 2d. Generation receives it clear of the debts and incumberances of the 1st. The 3d of the 2d. and so on. For if the 1st. Could charge it with a debt, then the earth would belong to the dead and not the living generation."

Our Citizens must restore the centrality of the constitution, establishing a less powerful government which will ensure President Franklin Roosevelt's Four Freedoms , freedom of speech and expression, freedom to worship God in ones own way, freedom from want "which means economic understandings which will secure to every nation a healthy peace time life for its inhabitants " and freedom from fear "which means a world-wide reduction of armaments "

Once restored: The Constitution will become, once again, the law of the land and of a free people. We will establish a government, hold elections, begin to direct traffic, arrest criminal politicians of the tyrannical oligarchy, and, in short, repair the damage of the previous totalitarian governments.

For the Democratic Republic!
Sons and Daughters of Liberty
florent.defeu@yahoo.com

SolontoCroesus, July 11, 2017 at 4:28 pm GMT

Scholars at Mercatus Center, George Mason Univ. https://www.mercatus.org/statefiscalrankings

are studying US states and ranking them according to financial stability measures. The states with biggest problems -- Illinois, California, New Jersey, Connecticut -- are in the mess they are in largely because of pension liability issues: some pensions are unfunded or underfunded.

I recall that ten years ago about a dozen Jewish organizations formed the "Iran Task Force," ** whose primary activity was to persuade managers of State pension funds to divest from Iran-connected companies; that is, corporations & banks, etc. that did business with Iran. I recall very clearly that Arnold Schwartznegger was the poster child for California's vanguard role in divesting from such nasty nasty companies, in accord with the wishes of Jewish Israel-firsters.

Perhaps the Mercatus scholars could prepare an exercise in alternative financial history: What shape would the US economy, and the various States's economies, be in if the US were NOT so overwhelmingly influenced by Israel firsters, and were NOT persuaded, Against Our Better Judgment, to entangle themselves in Israel's nefarious activities?

____
** The 2007 Iran Task Force is NOT the same as the group formed in 2015 or so, embedded in US House/Senate, with Joe Lieberman and Michael Hayden playing prominent roles in attempting to influence the Iran Deal.

The 2007 initiative was sponsored by groups such as ZOA, RJC, AIPAC, etc., and / or spun off groups such as Foundation for Defense of Democracy, United Against Nuclear Iran.

[Jan 02, 2018] Hillary Clinton and neoLiberal American Exceptionalism

Notable quotes:
"... It does, after all, have deep roots in the Manifest Destiny ethos that spurred the Mexican War, drove continental and trans-Pacific expansion, and emerged as a paternalistic justification for voluminous military interventions in Latin America, Africa, and the Middle East. As Dick Cheney suggests, "the world needs a powerful America." In this unilateral missionizing zeal Clinton proves most typical. ..."
"... she wants the United States to be the dominant power in the world, so she doesn't question the massive sums spent on the military and on the other branches of the national-security state. ..."
"... But Clinton's brand of American exceptionalism goes beyond the issue of American military dominion and into the policy potentials of mid-century social liberalism and, more specifically, the neoliberalism that has since replaced it. Indeed, since George McGovern's failed presidential bid of 1972, neoliberals, moving decidedly rightward on economic issues, have consistently employed exceptionalist code to fight off movements, ideas, and challengers from the left. ..."
"... She is smart enough to know that women in the United States endure far more poverty, unemployment, and food insecurity than women in Denmark-yet she shamelessly made clear that she was happy to keep it that way." Indeed, Clinton's denunciation of the idea that the United States should look more like Denmark betrayed one of the glaring the fault lines within the Democratic Party, and between Clintonian liberalism and Sandersite leftism. ..."
Jan 05, 2017 | economistsview.typepad.com
Peter K. : January 05, 2017 at 07:42 AM , 2017 at 07:42 AM
...It's hilarious how cocky and confident the neoliberals were throughout the election. It's amazing how wrong they were. Trump's victory is almost worth it.

http://www.commondreams.org/views/2016/02/26/we-are-not-denmark-hillary-clinton-and-liberal-american-exceptionalism

Published on
Friday, February 26, 2016
by Common Dreams

"We Are Not Denmark": Hillary Clinton and Liberal American Exceptionalism

by Matthew Stanley

Several months removed, it now seems clear that the Democratic debate on October 13 contained an illuminating moment that has come to embody the 2016 Democratic Primary and the key differences between its two candidates. Confronting Bernie Sanders's insistence that the United States has much to learn from more socialized nations, particularly the Nordic Model, Hillary Clinton was direct: "I love Denmark. But we are not Denmark. We are the United States of America."

The implication behind this statement-the reasoning that ideas and institutions (in this case social and economic programs) that are successful in other nations are somehow practically or ideologically inconsistent with Americans and American principles-speaks to a longstanding sociopolitical framework that has justified everything from continental expansion to the Iraq War: American exceptionalism. Rooted in writings of Alexis de Tocqueville and the mythology of John Winthrop's "City Upon a Hill," the notion that the history and mission of the United States and the superiority of its political and economic traditions makes it impervious to same the forces that influence other peoples has coursed through Abraham Lincoln's "Gettysburg Address," the Cold War rhetoric of John F. Kennedy and Lyndon Johnson, and the foreign policy declarations of Barack Obama.

Despite particular historical trends-early and relatively stable political democracy, birthright citizenship, the absence of a feudal tradition, the relative weakness of class consciousness-historians have critiqued this "American exceptionalism" as far more fictive than physical, frequently citing the concept as a form of state mythology. Although different histories lead naturally to historical and perhaps even structural dissimilarities, America's twenty-first century "exceptions" appear as dubious distinctions: gun violence, carbon emissions, mass incarceration, wealth inequality, racial disparities, capital punishment, child poverty, and military spending.

Yet even at a time when American exceptionalism has never been more challenged both by empirically-validated social and economic data and in public conversation, the concept continues to play an elemental role in our two-party political discourse. The Republican Party is, of course, awash with spurious, almost comically stupid dialogue about a mythic American past-"making America great again"-the racial and ethnic undertones of which are unmistakable. Those same Republicans have lambasted Obama and other high profile Democrats for not believing sufficiently in their brand of innate, transhistoric American supremacy.

But this Americentrism is not the sole province of the GOP. We need look no further than bipartisan support for the military-industrial complex and the surveillance state to see that national exceptionalism, and its explicit double-standard toward other nations, resides comfortably within the Democratic Party as well. Russian President Vladimir Putin and Ecuadorean President Rafael Correa censured Obama's use of the term in the fall of 2013, with the latter likening it to the "chosen race" theories of Nazi Germany. Hyperbole notwithstanding, academics often do associate American exceptionalism with military conquest.

It does, after all, have deep roots in the Manifest Destiny ethos that spurred the Mexican War, drove continental and trans-Pacific expansion, and emerged as a paternalistic justification for voluminous military interventions in Latin America, Africa, and the Middle East. As Dick Cheney suggests, "the world needs a powerful America." In this unilateral missionizing zeal Clinton proves most typical. As historian Michael Kazin argues in a recent piece for The Nation: "Hillary Clinton is best described as a liberal. Like every liberal president (and most failed Democratic nominees) since Wilson, she wants the United States to be the dominant power in the world, so she doesn't question the massive sums spent on the military and on the other branches of the national-security state. "

But Clinton's brand of American exceptionalism goes beyond the issue of American military dominion and into the policy potentials of mid-century social liberalism and, more specifically, the neoliberalism that has since replaced it. Indeed, since George McGovern's failed presidential bid of 1972, neoliberals, moving decidedly rightward on economic issues, have consistently employed exceptionalist code to fight off movements, ideas, and challengers from the left.

The victims include leftist efforts toward both American demilitarization and the expansion of a "socialistic" welfare state. Socialist feminist Liza Featherstone and others have denounced Clinton's uncritical praise of the "opportunity" and "freedom" of American capitalism vis-à-vis other developed nations. "With this bit of frankness," Featherstone explains, referring to the former Secretary of State's "Denmark" comments, "Clinton helpfully explained why no socialist-indeed, no non-millionaire-should support her.

She is smart enough to know that women in the United States endure far more poverty, unemployment, and food insecurity than women in Denmark-yet she shamelessly made clear that she was happy to keep it that way." Indeed, Clinton's denunciation of the idea that the United States should look more like Denmark betrayed one of the glaring the fault lines within the Democratic Party, and between Clintonian liberalism and Sandersite leftism. It also revealed a more clandestine strain of American exceptionalism common among liberals and the Democratic Party elite in which "opportunity" serves as a stand-in for wider egalitarian reform. As Elizabeth Bruenig highlighted in The New Republic: "Since getting ahead on one's own grit is such a key part of the American narrative, it's easy to see how voters might be attracted to Clinton's opportunity-based answer to our social and economic woes, though it leaves the problem of inequality vastly under-addressed. Indeed, a kind of American exceptionalism does seem to underpin much opportunity-focused political rhetoric."

This preference for insider politics (rather than mass movements involving direct action) and limited, means-tested social programs speaks to a broader truth about modern liberalism: it functions in a way that not only doesn't challenge the basic tenets of American exceptionalism, it often reinforces them. Whether vindicating war and torture and civil liberties violations, talking past the War on Drugs and the carceral state, or exhibiting coolness toward the type of popular protest seen during of Occupy Wall Street, with its direct attacks on a sort of American Sonderweg, establishment Democrats are adept at using a more "realistic" brand of Americentrism to consolidate power and anchor the party in the status quo. Now the 2016 Democratic Primary has seen progressive ideas including universal health care, tuition-free college, and a living minimum wage, all hallmarks of large swaths of the rest of the developed world, delegitimized through some mutation of liberal exceptionalist thinking. These broadminded reforms are apparently off limits, not because they are not good ideas (though opponents make that appraisal too), but because somehow their unachievability is exceptional to the United States.

All this is not to exclude (despite his "democratic socialist" professions) Sanders's own milder brand of "America first," most evident in his economic nationalism, but to emphasize that American exceptionalism and the logical and practical dangers it poses exist in degrees across a spectrum of American politics. Whatever his nationalistic inclinations, Sanders's constant reiteration of America's need to learn from and adapt to the social, economic, and political models of other nations demonstrates an ethno-flexibility rarely seen in American major party politics. "Every other major country " might as well be his official campaign slogan. This bilateral outlook does not fit nearly as neatly within Clinton's traditional liberal paradigm that, from defenses of American war and empire to the, uses American exceptionalism tactically, dismissing its conservative adherents as nationalist overkill yet quietly exploiting the theory when politically or personally expeditious.

In looking beyond our national shores and domestic origin-sources for fresh and functional policy, Sanders seems to grasp that, from the so-called "foreign influences" of the Republican free soil program or Robert La Follette's Wisconsin Idea or even Lyndon Johnson's Great Society, American high politics have been at their most morally creative and sweepingly influential not only when swayed by direct action and mass movements, but also when they are less impeded by the constraints of ethnocentrism and exceptionalism. The "We are not Denmark" sentiment might appear benign, lacking as it does the bluster of Republican claims to national supremacy and imaginary "golden age" pasts and what economist Thomas Picketty has termed a "mythical capitalism." But it is the "seriousness" and very gentility of liberal Americentrism that underscores the power, omnipresence, and intellectual poverty of cultural dismissal. "I still believe in American exceptionalism," Clinton has proclaimed in pushing for U.S. military escalation in Syria. Indeed she does, and it is by no means relegated to the sphere of foreign policy.

[Dec 31, 2017] Is [neo]Liberalism a Dying Faith by Pat Buchanan

Highly recommended!
Nationalism really represent a growing threat to neoliberalism. It is clear the the rise of nationalism was caused by the triumph of neoliberalism all over the globe. As neoliberal ideology collapsed in 2008, thing became really interesting now. Looks like 1920th-1940th will be replayed on a new level with the USA neoliberal empire under stress from new challengers instead of British empire.
Rumor about the death of neoliberalism are slightly exaggerated ;-). This social system still has a lot of staying power. you need some external shock like the need of cheap oil (defined as sustainable price of oil over $100 per barrel) to shake it again. Of some financial crisis similar to the crisis of 2008. Currently there is still no alternative social order that can replace it. Collapse of the USSR discredited both socialism even of different flavors then was practiced in the USSR. National socialism would be a step back from neoliberalism.
Notable quotes:
"... The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html ..."
"... What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey." ..."
"... Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power. ..."
"... Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers. ..."
"... It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc. ..."
"... If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008). ..."
"... And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade". ..."
"... The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election. ..."
"... Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency. ..."
"... But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism. ..."
Oct 01, 2002 | www.unz.com

Asked to name the defining attributes of the America we wish to become, many liberals would answer that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more democratic -- and the model for mankind's future.

Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state at whose altars Liberal Man worships.

But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting what America has on offer.

In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician peoples of Spain are following the Catalan secession crisis with great interest.

The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote, delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized from the Freedom Party. Summarized it is: Austria for the Austrians!

Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.

South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians are talking of separation.

By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."

Platform Promise: Keep the Muslim masses out of the motherland.

To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that in their own nations than did Jefferson in his

... ... ...

European peoples and parties are today using democratic means to achieve "illiberal" ends. And it is hard to see what halts the drift away from liberal democracy toward the restrictive right. For in virtually every nation, there is a major party in opposition, or a party in power, that holds deeply nationalist views.

European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion of the continent along the routes whence the invaders came centuries ago, not as a manageable problem but an existential crisis.

To many Europeans, it portends an irreversible alteration in the character of the countries their grandchildren will inherit, and possibly an end to their civilization. And they are not going to be deterred from voting their fears by being called names that long ago lost their toxicity from overuse.

And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled by American elites, they also seem to reject the idea that foreigners should be treated equally in nations created for their own kind.

Europeans seem to admire more, and model their nations more, along the lines of the less diverse America of the Eisenhower era, than on the polyglot America of 2017.

And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of 1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.

Kennedy promised that the racial and ethnic composition of the America of the 1960s would not be overturned, and he questioned the morality and motives of any who implied that it would.

Jason Liu , October 20, 2017 at 12:02 pm GMT
Yes. Fuck yes.

Liberalism is the naivete of 18th century elites, no different than today. Modernity as you know it is unsustainable, mostly because equality isn't real, identity has value for most humans, pluralism is by definition fractious, and deep down most people wish to follow a wise strongman leader who represents their interests first and not a vague set of universalist values.

Blind devotion to liberal democracy is another one of those times when white people take an abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide doesn't mean diversity is good.

The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html

Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been false, and flies against the long arc of history. Time for nationalists around the world to smash liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies and the primacy of majorities instead of guilt and pathological compassion dressed up as political ideology.

TG , October 20, 2017 at 1:10 pm GMT
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.

What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey."

Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power.

Paul's Ghost , October 20, 2017 at 6:08 pm GMT
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who lack the imagination to change their habitual targets for so long.

To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed in a suspicious plane crash that was never properly explained.

Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers.

And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now are in favor of Endless Unconstitutional War around the world.

Which can only mean that the term 'Liberal' has been so completely morphed away from its original meanings to be completely worthless.

The last true Liberal in American politics was Paul Wellstone. And even by the time he died for his sins, he was calling himself a "progressive" because after the Clintons and the Gores had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by bankers, a society at constant war and throwing money constantly at a gigantic war machine, a society of censorship where the government needed to control all music lyrics, the same corrupt government where money could by anything from a night in the Lincoln Bedroom to a Presidential Pardon or any other government favor.

Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in the American People over the profits of bankers were calling themselves Progressives in disgust at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even the term Progressive into bombing the world 365 days a year and still constantly throwing money at the military machine and the problems it invents.

So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must be getting senile and just throwing back out the same lines he once wrote as a speechwriter for the last Great Lefty President Richard Nixon.

Miro23 , October 20, 2017 at 6:17 pm GMT

Is Liberalism a Dying Faith?

Another question is whether this is wishful thinking from Pat or some kind of reality.

I think that he's right, that Liberalism is a dying faith, and it's interesting to check the decline.

It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc.

If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).

And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade".

In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich global elite to draw on a sea of globalized serf labour with little or no identity, while their media and SWJ activists operate a scorched earth defense against any sign of opposition.

The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election.

reiner Tor , October 20, 2017 at 6:39 pm GMT
@Randal

A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz, but then over time started moving to the right. It is often speculated that he started it for cynical reasons, like seeing how the right was divided and that there was essentially a vacuum there for a strong conservative party, but there's little doubt he totally internalized it. There's also little doubt (and at the time he and a lot of his fellow party leaders talked about it a lot) that as he (they) started a family and having children, they started to realize how conservatism kinda made more sense than liberalism.

With Kurz, there's the possibility for this path. However, he'd need to start a family soon for that to happen. At that age Orbán was already married with children

Verymuchalive , October 20, 2017 at 10:10 pm GMT
@Paul's Ghost

Liberalism ( large L) is indeed long dead.

Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency.

Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition laws, unlike any President since Clinton. Socially, he was interventionist, though this may have been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies were a long-term failure.

Price Control was quickly dropped, as it was in other Western countries. Long term Price Control, as in present day Venezuela, is economically disastrous.

KenH , October 21, 2017 at 1:51 pm GMT
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration and everything else that ails the West and has made it the sick and dying man of the world.

But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism.

What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing, and physically assaulting all of its enemies on the right who are gaining strength much to their chagrin. They resort to these methods because they can't win an honest debate and in a true free marketplace of ideas they lose.

[Dec 25, 2017] The USA as neocons occupied country

Apr 28, 2017 | economistsview.typepad.com
XXX, April 28, 2017 at 06:29 PM
Sanjait,

"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively make a huge difference in the lives of working people. "

I think you are wrong here.

Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised (immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)

Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and lower middle class, never at the expense of "fat cats" from Wall Street.

All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would be greater ?

In reality there are other powerful factors in play that diminish the importance of POTUS:

  1. The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind of dirty tricks for US public entertainment.
  2. While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic form of "National security state". In the National Security State, the US people no longer have the any chances to change the policies.
  3. Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties no longer represent the will of the people.
  4. Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
  5. The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves, their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
  6. While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the $400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM, neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
  7. The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.

The level of subservience to neocon agenda in Trump administration might well be higher then in previous administration. And "make America first" was already transformed into "full spectrum dominance" == "America uber alles". http://www.newyorker.com/culture/culture-desk/deutschland-uber-alles-and-america-first-in-song

8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure, in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of $40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf

Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or with a very fuzzy past) - symbolizes all too well).

[Dec 15, 2017] Rise and Decline of the Welfare State, by James Petras

Highly recommended!
Petras did not mention that it was Carter who started neoliberalization of the USA. The subsequent election of Reagan signified the victory of neoliberalism in this country or "quite coup". The death of New Deal from this point was just a matter of time. Labor relations drastically changes and war on union and atomization of workforce are a norm.
Welfare state still exists but only for corporation and MIC. Otherwise the New Deal society is almost completely dismanted.
It is true that "The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists retained their executive prerogatives." But the key factor in this compromise was the existence of the USSR as a threat to the power of capitalists in the USA. when the USSR disappeared cannibalistic instincts of the US elite prevailed over caution.
Notable quotes:
"... The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East. ..."
"... In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health. ..."
"... modern welfare state' ..."
"... Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility. ..."
"... Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions. ..."
"... World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war. ..."
"... So-called ' right to work' ..."
"... Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay ..."
"... Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined ..."
"... With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation. ..."
"... Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations. ..."
"... The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income. ..."
"... The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy ..."
"... Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home. ..."
"... President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff. ..."
"... Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities. ..."
"... President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven. ..."
"... Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' . ..."
"... Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe. ..."
"... Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump ..."
"... Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block. ..."
"... The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave. ..."
"... Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump. ..."
"... Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century. ..."
"... The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history ..."
"... "The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class." ..."
"... Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up ..."
"... Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers. ..."
"... The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy. ..."
"... Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it. ..."
Dec 13, 2017 | www.unz.com

Introduction

The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.

Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.

What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare legislation and institutions.

The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East.

In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health.

New Deals and Big Wars

The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern welfare state' .

Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility.

Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions.

World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war.

The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.

Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized low interest mortgages encourage home-ownership, especially for veterans.

The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still retained control over capital, the workplace and plant location of production.

Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses – sometimes through violence.

Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.

While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.

Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of them addressed structural racism and poverty.

The Last Wave of Social Welfarism

The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and young workers, threatened by military conscription, challenged the military and social order.

Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent: African American, Hispanic, draft resisters, etc.

Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented. A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats and the AFL-CIO. Overall, social and economic inequalities diminished during this period.

The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare as we knew it – as the bill for militarism placed even greater demands on the public treasury.

With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.

Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations.

The Debacle of Welfarism

Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.

Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations. On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.

The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income.

The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy.

The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists retained their executive prerogatives.

The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political organizations. The quality of labor organization declined even as the quantity of trade union membership increased.

Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official collaboration was extended overseas with strategic consequences.

The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.

US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant militants.

' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home.

Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants, activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare state.

Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans, community-based working poor and militant youth organizers.

The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War (and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.

Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale, non-unionized production at home.

The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.

Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers. Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline of wages, living standards and social benefits for millions of American workers.

The New Abolitionists: Trillionaires

The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.

Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness. Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.

As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the Democratic Party. They elected militarists and demagogues as their new presidents.

President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.

Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities.

Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.

The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were ' just too small to matter' .

The Age of Demagogues

President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.

Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade pacts – pushed by the eloquent African American President.

Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' .

Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe.

'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.

Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump

Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.

The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave.

Conclusion

Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump.

Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century.

The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.

Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy. To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich. Deception and demagogy of the labor-

Issac , December 11, 2017 at 11:01 pm GMT

"The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations."

"The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class."

A mirage so real, it even has you convinced.

whyamihere , December 12, 2017 at 4:24 am GMT
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.

I think that's one of the only situations where preppers would actually live out what they've been prepping for (except for a natural disaster).

I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.

I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today. I wonder how long it can last.

Disordered , December 13, 2017 at 8:41 am GMT
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism), I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs; while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation did as well.

From then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world. Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.

The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended targets and not moochers.

Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive up demand.

Wally , Website December 13, 2017 at 8:57 am GMT
"President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street " That's twice the amount that Bush gave them.
jacques sheete , December 13, 2017 at 10:52 am GMT

The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the capitalist class has been steadily dismantling the entire welfare state.

Wrong wrong wrong.

Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit even with all the special, government granted favors showered upon it.

Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers.

Den Lille Abe , December 13, 2017 at 11:09 am GMT
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.

In the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the middle of the 80 ties we were equal to the US in standards of living.

Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the same period has almost quadrupled. And so has our societies.

The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy.

wayfarer , December 13, 2017 at 1:01 pm GMT

Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an astronomical degree.

source: http://www.unz.com/jpetras/rise-and-decline-of-the-welfare-state/

What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems facing destitute Americans? "Qu'ils mangent de la bagels!", source: https://en.wikipedia.org/wiki/Let_them_eat_cake

... ... ...

Anonymous , Disclaimer December 13, 2017 at 1:40 pm GMT
@Greg Fraser

Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it.

Anonymous , Disclaimer December 13, 2017 at 2:43 pm GMT
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're only talking about a bunch of meat cutters at Safeway.

The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.

The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role of the media in the American transformation? The success is mind blowing.

America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed on, with a side of opiates.

There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering, disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a system that issues violence while portending (with the best media money can buy) that they claim the higher ground.

animalogic , December 13, 2017 at 2:57 pm GMT
@Wally

""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today."

Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.

Reg Cæsar , December 13, 2017 at 3:08 pm GMT

They elected militarists and demagogues as their new presidents.

Wilson and FDR were much more militarist and demagogic than those that followed.

Reg Cæsar , December 13, 2017 at 3:20 pm GMT
@whyamihere

I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people figure out they can vote for themselves generous benefits from the public treasury."

Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder. Anyone recognize the author?

phil , December 13, 2017 at 4:48 pm GMT
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending than ever before and Obamacare represents another huge entitlement.

Intellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.

HallParvey , December 13, 2017 at 4:57 pm GMT
@Anonymous

The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy, you're either in the club or not.

They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called unions. Access is via credentialing and licensing. Good Day

Anonymous , Disclaimer December 13, 2017 at 4:57 pm GMT
@Linda Green

Bernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and of NATO."

Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals and schools in self defense"

Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."

It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that gets them to bare their teeth and speak of poo.

Anonymous , Disclaimer December 13, 2017 at 5:54 pm GMT
@HallParvey

What came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication of what people know or their general intelligence – although that myth has flourished. Good afternoon.

Logan , December 13, 2017 at 9:10 pm GMT
@Realist

For an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of novels by SM Stirling.

It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly the cities did not have food, water, power, etc.

Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.

Logan , December 13, 2017 at 9:19 pm GMT
@phil

It has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden

[Dec 15, 2017] Neoliberalism undermines workers health not only via the financial consequences of un/under employment and low wages, but also through chronic exposure to stress due to insecurity

Neoliberalism as "Die-now economics." "Embodiment into lower class" or "the representation as a member the lower class" if often fatal and upper mobility mobility is artificially limited (despite all MSM hype it is lower then in Europe). So just being a member of lower class noticeably and negatively affects your life expectancy and other social metrics. Job insecurity is the hazard reserved for lower and lower middle classes destructivly effect both physical and mental health. Too much stress is not good for humans. Neoliberalism with its manta of competition uber alles and atomization of the workforce is a real killer. also the fact that such article was published and the comments below is a clear sign that the days of neoliberalism are numbered. It should go.
Notable quotes:
"... In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. ..."
"... Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways . ..."
"... Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything. ..."
"... "Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I". ..."
"... Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings ..."
"... "we have measurable health outcomes from political choices" So True!!! ..."
Dec 12, 2017 | www.nakedcapitalism.com

...Neoliberal epidemics are particular pathways of embodiment. From Ted Schrecker and Clare Bambra in The Conversation :

In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space that if they were biological contagions they would be seen as of epidemic proportions.

(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.) Case in point for one of the unluckier members of the 90%:

On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently, the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.

And Schrecker and Bambra conclude:

Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways .

... ... ...

Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything.

nonclassical , December 11, 2017 at 8:30 pm

L.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy) A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise (and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.

There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:

"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning.

Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve."

Amfortas the Hippie , December 11, 2017 at 4:20 pm

Well done, as usual.

On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here, and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.

... ... ...

Rosario , December 11, 2017 at 10:55 pm

I'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.

As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I".

Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that does not exist.

All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that formulating political action based strictly on the identity (often as an essential category) is impossible because it does not actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for political action.

... ... ...

Lambert Strether Post author , December 11, 2017 at 11:20 pm

I thought of a couple of other advantages of the "embodiment" paradigm:

Better Framing . Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs). Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological effects that can be measured and tracked, as with any epidemic.

... ... ...

oaf , December 12, 2017 at 7:11 am

"we have measurable health outcomes from political choices" So True!!!

Thank you for posting this.

[Dec 14, 2017] Tech Giants Trying to Use WTO to Colonize Emerging Economies

Notable quotes:
"... The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers. ..."
"... By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy ..."
"... Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation. ..."
"... One suspects big money will be thrown at this by the leading tech giants. ..."
"... Out of idle curiosity, how could you accurately deduce my country of origin from my name? ..."
Dec 14, 2017 | www.nakedcapitalism.com

December 14, 2017 by Yves Smith Yves here. Notice that Costa Rica is served up as an example in this article. Way back in 1997, American Express had designated Costa Rica as one of the countries it identified as sufficiently high income so as to be a target for a local currency card offered via a franchise agreement with a domestic institution (often but not always a bank). 20 years later, the Switzerland of Central America still has limited Internet connectivity, yet is precisely the sort of place that tech titans like Google would like to dominate.

The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers.

By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy

Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation.

n a few weeks' time, trade ministers from 164 countries will gather in Buenos Aires for the 11th World Trade Organization (WTO) Ministerial Conference (MC11). US President Donald Trump in November issued fresh accusations of unfair treatment towards the US by WTO members , making it virtually impossible for trade ministers to leave the table with any agreement in substantial areas.

To avoid a 'failure ministerial," some countries see the solution as pushing governments to open a mandate to start conversations that might lead to a negotiation on binding rules for e-commerce and a declaration of the gathering as the "digital ministerial". Argentina's MC11 chair, Susana Malcorra, is actively pushing for member states to embrace e-commerce at the WTO, claiming that it is necessary to " bridge the gap between the haves and have-nots ".

It is not very clear what kind of gaps Malcorra is trying to bridge. It surely isn't the "connectivity gap" or "digital divide" that is growing between developed and developing countries, seriously impeding digital learning and knowledge in developing countries. In fact, half of humanity is not even connected to the internet, let alone positioned to develop competitive markets or bargain at a multilateral level. Negotiating binding e-commerce rules at the WTO would only widen that gap.

Dangerously, the "South Vision" of digital trade in the global trade arena is being shaped by a recent alliance of governments and well-known tech-sector lobbyists, in a group called 'Friends of E-Commerce for Development' (FED), including Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay, and, most recently, China. FED claims that e-commerce is a tool to drive growth, narrow the digital divide, and generate digital solutions for developing and least developed countries.

However, none of the countries in the group (apart from China) is leading or even remotely ready to be in a position to negotiate and push for binding rules on digital trade that will be favorable to them, as their economies are still far away from the technology revolution. For instance, it is perplexing that one of the most fervent defenders of FED's position is Costa Rica. The country's economy is based on the export of bananas, coffee, tropical fruits, and low-tech medical instruments, and almost half of its population is offline . Most of the countries in FED are far from being powerful enough to shift negotiations in favor of small players.

U.S.-based tech giants and Chinese Alibaba – so-called GAFA-A – dominate, by far, the future of the digital playing field, including issues such as identification and digital payments, connectivity, and the next generation of logistics solutions. In fact, there is a no-holds-barred ongoing race among these tech giants to consolidate their market share in developing economies, from the race to grow the advertising market to the race to increase online payments.

An e-commerce agenda that claims unprecedented development for the Global South is a Trojan horse move. Beginning negotiations on such topics at this stage – before governments are prepared to understand what is at stake – could lead to devastating results, accelerating liberalization and the consolidation of the power of tech giants to the detriment of local industries, consumers, and citizens. Aware of the increased disparities between North and South, and the data dominance of a tiny group of GAFA-A companies, a group of African nations issued a statement opposing the digital ambitions of the host for MC11. But the political landscape is more complex, with China, the EU, and Russia now supporting the idea of a "digital" mandate .

Repeating the Same Mistakes?

The relationships of most countries with tech companies are as imbalanced as their relationships with Big Pharma, and there are many parallels to note. Not so long ago, the countries of the Global South faced Big Pharma power in pharmaceutical markets in a similar way. Some developing countries had the same enthusiasm when they negotiated intellectual property rules for the protection of innovation and research and development costs. In reality, those countries were nothing more than users and consumers of that innovation, not the owners or creators. The lessons of negotiating trade issues that lie at the core of public interest issues – in that case, access to medicines – were costly. Human lives and fundamental rights of those who use online services should not be forgotten when addressing the increasingly worrying and unequal relationships with tech power.

The threat before our eyes is similarly complex and equally harmful to the way our societies will be shaped in the coming years. In the past, the Big Pharma race was for patent exclusivity, to eliminate local generic production and keep drug prices high. Today, the Big Tech race is for data extractivism from those who have yet to be connected in the world, and tech companies will use all the power they hold to achieve a global regime in which small nations cannot regulate either data extraction or data localization.

Big Tech is one of the most concentrated and resourceful industries of all time. The bargaining power of developing countries is minimal. Developing countries will basically be granting the right to cultivate small parcels of a land controlled by data lords -- under their rules, their mandate, and their will -- with practically no public oversight. The stakes are high. At the core of it is the race to conquer the markets of digital payments and the battle to become the platform where data flows, splitting the territory as old empires did in the past. As the Economist claimed on May 6, 2017: "Conflicts over control of oil have scarred the world for decades. No one yet worries that wars will be fought over data. But the data economy has the same potential for confrontation."

If countries from the Global South want to prepare for data wars, they should start thinking about how to reduce the control of Big Tech over -- how we communicate, shop, and learn the news -- , again, over our societies. The solution lies not in making rules for data liberalization, but in devising ways to use the law to reduce Big Tech's power and protect consumers and citizens. Finding the balance would take some time and we are going to take that time to find the right balance, we are not ready to lock the future yet.

Jef , December 14, 2017 at 11:32 am

I thought thats what the WTO is for?

Thuto , December 14, 2017 at 2:14 pm

One suspects big money will be thrown at this by the leading tech giants. To paraphrase from a comment I made recently regarding a similar topic : "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world". With this dynamic in mind, and the "constant growth" mantra humming incessantly in the background, it's easy to see how high stakes a game this is for the tech giants and how no resources will be spared to stymie any efforts at establishing a regulatory oversight framework that will protect the digital rights of citizens in the global south.

Multilateral fora like the WTO are de facto enablers for the marauding frontal attacks of transnational corporations, and it's disheartening to see that some developing nations have already nailed the digital futures of their citizens to the mast of the tech giants by joining this alliance. What's more, this signing away of their liberty will be sold to the citizenry as the best way to usher them into the brightest of all digital futures.

Mark P. , December 14, 2017 at 3:30 pm

One suspects big money will be thrown at this by the leading tech giants.

Vast sums of money are already being thrown at bringing Africa online, for better or worse. Thus, the R&D aimed at providing wireless Internet via giant drones/balloons/satellites by Google, Facebook, etc.

You're African. Possibly South African by your user name, which may explain why you're a little behind the curve, because the action is already happening, but more to the north -- and particularly in East Africa.

The big corporations -- and the tech giants are competing with the banking/credit card giants -- have noted how mobile technology leapt over the dearth of last century's telephony tech, land lines, and in turn enabled the highest adoption rates of cellphone banking in the world. (Particularly in East Africa, as I say.) The payoffs for big corporations are massive -- de facto cashless societies where the corporations control the payment systems –and the politicians are mostly cheap.

In Nigeria, the government has launched a Mastercard-branded national ID card that's also a payment card, in one swoop handing Mastercard more than 170 million potential customers, and their personal and biometric data.

In Kenya, the sums transferred by mobile money operator M-Pesa are more than 25 percent of that country's GDP.

You can see that bringing Africa online is technically a big, decade-long project. But also that the potential payoffs are vast. Though I also suspect China may come out ahead -- they're investing far more in Africa and in some areas their technology -- drones, for instance -- is already superior to what the Europeans and the American companies have.

Thuto , December 14, 2017 at 4:58 pm

Thank you Mark P.

Hoisted from a comment I made here recently: "Here in South Africa and through its Free Basics programme, facebook is jumping into bed with unsuspecting ISPs (I say unsuspecting because fb will soon be muscling in on their territory and becoming an ISP itself by provisioning bandwidth directly from its floating satellites) and circumventing net neutrality "

I'm also keenly aware of the developments in Kenya re: safaricom and Mpesa and how that has led to traditional banking via bank accounts being largely leapfrogged for those moving from being unbanked to active economic citizens requiring money transfer facilities. Given the huge succes of Mpesa, I wouldn't be surprised if a multinational tech behemoth (chinese or american) were to make a play for acquiring safaricom and positioning it as a triple-play ISP, money transfer/banking services and digital content provider (harvesting data about users habits on an unprecedented scale across multiple areas of their lives), first in Kenya then expanded throughout east, central and west africa. I must add that your statement about Nigeria puts Mark Zuckerberg's visit there a few months back into context somewhat, perhaps a reconnaissance mission of sorts.

Out of idle curiosity, how could you accurately deduce my country of origin from my name?

Mark P. , December 14, 2017 at 6:59 pm

Out of idle curiosity, how could you accurately deduce my country of origin from my name?

Though I've lived in California for decades, my mother was South African and I maintain a UK passport, having grown up in London.

Mark P. , December 14, 2017 at 3:34 pm

As you also write: "with markets in the developed world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next 3 billion users for their products/services are going to come from developing world."

Absolutely true. This cannot be stressed enough. The tech giants know this and the race is on.

Mattski , December 14, 2017 at 3:41 pm

Been happening with food for 50 years.

[Dec 13, 2017] Stress of long-term unemployment takes a toll on thousands of Jerseyans who are out of work by Leslie Kwoh

Notable quotes:
"... Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147. ..."
Jun 13, 2010 | www.nj.com

At 5:30 every morning, Tony Gwiazdowski rolls out of bed, brews a pot of coffee and carefully arranges his laptop, cell phone and notepad like silverware across the kitchen table.

And then he waits.

Gwiazdowski, 57, has been waiting for 16 months. Since losing his job as a transportation sales manager in February 2009, he wakes each morning to the sobering reminder that, yes, he is still unemployed. So he pushes aside the fatigue, throws on some clothes and sends out another flurry of resumes and cheery cover letters.

But most days go by without a single phone call. And around sundown, when he hears his neighbors returning home from work, Gwiazdowski -- the former mayor of Hillsborough -- can't help but allow himself one tiny sigh of resignation.

"You sit there and you wonder, 'What am I doing wrong?'" said Gwiazdowski, who finds companionship in his 2-year-old golden retriever, Charlie, until his wife returns from work.

"The worst moment is at the end of the day when it's 4:30 and you did everything you could, and the phone hasn't rung, the e-mails haven't come through."

Gwiazdowski is one of a growing number of chronically unemployed workers in New Jersey and across the country who are struggling to get through what is becoming one long, jobless nightmare -- even as the rest of the economy has begun to show signs of recovery.

Nationwide, 46 percent of the unemployed -- 6.7 million Americans -- have been without work for at least half a year, by far the highest percentage recorded since the U.S. Labor Department began tracking the data in 1948.

In New Jersey, nearly 40 percent of the 416,000 unemployed workers last year fit that profile, up from about 20 percent in previous years, according to the department, which provides only annual breakdowns for individual states. Most of them were unemployed for more than a year.

But the repercussions of chronic unemployment go beyond the loss of a paycheck or the realization that one might never find the same kind of job again. For many, the sinking feeling of joblessness -- with no end in sight -- can take a psychological toll, experts say.

Across the state, mental health crisis units saw a 20 percent increase in demand last year as more residents reported suffering from unemployment-related stress, according to the New Jersey Association of Mental Health Agencies.

"The longer the unemployment continues, the more impact it will have on their personal lives and mental health," said Shauna Moses, the association's associate executive director. "There's stress in the marriage, with the kids, other family members, with friends."

And while a few continue to cling to optimism, even the toughest admit there are moments of despair: Fear of never finding work, envy of employed friends and embarassment at having to tell acquaintances that, nope, still no luck.

"When they say, 'Hi Mayor,' I don't tell a lot of people I'm out of work -- I say I'm semi-retired," said Gwiazdowski, who maxed out on unemployment benefits several months ago.

"They might think, 'Gee, what's wrong with him? Why can't he get a job?' It's a long story and maybe people really don't care and now they want to get away from you."


SECOND TIME AROUND

Lynn Kafalas has been there before, too. After losing her computer training job in 2000, the East Hanover resident took four agonizing years to find new work -- by then, she had refashioned herself into a web designer.

That not-too-distant experience is why Kafalas, 52, who was laid off again eight months ago, grows uneasier with each passing day. Already, some of her old demons have returned, like loneliness, self-doubt and, worst of all, insomnia. At night, her mind races to dissect the latest interview: What went wrong? What else should she be doing? And why won't even Barnes & Noble hire her?

"It's like putting a stopper on my life -- I can't move on," said Kafalas, who has given up karate lessons, vacations and regular outings with friends. "Everything is about the interviews."

And while most of her friends have been supportive, a few have hinted to her that she is doing something wrong, or not doing enough. The remarks always hit Kafalas with a pang.

In a recent study, researchers at Rutgers University found that the chronically unemployed are prone to high levels of stress, anxiety, depression, loneliness and even substance abuse, which take a toll on their self-esteem and personal relationships.

"They're the forgotten group," said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers, and a co-author of the report. "And the longer you are unemployed, the less likely you are to get a job."

Of the 900 unemployed workers first interviewed last August for the study, only one in 10 landed full-time work by March of this year, and only half of those lucky few expressed satisfaction with their new jobs. Another one in 10 simply gave up searching.

Among those who were still unemployed, many struggled to make ends meet by borrowing from friends or family, turning to government food stamps and forgoing health care, according to the study.

More than half said they avoided all social contact, while slightly less than half said they had lost touch with close friends. Six in 10 said they had problems sleeping.

Kafalas says she deals with her chronic insomnia by hitting the gym for two hours almost every evening, lifting weights and pounding the treadmill until she feels tired enough to fall asleep.

"Sometimes I forget what day it is. Is it Tuesday? And then I'll think of what TV show ran the night before," she said. "Waiting is the toughest part."


AGE A FACTOR

Generally, the likelihood of long-term unemployment increases with age, experts say. A report by the National Employment Law Project this month found that nearly half of those who were unemployed for six months or longer were at least 45 years old. Those between 16 and 24 made up just 14 percent.

Tell that to Adam Blank, 24, who has been living with his girlfriend and her parents at their Martinsville home since losing his sales job at Best Buy a year and half ago.

Blank, who graduated from Rutgers with a major in communications, says he feels like a burden sometimes, especially since his girlfriend, Tracy Rosen, 24, works full-time at a local nonprofit. He shows her family gratitude with small chores, like taking out the garbage, washing dishes, sweeping floors and doing laundry.

Still, he often feels inadequate.

"All I'm doing on an almost daily basis is sitting around the house trying to keep myself from going stir-crazy," said Blank, who dreams of starting a social media company.

When he is feeling particularly low, Blank said he turns to a tactic employed by prisoners of war in Vietnam: "They used to build dream houses in their head to help keep their sanity. It's really just imagining a place I can call my own."


LESSONS LEARNED

Meanwhile, Gwiazdowski, ever the optimist, says unemployment has taught him a few things.

He has learned, for example, how to quickly assess an interviewer's age and play up or down his work experience accordingly -- he doesn't want to appear "threatening" to a potential employer who is younger. He has learned that by occasionally deleting and reuploading his resume to job sites, his entry appears fresh.

"It's almost like a game," he said, laughing. "You are desperate, but you can't show it."

But there are days when he just can't find any humor in his predicament -- like when he finishes a great interview but receives no offer, or when he hears a fellow job seeker finally found work and feels a slight twinge of jealousy.

"That's what I'm missing -- putting on that shirt and tie in the morning and going to work," he said.

The memory of getting dressed for work is still so vivid, Gwiazdowski says, that he has to believe another job is just around the corner.

"You always have to hope that that morning when you get up, it's going to be the day," he said.

"Today is going to be the day that something is going to happen."

Leslie Kwoh may be reached at lkwoh@starledger.com or (973) 392-4147.

DrBuzzard Jun 13, 2010

I collect from the state of iowa, was on tier I and when the gov't recessed without passing extension, iowa stopped paying tier I claims that were already open, i was scheduled to be on tier I until july 15th, and its gone now, as a surprise, when i tried to claim my week this week i was notified. SURPRISE, talk about stress.

berganliz Jun 13, 2010

This is terrible....just wait until RIF'd teachers hit the unemployment offices....but then, this is what NJ wanted...fired teachers who are to blame for the worst recession our country has seen in 150 years...thanks GWB.....thanks Donald Rumsfeld......thanks Dick Cheney....thanks Karl "Miss Piggy" Rove...and thank you Mr. Big Boy himself...Gov Krispy Kreame!

rp121 Jun 13, 2010

For readers who care about this nation's unemployed- Call your Senators to pass HR 4213, the "Extenders" bill. Unfortunately, it does not add UI benefits weeks, however it DOES continue the emergency federal tiers of UI. If it does not pass this week many of us are cut off at 26 wks. No tier 1, 2 -nothing.

[Dec 13, 2017] Unemployment health hazard and stress

The longer you are unemployed, the more you are effected by those factors.
Notable quotes:
"... The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects. ..."
"... Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system. ..."
"... Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises. ..."
"... Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem. ..."
"... One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available. ..."
"... Depression is universally hated by anyone who's ever had it. ..."
"... Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either. ..."
"... You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard. ..."
Dec 13, 2017 | www.cvtips.com

It's almost impossible to describe the various psychological impacts, because there are so many. There are sometimes serious consequences, including suicide, and, some would say worse, chronic depression.

There's not really a single cause and effect. It's a compound effect, and unemployment, by adding stress, affects people, often badly.

The world doesn't need any more untrained psychologists, and we're not pretending to give medical advice. That's for professionals. Everybody is different, and their problems are different. What we can do is give you an outline of the common problems, and what you can do about them.

The good news is that only a relatively small number of people are seriously affected by the stress of unemployment to the extent they need medical assistance. Most people don't get to the serious levels of stress, and much as they loathe being unemployed, they suffer few, and minor, ill effects.

For others, there are a series of issues, and the big three are:

Stress

Stress is Stage One. It's a natural result of the situation. Worries about income, domestic problems, whatever, the list is as long as humanity. The result of stress is a strain on the nervous system, and these create the physical effects of the situation over time. The chemistry of stress is complex, but it can be rough on the hormonal system.

Over an extended period, the body's natural hormonal balances are affected, and this can lead to problems. These are actually physical issues, but the effects are mental, and the first obvious effects are, naturally, emotional.

Anger, and other negative emotions

Not at all surprisingly, people under stress experience strong emotions. It's a perfectly natural response to what can be quite intolerable emotional strains. It's fair to say that even normal situations are felt much more severely by people already under stress. Things that wouldn't normally even be issues become problems, and problems become serious problems. Relationships can suffer badly in these circumstances, and that, inevitably, produces further crises. Unfortunately for those affected, these are by now, at this stage, real crises.

If the actual situation was already bad, this mental state makes it a lot worse. Constant aggravation doesn't help people to keep a sense of perspective. Clear thinking isn't easy when under constant stress.

Some people are stubborn enough and tough enough mentally to control their emotions ruthlessly, and they do better under these conditions. Even that comes at a cost, and although under control, the stress remains a problem.

One of the reasons anger management is now a growth industry is because of the growing need for assistance with severe stress over the last decade. This is a common situation, and help is available.

If you have reservations about seeking help, bear in mind it can't possibly be any worse than the problem.

Depression

Depression is universally hated by anyone who's ever had it. This is the next stage, and it's caused by hormonal imbalances which affect serotonin. It's actually a physical problem, but it has mental effects which are sometimes devastating, and potentially life threatening.

The common symptoms are:

It's a disgusting experience. No level of obscenity could possibly describe it. Depression is misery on a level people wouldn't conceive in a nightmare. At this stage the patient needs help, and getting it is actually relatively easy. It's convincing the person they need to do something about it that's difficult. Again, the mental state is working against the person. Even admitting there's a problem is hard for many people in this condition.

Generally speaking, a person who is trusted is the best person to tell anyone experiencing the onset of depression to seek help. Important: If you're experiencing any of those symptoms:

Very important: Do not, under any circumstances, try to use drugs or alcohol as a quick fix. They make it worse, over time, because they actually add stress. Some drugs can make things a lot worse, instantly, too, particularly the modern made-in-a-bathtub variety. They'll also destroy your liver, which doesn't help much, either.

Alcohol, in particular, makes depression much worse. Alcohol is a depressant, itself, and it's also a nasty chemical mix with all those stress hormones.

If you've ever had alcohol problems, or seen someone with alcohol wrecking their lives, depression makes things about a million times worse.

Just don't do it. Steer clear of any so-called stimulants, because they don't mix with antidepressants, either.

Unemployment and staying healthy

The above is what you need to know about the risks of unemployment to your health and mental well being.

These situations are avoidable.

Your best defense against the mental stresses and strains of unemployment, and their related problems is staying healthy.

We can promise you that is nothing less than the truth. The healthier you are, the better your defenses against stress, and the more strength you have to cope with situations.

Basic health is actually pretty easy to achieve:

Diet

Eat real food, not junk, and make sure you're getting enough food. Your body can't work with resources it doesn't have. Good food is a real asset, and you'll find you don't get tired as easily. You need the energy reserves.

Give yourself a good selection of food that you like, that's also worth eating.

The good news is that plain food is also reasonably cheap, and you can eat as much as you need. Basic meals are easy enough to prepare, and as long as you're getting all the protein veg and minerals you need, you're pretty much covered.

You can also use a multivitamin cap, or broad spectrum supplements, to make sure you're getting all your trace elements. Also make sure you're getting the benefits of your food by taking acidophilus or eating yogurt regularly.

Exercise

You don't have to live in a gym to get enough exercise for basic fitness. A few laps of the pool, a good walk, some basic aerobic exercises, you're talking about 30-45 minutes a day. It's not hard.

Don't just sit and suffer

If anything's wrong, check it out when it starts, not six months later. Most medical conditions become serious when they're allowed to get worse.

For unemployed people the added risk is also that they may prevent you getting that job, or going for interviews. If something's causing you problems, get rid of it.

Nobody who's been through the blender of unemployment thinks it's fun.

Anyone who's really done it tough will tell you one thing:

Don't be a victim. Beat the problem, and you'll really appreciate the feeling.

[Dec 12, 2017] Can Uber Ever Deliver Part Eleven Annual Uber Losses Now Approaching $5 Billion

Notable quotes:
"... Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. ..."
"... Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins. ..."
"... In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week. ..."
"... An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8] ..."
"... Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017. ..."
"... Socialize the losses, privatize the gains, VC-ize the subsidies. ..."
"... The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. ..."
"... "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs ..."
Dec 12, 2017 | www.nakedcapitalism.com

Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5 billion in 2017.

The top line on the table below shows is total passenger payments, which must be split between Uber corporate and its drivers. Driver gross earnings are substantially higher than actual take home pay, as gross earning must cover all the expenses drivers bear, including fuel, vehicle ownership, insurance and maintenance.

Most of the "profit" data released by Uber over time and discussed in the press is not true GAAP (generally accepted accounting principles) profit comparable to the net income numbers public companies publish but is EBIDTAR contribution. Companies have significant leeway as to how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation, amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly from quarter to quarter, given the impact of one-time expenses such as legal settlements and stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd quarters of 2017, but have EBIDTAR contribution numbers for all other periods. [5]

Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of 132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year ending September 2015 presented in part one of the NC Uber series over a year ago.

No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4 billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5 billion.

While many Silicon Valley funded startups suffered large initial losses, none of them lost anything remotely close to $2.6 billion in their sixth year of operation and then doubled their losses to $5 billion in year eight. Reversing losses of this magnitude would require the greatest corporate financial turnaround in history.

No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had to reverse these cuts in 2017.

Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. These driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins.

In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week.

An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8]

A business model where profit improvement is hugely dependent on wage cuts is unsustainable, especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus has always been the rate of growth in gross passenger revenue, as this has been a major justification for its $68 billion valuation. This growth rate came under enormous pressure in 2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell, [9] and the avalanche of adverse publicity it was facing.

Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017.

MKS , December 12, 2017 at 6:19 am

"Uber's business model can never produce sustainable profits"

Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute statement in an non-absolute environment. The same environment that has produced the "Silicon Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of money for a company with no underlying fundamentals you damn right they will! Please stop with the I know all no body knows anything, especially the psychology and irrationality of markets which are made up of irrational people/investors/traders.

JohnnySacks , December 12, 2017 at 7:34 am

My thoughts exactly. Seems the only possible recovery for the investors is a perfectly engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there and many who would also like to get on board early in the ride in fear of missing out on all the money to be hoovered up from the greater fools. Count me out.

SoCal Rhino , December 12, 2017 at 8:30 am

The author clearly distinguishes between GAAP profitability and valuations, which is after all rather the point of the series. And he makes a more nuanced point than the half sentence you have quoted without context or with an indication that you omitted a portion. Did you miss the part about how Uber would have a strong incentive to share the evidence of a network effect or other financial story that pointed the way to eventual profit? Otherwise (my words) it is the classic sell at a loss, make it up with volume path to liquidation.

tegnost , December 12, 2017 at 9:52 am

apples and oranges comparison, nvidia has lots and lots of patented tech that produces revenue, facebook has a kajillion admittedly irrational users, but those users drive